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EXHIBIT 2.1
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF TEXAS
(HOUSTON DIVISION)
IN RE: : CASE NO. 00-38590 H5-11
:
PARACELSUS HEALTHCARE : CHAPTER 11
CORPORATION, :
:
Debtor. : DATED: April 18, 2001
:
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DEBTOR'S FIRST AMENDED PLAN OF REORGANIZATION
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Paracelsus Healthcare Corporation ("Paracelsus" or "Debtor") proposes
the following plan of reorganization under Section 1121(a) of Title 11 of the
United States Code:
ARTICLE I
DEFINITIONS AND CONSTRUCTION OF TERMS
Definitions. As used herein, the following terms have the respective
meanings specified below, unless the context otherwise requires:
I.1 Administrative Expense Claim means any right to payment
constituting a cost or expense of administration of the Chapter 11 Case under
Sections 503(b) and 507(a)(1) of the Bankruptcy Code, including, without
limitation, any actual and necessary costs and expenses of preserving the estate
of the Debtor, any actual and necessary costs and expenses of operating the
business of the Debtor, any indebtedness or obligations incurred or assumed by
the Debtor in Possession in connection with the conduct of its business,
including, without limitation, for the acquisition or lease of property or an
interest in property or the rendition of services (including, without
limitation, the claim of BNY for fees and expenses incurred for its services as
Trustee under the Senior Subordinated Note Indenture and as Indenture Trustee
under the New Indenture up to and including the Effective Date), but excluding
all Professional Compensation and Reimbursement Claims under Sections 330 or 503
of the Bankruptcy Code and any fees or charges assessed against the estate of
the Debtor under Section 1930 of Chapter 123 of Title 28 of the United States
Code.
I.2 Allowed means, with reference to any Claim, (a) any Claim
against the Debtor which has been listed by the Debtor in its Schedules, as such
Schedules may be amended by the Debtor from time to time in accordance with
Bankruptcy Rule 1009, as liquidated in amount and
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not disputed or contingent and for which no contrary proof of Claim has been
filed, (b) any Claim Allowed hereunder, (c) any Claim which is not Disputed, or
(d) any Claim which, if Disputed, (i) as to which, pursuant to the Plan or a
Final Order of the Bankruptcy Court, the liability of the Debtor and the amount
thereof is determined by a Final Order of a court of competent jurisdiction
other than the Bankruptcy Court, or (ii) has been Allowed or estimated for
allowance pursuant to Section 502(c) of the Bankruptcy Code by Final Order of
the Bankruptcy Court; provided, however, that any Claim allowed solely for the
purpose of voting to accept or reject the Plan pursuant to a Final Order of the
Bankruptcy Court shall not be considered an "Allowed Claim" hereunder. Unless
otherwise specified herein or by Final Order of the Bankruptcy Court, "Allowed
Administrative Expense Claim," or "Allowed Claim" shall not, for purposes of
computation of distributions under the Plan, include interest on such
Administrative Expense Claim, or Claim from and after the Commencement Date.
I.3 Ballot means the form distributed to each holder of an impaired
Claim on which is to be indicated acceptance or rejection of the Plan.
I.4 Bankruptcy Code means Title 11 of the United States Code, as
now in effect.
I.5 Bankruptcy Court means the United States Bankruptcy Court for the
Southern District of Texas (Houston Division) having jurisdiction over the
Chapter 11 Case.
I.6 Bankruptcy Rules means the Federal Rules of Bankruptcy
Procedure as now in effect, and any Local Rules of the Bankruptcy Court.
I.7 BNY means The Bank of New York as indenture trustee under
the Senior Subordinated Notes, or the New Notes, as the case may be.
I.8 Business Day means any day other than a Saturday, Sunday or
any other day on which commercial banks in New York, New York are required or
authorized to close by law or executive order.
I.9 Bylaws means the Bylaws of the Reorganized Debtor, which
shall be in substantially the form contained in the Plan Supplement.
I.10 California means, when used in connection with the qui tam
Claims Settlement, the State of California, acting through its Department of
Justice, Office of the Attorney General and the California Department of Health
Services.
I.11 Cash means legal tender of the United States of America and
equivalents thereof.
I.12 Cause of Action means, without limitation, any and all
actions, causes of action, liabilities, obligations, rights, suits, debts, sums
of money, damages, judgments, claims and demands whatsoever, whether known or
unknown, in law, equity or otherwise.
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I.13 Certificate of Incorporation means the Certificate of
Incorporation of the Reorganized Debtor, which shall be in substantially the
form contained in the Plan Supplement.
I.14 Chapter 11 Case means the case under Chapter 11 of the
Bankruptcy Code commenced by the Debtor in the Bankruptcy Court.
I.15 Claim has the meaning set forth in Section 101 of the
Bankruptcy Code.
I.16 Claimant means the holder of a Claim against the Debtor.
I.17 Claims Register shall mean the list of proofs of Claim
prepared and maintained by the Clerk of the Bankruptcy Court.
I.18 Class means a category of holder of Claims or Equity
Interests as set forth in Article IV of the Plan.
I.19 Class 4 Cash Payment means Cash in an amount equal to the
aggregate per diem interest earned on a principal amount of $130,000,00.00 at
the rate of 11 1/2 percent per annum for the number of whole days during the
period commencing on August 15, 2000 and ending on the Effective Date, including
the first day in such period and excluding the last.
I.20 Collateral means any property or interest in property of the
estate of the Debtor subject to a Lien or Security Interest to secure the
payment or performance of a Claim, which Lien or Security Interest is not
subject to avoidance under the Bankruptcy Code or otherwise invalid under the
Bankruptcy Code or applicable nonbankruptcy law.
I.21 Commencement Date means the date on which the Debtor
commenced the Chapter 11 Case.
I.22 Confirmation Date means the date on which the Clerk of the
Bankruptcy Court enters the Confirmation Order on the docket.
I.23 Confirmation Hearing means the hearing held by the
Bankruptcy Court to consider confirmation of the Plan pursuant to Section 1129
of the Bankruptcy Code, as such hearing may be adjourned or continued from time
to time.
I.24 Confirmation Order means the Final Order of the Bankruptcy
Court confirming the Plan pursuant to Section 1129 of the Bankruptcy Code.
I.25 Convenience Claim means any Claim in the amount of $5,000.00
or less and any Claim that is reduced to $5,000.00 by the election of the holder
thereof on such holder's Ballot (provided that (i) individual Claims less than
$5,000.00 of a single holder existing as of the Commencement Date will not be
treated as separate Convenience Claims if the aggregate of all Claims due any
such single holder as of the Commencement Date exceeds $5,000.00, and (ii) any
Claim that was originally in excess of $5,000.00 may not be subdivided into
multiple Claims of less than $5,000.00 for purposes of receiving treatment as a
Convenience Claim).
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I.26 Creditors' Committee means the statutory committee of
unsecured creditors appointed in the Chapter 11 Case pursuant to Section 1102 of
the Bankruptcy Code.
I.27 Debtor means Paracelsus Healthcare Corporation, a California
corporation.
I.28 Debtor in Possession means the Debtor in its capacity as
debtor in possession in the Chapter 11 Case pursuant to Sections 1101, 1107(a)
and 1108 of the Bankruptcy Code.
I.29 Disclosure Statement means the disclosure statement relating
to the Plan, including, without limitation, all exhibits and schedules thereto,
as approved by the Bankruptcy Court pursuant to Section 1125 of the Bankruptcy
Code.
I.30 Disclosure Statement Hearing means the hearing held by the
Bankruptcy Court to consider the approval of the Disclosure Statement pursuant
to Section 1126 of the Bankruptcy Code, as such hearing may be adjourned or
continued from time to time.
I.31 Disputed means the portion (including, when appropriate, the
whole) of any Claim as to which: (a) a proof of Claim has been or been deemed
timely and properly Filed under applicable law or pursuant to this Plan as
confirmed pursuant to the Confirmation Order, or as otherwise ordered by the
Bankruptcy Court; (b) an objection, motion to estimate, or complaint to
determine the validity, priority or extent of any Lien asserted by the claimant
with respect to the Claim has been timely Filed; and (c) such objection, motion
or complaint has not been withdrawn or granted, denied or otherwise determined
by Final Order. Before the time that such an objection, motion or complaint
has been filed, any Claim shall be considered Disputed (w) to the extent, if
any, that the amount of the Claim specified in a proof of Claim exceeds the
amount of any corresponding Claim scheduled by the Debtor in its Schedules; (x)
in its entirety, if any corresponding Claim scheduled by the Debtor has been
scheduled as disputed, contingent or unliquidated in the Schedules; (y) in its
entirety, if any corresponding Claim scheduled by the Debtor in its Schedules
places the Claim in a separate classification from that asserted in a proof of
Claim, or (z) in its entirety, if no corresponding Claim has been scheduled by
the Debtor in its Schedules.
I.32 Disputed Claim Amount means the higher of the amount set
forth in the proof of Claim or listed on the Schedules relating to a Disputed
Claim; provided, however, if a Disputed Claim is estimated for allowance
purposes under Section 502(c) of the Bankruptcy Code, the amount so estimated
pursuant to Final Order of the Bankruptcy Court shall be the Disputed Claim
Amount.
I.33 Effective Date means the first Business Day on which the
conditions precedent specified in Section 10.1 of the Plan have been satisfied,
or waived in accordance with Section 10.4 of the Plan.
I.34 Employment and Compensation Agreements means (a) that
certain employment agreement, dated as of March 1, 2000, by and between the
Debtor and Robert L. Smith as Chief
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Executive Officer of the Debtor, (b) those certain "Stay On Bonus Agreements,"
by and between the Debtor and PHC/CHC Holdings, Inc., on one hand, and fifteen
(15) key officers of the Debtor and certain of its subsidiaries, on the other,
and (c) the Debtor's Fiscal Year 2000 Incentive Bonus Plan.
I.35 Equity Interest means any share of common stock or other
instrument evidencing an ownership interest in the Debtor, whether or not
transferable, and any option, warrant or right, contractual or otherwise, to
acquire any such interest.
I.36 Estate means the Debtor's Chapter 11 bankruptcy estate.
I.37 File or Filed means filed with the Bankruptcy Court in the
Chapter 11 Case.
I.38 Final Order means an order of the Bankruptcy Court that has
been entered on the docket of the Bankruptcy Court for ten (10) or more days and
that is not then stayed or reversed.
I.39 General Unsecured Claim means any Claim that is not a Secured
Claim, Senior Subordinated Note Holder Claim, Miscellaneous Secured Claim,
Administrative Expense Claim, Professional Compensation and Reimbursement Claim,
a Claim for statutory fees due the United States Trustee pursuant to 28 U.S.C.
Section 1930(a)(6), Priority Tax Claim, Other Priority Claim, Intercompany Claim
or Convenience Claim.
I.40 Initial Distribution Date means the Effective Date or the
first Business Day practicable thereafter, provided, however, that the Initial
Distribution Date shall not be on a date that is later than five (5) Business
Days after the Effective Date unless the Creditors' Committee and the Debtor
agree in writing to a later date.
I.41 Insured Claim means any Claim arising from an incident,
occurrence, final arbitration award, judgment or similar final award to the
extent that liability thereunder, if any, is covered by an insurance policy or
bond, including, without limitation, any supersedeas bond.
I.42 Intercompany Claim means any Claim asserted against the
Debtor by any of the Debtor's direct or indirect subsidiaries.
I.43 Lien shall have the meaning set forth in Section 101 of the
Bankruptcy Code.
I.44 MIS means Mellon Investor Services LLC, or any
successor-in-interest thereto.
I.45 Miscellaneous Secured Claim means any Claim, other than a
Secured Tax Claim, to the extent reflected in the Schedules or a proof of Claim
as being secured by a Lien or Security Interest (whether consensual or
otherwise), to the extent it is secured by a valid, unavoidable Lien or Security
Interest in Collateral, to the extent of the value of the Estate's interest in
such Collateral, as determined in accordance with Section 506(a) of the
Bankruptcy Code and taking into account any other Secured Claims with respect to
such Collateral not inferior in priority to
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such Secured Claim, or, in the event that such Claim is subject to setoff under
Section 553 of the Bankruptcy Code, to the extent of such setoff.
I.46 New Common Stock means the common stock of the Reorganized
Debtor authorized and to be issued pursuant to the Plan. The New Common Stock
shall have a par value of $.01 per share and such rights with respect to
dividends, liquidation, voting and other matters as are provided for by
applicable nonbankruptcy law or in the Certificate of Incorporation and the
Bylaws.
I.47 New Indenture means that certain Indenture relating to the
New Notes, dated as of the Effective Date, by and between the Reorganized Debtor
and BNY as indenture trustee, in the original principal amount of $130,000,000,
in substantially the form contained in the Plan Supplement.
I.48 New Notes means the 11.50% Senior Notes, due on August 15,
2005, with interest thereon calculated commencing as of the Effective Date and
payable semi-annually on February 15 and August 15 each year thereafter until
the principal and all accrued or unpaid interest thereon is paid in accordance
with the terms of the New Indenture, in substantially the form contained in the
Plan Supplement, to be issued by the Reorganized Debtor pursuant to the New
Indenture to holders of Allowed Class 4 Claims in accordance with Section 4.4 of
the Plan.
I.49 Other Priority Claim means any Claim, other than an
Administrative Expense Claim or a Priority Tax Claim, entitled to priority in
right of payment under Section 507(a) of the Bankruptcy Code.
I.50 Park means Park Hospital GmbH.
I.51 Park Subordinated Note means that certain subordinated note,
in the original principal amount of $7,185,467, dated August 30, 1996 and
bearing interest at the rate of 6.51%, issued by Paracelsus as payor to Park as
payee.
I.52 PHC/Park/Champion Settlement Agreement means that certain
Settlement Agreement, dated as of March 24, 1999, by and between Park; the
Debtor; Dr. Manfred Georg Krukemeyer; Virginia Retirement System; Baker,
Fentress & Company; Weiss, Peck & Greer, LLC, as Sole Trustee for the WPG
Corporate Development Associates III, LP and WPG Corporate Development
Associates III (Overseas), LP Liquidating Trusts; William Blair Venture Partners
III L.P.; Frontenac VI Limited Partnership; William Khouri; Equiss II, Inc.;
Equus Capital Partners, L.P.; RFE Capital Partners, L.P.; RFE Investment
Partners IV, L.P.; Olympus Executive Fund, L.P.; Olympus Private Placement Fund,
L.P.; BankAmerica Investment Corporation; M. Ann O'Brien; Robert F. Perille;
Ford S. Bartholow; Jeffrey M. Mann; Matthew W. Clary; Equity-Linked Investors,
L.P.; Equity Linked Investors II; DLJ Venture Capital Fund II, L.P.; DLJ Capital
Corp.; Sprout Growth II L.P.; Sprout Growth L.P.; Sprout Growth Capital VI,
L.P.; John Hancock Venture Capital Fund Limited Partnership II; and HarbourVest
Partners III L.P., a true and correct copy of which is contained in the Plan
Supplement.
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I.53 Plan means this Chapter 11 plan of reorganization,
including, without limitation, the Plan Supplement and all exhibits,
supplements, appendices and schedules pertaining hereto, either in its present
form or as the same may be altered, amended or modified from time to time.
I.54 Plan of Merger means the Agreement and Plan of Merger of
Paracelsus and the Reincorporation Subsidiary, providing for the Reincorporation
Merger, which shall be in substantially the form contained in the Plan
Supplement.
I.55 Plan Supplement means the forms of documents specified in
Section 12.16 of the Plan.
I.56 Priority Tax Claim means any Claim of a governmental unit of
the kind specified in Sections 502(i) and 507(a)(8) of the Bankruptcy Code.
I.57 Pro Rata Share means a proportionate share, so that the ratio of
the consideration distributed on account of an Allowed Claim or Allowed Equity
Interest in a Class to the amount of such Allowed Claim or Allowed Equity
Interest is the same as the ratio of the amount of the consideration distributed
on account of all Allowed Claims or Allowed Equity Interests in such Class to
the amount of all Allowed Claims or Allowed Equity Interests in such Class.
I.58 Professional Compensation and Reimbursement Claim has the meaning
set forth in Section 2.2. of the Plan.
I.59 Quarter means the period beginning on the Effective Date and
ending on the next of December 31, March 31, June 30 and September 30, and each
three month period thereafter.
I.60 qui tam Claims Settlement means that certain Settlement
Agreement entered into among (a) the United States, (b) California, (c) the
Relator and (d) the Debtor, as of April 17, 2001, pertaining to a qui tam action
styled United States of America, ex rel Woods, Relator, v. Paracelsus Healthcare
Corporation, etc., et al., filed and pending in the United States District Court
for the Central District of California, as such Settlement Agreement may be
approved by Final Order of the Bankruptcy Court pursuant to the Debtor's Motion
for an Order Pursuant to Bankruptcy Rule 9019 Approving Settlement of Proofs of
Claim Nos. 658, 659, 689 and 691, set to be heard by the Bankruptcy Court
concurrently with the Confirmation Hearing.
I.61 Record Date means October 31, 2000.
I.62 Relator means Jeffrey D. Woods.
I.63 Reserve shall have the meaning set forth in Section 5.3(h) of the
Plan.
I.64 Registration Rights Agreement means a registration rights
agreement to be entered into between the Reorganized Debtor and any person or
entity entitled to become a party to such registration rights agreement under
Section 5.10 of the Plan, which shall be in substantially the form contained in
the Plan Supplement.
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I.65 Reincorporation Merger means the merger of Paracelsus with and
into the Reincorporation Subsidiary, pursuant to the Plan of Merger and
applicable provisions of the California Corporations Code and the Delaware
General Corporation Law.
I.66 Reincorporation Subsidiary means that corporation to be
incorporated under the Delaware General Corporation Law by the Debtor, as its
wholly owned subsidiary prior to the Effective Date. Prior to the Effective
Date, the Certificate of Incorporation shall be the certificate of
incorporation, and the Bylaws shall be the bylaws, respectively, of the
Reincorporation Subsidiary.
I.67 Reorganized Debtor means Paracelsus as it shall be merged with
and into the Reincorporation Subsidiary on the Effective Date, and any successor
thereto.
I.68 Schedules means the Schedules of Assets and Liabilities, the
list of holders of Equity Interests, and the Statements of Financial Affairs
filed by the Debtor under Section 521 of the Bankruptcy Code and Bankruptcy Rule
1007, and all amendments and modifications thereto through the Confirmation
Date.
I.69 Secured Tax Claim means any Secured Claim which, absent its
secured status, would be entitled to priority in right of payment under Section
507(a)(8) of the Bankruptcy Code.
I.70 Security Interest has the meaning set forth in Section 101
of the Bankruptcy Code.
I.71 Senior Subordinated Note Indenture means that certain Indenture
relating to the Senior Subordinated Notes, dated as of August 16, 1996, by and
between Paracelsus and AmSouth Bank of Alabama, as predecessor indenture trustee
to BNY.
I.72 Senior Subordinated Notes means the 10% Senior Subordinated
Notes, due 2006 in the original principal amount of $325,000,000, issued
pursuant to and governed by the Senior Subordinated Note Indenture.
I.73 Senior Subordinated Note Holder Claim means any claim for
principal, interest or other amount against the Debtor that arises under the
Senior Subordinated Note Indenture or the Senior Subordinated Notes, but
excluding Claims of BNY for fees and expenses pursuant to Section 5.9 of this
Plan.
I.74 Subsequent Distribution Date means the date or dates after
the Initial Distribution Date upon which the Reorganized Debtor makes
distributions in accordance with and pursuant to the terms of the Plan.
I.75 United States means, when used in connection with the qui tam
Claims Settlement, the United States of America, acting through the United
States Department of Justice and on behalf of the Office of Inspector General of
the United States Department of Health and Human Services.
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I.76 Interpretation; Application of Definitions and Rules of
Construction. Wherever from the context it appears appropriate, each term stated
in either the singular or the plural shall include both the singular and the
plural and pronouns stated in the masculine, feminine or neuter gender shall
include each of the masculine, feminine and neuter. Unless otherwise specified,
all section, article, schedule or exhibit references in the Plan are to the
respective Section in, Article of, Schedule to, or Exhibit to, the Plan. The
words "herein," "hereof," "hereto," "hereunder" and other words of similar
import refer to the Plan as a whole and not to any particular section,
subsection or clause contained in the Plan except as otherwise expressly stated.
The rules of construction contained in Section 102 of the Bankruptcy Code shall
apply to the construction of the Plan. A term used herein that is not defined
herein, but that is used in the Bankruptcy Code, shall have the meaning ascribed
to that term in the Bankruptcy Code. The headings in the Plan are for
convenience of reference only and shall not limit or otherwise affect the
provisions of the Plan.
ARTICLE II
TREATMENT OF ADMINISTRATIVE
EXPENSE CLAIMS AND PRIORITY TAX CLAIMS
II.1 Administrative Expense Claims. Except to the extent that any
entity entitled to payment of any Allowed Administrative Expense Claim has been
paid prior to the Effective Date or agrees to a different treatment, each holder
of an Allowed Administrative Expense Claim shall receive Cash in an amount equal
to such Allowed Administrative Expense Claim on the later of the Effective Date
and the date such Administrative Expense Claim becomes an Allowed Administrative
Expense Claim, or within ten (10) days thereof; provided, however, that Allowed
Administrative Expense Claims representing liabilities incurred in the ordinary
course of business by the Debtor in Possession or liabilities arising under
loans or advances to or other obligations incurred by the Debtor in Possession,
to the extent authorized and approved by the Bankruptcy Court if such
authorization and approval is required under the Bankruptcy Code, shall be paid
in full and performed by the Reorganized Debtor in the ordinary course of
business in accordance with the terms and subject to the conditions of any
agreements governing, instruments evidencing or other documents relating to,
such transactions.
II.2 Professional Compensation and Reimbursement Claims. All
entities seeking an award by the Bankruptcy Court of compensation for services
rendered or reimbursement of expenses incurred through and including the
Effective Date under Sections 503(b)(2), 503(b)(3), 503(b)(4) or 503(b)(5) of
the Bankruptcy Code or otherwise (a) shall file their respective final
applications for allowances of compensation for services rendered and
reimbursement of expenses incurred through the Effective Date by the date that
is ninety (90) days after the Effective Date or such other date as may be fixed
by the Bankruptcy Court, and (b) if granted such an award by the Bankruptcy
Court, shall be paid in full, in Cash, in such amounts as are Allowed by the
Bankruptcy Court on the date such Claim becomes an Allowed Claim, or within ten
(10) days thereof.
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II.3 Priority Tax Claims. Except to the extent that the holder of
an Allowed Priority Tax Claim has been paid by the Debtor prior to the Effective
Date or agrees to a different treatment, each holder of an Allowed Priority Tax
Claim shall, in accordance with Section 1129(a)(9)(C) of the Bankruptcy Code,
receive on account of such Allowed Priority Tax Claim deferred cash payments,
over a period not exceeding six years after the date of assessment of such claim
of a value as of the Effective Date of the Plan, equal to the amount of such
Allowed Priority Tax Claim.
II.4 Statutory Fees Due the United States Trustee. The Reorganized
Debtor shall timely pay post-confirmation quarterly fees assessed pursuant to 28
U.S.C. Section 1930(a)(6) until such time as this Bankruptcy Court enters a
final decree closing this Chapter 11 Case, or enters an order either converting
this Chapter 11 Case to a case under chapter 7 or dismissing this Chapter 11
Case. After Confirmation, the Reorganized Debtor shall file with this Bankruptcy
Court and shall serve on the United States Trustee a financial report for each
quarter, or portion thereof, that this Chapter 11 Case remains open in a format
prescribed by the United States Trustee.
ARTICLE III
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS
Claims, other than Administrative Expense Claims and Priority Tax
Claims, and Equity Interests are classified for all purposes, including voting,
confirmation and distribution pursuant to the Plan, as follows:
Class Status
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Class 1 -- Other Priority Claims.....................................Unimpaired
Class 2 -- Secured Tax Claims........................................Unimpaired
Class 3 -- Miscellaneous Secured Claims..............................Unimpaired
Class 4 -- Senior Subordinated Note Holder and
General Unsecured Claims..................................Impaired
Class 5 -- Intercompany Claims.......................................Unimpaired
Class 6 -- Equity Interests............................................Impaired
Class 7 -- Convenience Claims..........................................Impaired
ARTICLE IV
TREATMENT OF CLAIMS AND EQUITY INTERESTS
IV.1 CLASS 1 -- OTHER PRIORITY CLAIMS.
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(a) Impairment and Voting. Class 1 is unimpaired by the Plan.
Each holder of an Allowed Other Priority Claim is deemed to have accepted the
Plan and is not entitled to vote to accept or reject the Plan.
(b) Treatment. Except to the extent that a holder of an Allowed
Other Priority Claim has been paid by the Debtor prior to the Effective Date or
agrees to a different treatment, each holder of an Allowed Other Priority Claim
shall receive Cash in an amount equal to such Allowed Other Priority Claim on
the later of the Effective Date and the date such Other Priority Claim becomes
an Allowed Other Priority Claim, or within ten (10) days thereof.
IV.2 CLASS 2 -- SECURED TAX CLAIMS.
(a) Impairment and Voting. Class 2 is unimpaired by the Plan.
Each holder of an Allowed Secured Tax Claim is deemed to have accepted the Plan
and is not entitled to vote to accept or reject the Plan.
(b) Treatment. Except to the extent that a holder of an Allowed
Secured Tax Claim has been paid by the Debtor prior to the Effective Date or
agrees to a different treatment, each holder of an Allowed Secured Tax Claim
shall receive Cash in an amount equal to such Allowed Secured Tax Claim,
including any interest required to be paid pursuant to Section 506(b) of the
Bankruptcy Code, on the later of the Effective Date and the date such Secured
Tax Claim becomes an Allowed Secured Tax Claim, or within ten (10) days thereof.
(c) Retention of Liens. Each holder of an Allowed Secured Tax
Claim shall retain the Lien (or replacement Lien as may be contemplated under
nonbankruptcy law) securing its Allowed Secured Tax Claim as of the Effective
Date until full and final payment of such Allowed Secured Tax Claim is made as
provided herein, and upon such full and final payment, such Lien shall be deemed
null and void and shall be unenforceable for all purposes.
IV.3 CLASS 3 -- MISCELLANEOUS SECURED CLAIMS.
(a) Impairment and Voting. Class 3 is unimpaired by the Plan.
Each holder of an Allowed Miscellaneous Secured Claim is deemed to have accepted
the Plan and is not entitled to vote to accept or reject the Plan.
(b) Treatment. Except to the extent that a holder of an Allowed
Miscellaneous Secured Claim has been paid by the Debtor prior to the Effective
Date or agrees to a different treatment, each holder of an Allowed Miscellaneous
Secured Claim shall, at the option of the Debtor, exercised in the sole
discretion of the Debtor, either (a) receive Cash equal to such Allowed
Miscellaneous Secured Claim on the later of the Effective Date and the date such
Miscellaneous Secured Claim becomes an Allowed Miscellaneous Secured Claim, or
within ten (10) days thereof, (b) retain unaltered the legal, equitable, and
contractual rights to which such holder is entitled pursuant to such Allowed
Miscellaneous Secured Claim, or (c) otherwise
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receive such treatment under the Plan as to be deemed unimpaired pursuant to and
in accordance with Section 1124(2) of the Bankruptcy Code.
IV.4 CLASS 4 -- SENIOR SUBORDINATED NOTE HOLDER AND
GENERAL UNSECURED CLAIMS.
(a) Impairment and Voting. Class 4 is impaired by the Plan. Each holder
of a Senior Subordinated Note Holder Claim Allowed pursuant to Section 4.4(c) of
the Plan and each holder of an Allowed General Unsecured Claim as of the Record
Date is entitled to vote to accept or reject the Plan.
(b) Treatment. Each holder of a Senior Subordinated Note Holder Claim
Allowed pursuant to Section 4.4(c) of the Plan and each holder of an Allowed
General Unsecured Claim as of the Record Date shall receive on account of its
Allowed Claim its Pro Rata Share of (i) the New Notes, after deduction of the
amount of New Notes held in Reserve for Disputed General Unsecured Claims, if
any, from the aggregate principal amount of the New Notes; provided, however,
that because New Notes will be issued on the Initial Distribution Date under the
New Indenture in integral multiples of $1,000, the Reorganized Debtor shall be
deemed to have purchased for Cash from each such holder, substantially
simultaneously with the issuance of the New Notes on the Initial Distribution
Date, any fractional portions of New Notes that would otherwise be issued to
such holders on account of their Pro Rata Shares, so that each holder shall
receive New Notes on the Initial Distribution Date issued under the New
Indenture in an aggregate principal amount equal to the nearest integral
multiple of $1,000 that is less than or equal to its Pro Rata Share of the New
Notes, together with a payment in Cash on the Initial Distribution Date equal to
the amount (if any) by which its actual Pro Rata Share of New Notes exceeds such
nearest integral multiple; (ii) the Class 4 Cash Payment, and (iii) 6,106,665
shares of New Common Stock, less the number of shares of New Common Stock held
in Reserve for Disputed General Unsecured Claims, if any, on the later of the
Initial Distribution Date and the next Subsequent Distribution Date selected by
the Reorganized Debtor in the Quarter that follows the Quarter in which such
Claim becomes an Allowed Claim, or within ten (10) days thereof. The sum total
of fractional New Notes deemed purchased by the Reorganized Debtor on the
Initial Distribution Date in accordance with clause (i) of the immediately
preceding sentence shall be issued to the Reorganized Debtor on the Initial
Distribution Date and shall be the property of the Reorganized Debtor subject to
no further restrictions or claims under the Plan.
(c) Allowance of Senior Subordinated Note Holder Claims. On the
Effective Date, the Senior Subordinated Note Holder Claims shall be deemed
Allowed Claims in the aggregate amount of $358,475,000.
(d) Incorporation of qui tam Claims Settlement. The terms and
conditions of the qui tam Claims Settlement shall be, and are, incorporated in
their entirety and made a part of this Plan. The United States, California and
the Relator shall have Allowed Class 4 Claims in the amounts, and pursuant to
the terms and conditions, set forth in the qui tam Claims Settlement.
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IV.5 CLASS 5 -- INTERCOMPANY CLAIMS.
(a) Impairment and Voting. Class 5 is unimpaired by the Plan. Each
holder of an Allowed Intercompany Claim is deemed to have accepted the Plan and
is not entitled to vote to accept or reject the Plan.
(b) Treatment. Each holder of an Allowed Intercompany Claim shall
retain unaltered the legal, equitable, and contractual rights to which such
holder is entitled pursuant to such Allowed Intercompany Claim, or shall
otherwise receive such treatment under the Plan as to be deemed unimpaired
pursuant to and in accordance with Section 1124(2) of the Bankruptcy Code.
IV.6 CLASS 6 -- EQUITY INTERESTS.
(a) Impairment and Voting. Class 6 is impaired by the Plan. Holders of
Equity Interests are not entitled to vote to accept or reject the Plan. Each
holder of an Allowed Equity Interest as of the Record Date is deemed to have
rejected the Plan.
(b) Conversion of Park Subordinated Note. As of the Commencement Date,
the Park Subordinated Note shall be deemed to be converted into, and Park shall
be deemed to have been issued, 1,922,931 shares of common stock of the Debtor
pursuant to Section IIB of the PHC/Park/Champion Settlement Agreement, which
shares shall be classified and treated as Class 6 Equity Interests under the
Plan. Upon such conversion, the Park Subordinated Note shall be canceled and the
Debtor shall have no further obligation or liability arising out of or in
connection with the Park Subordinated Note.
(c) Treatment. Upon the Effective Date, all Equity Interests shall be
deemed cancelled and rendered null and void and the holders of such Equity
Interests shall neither receive nor retain any property under the Plan on
account of such Equity Interests.
(d) Cancellation of Common Stock and Related Securities. All shares of
common stock of Paracelsus, including but not limited to, all shares of such
common stock held or reserved by Paracelsus or held by any of its subsidiaries,
and any other securities giving rise to or resulting from ownership of Equity
Interests, and any and all rights related to or arising from such common stock
or other securities existing prior to the Effective Date, shall be deemed
canceled and rendered null and void on the Effective Date.
IV.7 CLASS 7 -- CONVENIENCE CLAIMS.
(a) Impairment and Voting. Class 7 is impaired by the Plan. Each holder
of an Allowed Convenience Claim as of the Record Date is entitled to vote to
accept or reject the Plan.
(b) Treatment. Except to the extent that an Allowed Convenience Claim
has been paid by the Debtor prior to the Effective Date or agrees to a different
treatment, each holder of an Allowed Convenience Claim as of the Record Date
shall receive Cash in an amount equal to 80%
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of such Allowed Convenience Claim on the later of the Effective Date and the
date such Allowed Convenience Claim becomes an Allowed Convenience Claim, or
within ten (10) days thereof.
ARTICLE V
PROVISIONS REGARDING VOTING AND DISTRIBUTIONS
UNDER THE PLAN AND TREATMENT OF DISPUTED,
CONTINGENT AND UNLIQUIDATED ADMINISTRATIVE
EXPENSE CLAIMS AND CLAIMS
V.1 Voting of Claims. Each holder of an Allowed Claim in an impaired
Class of Claims as of the Record Date shall be entitled to vote separately to
accept or reject the Plan unless otherwise ordered in any Final Order of the
Bankruptcy Court.
V.2 Nonconsensual Confirmation. Pursuant to Section 1126(g) of the
Bankruptcy Code, holders of Allowed Class 6 Equity Interests are deemed as a
class not to have accepted the Plan, and the Debtor will seek to have the
Bankruptcy Court confirm the Plan under Section 1129(b) of the Bankruptcy Code
notwithstanding such deemed non-acceptance of the Plan by such Class If any
impaired Class of Claims entitled to vote shall not accept the Plan by the
requisite statutory majorities provided in Sections 1126(c) or 1126(d) of the
Bankruptcy Code, as applicable, the Debtor reserves the right to amend the Plan
in accordance with Section 12.9 hereof or undertake to have the Bankruptcy Court
confirm the Plan under Section 1129(b) of the Bankruptcy Code notwithstanding
such vote of non-acceptance of the Plan, or both.
V.3 Method of Distributions Under the Plan.
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(a) In General. Subject to Bankruptcy Rule 9010, all distributions
under the Plan shall be made by the Reorganized Debtor or its designated agent.
Distributions under the Plan shall be made to the holder of each Allowed Claim
at the address of such holder as listed on the Schedules as of the Record Date,
unless the Debtor, Reorganized Debtor or its designated agent has been notified
in writing of a change of address in accordance with Section 12.13 of the Plan
by such holder that provides an address for such holder different from the
address reflected on the Schedules. All distributions under the Plan of
certificates for New Notes or Cash to holders of Allowed Senior Subordinated
Note Holder Claims and Allowed General Unsecured Claims with respect to their
Allowed Claims shall be made by the Bank of New York, as disbursing agent for
the holders of such Allowed Claims. All distributions under the Plan of New
Common Stock to holders of Allowed Senior Subordinated Note Holder Claims and
Allowed General Unsecured Claims shall be made by MIS, as transfer agent for
issuance of certificates for New Common Stock to the holders of such Claims
pursuant to the Plan. In the event that any distribution to any holder is
returned as undeliverable, the Debtor, Reorganized Debtor or its designated
agent, as applicable, shall use reasonable efforts to determine the current
address of such holder, including (i) by posting on the corporate web page of
the Debtor or the Reorganized Debtor, as applicable, or comparable electronic
medium, and (ii) by Filing with the Bankruptcy Court, a list of the names of all
such holders, together with notice that such holders are entitled to receive a
distribution pursuant to this Plan and a means for contacting the Debtor, the
Reorganized Debtor or its designated agent, as applicable, to claim such
distribution (the "Unclaimed Distribution Notice"). No distribution to such
holder shall be made unless and until such holder has provided to the Debtor,
Reorganized Debtor or its designated agent, as applicable, the then current
address of such holder, at which time such distribution shall be made to such
holder without interest; provided that such distributions shall be deemed
unclaimed property under Section 347(b) of the Bankruptcy Code at the expiration
of 180 days from the first date upon which such Unclaimed Distribution Notice is
published and Filed with the Bankruptcy Court. After such date, all unclaimed
property or interest in property shall revert to the Reorganized Debtor, and the
claim of any other holder to such property or interest in property shall be
discharged and forever barred.
(b) Distributions of Cash. Any payment of Cash made by the Reorganized
Debtor or its designated agent pursuant to the Plan shall be made, at the sole
option of the Reorganized Debtor, by check drawn on a domestic bank, wire
transfer, or any other method mutually agreeable between the Reorganized Debtor
and the payee.
(c) Timing of Distributions. Any payment or distribution required to be
made under the Plan on a day other than a Business Day shall be made on the next
succeeding Business Day.
(d) Hart-Scott-Rodino Compliance. Any certificates for shares of New
Common Stock to be distributed under the Plan to any entity required to file a
Premerger Notification and Report Form under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, shall not be distributed until the
notification and waiting periods applicable under such Act to such entity shall
have expired or been terminated.
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(e) Minimum Distributions. No payment of Cash less than one-hundred
dollars ($100.00), except for payments made pursuant to Sections 4.4(b)(i),
5.3(h), (i), or (j) hereunder, shall be made by the Reorganized Debtor or its
designated agent to any holder of a Claim unless a request therefor is made in
writing to the Reorganized Debtor or its designated agent, as the case may be.
(f) Fractional Shares. No fractional shares of New Common Stock or Cash
in lieu thereof shall be distributed under the Plan. When any distribution on
account of an Allowed Claim pursuant to the Plan would otherwise result in the
issuance of a number of shares of New Common Stock that is not a whole number,
the actual distribution of shares of New Common Stock shall be rounded as
follows: (i) fractions of 1/2 or greater shall be rounded to the next higher
whole number, and (ii) fractions of less than 1/2 shall be rounded to the next
lower whole number. The total number of shares of New Common Stock to be
distributed to a Class of Claims or Equity Interests, as the case may be, shall
be adjusted as necessary to account for the rounding provided in this Section
5.3(f).
(g) Distributions to Holders as of the Record Date. The Debtor and the
Reorganized Debtor shall have no obligation to recognize any transfer of any
Claims occurring after the Record Date. After the Record Date the Debtor and
Reorganized Debtor shall instead be entitled to recognize and deal for all
purposes under the Plan with only those record holders stated on the Claims
Register as of the close of business on the Record Date.
(h) Distributions Withheld for Disputed Claims.
(i) Establishment and Maintenance of Reserve. On the Initial
Distribution Date and each Subsequent Distribution Date, the
Reorganized Debtor shall reserve, or cause to be reserved, from the
distributions to be made on such dates to the holders of Allowed Claims
in a particular Class, an amount of New Notes, New Common Stock (in
each case issued to the Reorganized Debtor), and/or the Class 4 Cash
Payment, as the case may be, equal to 100% of any distributions of New
Notes, New Common Stock and/or the Class 4 Cash Payment to which
holders of Disputed Claims in such Class would be entitled under the
Plan as of such dates as if such Disputed Claims were Allowed Claims in
their Disputed Claim Amounts (the "Reserve"); provided, however, that
in accordance with Section 4.4(b) regarding the Treatment of Allowed
Class 4 Claims, if the calculation of the number of New Notes to be
deposited in the Reserve on the Initial Distribution Date would result
in a deposit of fractional New Notes (not in integral multiples of
$1,000), then the Reorganized Debtor shall be deemed to have purchased
for Cash, substantially simultaneously with the issuance of the New
Notes on the Initial Distribution Date, any fractional portion of a New
Note (determined after aggregating the value of all New Notes to be
deposited in the Reserve on the Initial Distribution Date), and such
Cash shall be deposited in the Reserve on the Initial Distribution
Date, together with New Notes in an aggregate principal amount reduced
by such purchased fractional portion of a New Note (such that the New
Notes so deposited in the Reserve shall be in
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an integral multiple of $1,000) and the amount of Cash and New Notes so
deposited in the Reserve shall be treated on each Subsequent
Distribution Date as provided in Sections 5.3(i) and (j) below. Any
fractional New Notes deemed purchased by the Reorganized Debtor on the
Initial Distribution Date in accordance with the immediately preceding
proviso shall be issued to the Reorganized Debtor (to the extent of
integral multiples of $1,000) on the Initial Distribution Date and
shall be the property of the Reorganized Debtor subject to no further
restrictions or claims under the Plan.
(ii) Cash Held in Reserve. Any Cash deposited in the Reserve
on the Initial Distribution Date or paid on account of (x) dividends in
respect of New Common Stock, (y) the Class 4 Cash Payment made pursuant
to Section 5.3(h)(i) of the Plan, or (z) interest in respect of New
Notes held in the Reserve shall be deposited in a segregated bank
account or accounts in the name of the Reorganized Debtor and
designated as held in trust for the benefit of holders of Disputed
Claims to the extent such Disputed Claims are ultimately Allowed. Cash
so deposited and held in the Reserve shall not constitute property of
the Reorganized Debtor. The Reorganized Debtor shall invest the Cash
held in the Reserve in a manner consistent with investment guidelines
set forth in the Plan Supplement. The Reorganized Debtor shall pay, or
cause to be paid, out of the funds held in the Reserve, any tax imposed
on the Reserve by any governmental unit with respect to income
generated by the property held in the Reserve. The yield earned on such
invested Cash (net of applicable taxes) shall be held in trust for the
benefit of holders of Disputed Claims to the extent such Disputed Claim
is ultimately Allowed. New Notes and New Common Stock held in the
Reserve shall be held in trust by the Reorganized Debtor for the
benefit of the potential claimants of such securities and shall not
constitute property of the Reorganized Debtor.
(i) Distributions Upon Allowance of Disputed Claims. The holder of a
Disputed Claim that becomes an Allowed Claim subsequent to the Initial
Distribution Date shall receive distributions from the Reserve in accordance
with and pursuant to the terms of the Plan on the next Subsequent Distribution
Date selected by the Reorganized Debtor during the Quarter that follows the
Quarter during which such Disputed Claim becomes an Allowed Claim pursuant to a
Final Order. Such distributions shall be made in accordance with the Plan based
upon the distributions that would have been made to such holder under the Plan
if the Disputed Claim had been an Allowed Claim on or prior to the Effective
Date, without any post-Effective Date interest thereon, except for the amount of
interest theretofore paid under the New Indenture on any New Notes actually
distributed out of the Reserve in integral multiple(s) of $1,000 to such
holders; and, in accordance with this Section and Section 4.4(b) regarding the
Treatment of Allowed Class 4 Claims, the Reorganized Debtor shall be deemed to
have purchased for Cash from each such holder, substantially simultaneously with
any distribution out of the Reserve to such holder, any fractional portion of
New Notes that would otherwise be distributed out of the Reserve to such holder
in respect of its Allowed Claim, so that each such holder shall receive an
aggregate principal amount of New Notes equal to the nearest integral multiple
of $1,000 that is less than or equal to its Pro Rata Share of New Notes,
together with a Cash payment equal to the amount (if
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any) by which such Pro Rata Share exceeds such nearest integral multiple; and if
any such Cash payment is to be made to any such holder in lieu of any fractional
portion of a New Note, such payment shall be made first from any Cash then held
in the Reserve and not attributable to any New Common Stock and not constituting
any payment of interest theretofore made in respect of New Notes under the New
Indenture and thereafter, if and to the extent such Cash held in the Reserve is
insufficient, from the Reorganized Debtor's general corporate funds. Any
fractional New Notes deemed purchased by the Reorganized Debtor in accordance
with this Section shall be the property of the Reorganized Debtor and no longer
held in the Reserve, shall be issued to the Reorganized Debtor to the extent of
integral multiples of $1,000, and shall (whether or not issued to the
Reorganized Debtor) be subject to no further restrictions or claims under the
Plan. Notwithstanding any provision of the Plan, if any portion of a Claim is a
Disputed Claim, no payment or distribution provided thereunder shall be made on
account of such Claim unless and until such Disputed Claim becomes an Allowed
Claim.
(j) Final Distribution of Amounts Held in Reserve. Upon resolution of
objections to all Disputed Claims, any New Notes held in the Reserve will be
distributed, on a final distribution date, to holders of Allowed Claims in Class
4 ("Allowed Class 4 Claimants") so that each such Claimant shall receive its Pro
Rata Share thereof in accordance with this Section 5.3(j), together with any
Cash held in Reserve on account of such New Notes and/or the Class 4 Cash
Payment. The Reorganized Debtor shall be deemed to have purchased for Cash from
each such Allowed Class 4 Claimant on such final distribution date any
fractional portions of New Notes that would otherwise be distributed to such
Allowed Class 4 Claimants on account of their Pro Rata Shares, so that each
Allowed Class 4 Claimant shall receive New Notes on such final distribution date
in an aggregate principal amount equal to the nearest integral multiple of
$1,000 that is less than or equal to its Pro Rata Share of such remaining New
Notes, together with a payment in Cash on such final distribution date equal to
the amount (if any) by which its actual Pro Rata Share exceeds such nearest
integral multiple. Any Cash payments to be made to any such Allowed Class 4
Claimants in lieu of fractional portions of New Notes shall be made first from
any Cash then held in the Reserve and not attributable to any New Common Stock
and thereafter, if and to the extent such Cash held in the Reserve is
insufficient, from the Reorganized Debtor's general corporate funds. Any such
Cash not so applied to the purchase of fractional New Notes and remaining in the
Reserve on the final distribution date shall be distributed to such Allowed
Class 4 Claimants so that each receives its Pro Rata Share of such Cash. Any
fractional New Notes deemed purchased by the Reorganized Debtor on the final
distribution date (together with any fractional New Notes of the Reorganized
Debtor not theretofore issued to the Reorganized Debtor) shall be issued to the
Reorganized Debtor and shall be the property of the Reorganized Debtor subject
to no further restrictions or claims under the Plan. The Reorganized Debtor may,
in its discretion, pay Cash to any Allowed Class 4 Claimant from the Reorganized
Debtor's general corporate funds in lieu of New Notes in order to effect a final
distribution of New Notes in integral multiples of $1,000 so that the aggregate
of all fractional portions of New Notes constituting property of the Reorganized
Debtor shall also be in an integral multiple of $1,000.
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V.4 Distributions Relating to Allowed Insured Claims. Distributions
under the Plan to each holder of an Allowed Insured Claim shall be in accordance
with the treatment provided under the Plan for the Class in which such Allowed
Insured Claim is classified, but solely to the extent that such Allowed Insured
Claim is not satisfied from proceeds payable to the holder thereof under any
pertinent bond, insurance policy and applicable law. Nothing contained in this
Section 5.4 shall constitute or be deemed a waiver of any Cause of Action that
the Debtor or any entity may hold against any other entity, including, without
limitation, insurers under any policies of insurance.
V.5 Cancellation and Surrender of Existing Securities and Agreements.
On the Effective Date, the promissory notes, share certificates and other
instruments evidencing any Claim or Equity Interest (including, without
limitation, the Senior Subordinated Notes) shall be deemed canceled without
further act or action under any applicable agreement, law, regulation, order or
rule and the obligations of the Debtor under the agreements, indentures and
certificates of designations governing such Claims or Equity Interests, as the
case may be, shall be discharged, except for Debtor's obligations pursuant to
this Plan and to BNY pursuant to Section 5.9 of this Plan for fees and expenses
under the Senior Subordinated Notes Indenture and the New Notes Indenture (which
fees and expenses shall constitute an Administrative Expense Claim in the
Chapter 11 Case).
V.6 Record Date for Distributions to Holders of Senior Subordinated
Notes. At the close of business on the Record Date, the transfer ledgers of BNY,
regarding the Senior Subordinated Notes, shall be closed and there shall be no
further changes in the record holders of the Senior Subordinated Notes. On or
before the Effective Date, BNY shall certify to the Debtor or the Reorganized
Debtor, as the case may be, the names and addresses of all holders of the Senior
Subordinated Notes and the face amount of the Senior Subordinated Notes held by
each such holder as of the Record Date. BNY, and the Debtor and the Reorganized
Debtor and its agents, shall have no obligation to recognize any transfer of
Senior Subordinated Notes occurring after the Record Date.
V.7 Cancellation of Senior Subordinated Note Indenture. On the
Effective Date, the Senior Subordinated Indenture shall be deemed canceled,
terminated and of no further force or effect pursuant to Section 5.5 of the
Plan. Notwithstanding the foregoing, such cancellation of the Senior
Subordinated Note Indenture shall not impair the rights and the duties under the
respective Senior Subordinated Note Indenture as between BNY and the
beneficiaries of the trust created thereby, or as between BNY and the Debtor, as
set forth in the Senior Subordinated Note Indenture. The Senior Subordinated
Note Indenture shall not be canceled other than pursuant to Section 5.5 and this
Section 5.7 of the Plan and, until such cancellation, the Senior Subordinated
Note Indenture shall be evidence of the entitlement of the holders of such
Senior Subordinated Note Holder Claims to receive distribution of property from
the Debtor or the Reorganized Debtor pursuant to the Plan.
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V.8 Termination of BNY's Duties. Subsequent to the performance
by BNY of the obligations required under the provisions of this Plan, the
Confirmation Order and the Senior Subordinated Note Indenture, BNY and its
successors and assigns shall be relieved of all obligations under the Senior
Subordinated Note Indenture.
V.9 Fees and Expenses of BNY. Notwithstanding anything to the
contrary contained in the Plan, any fees and expenses of BNY incurred through
the Effective Date with regard to any of the Senior Subordinated Notes and the
New Notes, including legal fees and expenses incurred in connection with the
Chapter 11 Case, shall be Administrative Expense Claims and paid in full, in
Cash, as part of the Plan.
V.10 Registration Rights Agreement for Certain New Notes and New
Common Stock. On the Effective Date or as soon thereafter as is practicable,
each person or entity receiving a distribution of New Common Stock and/or New
Notes pursuant to the Plan who shall be named as a party to the Registration
Rights Agreement included in the Plan Supplement shall become a party to the
Registration Rights Agreement.
V.11 Listing of New Common Stock. The Board of Directors of the
Reorganized Debtor shall, at its discretion, cause the shares of New Common
Stock to be listed on a national securities exchange or the NASDAQ National
Market on or before six (6) months after the Effective Date.
V.12 Waiver of Subordination. Subject to the provisions of Section 5.7
of the Plan, the distributions to the holders of Senior Subordinated Notes shall
not be subject to levy, garnishment, attachment or other legal process by any
holder of Senior Indebtedness (as such term is defined in each of the Senior
Subordinated Note Indentures) by reason of claimed contractual subordination
rights. On the Effective Date, all creditors shall be deemed to have waived any
and all contractual subordination rights which they may have with respect to
such distributions. The Bankruptcy Court in the Confirmation Order shall
permanently enjoin, effective as of the Confirmation Date, all holders of Senior
Indebtedness from enforcing or attempting to enforce any such rights with
respect to such distributions to the subordinated creditors, including the
holders of the Senior Subordinated Notes.
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ARTICLE VI
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
VI.1 Assumption or Rejection of Executory Contracts and Unexpired
Leases.
(a) Executory Contracts and Unexpired Leases. Pursuant to Sections
365(a) and 1123(b)(2) of the Bankruptcy Code, all executory contracts and
unexpired leases entered into prior to the Commencement Date that exist between
the Debtor and any person shall be rejected by the Debtor and/or Reorganized
Debtor as of the Effective Date, except as set forth in this Section 6.1 of the
Plan. Notwithstanding anything contained herein to the contrary, any executory
contract or unexpired lease (i) which has been assumed pursuant to a Final Order
of the Bankruptcy Court entered prior to the Confirmation Date, (ii) which has
been rejected pursuant to a Final Order of the Bankruptcy Court entered prior to
the Confirmation Date, or (iii) as to which a motion for approval of the
assumption/rejection of such executory contract or unexpired lease has been
filed prior to the Confirmation Date shall be assumed or rejected in accordance
with such motion or Final Order. Subject to the immediately preceding sentence,
the executory contracts and unexpired leases identified in Exhibits "E" through
"F" of the Disclosure Statement shall be deemed to be, respectively, assumed or
rejected in accordance with the provisions of this Section 6.1 of the Plan.
(b) Approval of Assumption or Rejection of Executory Contracts and
Unexpired Leases. Entry of the Confirmation Order shall constitute (i) the
approval, pursuant to Sections 365(a) and 1123(b)(2) of the Bankruptcy Code, of
the assumption of the executory contracts and unexpired leases assumed pursuant
to Section 6.1 (a) hereof, (ii) the extension of time, pursuant to Section
365(d)(4) of the Bankruptcy Code, within which the Debtor may assume or reject
the unexpired leases specified in Section 6.1 (a) hereof through the date of
entry of a Final Order approving the assumption or rejection of such unexpired
leases, and (iii) the approval, pursuant to Sections 365(a) and 1123(b)(2) of
the Bankruptcy Code, of the rejection of the executory contracts and unexpired
leases rejected pursuant to Section 6.1 (a) hereof.
(c) Cure of Defaults. Except as may otherwise be agreed to by the
parties, or as may otherwise be set forth in any Final Order of the Bankruptcy
Court, within ninety (90) days after the Effective Date, the Reorganized Debtor
shall cure any and all undisputed defaults under any executory contract or
unexpired lease assumed pursuant to Section 6.1(a) of the Plan in accordance
with Section 365(b)(1) of the Bankruptcy Code. All disputed defaults that are
required to be cured shall be cured either within ten (10) days of the entry of
a Final Order determining the amount, if any, of the Debtor's or Reorganized
Debtor's liability with respect thereto, or as may otherwise be agreed to by the
parties.
(d) Bar Date for Filing Proofs of Claim Relating to Executory Contracts
and Unexpired Leases Rejected Pursuant to the Plan. Claims arising out of the
rejection of an executory contract or unexpired lease pursuant to Section 6.1
(a) of the Plan must be filed with the Bankruptcy Court and served upon the
Debtor or Reorganized Debtor, or as otherwise may be provided in the
Confirmation Order, by no later than thirty (30) days after the later of (i)
notice of
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entry of an order approving the rejection of such executory contract or
unexpired lease, and (ii) notice of entry of the Confirmation Order. Any Claims
not filed within such time will be forever barred from assertion against the
Debtor, its estate, the Reorganized Debtor and its property. Notwithstanding
anything to the contrary contained in Section 9.2 of the Plan, the Debtor or the
Reorganized Debtor, as the case may be, shall have until sixty (60) days after a
proof of Claim filed in accordance with this Section 6.1 (d) to file an
objection to such Claim.
VI.2 Compensation and Benefit Programs. Except as otherwise provided
in Section 7.4(b) of the Plan, all ordinary course employment and severance
practices and policies, all insurance programs and policies, and all ordinary
course compensation and benefit plans, policies, and programs of the Debtor
applicable to its directors, officers or employees as of the Confirmation Date,
including, without limitation, all savings plans, retirement plans, health care
plans, severance benefit plans, indemnity agreements, incentive plans, workers'
compensation programs and life, disability and other insurance plans not assumed
or rejected by the Debtor pursuant to a Final Order of the Bankruptcy Court
entered prior to the Effective Date are treated as executory contracts under the
Plan and are hereby assumed pursuant to Sections 365(a) and 1123(b)(2) of the
Bankruptcy Code.
ARTICLE VII
PROVISIONS REGARDING CORPORATE GOVERNANCE
AND MANAGEMENT OF THE REORGANIZED DEBTOR
VII.1 Reincorporation Merger. On the Effective Date, and without
any further action by the stockholders or directors of the Debtor or the
Reincorporation Subsidiary, the Reincorporation Merger shall become effective in
accordance with its terms, pursuant to which the separate existence of
Paracelsus shall cease, and the Reincorporation Subsidiary shall be the
surviving corporation. The Reincoporation Subsidiary shall thereupon be the
Reorganized Debtor for all purposes. The Certificate of Incorporation shall be
the certificate of incorporation of the surviving corporation, and the Bylaws
shall be the bylaws of the surviving corporation. The Reincorporation
Subsidiary, as the surviving corporation, shall succeed to, and be vested with,
all of the properties and assets, and shall be liable for the debts and
obligations, of Paracelsus to the extent provided for the Reorganized Debtor
herein and (to the extent not inconsistent herewith) in the Plan of Merger. The
name of Paracelsus shall, pursuant to the Reincorporation Merger, be changed to
the name set forth in the Certificate of Incorporation filed as part of the Plan
Supplement, or as otherwise may be approved by order of the Bankruptcy Court.
VII.2 Management in General. On the Effective Date, the management,
control and operation of the Reorganized Debtor shall become the general
responsibility of the Board of Directors of the Reorganized Debtor, who shall,
thereafter, have the responsibility for the management, control and operation of
the Reorganized Debtor.
VII.3 Meetings of Stockholders of Reorganized Debtor. In
accordance with the Certificate of Incorporation, and the Bylaws, as the same
may be amended from time to time, the first annual meeting of the stockholders
of the Reorganized Debtor shall be held on a date in
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calendar year 2001 selected by the Board of Directors of the Reorganized Debtor,
and subsequent meetings of the stockholders of the Reorganized Debtor shall be
held at least once annually each year thereafter.
VII.4 Directors and Officers of the Reorganized Debtor.
(a) Board of Directors.
(i) The initial Board of Directors of Reorganized Debtor shall
consist of five (5) individuals as identified in the Plan Supplement.
(ii) Each of the individuals set forth in sub-paragraph (i)
above shall serve until the first annual meeting of stockholders of the
Reorganized Debtor or his earlier resignation or removal in accordance
with the Certificate of Incorporation and/or Bylaws, as the same may be
amended from time to time.
(b) Officers. The officers of the Debtor immediately prior to the
Effective Date shall serve as the initial officers of the Reorganized Debtor on
and after the Effective Date. Such officers shall serve and be compensated in
accordance with the Employment and Compensation Agreements, which shall become
binding upon confirmation of the Plan, and applicable nonbankruptcy law.
VII.5 Bylaws and Certificate of Incorporation. The Bylaws and
Certificate of Incorporation shall contain provisions to the extent necessary
(a) to prohibit the issuance of nonvoting equity securities as required by
Section 1123(a)(6) of the Bankruptcy Code, subject to further amendment of such
Certificate of Incorporation and Bylaws as permitted by applicable law, and (b)
to effectuate the provisions of the Plan, including the filing of the same with
the Secretary of State of each of the states of incorporation of the Debtor and
the Reorganized Debtor, in each case without any further action by the
stockholders or directors of the Debtor, the Debtor in Possession or the
Reorganized Debtor.
VII.6 Issuance of New Securities. The issuance of the following
securities and notes by the Reorganized Debtor is hereby authorized without
further act or action under applicable law, regulation, order or rule:
(a) the issuance of up to 6,106,665 shares of New Common Stock to the
persons entitled to those shares in accordance with the Plan; and
(b) the issuance of the New Notes.
VII.7 Investment Guidelines. Effective on the Effective Date, the
Reorganized Debtor shall adopt the investment guidelines as set forth in the
Plan Supplement for Cash held in Reserve under the Plan in respect of Disputed
Claims.
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VII.8 Execution of the New Indenture. Effective on the Effective Date,
the Reorganized Debtor and BNY shall execute the New Indenture.
VII.9 Execution of Registration Rights Agreement. Effective on the
Effective Date, the Reorganized Debtor shall execute the Registration Rights
Agreement.
VII.10 Employment and Compensation Agreements. As of the Effective
Date, the Debtor or the Reorganized Debtor shall, in accordance with and
pursuant to Section 6.1(a) of the Plan, assume any and all Employment and
Compensation Agreements not theretofore assumed or rejected by the Debtor
pursuant to a Final Order entered by the Bankruptcy Court.
VII.11 Bankruptcy Code Section 1145. The issuance of the New Notes and
New Common Stock pursuant to the Plan are hereby authorized in accordance with
Section 1145 of the Bankruptcy Code.
ARTICLE VIII
IMPLEMENTATION AND EFFECT OF CONFIRMATION OF PLAN
VIII.1 Internal Funding. Any funds necessary to make the Cash
distributions required under the Plan and to fund the future obligations of the
Reorganized Debtor shall be obtained through the existing Cash assets of the
Reorganized Debtor on the Effective Date and the future business operations of
the Reorganized Debtor.
VIII.2 Revesting of Assets
(a) The property of the Debtor shall revest in the Reorganized Debtor
on the Effective Date, except as otherwise provided in the Plan.
(b) From and after the Effective Date, the Reorganized Debtor may
operate its businesses, and may use, acquire and dispose of property free of any
restrictions imposed under the Bankruptcy Code.
(c) As of the Effective Date, all property of the Debtor and
Reorganized Debtor shall be free and clear of all liens, claims and interests of
holders of Claims and Equity Interests, except as provided in the Plan.
VIII.3 Causes of Action. Except as provided in the Plan, as of the
Effective Date, pursuant to Section 1123(b)(3)(B) of the Bankruptcy Code, any
and all Causes of Action accruing to the Debtor and Debtor in Possession,
including, without limitation, (i) Causes of Action under Sections 544, 545,
547, 548, 549, 550, 551, and/or 553 of the Bankruptcy Code, and (ii) Causes of
Action as designated in Exhibit "A" to the Plan, shall become assets of the
Reorganized Debtor, and the Reorganized Debtor shall have the authority to
prosecute such Causes of Action for the benefit of the estate of the Debtor. The
Reorganized Debtor shall have the authority to compromise and settle, otherwise
resolve, discontinue, abandon or dismiss all such Causes of Action without
approval of the Bankruptcy Court.
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VIII.4 Discharge of Debtor. The rights afforded herein and the
treatment of all Claims and Equity Interests herein shall be in exchange for and
in complete satisfaction, discharge, and release of Claims and Equity Interests
of any nature whatsoever, including any interest accrued on such Claims from and
after the Commencement Date, against the Debtor and the Debtor in Possession, or
any of its assets or properties. Except as otherwise provided herein, on the
Effective Date, all such Claims against and Equity Interests in the Debtor shall
be satisfied, discharged, and released in full, and all persons shall be
precluded from asserting against the Reorganized Debtor, its successors,
assigns, or its or their assets or properties any other or further Claims or
Equity Interests based upon any act or omission, transaction or other activity
of any kind or nature that occurred prior to the Effective Date.
VIII.5 Injunction. Except as otherwise expressly provided in the Plan
or the Confirmation Order, all entities, persons and governmental units who have
held, hold or may hold Claims against or Equity Interests in the Debtor, are
permanently enjoined, on and after the Effective Date, from (a) commencing or
continuing in any manner any action or other proceeding of any kind against the
Debtor or the Reorganized Debtor or any successor thereto with respect to any
such Claim or Equity Interest, (b) the enforcement, attachment, collection or
recovery by any manner or means of any judgment, award, decree or order against
the Debtor on account of any such Claim or Equity Interest, (c) creating,
perfecting or enforcing any encumbrance of any kind against the Debtor or
against the property or interests in property of the Debtor on account of any
such Claim or Equity Interest, and (d) asserting any right of setoff,
subrogation or recoupment of any kind against any obligation due from the Debtor
or against the property or interests in property of the Debtor on account of any
such Claim or Equity Interest. Such injunction shall extend to the successors of
the Debtor (including, without limitation, the Reorganized Debtor) and its
respective properties and interests in property.
VIII.6 Release. The acceptance of any distribution under the Plan by
any holder of a Claim shall constitute a waiver and release of any and all
Causes of Action by or on behalf of the Debtor that such holder of a Claim could
have commenced against any officer or director of the Debtor, serving in such
capacity on the Confirmation Date, that is based upon, related to or arising
from any pre-Confirmation Date actions or omissions of such officers or
directors in connection with or related to their capacities as officers or
directors of the Debtor to the fullest extent permitted under Section 524(e) of
the Bankruptcy Code and applicable law.
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ARTICLE IX
PROCEDURES WITH RESPECT TO CLAIMS
IX.1 Bar Date for Filing Proofs of Claims and Proofs of Interest.
Except as otherwise provided in Sections 2.1, 2.2 and/or 6.1(d) of the Plan or
in any Final Order of the Bankruptcy Court, any Proofs of Claim required to be
filed by or on behalf of holders of Administrative Claims, Priority Tax Claims,
Other Priority Claims, Miscellaneous Secured Claims, Senior Subordinated Note
Holder Claims, General Unsecured Claims, Intercompany Claims and Equity
Interests pursuant to Bankruptcy Code Sections 501 and/or 1111(a), Part III of
the Federal Rules of Bankruptcy Procedure and/or the Local Bankruptcy Rules of
the Bankruptcy Court, must be Filed on or before sixty (60) days after the
Effective Date, or such other date as may be fixed by the Bankruptcy Court,
provided, however, that neither BNY nor any holder of a Senior Subordinated Note
Holder Claim shall be required hereunder to File any proof of claim in respect
of the Senior Subordinated Notes, the Senior Subordinated Note Indenture, or any
Senior Subordinated Note Holder Claim.
IX.2 Objections to Claims. Except as otherwise provided for with
respect to applications for professional compensation and reimbursement claims
under Section 2.2 of the Plan, or otherwise ordered by the Bankruptcy Court
after notice and a hearing, the Debtor or the Reorganized Debtor, as the case
may be, shall have the exclusive right to make and file objections to
Administrative Expense Claims and Claims pursuant to this Section 9.2. All
objections shall be litigated to Final Order; provided, however, that the Debtor
or the Reorganized Debtor, as the case may be, shall have the authority to
compromise, settle, otherwise resolve or withdraw any objections, without
approval of the Bankruptcy Court but subject to the consent of the Creditors'
Committee. Unless otherwise ordered by the Bankruptcy Court, the Debtor or the
Reorganized Debtor, as the case may be, shall file all objections to
Administrative Expense Claims that are the subject of proofs of Claim or
requests for payment filed with the Bankruptcy Court (other than applications
for allowances of compensation and reimbursement of expenses) and Claims and
serve such objections upon counsel to the Creditors' Committee and to Wachtell,
Lipton, Rosen & Katz, BNY as Trustee under the New Indenture, and upon the
holder as of the Record Date of the Administrative Expense Claim or Claim as to
which the objection is made, as soon as is practicable, but in no event after
the later of (i) ninety (90) days after the Effective Date, and (ii) ninety (90)
days after the Proof of Claim or request for payment of an Administrative
Expense Claim is filed, or such later date as may be approved by the Bankruptcy
Court.
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ARTICLE X
EFFECTIVENESS OF THE PLAN
X.1 Conditions Precedent to Effectiveness. The Plan shall not become
effective unless and until the following conditions shall have been satisfied or
waived pursuant to Section 10.4 of the Plan:
(a) the Confirmation Order, in form and substance reasonably acceptable
to the Debtor and the Creditors' Committee, shall have been signed by the judge
presiding over the Chapter 11 Case, and there shall not be a stay or injunction
in effect with respect thereto;
(b) all actions, documents and agreements necessary to implement the
Plan shall have been effected or executed;
(c) the Debtor shall have received all authorizations, consents,
regulatory approvals, rulings, letters, no-action letters, opinions or documents
that are determined by the Debtor to be necessary to implement the Plan;
(d) all Exhibits to the Disclosure Statement and all documents,
agreements and instruments contained in the Plan Supplement, shall be in form
and substance reasonably acceptable to the Debtor and the Creditors' Committee;
and
(e) the investment guidelines for Cash held in Reserve under the Plan
in respect of Disputed Claims.
X.2 Conditions Subsequent to Effectiveness. It shall be a condition
subsequent to the effectiveness of the Plan that each of the following shall
have been effected or executed (including, without limitation, the filing of
such documents with any applicable state or federal regulatory agency to cause
such documents to become effective):
(1) the Plan of Merger;
(2) the Certificate of Incorporation;
(3) the Bylaws;
(4) the New Indenture and New Notes;
(5) the Registration Rights Agreement; and
(6) the issuance of 6,106,665 shares of New Common Stock.
X.3 Effect of Failure of Conditions. In the event that one or more of
the conditions specified in Sections 10.1 and 10.3 of the Plan have not occurred
or been waived in accordance with Section 10.4 of the Plan on or before three
(3) months after the Confirmation Date, and upon notification submitted by the
Debtor or the Creditors' Committee to the Bankruptcy Court, (a) the Confirmation
Order shall be vacated, (b) no distributions under the Plan shall be made, (c)
the
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Debtor and all holders of Claims and Equity Interests shall be restored to the
status quo ante as of the day immediately preceding the Confirmation Date as
though the Confirmation Date never occurred, and (d) the Debtor's obligations
with respect to the Claims and Equity Interests shall remain unchanged and
nothing contained herein shall constitute or be deemed a waiver or release of
any Claims or Equity Interests by or against the Debtor or any other person or
to prejudice in any manner the rights of the Debtor or any person in any further
proceedings involving the Debtor.
X.4 Waiver of Conditions. With the consent of the Creditors' Committee,
the Debtor may waive, by a writing signed by an authorized representative of the
Debtor and subsequently filed with the Bankruptcy Court, one or more of the
conditions to effectiveness of the Plan set forth in Sections 10.1 and 10.2 of
the Plan.
ARTICLE XI
RETENTION OF JURISDICTION
The Bankruptcy Court shall have exclusive jurisdiction of all matters
arising out of, and related to, the Chapter 11 Case and the Plan pursuant to,
and for the purposes of, Sections 105(a) and 1142 of the Bankruptcy Code and
for, among other things, the following purposes:
(a) To determine any and all objections to and proceedings involving
the allowance, estimation, classification, and subordination of Claims or Equity
Interests;
(b) To determine any and all applications for allowances of
compensation and reimbursement of expenses and any other fees and expenses
authorized to be paid or reimbursed under the Bankruptcy Code or the Plan;
(c) To determine the terms for the rejection or assumption of executory
contracts or unexpired leases or for the assumption and assignment, as the case
may be, of executory contracts or unexpired leases to which the Debtor is a
party or with respect to which the Debtor may be liable, and to hear and
determine, and if need be to liquidate, any and all Claims arising therefrom
including the determination of defaults required to be cured;
(d) To determine any and all applications, adversary proceedings and
contested or litigated matters initiated or asserted by the Debtor on or prior
to Effective Date and initiated or asserted by the Reorganized Debtor subsequent
to the Effective Date and arising under Chapter 11 of the Bankruptcy Code or
arising in or related to the Debtor's Chapter 11 Case; including, but not
limited to, (i) Causes of Action to avoid or recover transfers (including
fraudulent or preferential transfers) of the Debtor's property pursuant to
Sections 542 through 553 of the Bankruptcy Code or applicable law, (ii) claims
and Causes of Action arising from the prepetition activities of the Debtor,
whether arising by statute or common law, whether arising under the laws of the
United States, Texas, or any other state having jurisdiction over any claim or
controversy, and whether maintainable against third parties, affiliates or
insiders of the Debtor, (iii) claims, Causes of Action and other litigation that
may adversely impact or affect the
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Reorganized Debtor's property, (iv) contests to Claims, and (v) proceedings
involving offsets against Claims;
(e) To issue orders, determinations, and rulings regarding the
valuation, recovery, disposition, distribution, operation, or use of the
Debtor's property, including claims to recover preferences, fraudulent
conveyances, or damages of any type from any person, and whether initiated prior
to or after the Effective Date;
(f) To determine any and all applications, claims, Causes of Action,
adversary proceedings, and contested or litigated matters that may be commenced
by the Reorganized Debtor subsequent to the Effective Date;
(g) To consider any modifications of the Plan, remedy any defect or
omission or reconcile any inconsistency in any order of the Bankruptcy Court,
including the Confirmation Order, to the extent authorized by the Bankruptcy
Code;
(h) To determine all controversies, suits, and disputes that may arise
in connection with the interpretation, enforcement, or consummation of the Plan,
the Plan documents and agreements executed in connection therewith or any
person's obligations under the Plan or any documents and agreements executed in
connection therewith;
(i) To consider and act on the compromise and settlement of any Claim
against or Cause of Action by or against the Debtor;
(j) To issue such orders in aid of execution of the Plan to the extent
authorized by Section 1142 of the Bankruptcy Code;
(k) To enter a Final Decree under Bankruptcy Rule 3022 terminating the
Chapter 11 Case;
(l) To determine such other matters as may be set forth in the
Confirmation Order or which may arise in connection with the Plan, the
Confirmation Order or the Effective Date.
(m) To enter and implement such orders as may be appropriate in the
event the Confirmation Order is for any reason stayed, revoked, modified or
vacated;
(n) To recover all assets of the Debtor and property of the Debtor's
estate, wherever located;
(o) To hear and determine matters concerning state, local and federal
taxes in accordance with Sections 346, 505 and 1146 of the Bankruptcy Code; and
(p) To hear any other matter not inconsistent with the Bankruptcy Code.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
XII.1 Effectuating Documents and Further Transactions. The Debtor, the
Reincorporation Subsidiary and/or Reorganized Debtor, as the case may be, is
authorized to execute, deliver, file or record such contracts, instruments,
releases, indentures, certificates of ownership and merger and other agreements
or documents and take such actions as may be reasonably necessary or appropriate
to effectuate and further evidence the terms and conditions of the Plan and any
notes or securities issued pursuant to the Plan.
XII.2 Corporate Action. On the Effective Date, all matters provided for
under the Plan that would otherwise require approval of the stockholders,
directors or members of one or more of the Debtor, the Reincorporation
Subsidiary or Reorganized Debtor or their successors in interest under the Plan,
including, without limitation, the formation of the Reincorporation Subsidiary,
the Reincorporation Merger, the Plan of Merger, the authorization of 150 million
shares of New Common Stock, the issuance of up to 6,106,665 shares of New Common
Stock, the authorization, approval and effectiveness of the Certificate of
Incorporation and the Bylaws, the investment guidelines for Cash held in Reserve
under the Plan in respect of Disputed Claims, the issuance of the New Notes, the
execution and delivery of the New Indenture, and the election or appointment, as
the case may be, of directors and officers of the Reorganized Debtor pursuant to
the Plan shall be deemed to have occurred and shall be in effect from and after
the Effective Date pursuant to the applicable general corporation law of the
state in which the Debtor, the Reincorporation Subsidiary or Reorganized Debtor
is incorporated, without any requirement of further action by the stockholders
or directors of the Debtor, the Reincorporation Subsidiary or Reorganized
Debtor.
XII.3 Exemption from Transfer Taxes. Pursuant to Section 1146(c) of the
Bankruptcy Code, the issuance, transfer or exchange of notes or equity
securities under the Plan, the creation of any mortgage, deed of trust or other
security interest, the making or assignment of any lease or sublease, or the
making or delivery of any deed or other instrument of transfer under, in
furtherance of, or in connection with the Plan, including, without limitation,
any merger agreements or agreements of consolidation, deeds, bills of sale or
assignments executed in connection with any of the transactions contemplated
under the Plan shall not be subject to any stamp, real estate transfer, mortgage
recording, sales and use, or other similar tax.
XII.4 Injunction Regarding Worthless Stock Deduction. At the
Confirmation Hearing, the Debtor shall request that the Bankruptcy Court include
in the Confirmation Order a provision enjoining any "50-percent shareholder" of
the Debtor within the meaning of section 382(g)(4)(D) of the Internal Revenue
Code of 1986, as amended, from claiming a worthless stock deduction with respect
to its Equity Interest for any taxable year of such shareholder ending prior to
the Effective Date.
XII.5 Exculpation. Neither the Debtor, the Reincorporation Subsidiary,
the Reorganized Debtor, the Creditors' Committee, BNY in its capacity as
Indenture Trustee under
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the Senior Subordinated Notes Indenture, the holders of Senior Subordinated Note
Holder Claims, nor any of their respective members, officers, directors,
employees, advisors, attorneys or agents shall have or incur any liability to
any holder of a Claim or Equity Interest for any act or omission in connection
with, related to, or arising out of, the Chapter 11 Case, the pursuit of
confirmation of the Plan, the consummation of the Plan or the administration of
the Plan or the property to be distributed under the Plan, except for willful
misconduct or gross negligence, and, in all respects, the Debtor, the
Reincorporation Subsidiary, the Reorganized Debtor, the Creditors' Committee,
BNY in its capacity as Indenture Trustee under the Senior Subordinated Notes
Indenture, the holders of Senior Subordinated Note Holder Claims, and each of
their respective members, officers, directors, employees, advisors, attorneys
and agents shall be entitled to rely upon the advice of counsel with respect to
their duties and responsibilities under the Plan; provided, however, that,
subject to Section 8.6 of the Plan, nothing contained herein shall exculpate,
satisfy, discharge or release any Cause of Action accruing to the Debtor and
Debtor in Possession under Sections 547, 548 and 550 of the Bankruptcy Code
against present or former officers, directors or employees of the Debtor in
their capacities other than as present or former officers, directors or
employees.
XII.6 Termination of Creditors Committee. The appointment of the
Creditors' Committee shall terminate on the later of the Effective Date or the
date on which all applications for final allowances of compensation and
reimbursement of expenses have been granted or denied by Final Order.
XII.7 Post-Effective Date Fees and Expenses. From and after the
Effective Date, the Debtor and Reorganized Debtor shall, in the ordinary course
of business and without the necessity for any approval by the Bankruptcy Court,
pay the reasonable fees and expenses of professional persons thereafter incurred
by the Debtor and Reorganized Debtor, including, without limitation, those fees
and expenses incurred in connection with the implementation and consummation of
the Plan.
XII.8 Payment of Statutory Fees Due the United States Trustee. All fees
due and payable pursuant to 28 U.S.C. Section 1930(a)(6) shall be paid in
accordance with Section 2.4 of the Plan.
XII.9 Amendment or Modification of the Plan. With the consent of the
Creditors' Committee, alterations, amendments or modifications of the Plan may
be proposed in writing by the Debtor at any time prior to the Confirmation Date,
provided that the Plan, as altered, amended or modified, satisfies the
conditions of Sections 1122 and 1123 of the Bankruptcy Code, and the Debtor
shall have complied with Section 1125 of the Bankruptcy Code. With the consent
of the Creditors' Committee, the Plan may be altered, amended or modified at any
time after the Confirmation Date and before substantial consummation, provided
that the Plan, as altered, amended or modified, satisfies the requirements of
Sections 1122 and 1123 of the Bankruptcy Code and the Bankruptcy Court, after
notice and a hearing, confirms the Plan, as altered, amended or modified, under
Section 1129 of the Bankruptcy Code and the circumstances warrant such
alterations, amendments or modifications. A holder of a Claim or Equity Interest
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that has accepted the Plan shall be deemed to have accepted the Plan, as
altered, amended or modified, if the proposed alteration, amendment or
modification does not materially and adversely change the treatment of the Claim
or Equity Interest of such holder.
XII.10 Severability. In the event that the Bankruptcy Court determines,
prior to the Confirmation Date, that any provision in the Plan is invalid, void
or unenforceable, such provision shall be invalid, void or unenforceable with
respect to the holder or holders of such Claims or Equity Interests as to which
the provision is determined to be invalid, void or unenforceable. The
invalidity, voidness or unenforceability of any such provision shall in no way
limit or affect the enforceability and operative effect of any other provision
of the Plan.
XII.11 Revocation or Withdrawal of the Plan. The Debtor reserves the
right to revoke or withdraw the Plan prior to the Confirmation Date. If the
Debtor revokes or withdraws the Plan prior to the Confirmation Date, then the
Plan shall be deemed null and void. In such event, nothing contained herein
shall constitute or be deemed a waiver or release of any claims by or against
the Debtor or any other person or to prejudice in any manner the rights of the
Debtor or any person in any further proceedings involving the Debtor.
XII.12 Binding Effect. The Plan shall be binding upon and inure to the
benefit of the Debtor, the holders of Claims and Equity Interests, and their
respective successors and assigns, including, without limitation, the
Reorganized Debtor.
XII.13 Notices. All notices, requests and demands to or upon the Debtor
or the Reorganized Debtor 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, with a copy by mail,
addressed as follows:
If to the Debtor:
Paracelsus Healthcare Corporation
515 W. Greens Road, Suite 500
Houston, Texas 77067
Attention: Frank A. Uribie
Telephone: (281) 774-5100
Facsimile: (281) 774-5471
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with a copy to:
Andrews & Kurth L.L.P.
600 Travis, Suite 4200
Houston, Texas 77002
Attention: Hugh M. Ray and Douglas G. Walter
Telephone: (713) 220-4200
Facsimile: (713) 220-4285
If to the Creditors' Committee:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Chaim J. Fortgang
Tel: (212) 403-1000
Fax: (212) 403-2000
XII.14 Governing Law. Except to the extent the Bankruptcy Code,
Bankruptcy Rules or other federal law is applicable, or to the extent an Exhibit
to the Disclosure Statement or other document executed in connection with the
Plan provides otherwise, the rights and obligations arising under the Plan shall
be governed by, and construed and enforced in accordance with, the laws of the
State of New York, without giving effect to the principles of conflicts of law
of such jurisdiction.
XII.15 Withholding and Reporting Requirements. In connection with the
consummation of the Plan, the Debtor or the Reorganized Debtor, 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.
XII.16 Plan Supplement. Forms of the documents comprising or relating
to the following documents shall be consistent with the Plan and Disclosure
Statement and shall be contained in the Plan Supplement and filed with the Clerk
of the Bankruptcy Court prior to the conclusion of the Confirmation Hearing:
(1) the Plan of Merger;
(2) the Certificate of Incorporation;
(3) the Bylaws;
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(4) the investment guidelines for Cash held in Reserve under the Plan
in respect of Disputed Claims;
(5) the form of certificate for the New Common Stock;
(6) the New Indenture and the New Notes;
(7) the Registration Rights Agreement; and
(8) the List of Directors of the Reorganized Debtor pursuant to Section
7.3(a) of the Plan.
Upon its filing with the Bankruptcy Court, the Plan Supplement may be inspected
in the office of the Clerk of the Bankruptcy Court during normal Bankruptcy
Court hours. Holders of Claims or Equity Interests may obtain a copy of the Plan
Supplement upon written request to the Debtor in accordance with Section 12.13
of the Plan.
XII.17 Allocation of Plan Distributions Between Principal and Interest.
Except as otherwise expressly provided in the Plan, 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 accrued but unpaid interest.
XII.18 Setoffs and Recoupment. The Debtor or the Reorganized Debtor, as
the case may be, may, but shall not be required to, setoff against, or recoup
from, any Claim and the payments to be made pursuant to the Plan in respect of
such Claim (other than Senior Subordinated Noteholder Claims), any claims of any
nature whatsoever that the Debtor or Reorganized Debtor may have against the
Claimant; but neither the failure to do so nor the allowance of any Claim
hereunder shall constitute a waiver or release by the Debtor or the Reorganized
Debtor of any such claim it may have against such Claimant.
XII.19 Headings. Headings are used in the Plan for convenience and
reference only, and shall not constitute a part of the Plan for any other
purpose.
XII.20 Exhibits. All Exhibits to the Disclosure Statement and the Plan
Supplement are incorporated into and are a part of the Plan as if set forth in
full herein.
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XII.21 Filing of Additional Documents. On or before substantial
consummation of the Plan, the Debtor shall file with the Bankruptcy Court such
agreements and other documents as may be necessary or appropriate to effectuate
and further evidence the terms and conditions of the Plan.
Dated: Houston, Texas
April 18, 2001
PARACELSUS HEALTHCARE CORPORATION,
a California corporation
By: /s/ ROBERT L. SMITH
--------------------------------------
Robert L. Smith
Chief Executive Officer
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