IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
BALTIMORE DIVISION
In re: *
USINTERNETWORKING, INC., et al., * Case No.: 02-5-0215-SD
Through 02-5-0219-SD
Debtors. * Chapter 11
(Jointly Administered
* under Case No.: 02-5-0215-SD)
* * * * * * * * * * * * * * * *
DEBTORS' SECOND AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION
March 19, 2002
WILLKIE FARR & GALLAGHER
787 Seventh Avenue
New York, NY 10019
212-728-8000
and
WHITEFORD, TAYLOR & PRESTON L.L.P.
Suite 1400
Seven Saint Paul Street
Baltimore, MD 21202
410-347-8700
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS AND RULES OF INTERPRETATION.................................... 1
1.01 Definitions................................................................ 1
1.02 Rules of Interpretation....................................................11
1.03 Incorporation of Exhibits and Attachments..................................11
ARTICLE 2. PROVISIONS FOR TREATMENT OF ADMINISTRATIVE EXPENSES........................12
2.01 Allowance of Administrative Expenses.......................................12
2.02 Payment of Administrative Expenses.........................................12
ARTICLE 3. PROVISIONS FOR TREATMENT OF PRIORITY TAX CLAIMS............................13
3.01 Priority Tax Claims........................................................13
ARTICLE 4. CLASSIFICATION OF CLAIMS AND INTERESTS.....................................13
4.01 Secured Claims.............................................................13
4.02 Priority Claims............................................................14
4.03 Unsecured Claims...........................................................14
4.04 Interests and LLC Interests................................................14
ARTICLE 5. PROVISIONS FOR TREATMENT OF CLAIMS AND INTERESTS...........................14
5.01 Equipment Lease Secured Claims (Class 1)...................................14
5.02 Miscellaneous Secured Claims (Class 2).....................................19
5.03 Miscellaneous Priority Claims (Class 3)....................................19
5.04 General Unsecured Claims (Class 4).........................................19
5.05 Senior Creditor Claims (Class 5)...........................................20
5.06 Convertible Subordinated Note Claims (Class 6).............................21
5.07 Convenience Claims (Class 7)...............................................22
5.08 Convertible Subordinated Note Section 510(b) Claims (Class 8)..............22
5.09 Interdebtor Claims (Class 9)...............................................22
5.10 Interests and LLC Interests (Class 10).....................................22
5.11 Section 510(c) Claims (Class 11)...........................................23
ARTICLE 6. IDENTIFICATION OF CLASSES OF CLAIMS AND INTERESTS IMPAIRED AND NOT
IMPAIRED BY THIS PLAN; ACCEPTANCE OR REJECTION OF THIS PLAN................23
6.01 Acceptance by an Impaired Class of Creditors...............................23
6.02 Voting Classes.............................................................23
6.03 Classes Receiving No Property Deemed to Reject this Plan...................23
6.04 Unimpaired Classes Conclusively Presumed to Accept this Plan...............23
6.05 Confirmation Pursuant to Section 1129(b)...................................23
ARTICLE 7. UNEXPIRED LEASES AND EXECUTORY CONTRACTS...................................23
7.01 Assumption and Rejection...................................................23
7.02 Cure of Defaults...........................................................24
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7.03 Assigned Leases............................................................24
7.04 Assignments of Contracts and Leases........................................25
7.05 Rejection Claims...........................................................25
7.06 Equipment Leases and Indemnification Contracts Excluded....................25
ARTICLE 8. ISSUANCE OF NEW COMMON STOCK; OPERATION AND MANAGEMENT OF
REORGANIZED DEBTORS AND THE ESTATE.........................................25
8.01 Issuance of New Common Stock; Use of Proceeds..............................25
8.02 Governance of Reorganized USi..............................................26
8.03 Appointment of Directors...................................................26
8.04 Effect of Appointment......................................................26
ARTICLE 9. IMPLEMENTATION OF THIS PLAN................................................26
9.01 Vesting of Property in Reorganized Debtors.................................26
9.02 Administration of the Plan.................................................27
9.03 Cancellation of Securities.................................................27
9.04 Surrender of Cancelled Securities..........................................27
9.05 Allowance of Claims Subject to Section 502(d)..............................28
9.06 Right of Setoff............................................................28
9.07 Deemed Consolidation of Debtors for Plan Purposes Only.....................28
ARTICLE 10. PROVISIONS COVERING DISTRIBUTIONS..........................................29
10.01 Distributions..............................................................29
10.02 Cash in Lieu of De Minimis New Warrant Distributions to Class 6............32
10.03 Fractional Warrants........................................................32
10.04 Retention of Distribution Agent............................................32
10.05 Compliance With Tax Requirements...........................................32
10.06 Persons Deemed Holders of Registered Securities............................32
10.07 Distribution of Unclaimed Property.........................................33
ARTICLE 11. RESOLUTION OF DISPUTED CLAIMS..............................................33
11.01 Objections to Claims.......................................................33
11.02 Procedure..................................................................33
11.03 No Distributions on Disputed Claims........................................33
11.04 Estimation; Partial Allowance..............................................34
ARTICLE 12. DISCHARGE, RELEASE AND PRESERVATION OF CLAIMS..............................34
12.01 Discharge and Termination..................................................34
12.02 Distributions in Complete Satisfaction.....................................34
12.03 Injunction.................................................................34
12.04 Release and Injunction.....................................................34
12.05 Exculpation................................................................35
12.06 Termination of Indemnification Obligations.................................36
12.07 Preservation of Insurance..................................................36
12.08 Subordination..............................................................36
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ARTICLE 13. CONDITIONS TO CONSUMMATION OF THE PLAN.....................................37
13.01 Conditions.................................................................37
13.02 Consummation...............................................................37
ARTICLE 14. MISCELLANEOUS PROVISIONS...................................................37
14.01 Bankruptcy Court to Retain Jurisdiction....................................37
14.02 Binding Effect of this Plan................................................38
14.03 Nonvoting Stock............................................................38
14.04 Authorization of Corporate Action..........................................38
14.05 Retiree Benefits...........................................................38
14.06 Withdrawal of this Plan....................................................38
14.07 Final Order................................................................38
14.08 Notice.....................................................................39
14.09 Dissolution of Committee...................................................40
14.10 Amendments and Modifications...............................................40
14.11 Time.......................................................................40
14.12 Section 1145 Exemption.....................................................40
14.13 Section 1146 Exemption.....................................................40
14.14 No Admissions..............................................................41
EXHIBITS
A - Form of Amended Equipment Lease Agreement
B - Form of Substitute Equipment Lease Agreement
C - Amended Bylaws of Reorganized USi
D - Amended Certificate of Incorporation of Reorganized USi
E - Plan Notes and Plan Note Indenture
F - Secondary Plan Notes and Secondary Plan Note Indenture
G - Substitute Plan Notes and Substitute Plan Note Indenture
H - New Warrants
ATTACHMENTS
1 - List of Subsidiary Debtors
2 - Conditional Subscription Agreement
3 - Allowed amount of Equipment Lease Claims and Equipment Lease Secured Claims
iii
DEBTORS' SECOND AMENDED JOINT CHAPTER 11 PLAN
USinternetworking, Inc., and its subsidiaries listed on Attachment 1
hereto, the Debtors and Debtors in Possession in the above-captioned cases,
propose the following second amended joint chapter 11 plan pursuant to Section
1121(a) of the Bankruptcy Code:
ARTICLE 1.
DEFINITIONS AND RULES OF INTERPRETATION
1.01 Definitions. As used herein:
"Adequate Protection Payments" means any and all payments made on
account of (i) a Secured Claim or (ii) an Equipment Lease after the Filing Date
and prior to the Effective Date, including all payments made at any time prior
to the Effective Date pursuant to any order of the Bankruptcy Court relating to
provision of adequate protection to the Holders of such Claims or pursuant to
Section 365(d)(10) of the Bankruptcy Code.
"Administrative Expense" means a cost or expense of administration of
the Chapter 11 Case allowable under Section 503(b) of the Bankruptcy Code,
including (i) Fee Claims, (ii) any fees assessed against the Estate under 28
U.S.C. Section 1930, (iii) Ordinary Course Administrative Expenses, (iv)
Approved Chapter 11 Liabilities, and (v) Reclamation Claims.
"Allowed" means with respect to a Claim (other than an Administrative
Expense) that the Claim:
A. Either (i) is set forth in a proof of claim that was timely
filed or by order of the Bankruptcy Court is not and will not be
required to be filed, or (ii) has been or hereafter is listed in the
Schedules as liquidated in amount and not disputed or contingent and
the claimant has not filed a proof of claim in an amount different than
that listed in the Schedules, or (iii) is to be allowed pursuant to
this Plan in an amount set forth herein; and
B. Either (i) no objection to the allowance thereof has been
interposed within the applicable period of time fixed by this Plan, the
Bankruptcy Code, the Bankruptcy Rules or the Bankruptcy Court, or (ii)
such an objection is so interposed and such Claim has been allowed by a
Final Order;
and means, with respect to an Administrative Expense, an Administrative Expense
that becomes Allowed as set forth in Section 2.01.
"Amended Equipment Lease Agreement" means an agreement in substantially
the form of Exhibit A to this Plan executed and delivered by Reorganized USi in
favor of the Holder of an Equipment Lease Secured Claim, amending and restating
the terms of the Equipment Lease Agreement governing such Holder's Equipment
Lease Claim.
"Amended Bylaws" means the bylaws of Reorganized USi, in substantially
the form of Exhibit C to this Plan.
"Amended Certificate of Incorporation" means the certificate of
incorporation of Reorganized USi, in substantially the form of Exhibit D to this
Plan.
"Approved Chapter 11 Liabilities" means any and all liabilities that
have, with the approval of the Bankruptcy Court, been assumed by or otherwise
become binding upon the Debtors in the Chapter 11 Case at any time through the
Effective Date and includes, so long as approved by the Bankruptcy Court, any
such liability relating to (i) any DIP Financing, (ii) all contracts and other
obligations undertaken by or imposed upon the Debtors at any time during such
period, and (iii) all unexpired leases and executory contracts entered into
prior to the Filing Date and assumed and not assigned by the Debtors at any time
during such period.
"Bankruptcy Code" means Title 11 of the United States Code, as amended
from time to time.
"Bankruptcy Court" means the United States Bankruptcy Court for the
District of Maryland, Baltimore Division.
"Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure and
the Local Rules of the Bankruptcy Court, as amended and supplemented from time
to time.
"Binding Fee Estimate" has the meaning given in Section 2.01(d).
"Business Day" means any day other than a Saturday, Sunday or "legal
holiday" as defined in Bankruptcy Rule 9006(a).
"Cash" means legal tender of the United States of America.
"Cancelled Security" means the Convertible Subordinated Notes, the
Conklin & Conklin Note and any other note, bond, debenture, stock certificate or
other instrument or investment security evidencing or representing an Impaired
Claim or Impaired Interest outstanding immediately prior to the Effective Date.
"Catch-Up Distribution" has the meaning given in Section 10.01(b).
"Cause of Action" means any action, cause of action, suit, account,
controversy, agreement, promise, right to legal remedy, right to an equitable
remedy, right to payment and claim, whether known or unknown, reduced to
judgment, not reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, secured, unsecured and whether
asserted or assertable directly or derivatively, in law, equity or otherwise.
"Chapter 11 Case" means, collectively, the cases under chapter 11 of
the Bankruptcy Code voluntarily commenced by the Debtors on the Filing Date.
"Claim" means any "claim," as that term is defined in Section 101(5)
of the Bankruptcy Code, against any of the Debtors or the Estate.
"Claims Agent" means Logan & Company, Inc., located at 546 Valley Road,
2nd Floor, Upper Montclair, New Jersey 07043.
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"Claims Entitled to the Plan Distribution" means Allowed General
Unsecured Claims, Allowed Senior Creditor Claims and Allowed Convertible
Subordinated Note Claims.
"Class" means a group of Claims or Interests as classified under this
Plan.
"Conditional Subscription Agreement" means the commitment of Investor,
subject to the conditions set forth therein, to subscribe for and purchase on
the Effective Date for the Subscription Price, payable to Reorganized USi in
Cash on the Effective Date, the New Common Stock to be issued by Reorganized USi
pursuant to Section 8.01 of this Plan. A copy of the Conditional Subscription
Agreement (without exhibits and schedules) is attached hereto as Attachment 2.
"Confirmation Date" means the date and time on which the Confirmation
Order is entered on the docket maintained by the Clerk of the Bankruptcy Court.
"Confirmation Hearing" means the hearing on the confirmation of the
Plan.
"Confirmation Order" means an order entered by the Bankruptcy Court
confirming the Plan.
"Conklin & Conklin Note" means the 10% Promissory Note for $2,000,000
dated October 8, 1999 from USi to Conklin & Conklin, Inc.
"Conklin & Conklin Note Claims" means any and all Claims on account of
the Conklin & Conklin Note, which Claims shall be treated as (i) an Allowed
Miscellaneous Secured Claim in the amount of $100,000 and (ii) an Allowed Senior
Creditor Claim in the amount of $1,900,000, and otherwise disallowed.
"Convenience Claim" means any Allowed General Unsecured Claim against
the Debtors in the amount of $2,500 or less; provided, however, that if the
Holder of an Allowed General Unsecured Claim in amount greater than $2,500
elects on such Holder's ballot for voting on the Plan (i) Convenience Claim
treatment and (ii) to reduce such Claim to $2,500 in accordance with Section
5.07(b) hereof, such Claim shall be treated as a Convenience Claim for all
purposes.
"Convertible Subordinated Notes" means the 7% Convertible Subordinated
Notes Due 2004 outstanding under the Convertible Subordinated Note Indenture.
"Convertible Subordinated Note Claims" means any and all Claims on
account of the Convertible Subordinated Notes or the indebtedness evidenced
thereby (other than Convertible Subordinated Note Section 510(b) Claims),
whether for principal or interest or otherwise, or any conversion thereof or
any right of conversion with respect thereto or any right to receive
consideration on account of the conversion thereof.
"Convertible Subordinated Note Section 510(b) Claims" means, to the
extent required or permitted by Section 510(b) of the Bankruptcy Code to be
subordinated to the Convertible Subordinated Note Claims, any and all Claims
arising from or relating to any issuance, purchase or sale of the Convertible
Subordinated Notes or any rescission thereof or any right of reimbursement or
contribution with respect thereto or otherwise arising from or relating to the
3
Convertible Subordinated Notes or the Convertible Subordinated Note Indenture
(except any Indenture Trustee Prepetition Claim) or any instrument, agreement,
breach of contract, breach of legal duty, tort, wrongful conduct, act, omission
or event in any respect or in any manner arising therefrom or related thereto.
"Convertible Subordinated Note Indenture" means the Indenture dated as
of October 29, 1999 between USi and The Bank of New York, as trustee.
"CSFB Fee" means a $4,000,000 fee payable by the Debtor to Credit
Suisse First Boston Corporation pursuant to a letter agreement dated December
18, 2001, in connection with consummation of certain transactions, as defined
therein.
"Debtors" means, collectively, USinternetworking, Inc., a Delaware
corporation, and each of its subsidiaries listed on Attachment 1 hereto.
"Debtors in Possession" means the Debtors as debtors in possession in
the Chapter 11 Case.
"DGCL" means the Delaware General Corporation Law, as amended.
"DIP Financing" means any and all loans, letters of credit and other
indebtedness for money borrowed and related contractual obligations incurred by
the Debtors, with the approval of the Bankruptcy Court, at any time in the
period from the Filing Date to the Effective Date but shall, in any event, not
include any (i) Claim that is not an Administrative Expense, (ii) Fee Claim,
(iii) fees assessed against the Estate under 28 U.S.C. Section 1930, (iv)
Ordinary Course Administrative Expense, (v) contract or other obligation
undertaken by or imposed upon the Debtors at any time after the Filing Date
that do not relate to the incurrence of indebtedness for money borrowed, (vi)
unexpired lease or executory contract entered into prior to the Filing Date and
assumed by the Debtors at any time prior to the Effective Date, or (vii)
Reclamation Claim.
"DIP Financing Payout" means the payment in full of all Allowed
Administrative Expenses for amounts outstanding as or on account of any DIP
Financing.
"Directors and Officers" means any and all present and former directors
and officers of the Debtors.
"Disclosure Statement" means the disclosure statement concerning this
Plan distributed to Holders of Claims entitled to vote for the purpose of
acceptance or rejection of this Plan in accordance with Section 1126(b) of the
Bankruptcy Code and Bankruptcy Rule 3018.
"Disputed" means, in respect of any Claim, that such Claim has been
asserted or filed but has not been Allowed, whether or not such Claim is then
being prosecuted or opposed.
"Effective Date" means the date and time on which all of the conditions
set forth in Section 13.01 have been satisfied, but not earlier than the
eleventh day after the Confirmation Order is entered.
4
"Employee Stock Incentive Program" means any program or transaction (i)
approved by the directors of Reorganized USi appointed pursuant to Section 8.03,
or their successors, for the issuance of New Common Stock, or options or
warrants to acquire New Common Stock, to one or more officers and employees of
Reorganized USi or pursuant to a stock incentive plan established for the
benefit of any such officers or employees, (ii) implemented by Investor and
providing for the issuance of common stock in Investor, or options or warrants
to acquire such common stock in Investor, to any such officers and employees, or
(iii) any such similar program or transaction.
"Entity" means any individual, corporation, limited or general
partnership, limited liability company, joint venture, association, joint stock
company, estate, entity, trust, trustee, United States trustee, unincorporated
organization, government, governmental unit (as defined in the Bankruptcy Code),
agency or political subdivision thereof.
"Equipment Lease Claims" means any and all Claims arising under or in
respect of any of the Equipment Leases or any promissory note issued thereunder
or the indebtedness evidenced thereby or any instrument, agreement, breach of
contract, breach of legal duty, tort, wrongful conduct, act, omission or event
in any respect and in any manner arising therefrom or related thereto and
specifically includes, but is not limited to, all Claims asserted or alleged in
that certain lawsuit initiated against USi by Wells Fargo Equipment Finance Inc.
(Charter) prior to the Filing Date.
"Equipment Lease Deficiency Claims" means, in the case of (i) Equipment
Lease Claims treated under Section 5.01, Alternative A, the amount specified in
Attachment 3 to the Plan in accordance with Section 5.05(a)(1)(i), and (ii)
Equipment Lease Claims treated under Section 5.01, Alternative B, an amount
determined in accordance with Section 5.05(a)(1)(ii).
"Equipment Leases" means the lease documents (including any schedules
related thereto) giving rise to the Equipment Lease Claims identified in
Attachment 3 to the Plan.
"Equipment Lease Secured Claims" means, in the case of each Equipment
Lease Claim, the amount of such Equipment Lease Claim that is a Secured Claim,
as Allowed pursuant to Section 5.01 I. (a) or Section 5.01 II. (a).
"Estate" means, collectively, the bankruptcy estates created by the
commencement of the Chapter 11 Case.
"Fee Claim" means a Claim under Section 330(a), Section 331 or
Section 503(b) of the Bankruptcy Code for compensation for professional
services rendered and reimbursement of expenses in the Chapter 11 Case.
"Filing Date" means January 7, 2002.
"Final Order" means an order or judgment entered on the docket by the
Clerk of the Bankruptcy Court or any other court exercising jurisdiction over
the subject matter and the parties (i) that has not been reversed, stayed,
modified or amended, (ii) as to which no appeal, certiorari proceeding,
reargument or other review or rehearing has been requested or is still pending,
(iii) as to which the time for filing a notice of appeal or petition for
certiorari or request
5
for reargument or further review or rehearing has expired and (iv) in the event
than an appeal, writ of certiorari, reargument, rehearing or new trial has been
sought, as to which (a) such order shall have been affirmed by the highest court
to which such order is appealed or (b) certiorari has been denied as to such
order, or (c) reargument or rehearing or new trial from such order shall have
been denied, and the time to take any further appeal, petition for certiorari,
or move for reargument, rehearing or new trial shall have expired without such
actions having been taken.
"General Unsecured Claims" means all Claims of the type specified in
Section 502(g), Section 502(h) and Section 502(i) of the Bankruptcy Code, all
Pre-Petition Indemnification Claims (except those Pre-Petition Indemnification
Claims, if any, that are subordinated pursuant to Section 510(b) or (c) of the
Bankruptcy Code), all Indenture Trustee Prepetition Claims, and all other
Claims that are not Administrative Expenses, Priority Tax Claims, Miscellaneous
Priority Claims, Equipment Lease Secured Claims, Senior Creditor Claims,
Miscellaneous Secured Claims, Convenience Claims (except for purposes of
defining Convenience Claims), Convertible Subordinated Note Claims, Convertible
Subordinated Note Section 510(b) Claims, Interdebtor Claims, Claims classified
as Interests, or Section 510(c) Claims.
"Holder" means, in respect of any Claim or any Interest, the holder or
owner of, or person otherwise entitled to enforce, such Claim or such Interest.
"Impaired" means any Claim or Interest that is impaired within the
meaning of Section 1124 of the Bankruptcy Code.
"Indemnification Contracts" has the meaning given in Section 12.06.
"Indenture Trustee" means the Bank of New York, solely in its capacity
as Indenture Trustee under the Convertible Subordinated Note Indenture.
"Indenture Trustee Prepetition Claim" means a Claim for fees, expense
reimbursements and other amounts owed to the Indenture Trustee, to the extent
such amounts were accrued and unpaid on the Filing Date.
"Initial Distribution" has the meaning given in Section 10.01(a).
"Interdebtor Claims" means any Claim held by a Debtor against another
Debtor.
"Interests" means (i) any and all equity or ownership interests in any
of the Debtors and all stock certificates and other investment securities,
whether or not certificated, representing any such equity or ownership interest
and any and all options, warrants, subscription agreements and contractual
rights to acquire any such equity or ownership interest, (ii) pursuant to
Section 510(b) of the Bankruptcy Code, all Claims arising from or relating to
any issuance, purchase or sale of any such securities or any rescission thereof
or any right of reimbursement or contribution with respect thereto or otherwise
arising from or relating to of any instrument, agreement, breach of contract,
breach of legal duty, tort, wrongful conduct, act, omission or event in any
respect or in any manner arising therefrom or related thereto, including but
not limited to all Claims asserted or alleged in or arising from or related to
transactions at issue in that certain action entitled Weizel V.
USinternetworking, Inc., et al. (01-CV-9348) commenced in the United States
District
6
Court for the Southern District of New York and (iii) Pre-Petition
Indemnification Claims, if any, that are subordinated pursuant to Section
510(b) or (c) of the Bankruptcy Code.
"Investor" means US Internetworking Holdings, Inc., a Delaware
corporation.
"LLC Interests" means any Interest other than Interests in USi and
Interests held by USi.
"Miscellaneous Priority Claims" mean any and all Claims entitled to
priority in payment under Section 507(a) of the Bankruptcy Code, except
Administrative Expenses and Priority Tax Claims.
"Miscellaneous Secured Claims" means any and all Secured Claims
(including the Miscellaneous Secured Claim portion of the Conklin & Conklin Note
Claims) that are not Administrative Expenses or Equipment Lease Secured Claims.
"New Common Stock" means the 812,500 shares of common stock of
Reorganized USi ($0.001 par value), having one vote per share, without
preemptive rights or cumulative voting rights, authorized and issued hereunder
on the Effective Date.
"New Indentures" means the indentures, to be dated as of the Effective
Date, executed by Reorganized USi and the indenture trustees thereunder,
pursuant to which the Plan Notes, the Secondary Plan Notes and the Substitute
Plan Notes respectively, will be issued, the forms of which will be
substantially in the form of Exhibits E, F and G to this Plan.
"New Warrants" means warrants to purchase shares of common stock of the
ultimate corporate parent (but in all events in such corporation in which Bain
Capital Fund VII, L.P. holds its investment) of Reorganized USi after giving
effect to the issuance of the New Common Stock to the Investor on the Effective
Date, having an aggregate value of $812,500 as of the Effective Date for an
aggregate exercise price of $812,500, subject to reduction to reflect
alternative treatment under Sections 10.02 and 10.03 of the Plan. The New
Warrants will not be exercisable at any time following the fifth anniversary of
the Effective Date. The New Warrants will be in substantially the form of
Exhibit H to this Plan.
"Official Committee" means the Official Committee of Unsecured
Creditors of the Debtors appointed by the United States Trustee pursuant to
Section 1102(a) of the Bankruptcy Code.
"Ordinary Course Administrative Expenses" means the actual, necessary
costs and expenses of preserving the Estate and operating the business of the
Debtors, incurred and payable in the ordinary course of business by the Debtors
after the Filing Date.
"Payment Dates" means the monthly payment dates in connection with the
Plan Notes (consisting of twenty-four (24) consecutive installments of principal
and interest combined) and Substitute Plan Notes (consisting of thirty-six (36)
monthly consecutive installments of principal and interest combined).
"Periodic Distribution" has the meaning given in Section 10.01(b).
7
"Plan" means this Second Amended Joint Chapter 11 Plan, as may be
further amended or modified from time to time by the Debtors.
"Plan Distribution" means a distribution of Plan Notes on account of
Claims Entitled to the Plan Distribution in an aggregate amount equal to
$48,794,000 in principal amount of Plan Notes, in the proportions required by
Sections 5.04, 5.05, 5.06 and 10.01; provided, that, (i) the aggregate principal
amount of the Plan Distribution shall be increased by an amount equal to the
product of 23.66% multiplied by the lesser of (a) $4,000,000 or (b) the amount,
if any, of any Allowed General Unsecured Claim of Credit Suisse First Boston
Corporation in respect of the CSFB Fee, and (ii) the aggregate principal amount
of the Plan Distribution shall be decreased by (a) an aggregate amount equal to
the product of 23.66% multiplied by the amount of Allowed Convenience Claims as
of the applicable date of the distribution and (b) the aggregate of the
Substitute Plan Distribution Amount payable to Holders of General Unsecured
Claims and Senior Creditor Claims, respectively electing the substitute payment
schedule pursuant to Sections 5.04(b) and 5.05(c).
"Plan Distribution Ratio" means, where this Plan provides that a Plan
Distribution is to be made at any time on account of any Claim Entitled to the
Plan Distribution, that (subject to the provisions of Section 10.01 and further
subject, in the case of Convertible Subordinated Note Claims, to the enforcement
of the Subordination Provisions as set forth in this Plan) the Holder of such
Claim shall be entitled to receive a Ratable Share of the Plan Distribution
(calculated without regard to any elections to receive Substitute Plan Notes)
based on the ratio of the Allowed amount at such time of such Holder's Claim to
the Allowed amount at such time of all Claims Entitled to the Plan Distribution.
"Plan Notes" means unsecured promissory notes issued by Reorganized USi
on or after the Effective Date in substantially the form of Exhibit E to this
Plan, bearing interest from the Effective Date at a fixed per annum rate (based
on a year consisting of twelve 30-day months) equal to ten percent (10%),
maturing on the second (2nd) anniversary of the last day of the month in which
the Effective Date occurs, with principal amortized on a straight-line basis and
payable in twenty-four (24) consecutive monthly installments of principal and
interest combined, commencing on the last day of the first full month following
the Effective Date. Reorganized USi shall have the right to pay in full any Plan
Note by paying the remaining principal balance of such Plan Note, with accrued
interest through the payment date, in Cash at any time on or after the Effective
Date, without premium or penalty.
"Pre-Petition Indemnification Claims" has the meaning given in Section
12.06.
"Priority Tax Claims" means any and all Claims entitled to priority in
payment under Section 507(a)(8) oF the Bankruptcy Code.
"Ratable Share" means, with reference to any distribution on account of
any Allowed Claim in any Class, a distribution equal in amount to the ratio
(expressed as a percentage) that the amount of such Allowed Claim bears to the
aggregate amount of all Allowed Claims in that ClaSection
8
"Reclamation Claims" means any and all rights of reclamation converted
to an Administrative Expense pursuant to any order of the Bankruptcy Court under
Section 546(c) of the Bankruptcy Code.
"Remaining Plan Distribution Amount" has the meaning given in Section
10.01(a).
"Remaining Secondary Plan Distribution B Amount" has the meaning given
in Section 10.01(a).
"Remaining Substitute Plan Distribution Amount" has the meaning given
in Section 10.01(a).
"Reorganized Debtors" means, collectively, Reorganized USi and each of
the Subsidiary Debtors, as reorganized and discharged on the Effective Date
pursuant to this Plan.
"Reorganized USi" means USi as reorganized and discharged on the
Effective Date pursuant to this Plan.
"Representatives" means (i) any and all attorneys, advisors and
investment bankers employed by the Debtors in the Chapter 11 Case or in
connection with the Transactions, and (ii) any and all present and former
members of the Official Committee and its attorneys and advisors employed in the
Chapter 11 Case.
"Reserved Causes of Action" means (i) any and all Causes of Action
against Directors and Officers based upon their obligations to one or more of
the Debtors under any promissory notes, loans or other similar obligations to
the Debtors, (ii) any and all Causes of Action against any Holder of an
Equipment Lease Secured Claim that has elected treatment under Alternative B as
described in Section 5.01, including all Causes of Action of the type described
in Section 12.04, (iii) any and all Causes of Action against any Holder of a
Miscellaneous Secured Claim, including all Causes of Action of the type
described in Section 12.04, and (iv) any and all Causes of Action against
Directors and Officers for willful misconduct.
"Schedules" means the Schedules of Assets and Liabilities and the
Statement of Affairs for Debtors Engaged in Business filed by the Debtors in the
Chapter 11 Case, as such schedules may be amended or supplemented by the Debtors
from time to time.
"Secondary Plan Distribution A" means a distribution on account of
Allowed Convertible Subordinated Note Claims of (i) Cash in the amount of
$6,250,000, (ii) Secondary Plan Notes in an aggregate principal amount equal to
$11,250,000, and (iii) New Warrants, in the proportions required by Sections
5.06 and 10.01 (and subject to the provisions of Sections 10.02 and 10.03).
"Secondary Plan Distribution B" means a distribution on account of
Allowed General Unsecured Claims in an aggregate principal amount of Plan Notes
equal to $1,861,000 less an aggregate amount equal to the product of 10.68%
multiplied by the amount of Allowed Convenience Claims as of the applicable date
of the distribution, in the proportions required by Sections 5.04 and 10.01;
provided, that, the aggregate amount of the Secondary Plan Distribution B on
account of Allowed General Unsecured Claims shall be increased by an amount
equal to the product of 10.68% multiplied by the lesser of (i) $4,000,000 or
(ii) the amount, if any, of any
9
Allowed General Unsecured Claim of Credit Suisse First Boston Corporation in
respect of the CSFB Fee.
"Secondary Plan Notes" means unsecured promissory notes issued by
Reorganized USi on or after the Effective Date, substantially in the form of
Exhibit F to this Plan. The Secondary Plan Notes will have a six (6) year bullet
maturity, accrue simple interest at eight percent (8%) per annum, payable at
maturity, and be pari passu with the Plan Notes.
"Section 510(c) Claims" means any Claim against a Debtor subject to
subordination pursuant to Section 510(c) of the Bankruptcy Code.
"Secured Claim" means a Claim secured by a lien on property in which
the Estate has an interest or that is subject to setoff under Section 553 of the
Bankruptcy Code, to the extent of the value of the Holder'S interest in the
Estate's interest in such property or to the extent of the amount subject to
setoff, as applicable, as determined pursuant to Section 506(a) of the
Bankruptcy Code.
"Senior Creditor Claims" means (i) all Equipment Lease Deficiency
Claims (provided that with respect to Equipment Lease Deficiency Claims
determined pursuant to Section 5.05(a)(1)(ii) herein, only to the extent agreed
to by Reorganized USi or determined by the Bankruptcy Court to be entitled to
the benefit of the Subordination Provisions), (ii) the Senior Creditor Claim
portion of the Conklin & Conklin Note Claims, and (iii) subject to Section
5.05(a)(3), all other Claims that (a) are not Administrative Expenses, Priority
Tax Claims, Miscellaneous Priority Claims, Equipment Lease Secured Claims,
Miscellaneous Secured Claims, General Unsecured Claims, Convenience Claims,
Convertible Subordinated Note Claims, Convertible Subordinated Note Section
510(b) Claims, Interdebtor Claims or Claims classified as Interests (including
Section 510(c) Claims) anD (b) are entitled to the benefit of the Subordination
Provisions.
"Subscription Price" means a purchase price, payable in full in Cash on
the Effective Date, equal to $81,250,000.00.
"Subordination Provisions" means the provisions of Article 5 of the
Convertible Subordinated Note Indenture.
"Subsequent Bankruptcy Case" has the meaning given in Section 5.01,
Alternative A.
"Substitute Equipment Lease Agreement" means an agreement in
substantially the form of Exhibit B to this Plan executed and delivered by
Reorganized USi in favor of the Holder of an Equipment Lease Secured Claim
electing the substitute payment schedule pursuant to Section 5.01 I. (d),
amending and restating the terms of the Equipment Lease Agreement governing such
Holder's Equipment Lease Claim.
"Substitute Plan Distribution Amount" has the meaning given in Section
5.04.
"Substitute Plan Notes" means unsecured promissory notes issued by
Reorganized USi on or after the Effective Date in substantially the form of
Exhibit G to this Plan, (i) bearing interest from the Effective Date on the
unamortized portion of the 50% of the principal amount, which is not payable at
issuance, at a fixed per annum rate (based on a year consisting of twelve
10
30-day months) equal to ten percent (10%) and (ii) with (a) 50% of the principal
amount of which being paid in Cash proportionately with and at the times of
distribution of Substitute Plan Notes pursuant to Section 10.01 hereof, (b)
current monthly interest to be paid on such unamortized portion of the principal
balance commencing on the date that is the last day of the first full month that
occurs after the Effective Date through December 31, 2003, and (c) the balance
of the principal amount amortized on a straight-line basis over a 48-month
period commencing on January 1, 2004 and payable (1) in eighteen (18)
consecutive monthly installments of principal and interest combined, commencing
on January 31, 2004 and (2) with a balloon payment of the remaining principal
balance to be made on June 30, 2005. Reorganized USi shall have the right to
prepay any Substitute Plan Note by paying the remaining principal balance
thereof, with accrued interest through the date of payment, in Cash at any time
on or after the Effective Date, without premium or penalty.
"Transactions" means any prepetition or post-petition transactions and
negotiations related to the proposed investment in USi by the Investor.
"USi" means USinternetworking, Inc., a Delaware corporation, the parent
Debtor in the Chapter 11 Case.
1.02 Rules of Interpretation. References herein to a "Section," when
not qualified by a reference to another document, are references to the sections
of this Plan. Whenever from the context it appears appropriate, each term stated
in either the singular or the plural shall include the singular and the plural,
and pronouns stated in the masculine, feminine or neuter gender shall include
the masculine, the feminine and the neuter. The words "herein," "hereof,"
"hereto," "hereunder" and others of similar import, refer to this Plan as a
whole and not to the part in which such words appear. The words "includes" and
"including" are not limiting and mean that the things specifically identified
are set forth for purposes of illustration, clarity or specificity and do not in
any respect qualify, characterize or limit the generality of the class within
such things are included. Captions and headings to articles, sections and
exhibits are inserted for convenience of reference only, are not a part of this
Plan, and shall not be used to interpret this Plan. The rules of construction
set forth in Section 102 of the Bankruptcy Code shall (except for the rule
contained in Section 102(5) of the Bankruptcy Code) apply. In computing any
period of time prescribed or alloweD by this Plan, the provisions of Bankruptcy
Rule 9006(a) and Section 14.12 shall apply, but Bankruptcy Rule 9006(a) shall
govern.
1.03 Incorporation of Exhibits and Attachments. All Exhibits and
Attachments to this Plan are part of this Plan and incorporated herein as fully
as if set forth at length herein. The Exhibits to this Plan (i) must be
satisfactory to and approved by the Debtors and the Investor, (ii) are subject
to the Debtors having consulted in good faith with the Committee as to their
contents and (iii) if not already attached hereto, will be filed by the Debtors
with the Bankruptcy Court at least 10 days prior to the Confirmation Hearing.
11
ARTICLE 2.
PROVISIONS FOR TREATMENT OF ADMINISTRATIVE EXPENSES
2.01 Allowance of Administrative Expenses. Claims for Administrative
Expenses shall become Allowed as follows:
(a) DIP Financing Payout. Claims in respect of the DIP
Financing, if any, shall be Allowed in an amount approved by the Debtors or the
Bankruptcy Court on or prior to the Effective Date.
(b) Ordinary Course Administrative Expenses and Approved
Chapter 11 Liabilities. An Ordinary Course Administrative Expense or Approved
Chapter 11 Liability (other than the DIP Financing) that is known and not
disputed by Reorganized USi by written notice given to the claimant prior to the
60th day after the Effective Date shall become Allowed on such day.
(c) Reclamation Claims. A Reclamation Claim shall become
Allowed only to the extent either (i) Reorganized USi and the Holder of the
Reclamation Claim agree upon the amount thereof in a stipulation approved by the
Bankruptcy Court or (ii) at least 10 days before the Confirmation Hearing, the
Holder files with the Bankruptcy Court and serves on Reorganized USi a motion
requesting payment of such Reclamation Claim and a Final Order is entered
granting such motion.
(d) Fee Claims. A Fee Claim may be Allowed if (i) at least 10
days before the Confirmation Hearing, the Holder has filed with the Bankruptcy
Court and served upon the Debtors a binding estimate of the aggregate amount of
Fee Claims of such Holder in the Chapter 11 Case from the Filing Date through
the Effective Date (as the same may be supplemented by notice to the Debtors and
the Investor on or before the Effective Date, a "Binding Fee Estimate"), and
(ii) no later than 45 days after the Effective Date, the Holder has filed with
the Bankruptcy Court and served a fee application in accordance with the
Bankruptcy Code and Bankruptcy Rules. A Fee Claim shall be Allowed in an amount
not to exceed the Binding Fee Estimate filed by such Holder if and to the extent
allowed or approved by the Bankruptcy Court. The Reorganized Debtors are
authorized to pay compensation for services rendered or reimbursement of
services incurred after the Effective Date in the ordinary course of business
and without the need for Bankruptcy Court approval.
(e) Other Administrative Expenses. All other Claims for
Administrative Expenses (including Ordinary Course Administrative Expenses and
Approved Chapter 11 Liabilities that are disputed by Reorganized USi as set
forth in Section 2.01(b)) shall become Allowed only if the Holder of such Claim
files with the Bankruptcy Court and serves on Reorganized USi, within 90 days
after the Effective Date, a motion requesting payment of such Administrative
Expense and only if and to the extent such Claim is allowed by the Bankruptcy
Court pursuant to a Final Order.
2.02 Payment of Administrative Expenses. The Reorganized Debtors shall
assume and pay each Allowed Administrative Expense, other than Ordinary Course
Administrative Expenses and Approved Chapter 11 Liabilities, in full and in Cash
on or before the latest of (i) the
12
Effective Date, (ii) the date that is thirty (30) days after the date such
Administrative Expense becomes Allowed, and (iii) a date agreed by Reorganized
USi or the Debtors and the Holder of such Administrative Expense. The
Reorganized Debtors shall pay the DIP Financing Payout, if any, on the Effective
Date. The Reorganized Debtors shall assume and pay each Allowed Ordinary Course
Administrative Expense and each Allowed Approved Chapter 11 Liability on the
date on which payment is due or would otherwise be permitted to be made in
accordance with the terms and conditions of the particular transaction and any
agreements relating thereto.
ARTICLE 3.
PROVISIONS FOR TREATMENT OF PRIORITY TAX CLAIMS
3.01 Priority Tax Claims. Except to the extent that a Holder of an
Allowed Priority Tax Claim agrees to a different treatment, at the sole option
of the Reorganized Debtors, each Holder of an Allowed Priority Tax Claim shall
receive, in full and complete settlement, satisfaction and discharge of its
Allowed Priority Tax Claim: (i) Cash in an amount equal to such Allowed Priority
Tax Claim on, or as soon thereafter as is reasonably practicable, the later of
the Effective Date and the first (1st) Business Day after the date that is
thirty (30) calendar days after the date such Priority Tax Claim becomes an
Allowed Priority Tax Claim, or (ii) equal annual Cash payments of principal in
an aggregate amount equal to such Allowed Priority Tax Claim, together with
simple interest at a fixed rate of six percent (6%) per annum (or upon such
other terms determined by the Bankruptcy Court to provide Holders of Allowed
Priority Tax Claims with deferred Cash payments having a value, as of the
Effective Date, equal to the Allowed amount of such Claims), over a period not
exceeding six (6) years after the date of assessment of such Allowed Priority
Tax Claim, which shall begin on, or as soon thereafter as is reasonably
practicable, the later of the Effective Date and the first Business Day after
the date that is thirty (30) calendar days after the date such Priority Tax
Claim becomes an Allowed Priority Tax Claim. The Reorganized Debtors shall have
the right to pay any Allowed Priority Tax Claim in full by paying the remaining
principal balance of such Allowed Priority Tax Claim, with interest through the
date of payment, in Cash at any time on or after the Effective Date, without
premium or penalty. The Holder of an Allowed Priority Tax Claim shall not be
entitled to receive any payment on account of any penalty arising with respect
to or in connection with such Allowed Priority Tax Claim. Any such Claim for a
penalty shall not be Allowed, and the Holder of an Allowed Priority Tax Claim
shall not assess or attempt to collect such penalty from the Reorganized Debtors
or their property.
ARTICLE 4.
CLASSIFICATION OF CLAIMS AND INTERESTS
Pursuant to Section 1122 of the Bankruptcy Code, set forth below is a
designation of classes of Claims anD Interests, except Administrative Expenses
and Priority Tax Claims, that have been classified and are not excluded by
Section 1123(a)(1) of the Bankruptcy Code.
4.01 Secured Claims.
CLASS 1. Class 1 consists of all Equipment Lease Secured Claims.
CLASS 2. Class 2 consists of all Miscellaneous Secured Claims.
13
4.02 Priority Claims.
CLASS 3. Class 3 consists of all Miscellaneous Priority
Claims.
4.03 Unsecured Claims.
CLASS 4. Class 4 consists of all General Unsecured Claims.
CLASS 5. Class 5 consists of all Senior Creditor Claims.
CLASS 6. Class 6 consists of all Convertible Subordinated
Note Claims.
CLASS 7. Class 7 consists of all Convenience Claims.
CLASS 8. Class 8 consists of all Convertible Subordinated
Note Section 510(b) Claims.
CLASS 9. Class 9 consists of Interdebtor Claims.
4.04 Interests and LLC Interests.
CLASS 10.Class 10 consists of all Interests in USi and all
LLC Interests.
CLASS 11.Class 11 consists of all Section 510(c) Claims.
ARTICLE 5.
PROVISIONS FOR TREATMENT OF
CLAIMS AND INTERESTS
5.01 Equipment Lease Secured Claims (Class 1). For the convenience of
identification, the Plan classifies the Allowed Claims in Class 1 as a single
ClaSection This Class is actually a group of subclasses, depending upon the
applicable Equipment Lease at issue and the underlying property securing such
Allowed Claims, and each subclass is treated as set forth in this Section 5.01
as a distinct Class for voting and distribution purposes. The separate
subclasses consist severally of each of the Equipment Lease Claims listed on
Attachment 3 to this Plan. Holders of Equipment Lease Secured Claims (i) voting
to accept the Plan or (ii) failing to timely vote on the Plan shall be deemed to
have elected to be treated in accordance with Alternative A below. Holders of
Equipment Lease Secured Claims voting to reject the Plan shall be deemed to have
elected to be treated in accordance with Alternative B below. Class 1 is
Impaired.
14
I. Alternative A(1)
(a) Allowance of Claims. The Equipment Lease Secured Claims deemed to
elect Alternative A shall be Allowed in the amounts set forth in
Attachment 3 to this Plan (less in the case of each Equipment
Lease Secured Claim, all Adequate Protection Payments made on
account of such Claim), and the Equipment Lease Deficiency Claims
(if any) held by the Holders of such Equipment Lease Secured
Claims shall be Allowed in the amounts set forth in Attachment 3
to this Plan.
(b) Treatment. Each Holder of an Allowed Equipment Lease Secured
Claim deemed to elect Alternative A:
(1) shall receive, on account of such Claim, the obligation of
Reorganized USi to pay such Holder deferred Cash payments
equal to the Allowed amount of such Claim, with interest
from the Effective Date at a fixed per annum interest rate
(based on a year consisting of twelve 30 day months) as set
forth in Attachment 3 with respect to the applicable lessor
of each schedule of the Equipment Lease related to such
Claim, and otherwise on the terms set forth in an Amended
Equipment Lease Agreement. Commencing on the one month
anniversary of the Effective Date, payments shall be made in
equal monthly installments of principal and interest over a
term of months equal to the number of months (counting a
partial month as a whole month) remaining unexpired on the
Filing Date on the lease term under each schedule of the
applicable Equipment Lease. Reorganized USi shall have the
right to pay any such Claim in full by paying the remaining
principal balance thereof, with accrued interest through the
date of payment, in Cash at any time on or after the
Effective Date, without premium or penalty; and
(2) shall retain, as security for such obligation on the terms
set forth in such Amended Equipment Lease Agreement, its
security interest in the equipment leased to the Debtor
under the applicable Equipment Lease.
- -------------------------
(1) The Debtors offer the proposed Allowed amount of the Equipment Lease
Secured Claims in Alternative A subject to the acceptance or deemed
acceptance of this Plan and such treatment by such Holders of Equipment
Lease Claims and confirmation of this Plan, and solely as a proposed
compromise and settlement of certain matters that are or may be in
controversy between the Debtors and such Holders in the Chapter 11 Case.
The Debtors' offer herein is in all respects subject to Rule 408 of the
Federal Rules of Evidence and shall not be used against the Debtors, as an
admission or otherwise, in the adjudication of any such matters.
15
(c) Satisfaction of Section507(b) and Section365(d)(10) and Rights.
The distribution pursuant TO Section 5.01 I. (b) to Holders of
Equipment Lease Secured Claims electing or deemed to have elected
Alternative A shall be in full satisfaction of any and all rights
of such Holders under Section 507(b) or Section365(d)(10) of the
Bankruptcy Code.
(d) Treatment Option for Substitute Payment Schedule. On or before
the Effective Date, a Holder of an Equipment Lease Secured Claim
electing or deemed to have elected Alternative A, may, at its
option by delivering written notice to Reorganized USi, elect a
substitute payment schedule and interest rate under a Substitute
Equipment Lease Agreement, in lieu of the treatment set forth in
Section 5.01 I. (b) (1) and (2), as follows: (i) the Equipment
Lease Secured Claim bearing interest from the Effective Date at a
fixed per annum rate (based on a year consisting of twelve 30-day
months) equal to ten percent (10%), (ii) 50% of the Equipment
Lease Secured Claim to be paid in Cash on or as soon as
practicable after the Effective Date, (iii) current monthly
interest to be paid on the unamortized portion of the unpaid
amount of the Equipment Lease Secured Claim to be paid commencing
on the date that is the last day of the first full month that
occurs after the Effective Date through December 31, 2003 and
(iv) the principal balance of the Equipment Lease Secured Claim
to be amortized on a straight-line basis over a 48-month period
commencing on January 1, 2004 and payable (1) in eighteen (18)
consecutive monthly installments of principal and interest
combined, commencing on January 31, 2004 and (2) with a balloon
payment of the remaining principal balance to be made on June 30,
2005. The substitute payment schedule and interest rate shall be
pursuant to the terms of a Substitute Equipment Lease Agreement.
Under the Substitute Equipment Lease Agreement, the Holder of the
Equipment Lease Secured Claim shall retain, as security for its
obligations under such agreement, its security interest in the
equipment leased under the applicable Equipment Lease. Holders of
Equipment Lease Secured Claims that have elected a substitute
payment schedule and interest rate as provided herein may elect,
by delivering written notice to Reorganized USi on or before the
Effective Date, to deem payments under Substitute Plan Notes
received in respect of any Equipment Lease Deficiency Claim of
such holders under the Equipment Leases as additional rent under
the Substitute Equipment Lease Agreement. Reorganized USi shall
have the right to prepay amounts due under such substitute
payment schedule by paying the remaining balance thereof, with
accrued interest through the date of payment, in Cash at any time
on or after the Effective Date, without premium or penalty.
(e) Equipment Leases as Secured Financings. Extensions of credit
under Amended Equipment Lease Agreements or Substitute Equipment
Lease Agreements (as applicable) shall be deemed to be secured
financings and not true leases. Notwithstanding the foregoing, if
an Equipment Lease that gives rise to an Equipment Lease Secured
Claim is a "true lease" (as
16
opposed to a secured financing) and Reorganized USi files a
petition or consents to an order for relief under the Bankruptcy
Code after the Effective Date (a "Subsequent Bankruptcy Case"),
such Holder may at its option reinstate its Equipment Lease as a
true lease by notifying Reorganized USi of such election in
writing. Upon such election, (i) the original terms of such
Equipment Lease shall be reinstated except that (a) the term of
such Equipment Lease shall extend until the later of the end of
the term of the Amended Equipment Lease Agreement or Substitute
Equipment Lease Agreement applicable to such Equipment Lease and
the maturity date of the Plan Notes or Substitute Plan Notes (as
applicable) issued in respect of the Equipment Lease Deficiency
Claim of such Holder, and (b) the sole payments due under such
Equipment Lease shall be payments in amounts and at times
required under the Amended Equipment Lease Agreement or
Substitute Equipment Lease Agreement applicable to such Equipment
Lease and under the Plan Notes or Substitute Plan Notes (as
applicable) issued in respect of the Equipment Lease Deficiency
Claim of such Holder, (ii) all payments received by such Holder
in respect of the Amended Equipment Lease Agreement or Substitute
Equipment Lease Agreement (as applicable) and the Plan Notes or
Substitute Plan Notes (as applicable) issued in respect of the
Equipment Lease Deficiency Claim of such Holder shall be credited
as payments under the Equipment Lease so reinstated, (iii) the
Amended Equipment Lease Agreement or Substitute Equipment Lease
Agreement applicable to such Equipment Lease and the Plan Notes
or Substitute Plan Notes (as applicable) issued in respect of the
Equipment Lease Deficiency Claim of such Holder shall be
cancelled, and (iv) the Equipment Lease so reinstated shall be
deemed to be a true lease in the Subsequent Bankruptcy Case.
II. Alternative B.
(a) Allowance of Claims. Each Equipment Lease Secured Claim deemed to
elect Alternative B shall be Allowed in an amount equal to the
value of the collateral securing such Claim as of the Filing
Date, as agreed by the Debtors or Reorganized USi (as applicable)
and such Holder or as determined by the Bankruptcy Court, less
all Adequate Protection Payments made on account of such Claim.
(b) Treatment. Each Holder of an Allowed Equipment Lease Secured
Claim deemed to elect Alternative B shall, on account of such
Claim, at the option of Reorganized USi: (i) receive return of
the collateral securing such Claim or return of a portion of the
collateral securing such Claim (with the balance of the Allowed
Equipment Lease Secured Claim to be treated as provided herein)
with the amount of any Allowed Equipment Lease Secured Claim and
any unsecured deficiency claim in Class 4 to be as agreed by
Reorganized USi and such Holder or as determined by the
Bankruptcy Court; (ii) (a) receive equal annual Cash payments
commencing on the first anniversary of the Effective Date and
continuing
17
through the fifth anniversary of the Effective Date in an
aggregate amount equal to the Allowed amount of such Claim, plus
interest at a fixed rate as agreed by Reorganized USi and such
Holder or as determined by the Bankruptcy Court (provided, that,
Reorganized USi shall have the right to pay any such Claim in
full by paying the remaining principal balance thereof, with
accrued interest through the date of payment, in Cash at any time
on or after the Effective Date, without premium or penalty); and
(b) retain the liens securing such Claim to the extent of the
Allowed amount of such Claim, pursuant to Section
1129(b)(2)(A)(i) of the Bankruptcy Code; or (iii) receive such
other treatment as will provide for realization of the
indubitable equivalent of such Claim pursuant to Section
1129(b)(2)(A)(iii) of the Bankruptcy Code.
(c) Reserved Causes of Action. Reorganized USi reserves all of its
rights in respect of Holders of Equipment Lease Claims electing
Alternative B, including the right to assert (i) Reserved Causes
of Action against such Holders in respect of such Claims and/or
(ii) that Equipment Leases are "true leases" subject to rejection
and as to which Equipment Lease Deficiency Claims are not Senior
Claims entitled to the benefit of the Subordination Provisions.
(d) Equipment Leases as True Leases. If the holder of an Equipment
Lease is deemed to elect Alternative B and the Equipment Lease is
determined by the Bankruptcy Court to be a "true lease" (as
opposed to a secured financing) subject to rejection pursuant to
Section 365 of the Bankruptcy Code, USi shall be entitled to seek
assumption or rejection of such lease (or any separate lease
schedules thereof) at any time on or before the date that is
thirty (30) days after such determination becomes a Final Order
and if USi fails timely to seek assumption of such lease (or any
separate schedules thereof) or notifies the applicable lessor of
rejection of the lease (or any separate schedules thereof), the
lease (or any separate schedules thereof not assumed) shall be
deemed rejected without further order of the Bankruptcy Court. In
the event of rejection of such Equipment Lease (or any separate
lease schedules thereof), any rejection damage claim, which shall
remain subject to allowance, must be filed on or before the date
that is thirty (30) days after the later of the Effective Date or
such later rejection date and shall be a Senior Claim only to the
extent that Reorganized USi agrees or the Bankruptcy Court
determines that such claim is entitled to the benefit of the
Subordination Provisions.
(e) Satisfaction of Section 507(b) and Section 365(d)(10) Rights. The
distribution pursuant TO Section 5.01(II)(b) to Holders of
Equipment Lease Secured Claims electing Alternative B shall be in
full satisfaction of any and all rights of such Holders under
Section 507(b) or Section 365(d)(10) of the Bankruptcy Code.
18
5.02 Miscellaneous Secured Claims (Class 2).
(a) Treatment. On the Effective Date, at Reorganized USi's option,
either (i) the Reorganized Debtors shall assume an Allowed Miscellaneous Secured
Claim and the legal, equitable and contractual rights to which an Allowed
Miscellaneous Secured Claim entitles the Holder of such Claim shall not be
altered by this Plan, or (ii) the Reorganized Debtors shall provide such other
treatment in respect of such Claim as will cause such Claim not to be Impaired;
provided, however, that the Allowed Miscellaneous Secured Claim portion of the
Conklin & Conklin Note Claims shall be treated pursuant to Section 5.02(c)(i)
below. The Debtors' failure to object to any such Claim during the pendency of
the Chapter 11 Case shall not prejudice, diminish, affect or impair the
Reorganized Debtors' right to contest or defend against such Claim in any lawful
manner or forum when and if such Claim is sought to be enforced by the Holder
thereof. Each Miscellaneous Secured Claim and all liens lawfully granted or
existing on any property of the Estate on the Filing Date as security for a
Miscellaneous Secured Claim shall (x) survive the confirmation and consummation
of this Plan, the Debtors' discharge under Section 1141(d) of the Bankruptcy
Code and Section 12.01, and thE vesting of the property of the Estate in the
Reorganized Debtors, (y) remain enforceable against the Reorganized Debtors in
accordance with the contractual terms of any lawful agreements enforceable by
the Holder of such Claim on the Filing Date until the Allowed amount of such
Claim is paid in full, and (z) remain subject to avoidance by the Reorganized
Debtors under the Bankruptcy Code.
(b) Impairment. Class 2 is not Impaired.
(c) Preservation of Rights. Notwithstanding the foregoing provisions of
this Section 5.02, on or as soon as reasonably practicable after the later of
the Effective Date and the date that is thirty (30) calendar days after a
Miscellaneous Secured Claim becomes Allowed, Reorganized USi may elect to
provide the Holder of a Miscellaneous Secured Claim with (i) Cash in an amount
equal to 100% of the unpaid amount of such Claim, (ii) the proceeds of the sale
or disposition of the collateral securing such Claim to the extent of the value
of the Holder's secured interest in such Claim, (iii) the collateral securing
such Claim, (iv) a note with periodic Cash payments having a present value equal
to the Allowed amount of such Claim, or (v) such other distribution as necessary
to satisfy the requirements of the Bankruptcy Code. In the event Reorganized USi
treats a Claim under clause (i) or (ii) of this Section 5.02(c), the liens
securing such Claim shall be deemed released.
5.03 Miscellaneous Priority Claims (Class 3).
(a) Treatment. The Holder of each Allowed Miscellaneous Priority Claim
shall receive, on account of such Claim, payment of the Allowed amount of such
Claim in full, in Cash.
(b) Impairment. Class 3 is not Impaired.
5.04 General Unsecured Claims (Class 4).
(a) Treatment. Each Holder of an Allowed General Unsecured Claim shall
receive, on account of such Claim, its Ratable Share (determined as if no
elections to receive
19
Substitute Plan Notes had been made) of (i) the Plan Distribution determined
based on the Plan Distribution Ratio, and (ii) the Secondary Plan Distribution
B.
(b) Option for Substitute Payment Schedule. On or before the Effective
Date, a Holder of a General Unsecured Claim may, at its option by delivering
written notice to Reorganized USi and in lieu of receiving Plan Notes, elect to
receive an amount equal to its Ratable Share of the principal amount of Plan
Notes that would have been distributed pursuant to the Plan Distribution and the
Secondary Plan Distribution B, had no elections to receive Substitute Plan Notes
been made (such amount, together with an amount equal to the principal amount of
Substitute Plan Notes to be issued in accordance with Section 5.05(c), the
"Substitute Plan Distribution Amount"), in the form of Substitute Plan Notes.
(c) Effect of Allowance of Reclamation Claims. If any Holder of a
General Unsecured Claim holds or asserts a Reclamation Claim, such General
Unsecured Claim shall not be Allowed until such Reclamation Claim is Allowed,
disallowed or otherwise resolved, and when Allowed such General Unsecured Claim
shall be reduced by the Allowed amount of the Reclamation Claim.
(d) Impairment. Class 4 is Impaired.
5.05 Senior Creditor Claims (Class 5).
(a) Allowance of Claims.
(1) Each Equipment Lease Deficiency Claim deemed to elect (i)
Alternative A shall be Allowed as a Senior Creditor Claim in the amount
set forth in Attachment 3 to the Plan, and (ii) Alternative B shall be
Allowed as a Senior Creditor Claim only if, to the extent and in the
amount agreed upon by the Debtors and the respective Holder of such
Equipment Lease Deficiency Claim or, if such status, extent and amount
cannot be mutually agreed upon as determined by the Bankruptcy Court.
(2) A portion of the Conklin & Conklin Note Claims shall be
Allowed as a Senior Creditor Claim in the amount of $1,900,000.
(3) No other Claim shall be Allowed as a Senior Creditor Claim
unless (i) the Holder of such Claim delivers to the Debtors, no later
than 20 days prior to the Confirmation Hearing or any earlier date
fixed by order of the Bankruptcy Court, a demand for Allowance of such
Claim as a Senior Creditor Claim accompanied by the written opinion of
independent legal counsel acting for such Holder, addressed to the
Debtors and Reorganized USi, stating that such Holder is entitled to
the benefit of the Subordination Provisions and (ii) the Debtors
approve, or at or prior to the Confirmation Hearing the Bankruptcy
Court orders, classification of the Allowed amount of such Claim as a
Senior Creditor Claim.
(b) Treatment. Each Holder of an Allowed Senior Creditor Claim shall
receive, on account of such Claim, its Ratable Share of:
20
(1) A portion of the Plan Distribution determined based on the
Plan Distribution Ratio, calculated as if no elections to receive
Substitute Plan Notes had been made; and
(2) In enforcement of the Subordination Provisions, an
additional portion of the Plan Distribution (being the portion that
otherwise would be distributed to Holders of Allowed Convertible
Subordinated Note Claims) determined by applying the Plan Distribution
Ratio to the Allowed amount of the Convertible Subordinated Note
Claims.
(c) Option for Substitute Payment Schedule. On or before the Effective
Date, a Holder of a Senior Creditor Claim may, at its option by delivering
written notice to Reorganized USi and in lieu of receiving Plan Notes, elect to
receive an amount equal to its Ratable Share of the principal amount of Plan
Notes that would have been distributed pursuant to the Plan Distribution,
calculated as if no elections to receive Substitute Plan Notes had been made, in
the form of Substitute Plan Notes.
(d) Impairment. Class 5 is Impaired.
5.06 Convertible Subordinated Note Claims (Class 6).
(a) Allowance of Claims. The Convertible Subordinated Note Claims shall
be Allowed in the amount of $125,000,000 plus interest accrued but unpaid prior
to the Filing Date.
(b) Treatment and Limited Enforcement of Subordination. In accordance
with and in enforcement of the Subordination Provisions, all distributions which
the Holders of Convertible Subordinated Note Claims would otherwise be entitled
to receive under this Plan on account of the Plan Distribution shall be
delivered to the Holders of the Allowed Senior Creditor Claims and provision
therefor is made in Section 5.05(b)(2). Notwithstanding the Subordination
Provisions, each Holder of an Allowed Convertible Subordinated Note Claim shall
be entitled to receive and retain, on account of such claim, its ratable share
of Secondary Plan Distribution A (subject to the provisions of Sections 10.02
and 10.03) based upon the amount of Convertible Subordinated Notes held by each
Holder. Secondary Plan Distribution A is made in compromise and settlement of
issues in dispute and approval shall be sought pursuant to Bankruptcy Rule 9019
in connection with confirmation of the Plan. The treatment provided in this Plan
shall be in full and complete settlement, satisfaction and discharge of any
Claims of Holders of Senior Creditor Claims pursuant to the Subordination
Provisions or otherwise.
(c) Limited Subordination Enforcement as Essential Element. Whether or
not Class 6 or any individual Holder of a Convertible Subordinated Note Claim
has accepted this Plan, the Subordination Provisions shall be enforced, without
exception, through the consummation of this Plan as an essential element
thereof, as to (i) the Plan Distribution and (ii) except with respect to
Secondary Plan Distribution A, any and all other distributions or property that
the Holders of Allowed Convertible Subordinated Note Claims are, would or might
otherwise be entitled to receive from the Debtors or the Estate or in the Case
on account of Convertible Subordinated Note Claims. All such portions of the
Plan Distribution and, except for Secondary Plan Distribution A, other
distributions and property shall be delivered by the
21
Debtors and Reorganized USi directly to the Holders of Senior Creditor Claims
pursuant to the Subordination Provisions.
(d) Impairment. Class 6 is Impaired.
5.07 Convenience Claims (Class 7)
(a) Treatment. Each Holder of an Allowed Convenience Claim shall
receive Cash equal to thirty four and thirty four one hundredths percent
(34.34%) of the unpaid amount of such Allowed Claim.
(b) Election of Treatment. Any Holder of an Allowed General Unsecured
Claim whose Allowed General Unsecured Claim is equal to or less than $2,500
shall receive treatment of its Allowed Claim under Section 5.07(a) hereof in
full settlement, satisfaction, release and discharge of such Allowed Claim. Any
Holder of an Allowed General Unsecured Claim whose Allowed General Unsecured
Claim is more than $2,500, and who timely elects to reduce the amount of such
Allowed Claim to $2,500 in accordance with the terms of this Section 5.07(b),
also shall receive treatment of its Allowed Claim, as so reduced, under Section
5.07(a) hereof in full settlement, satisfaction, release and discharge of such
Allowed Claim. Election of treatment in Class 7 must be made on such Holder's
ballot for voting on this Plan and be received by the Debtors on or prior to the
deadline for voting established by the Bankruptcy Court. Any election of
Convenience Claim treatment made after such deadline shall not be binding upon
the Debtors or the Reorganized Debtors unless the deadline is expressly waived,
in writing, by the Debtors. The exercise of such an election shall in no way
preclude the Debtors or the Reorganized Debtors from objecting to the Claim.
5.08 Convertible Subordinated Note Section 510(b) Claims (Class 8).
(a) No Distribution. The Holders of Allowed Convertible Subordinated
Note Section 510(b) Claims shall receive no distribution under this Plan.
(b) Impairment. Class 8 is Impaired.
5.09 Interdebtor Claims (Class 9).
(a) Treatment. Each Holder of an Interdebtor Claim shall be unimpaired.
(b) Impairment. Class 9 is not Impaired.
5.10 Interests and LLC Interests (Class 10).
(a) No Distribution. The Holders of Allowed Interests in USi and/or
Allowed LLC Interests shall receive no distribution under this Plan.
(b) Impairment. Class 10 is Impaired.
22
5.11 Section 510(c) Claims (Class 11).
(a) No Distribution. The Holders of Section 510(c) Claims shall receive
no distribution under this Plan.
(b) Impairment. Class 11 is Impaired.
ARTICLE 6.
IDENTIFICATION OF CLASSES OF CLAIMS
AND INTERESTS IMPAIRED AND NOT IMPAIRED BY THIS PLAN;
ACCEPTANCE OR REJECTION OF THIS PLAN
6.01 Acceptance by an Impaired Class of Creditors. Consistent with Section
1126(c) of the BankruptcY Code and except as provided in Section 1126(e) of the
Bankruptcy Code, an Impaired Class of Claims shall havE accepted this Plan if
this Plan is accepted by the Holders of at least two-thirds in dollar amount and
more than one-half in number of the Allowed Claims of such Class that have
timely and properly voted to accept or reject this Plan.
6.02 Voting Classes. Equipment Lease Secured Claims (Class 1), General
Unsecured Claims (Class 4), Senior Creditor Claims (Class 5), Convertible
Subordinated Note Claims (Class 6) and Convenience Claims (Class 7) are Impaired
by this Plan, and only the Holders of Allowed Claims in such Classes at the time
the vote on this Plan is solicited are entitled to vote to accept or reject this
Plan.
6.03 Classes Receiving No Property Deemed to Reject this Plan. No
distribution will be made in respect of Convertible Subordinated Note Section
510(b) Claims (Class 8), Interests (Class 10) and Section 510(c) Claims (Class
11). Claims in those Classes of Claims and Interests are Impaired by this Plan
and Holders thereof will not receive or retain any property under this Plan.
Under Section 1126(g) of the Bankruptcy Code, the Holders of such Classes of
Claims and Interests are deemed to reject this Plan and the votes of Holders in
such Classes will not be solicited.
6.04 Unimpaired Classes Conclusively Presumed to Accept this Plan.
Miscellaneous Secured Claims (Class 2), Miscellaneous Priority Claims (Class 3)
and Interdebtor Claims (Class 9) are not Impaired by this Plan. Under Section
1126(f) of the Bankruptcy Code, such classes of Claims are conclusively presumed
to accepT this Plan, and the votes of Holders in such Classes will not be
solicited.
6.05 Confirmation Pursuant to Section 1129(b). The Debtor may seek
confirmation of the Plan undeR Section 1129(b) of the Bankruptcy Code with
respect to any Class, if such Class rejects or is deemed to havE rejected this
Plan.
ARTICLE 7.
UNEXPIRED LEASES AND EXECUTORY CONTRACTS
7.01 Assumption and Rejection. Any unexpired lease or executory contract
that has not been expressly rejected or assumed by the Debtors with the
Bankruptcy Court's approval on or prior to the Effective Date shall be deemed to
have been assumed by the applicable Debtor as of the Effective Date unless (a)
such lease or contract has then been rejected, (b) there is then
23
pending before the Bankruptcy Court a motion to assume, a motion to reject or a
motion to assume and assign such lease or contract, (c) such lease or contract
is identified on a "Schedule of Leases and Contracts to be Rejected" filed at
least ten days before the date of the Confirmation Hearing (as such schedule may
be amended on or prior to the date of the Confirmation Hearing), or (d) such
lease or contract is rejected following entry of an order regarding and fixing
the amount of a disputed cure amount as provided in Section 7.02. At the
Confirmation Hearing, the Debtors may request the Bankruptcy Court to approve
assumption or assumption and assignment of certain of its real property leases
and executory contracts. The Debtors will file and serve a schedule of such
leases and contracts with the Bankruptcy Court as provided in Section 7.02
below.
7.02 Cure of Defaults. Except to the extent that different treatment has
been agreed to by the non-debtor party or parties to any executory contract or
unexpired lease to be assumed pursuant to the Plan, the Debtors shall,
consistent with the requirements of section 365 of the Bankruptcy Code, at the
time of the commencement of the solicitation of votes on the Plan, file and
serve on parties to executory contracts or unexpired leases to be assumed and
other parties in interest a pleading with the Bankruptcy Court listing all
executory contracts or unexpired leases to be assumed and the cure amounts
(including amounts of compensation for actual pecuniary loss) proposed by the
Debtors to be paid in connection with such assumption and the parties to such
executory contracts or unexpired leases to be assumed shall have until ten (10)
days before the date of commencement of the Confirmation Hearing to object in
writing to such cure amounts listed by the Debtors and to propose alternative
cure amounts; provided, that, the Debtors shall be entitled to modify and amend
such pleading at any time on or before the date of the Confirmation Hearing to
add or subtract an executory contract or unexpired lease from such pleading
and/or to amend or modify any cure amount listed by the Debtors, provided,
further, that if the Debtors amend the pleading to add an executory contract or
unexpired lease or to reduce the cure amount thereof, the non-debtor party
thereto shall have until ten (10) days after service of such amendment to object
in writing thereto or to propose alternative cure amounts. In the event that no
objection is timely filed, the applicable party shall be deemed to have
consented to the cure amount (including amounts of compensation for actual
pecuniary loss) proposed by the Debtors and shall be forever enjoined and barred
from seeking any additional amount on account of the Debtors' cure obligations
under section 365 of the Bankruptcy Code from the Debtors, the Estate,
Reorganized USi or any other Reorganized Debtor. If an objection is filed with
respect to an executory contract or unexpired lease, the Bankruptcy Court shall
hold a hearing to determine the amount of any disputed cure amount not settled
by the parties. Notwithstanding the foregoing, at all times through the date
that is five (5) Business Days after the Bankruptcy Court enters an order
resolving and fixing the amount of a disputed cure amount, the Debtors and
Reorganized USi shall be authorized to reject such executory contract or
unexpired lease by notice to (i) the non-debtor party to such executory contract
or unexpired lease and (ii) the office of the United States Trustee, without
obtaining further Bankruptcy Court approval.
7.03 Assigned Leases. Any lease of nonresidential real property that was
assigned by the Debtors prior to the Filing Date shall be treated as being
neither executory nor unexpired and shall be deemed neither assumed nor rejected
pursuant to this Plan.
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7.04 Assignments of Contracts and Leases. The Debtors reserve all rights
accorded to them under Section 365 of the Bankruptcy Code, including all rights
under Section 365(f) of the Bankruptcy Code with respect to the assignment of
any or all of their executory contracts and unexpired leases.
7.05 Rejection Claims. In the event that the rejection of an executory
contract or unexpired lease by any of the Debtors pursuant to the Plan results
in damages to the non-debtor party or parties to such contract or lease, a Claim
for such damages, if not heretofore evidenced by a filed proof of claim, shall
be forever barred and shall not be enforceable against the Debtors, or their
respective properties or interests in property as agents, successors, or
assigns, unless a proof of claim is filed with the Bankruptcy Court and served
upon counsel for the Debtors and the Claims Agent on or before the date that is
thirty (30) days after the later of the Effective Date or such later rejection
date that occurs as a result of a dispute concerning amounts necessary to cure
any defaults.
7.06 Equipment Leases and Indemnification Contracts Excluded. The
provisions of this Article 7 do not apply to the Equipment Leases and
Indemnification Contracts.
ARTICLE 8.
ISSUANCE OF NEW COMMON STOCK;
OPERATION AND MANAGEMENT
OF REORGANIZED DEBTORS AND THE ESTATE
8.01 Issuance of New Common Stock; Use of Proceeds.
(a) Issuance of New Common Stock. On the Effective Date, Reorganized
USi shall issue and deliver to the Investor, against payment of the Subscription
Price by the Investor to Reorganized USi, 100% of the shares of New Common Stock
representing all outstanding capital stock of Reorganized USi. From and after
the Effective Date, Reorganized USi shall be authorized to issue additional
shares of common stock in accordance with its Amended Certificate of
Incorporation and applicable law.
(b) Use of Proceeds. Reorganized USi shall use the proceeds of the
Subscription Price received by it to (i) pay Allowed Administrative Expenses and
to make other Cash distributions required to be made by the Reorganized Debtors
hereunder, (ii) fund the DIP Financing Payout, if any, and (iii) satisfy the
Debtors' obligations in connection with the closing of the Plan. Reorganized USi
shall be entitled to retain the entire remaining proceeds of the Subscription
Price and all property retained by it or vested in it pursuant to Section 9.01
of this Plan for its own future uses and purposes, free from any claim, use,
benefit or interest in favor of the Estate or any Holder of any Claim or
Interest.
(c) Assumption of Plan Obligations. On the Effective Date, the
Reorganized Debtors shall assume and perform and observe each and all of the
provisions of this Plan applicable to them and each and all of the obligations
and undertakings of the Debtors under this Plan, including, but not limited to,
payment of (i) all Allowed Administrative Expenses, (ii) all Allowed Priority
Tax Claims, (iii) all Allowed Miscellaneous Priority Claims, (iv) the obligation
to pay the Allowed amount of all Equipment Lease Secured Claims as set forth in
25
Section 5.01(b), (v) all Allowed Miscellaneous Secured Claims, (v) the Plan
Distribution, (vi) the Secondary Plan Distribution A, (vii) the Secondary Plan
Distribution B, (viii) all Allowed Convenience Claims, and (ix) all other
obligations of the Reorganized Debtors under this Plan.
8.02 Governance of Reorganized USi. From and after the Effective Date,
Reorganized USi shall be managed under the direction of its board of directors
in accordance with the applicable provisions of the DGCL, the Amended
Certificate of Incorporation and the Amended Bylaws. Reorganized USi shall file
the Amended Certificate of Incorporation, which shall prohibit the issuance of
nonvoting equity securities (subject to amendment of such certificate as
permitted by applicable law), with the Secretary of State of the State of
Delaware on the Effective Date. The amended Bylaws shall be adopted by the board
of directors of Reorganized USi as of the Effective Date (subject to amendment
as permitted by applicable law). Subject to Section 5.10(a) hereof, all limited
liability company agreements to which the Debtors are a party shall be assumed
in accordance with Section 7.01 hereof.
8.03 Appointment of Directors. On or prior to the date which is fifteen
(15) days prior to the date of the Confirmation Hearing, the Investor, subject
to the consent of USi, shall designate five directors of Reorganized USi and
notify the Debtors in writing of such designation. On or before the date of the
Confirmation Hearing, the Debtors will file with the Bankruptcy Court a schedule
setting forth the names of the persons to be appointed as the directors of
Reorganized USi pursuant to this Section 8.03.
8.04 Effect of Appointment. On the Effective Date, subject to appointment
of the persons named in such schedule as directors of Reorganized USi and
acceptance of such appointment by such persons, (i) all rights of USi with
respect to appointment of directors shall be extinguished and the directors of
Reorganized USi shall thereafter be appointed or elected in accordance with the
DGCL, the Amended Certificate of Incorporation and the Amended Bylaws, as they
may from time to time be amended, and (ii) the authority, power and incumbency
of the persons then acting as directors of USi shall be terminated and such
directors shall be deemed to have resigned.
ARTICLE 9.
IMPLEMENTATION OF THIS PLAN
9.01 Vesting of Property in Reorganized Debtors. If this Plan becomes
effective as set forth in Section 13.02, (a) the Reorganized Debtors shall
retain, and confirmation of this Plan shall vest in the Reorganized Debtors, all
property of the Estate except any property of the Estate that is abandoned or
transferred to any other Entity as permitted under the Bankruptcy Code on or
prior to the Effective Date, and (b) title to all such non-excepted property
shall vest in the Reorganized Debtors, absolutely, unconditionally, indefeasibly
and forever, on the Effective Date, free and clear of all Claims, all liens
securing Claims and all Interests, except any lien preserved under Section 5.01
or 5.02 of this Plan. The Reorganized Debtors shall not be liable or responsible
for any Claim against the Debtors or the Estate or any obligation of the Debtors
or the Estate except as expressly assumed by the Reorganized Debtors in this
Plan. The Reorganized Debtors shall be the successor to the Debtors for the
purposes of Section 1123, Section 1129 and Section 1145 of the Bankruptcy Code.
The Reorganized Debtors may operate their businesses and may use, acquire, and
dispose of property free of any restrictions of the Bankruptcy Code or the
26
Bankruptcy Rules and in all respects as if there were no pending case under any
chapter or provision of the Bankruptcy Code, except as provided herein.
9.02 Administration of the Plan. After the Effective Date, the Plan shall
be administered in accordance with the terms hereof and applicable law. From and
after the Effective Date, any right or power under this Plan which is
exercisable by the Debtors or the Reorganized Debtors or any of them shall be
exercisable by the Reorganized Debtors only. Subject to any further order of the
Bankruptcy Court, Reorganized USi or its designee shall administer the Plan from
and after the Effective Date and as such shall be both authorized and obligated,
as agent for and on behalf of the Estate, to admit, object to or contest any and
all Claims, to defend, protect and enforce any and all rights and interests, to
make any and all distributions required or permitted to be made under this Plan,
to file any and all reports, requests for relief or opposition thereto, and to
take any and all other actions necessary or appropriate to administer and
implement this Plan in accordance with applicable law and shall be authorized to
pay (from its own funds and without any right of contribution or reimbursement
as against the Estate) any and all claims, liabilities, losses, damages, costs
and expenses incurred in connection therewith or as a result thereof, including
all fees and expenses of the Debtors' professionals accruing from and after the
Effective Date without any application to the Bankruptcy Court. Reorganized USi
shall not be entitled to receive any compensation or indemnification whatsoever
from the Estate for its services in administering or implementing the Plan or in
respect of any such claims, liabilities, losses, damages, costs or expenses.
9.03 Cancellation of Securities. On the Effective Date, the Equipment
Leases and the Convertible Subordinated Note Indenture and all Cancelled
Securities shall be cancelled and, except for purposes of distribution under the
Plan, all obligations thereunder discharged by confirmation of this Plan.
9.04 Surrender of Cancelled Securities. On the Effective Date, each of the
respective transfer books maintained for the Cancelled Securities shall be
closed. Except for the right to receive the distributions, if any, pursuant to
this Plan, the Holder of a Cancelled Security shall have no rights arising from
or relating to such Cancelled Security after the Effective Date, including
rights of subordination or subrogation that may be construed to be inherent in
or ancillary or related to such Cancelled Security. Reorganized USi may require
as a condition to any distribution to any Holder of a Cancelled Security that
the beneficial holder thereof execute a letter of transmittal or other
certificate as to the amount of Cancelled Securities held and the designation by
such beneficial holder of the name and address of such beneficial holder for
purposes of distribution under the Plan. Each Holder of a Cancelled Security
evidencing any Allowed Claim shall surrender such Cancelled Security to
Reorganized USi (or its designee), and Reorganized USi (or its designee) shall
distribute to such Holder or to such Holder's agent, trustee or representative
the appropriate consideration therefor in accordance with this Plan as promptly
as is reasonably practicable. No distribution under this Plan shall be made to
or for account of any Holder of an Allowed Claim evidenced by a Cancelled
Security unless and until such Cancelled Security is received by Reorganized USi
(or its designee). If a Cancelled Security is lost or destroyed, the Holder of
such Cancelled Security must deliver an affidavit of loss or destruction to the
Debtors or Reorganized USi (or their designee), as well as an agreement to
indemnify the Debtors and Reorganized USi (and post a bond if so requested by
the Debtors or Reorganized USi), in form and substance reasonably acceptable to
Reorganized USi,
27
before such Holder may receive any distribution that it would otherwise be
entitled to receive under this Plan in respect of such lost or destroyed
Cancelled Security. Any Holder of an Allowed Claim that fails to surrender a
Cancelled Security related thereto or to deliver an affidavit and an indemnity
agreement before the later to occur of (i) two years from the Effective Date,
and (ii) six months following the date such Holder's Claim becomes an Allowed
Claim shall be deemed to have no further Claim and no distributions shall be
made under this Plan in respect of such Claim. The Debtors or Reorganized USi
may waive the requirements of this Section 9.04.
9.05 Allowance of Claims Subject to Section 502(d). Allowance of Claims
shall be in all respectS subject to the provisions of Section 502(d) of the
Bankruptcy Code, except that no Claim that is Allowed in aN amount set forth in
this Plan or an Attachment hereto shall be disallowed under Section 502(d) of
the BankruptcY Code.
9.06 Right of Setoff. The Reorganized Debtors shall have the right to set
off against any Claim and the distributions to be made pursuant to this Plan in
respect of such Claim, any and all debts, liabilities and claims of every type
and nature whatsoever which (after giving effect to the releases set forth in
Section 12.04) the Estate or Reorganized USi or any other Reorganized Debtor may
have against the Holder of such Claim, and neither any prior failure to do so
nor the Allowance of such Claim, whether pursuant to this Plan or otherwise,
shall constitute a waiver or release of any such right of setoff.
9.07 Deemed Consolidation of Debtors for Plan Purposes Only. Subject to the
occurrence of the Effective Date, the Debtors shall be deemed consolidated for
the following purposes under the Plan: (i) no distributions shall be made under
the Plan on account of the Interdebtor Claims or any Interest of a Debtor in
another Debtor; (ii) all guarantees by any of the Debtors of the obligations of
any other Debtor arising prior to the Effective Date or other obligations as to
which one or more Debtors are co-obligors arising prior to the Effective Date
shall be deemed eliminated so that any Claim against any Debtor and any
guarantee thereof executed by any other Debtor and any joint and/or several
liability of any of the Debtors shall be deemed to be one obligation of the
deemed consolidated Debtors; and (iii) each and every Claim filed or to be filed
in the Chapter 11 Case of any of the Debtors shall be deemed filed against the
deemed consolidated Debtors and shall be deemed one Claim against and, to the
extent Allowed, obligation of the deemed consolidated Debtors.
Except as otherwise provided herein, such deemed consolidation, however,
shall not (other than for purposes related to funding distributions under the
Plan and as set forth above in this section 9.07) affect: (i) the legal and
organizational structure of the Reorganized Debtors; or (ii) the enforceability
or existence of any pre- or post-Filing Date guarantees, liens, and security
interests that are required to be maintained (a) in connection with executory
contracts or unexpired leases that were entered into during the Chapter 11 Case
or that have been or will be assumed, (b) pursuant to the Plan, or (c) in
connection with any financing entered into by the Reorganized Debtors on the
Effective Date; or (iii) distributions out of any insurance policies or proceeds
of policies.
28
ARTICLE 10.
PROVISIONS COVERING DISTRIBUTIONS
10.01 Distributions.
(a) Initial Distribution. Except as otherwise provided in this Plan,
Reorganized USi, or its designee, shall make, on or as promptly as practicable
after the Effective Date, but no later than 30 days after the Effective Date
with respect to property other than Cash and 45 days after the Effective Date
with respect to Cash, an initial distribution (each, an "Initial Distribution")
equal to (i) 25% in the case of the Plan Distribution and Secondary Plan
Distribution B and (ii) 50% in the case of the Substitute Plan Distribution (or,
in each case, such other percentage determined by the Bankruptcy Court as
provided in the following proviso, the "Initial Distribution Percentage") of (i)
the aggregate Plan Distribution in respect of Claims that are, on the Effective
Date, Allowed Claims Entitled to the Plan Distribution, by applying the Plan
Distribution Ratio to such Allowed Claims, and such distribution shall be made
in Plan Notes as provided in Sections 5.04, 5.05 and 5.06 of this Plan, (ii) the
Secondary Plan Distribution B in respect of General Unsecured Claims that are
Allowed as of the Effective Date, by providing each such Holder with its Ratable
Share of such distribution, and such distribution shall be made in Plan Notes as
provided in Section 5.04 of this Plan, and (iii) the aggregate Substitute Plan
Distribution Amount in respect of General Unsecured Claims and Senior Creditor
Claims that are Allowed as of the Effective Date and that have elected to
receive the Substitute Plan Distribution Amount pursuant to Sections 5.04(b) and
5.05(c), as applicable; provided, however, that the Debtors and Reorganized USi
(as applicable) shall have the right to request that the Bankruptcy Court
determine the Initial Distribution Percentage to be used to calculate the
Initial Distributions. Subject to the following provisions of this Section
10.01, (x) the remainder of the Plan Distribution (the "Remaining Plan
Distribution Amount") shall be held by Reorganized USi pending final
determination of the Allowed amount of all Claims Entitled to the Plan
Distribution, (y) the remainder of the Secondary Plan Distribution B (the
"Remaining Secondary Plan Distribution B Amount") shall be held by Reorganized
USi pending final determination of the Allowed amount of General Unsecured
Claims entitled to such distribution, and (z) the remainder of the Substitute
Plan Distribution Amount (the "Remaining Substitute Plan Distribution Amount")
shall be held by Reorganized USi (provided that a good faith estimate of the
portion of the Substitute Plan Distribution Amount payable in Cash on the date
of issuance of the Substitute Plan Notes but not distributed as part of the
Initial Distribution shall be placed by Reorganized USi in an interest bearing
escrow account for distribution consistent with the terms of this Section 10.01)
pending final determination of the Allowed amount of all General Unsecured
Claims and Senior Creditor Claims that have elected to receive the Substitute
Plan Distribution Amount pursuant to Sections 5.04(b) and 5.05(c), as
applicable.
(b) Periodic Distributions. After the Effective Date but prior to the
date of the Final Distribution, the Reorganized Debtors shall, no less than
semi-annually (provided that no less than 25% of the Remaining Plan Distribution
Amount will be distributed as a result of Disputed Claims as of the Effective
Date subsequently becoming Allowed Claims), make periodic distributions
("Periodic Distributions") of the Remaining Plan Distribution Amount to Holders
of Allowed Claims Entitled to the Plan Distribution which became Allowed after
the Effective Date. Each Periodic Distribution shall be used first to fund a
distribution to each Holder of an Allowed Claim Entitled to the Plan
Distribution on which no distribution was made
29
in the Initial Distribution or in any prior Periodic Distribution, in an amount
determined based on the same ratio of Plan Distribution to Allowed amount of
Claims Entitled to the Plan Distribution (without any allowance for interest
accrued subsequent to the date of the Initial Distribution or any prior Periodic
Distribution) as that received in the Initial Distribution and any Periodic
Distribution by the Holders of Allowed Claims Entitled to the Plan Distribution
that were Allowed on the Effective Date or any such Periodic Distribution Date.
Periodic Distributions to Holders of Allowed General Unsecured Claims and
Allowed Senior Creditor Claims on account of, as appropriate, the Remaining
Secondary Plan Distribution B Amount and the Remaining Substitute Plan
Distribution Amount shall be determined and made in a similar manner and fashion
as Periodic Distributions on respect of the Remaining Plan Distribution Amount.
(c) Final Distribution. A final distribution of the Remaining Plan
Distribution Amount shall be made as promptly as practicable after determination
of the Allowed amount of all Claims Entitled to the Plan Distribution. Such
distribution shall be applied first to fund a distribution to each Holder of an
Allowed Claim Entitled to the Plan Distribution on which no distribution was
made in the Initial Distribution or in any Periodic Distribution, in an amount
(the "Catch-Up Distribution") determined based on the same ratio of Plan
Distribution to Allowed amount of Claims Entitled to the Plan Distribution
(without any allowance for interest accrued subsequent to the date of the
Initial Distribution) as that received in the Initial Distribution and any
Periodic Distributions by the Holders of Claims Entitled to the Plan
Distribution that were Allowed on the Effective Date or any Periodic
Distribution Date. Subject to 10.01(d) below, any portion of the Plan
Distribution remaining after the Catch-Up Distribution shall be distributed
ratably to the Holders of all Allowed Claims Entitled to the Plan Distribution,
by applying the Plan Distribution Ratio to such Allowed Claims in accordance
with and as provided in Sections 5.04, 5.05 and 5.06 of this Plan. Final
distributions to Holders of Allowed General Unsecured Claims and Allowed Senior
Creditor Claims on account of, as appropriate, the Remaining Secondary Plan
Distribution B Amount and the Remaining Substitute Plan Distribution Amount
shall be determined and made in a similar manner and fashion as the final
distribution in respect of the Remaining Plan Distribution Amount.
(d) No Adjustments or Claims for Excess Initial or Periodic
Distribution. No rescission or other adjustment shall be required in respect of
an Initial Distribution or any Periodic Distribution if the Remaining Plan
Distribution Amount, the Remaining Secondary Plan Distribution B Amount or the
Remaining Substitute Plan Distribution Amount, as applicable, is less than the
amount required for the Catch-Up Distribution. In such event:
(1) The deficiency shall be allocated ratably to Allowed
Claims entitled to receive the Catch-Up Distribution.
(2) The payment of the Remaining Plan Distribution Amount,
Remaining Secondary Plan Distribution B Amount or the Remaining
Substitute Plan Distribution Amount, as applicable, ratably on account
of Allowed Claims entitled to receive the Catch-Up Distribution shall
discharge all liability of Reorganized USi in respect of any
distribution required to be made pursuant to this Plan on account of
such Claims.
30
(3) The Holders of Allowed Claims entitled to receive the
Catch-Up Distribution shall not have any claim or Cause of Action
against Reorganized USi or any other Entity in respect of any excess
distribution received by any Holder of a Claim by reason of its
participation in an Initial Distribution or Periodic Distribution.
(e) Limitation on Plan Distribution. Notwithstanding anything to the
contrary contained in the Plan, no Holder of an Allowed Claim Entitled to the
Plan Distribution shall be entitled to receive a Plan Note in respect of the
Plan Distribution with a principal amount in excess of 23.66% of the Allowed
amount of such Claim; provided, however, that such limitation as it applies to
Holders of Allowed Senior Creditor Claims shall be increased to include such
Holders' Ratable Share of 23.66% of the Plan Distribution in respect of the
Allowed amount of Convertible Subordinated Note Claims. If, after distribution
of the Remaining Plan Distribution Amount and after giving effect to the
limitation contained in the immediately preceding sentence, there remain Plan
Notes in the Plan Distribution, such notes shall be deemed cancelled.
(f) Limitation on Secondary Plan Distribution B. Notwithstanding
anything to the contrary contained in the Plan, no Holder of an Allowed General
Unsecured Claim shall be entitled to receive a Plan Note in respect of the
Secondary Plan Distribution B with a principal amount in excess of 10.68% of the
Allowed amount of such Claim. If, after distribution of the Remaining Secondary
Plan Distribution B Amount, there remain Plan Notes in the Secondary Plan
Distribution B, such notes shall be deemed cancelled.
(g) Limitation of Substitute Plan Distribution Amount. Notwithstanding
anything to the contrary contained in the Plan, no Holder of an Allowed General
Unsecured Claim or Allowed Senior Creditor Claim shall be entitled to receive a
Substitute Plan Note in respect of the Substitute Plan Distribution Amount with
a principal amount in excess of the amount equal to the product of (i) the total
percentage distribution to Holders of Allowed Claims receiving the Plan
Distribution and the Secondary Plan Distribution B and (ii) the Allowed amount
of such Claims; provided, however, that the total percentage distribution
(calculated as a percentage of Allowed amounts) in respect of Holders of Allowed
Senior Creditor Claims shall include such Holders' Ratable Share of the Plan
Distribution in respect of the Allowed amount of Convertible Subordinated Note
Claims. If, after distribution of the Remaining Substitute Plan Distribution
Amount and after giving effect to the limitation contained in the immediately
preceding sentence, there remain Substitute Plan Notes, such notes shall be
deemed cancelled.
(h) Secondary Plan Distribution A. On or as promptly as practicable
after the Effective Date but not later than thirty days after the Effective
Date, Reorganized USi shall distribute or cause to be distributed the Secondary
Plan Distribution A to the Indenture Trustee for distribution pursuant to the
terms of the Convertible Subordinated Note Indenture so as to provide each
Holder of an Allowed Convertible Subordinated Note Claim its ratable share of
the Secondary Plan Distribution A based upon the amount of Convertible
Subordinated Notes held by such Holder.
(i) Timing of Other Distributions. Except as otherwise provided in the
Plan, distributions in respect of Claims that, on the Effective Date, are
Allowed Claims shall be made by Reorganized USi (or its designee) on or as
promptly as practicable after the Effective Date but
31
not later than thirty days after the Effective Date with respect to property
other than Cash and forty five days after the Effective Date with respect to
Cash. Distributions in respect or as a result of Claims Allowed after the
Effective Date shall be made as soon as practicable after such Claim becomes
Allowed.
(j) Subsequent Payments on Plan Notes and Substitute Plan Notes. If any
Plan Notes or Substitute Plan Notes are issued after the occurrence of one or
more monthly Payment Dates, Reorganized USi shall pay principal and interest due
and payable on such Payment Dates at the time of issuance of such Plan Notes or
Substitute Plan Notes. Such payment shall be deemed timely and no interest shall
be payable as a result of delay in receipt of principal and interest due on any
Payment Date caused by such delayed issuance of Plan Notes or Substitute Plan
Notes.
10.02 Cash in Lieu of De Minimis New Warrant Distributions to Class 6.
Notwithstanding anything herein to the contrary, no Allowed Class 6 Claim
(Convertible Subordinated Note Claim) in an amount less than $500,000 in
principal amount (calculated without regard to interest accrued thereon but
unpaid prior to the Filing Date) shall be entitled to receive any New Warrants.
In lieu of being entitled to receive a portion of the New Warrants, each Holder
of an Allowed Class 6 Claim that is less than $500,000 in principal amount shall
instead receive (in substitution for New Warrants) additional Cash in an amount
equal to (a) the principal amount of such Holder's Allowed Class 6 Claim,
divided by (b) $125,000,000 (i.e., the total principal amount of the Convertible
Subordinated Note Claims), multiplied by (c) $500,000 (i.e., the aggregate value
of the New Warrants).
10.03 Fractional Warrants. Cash will be distributed (based on a valuation
of $500,000 for the aggregate value of the New Warrants) in lieu of any portion
of a distribution on account of an Allowed Claim that would otherwise result in
a fractional New Warrant.
10.04 Retention of Distribution Agent. The Debtors or Reorganized Debtors
may, in their sole discretion, retain one or more distribution agents to assist
the Debtors and Reorganized Debtors in making the distributions contemplated by
the Plan.
10.05 Compliance With Tax Requirements. In connection with each
distribution with respect to which the filing of an information return (such as
an Internal Revenue Service Form 1099) or withholding is required, Reorganized
USi shall file such information return with the Internal Revenue Service and
provide any required statements in connection therewith to the recipients of
such distribution or effect any such withholding and deposit all moneys so
withheld as required by law. With respect to any Entity from whom a tax
identification number, certified tax identification number or other tax
information required by law to avoid withholding has not been received by
Reorganized USi (or its distribution agent), Reorganized USi may, at its option,
withhold the amount required and distribute the balance to such Entity or
decline to make such distribution until the information is received. In no
event, however, shall Reorganized USi be obligated to liquidate Plan Notes,
Substitute Plan Notes, Secondary Plan Notes or New Warrants to honor any
withholding obligation.
10.06 Persons Deemed Holders of Registered Securities. Except as otherwise
provided herein, Reorganized USi and each transfer or distribution agent shall
be entitled to treat the
32
record holder of a registered security as of the Confirmation Date the sole
Holder of the Claim or Interest in respect thereof for purposes of all notices,
payments or other distributions under this Plan. No notice of any transfer of
any such security shall be binding on Reorganized USi or any transfer or
distribution agent, unless such transfer has been properly registered in
accordance with the provisions of the governing indenture or agreement at least
ten Business Days prior to the day on which any such notice is given or any such
payment or other distribution is made. If there is any dispute regarding the
identity the person entitled to any payment or distribution in respect of any
Claim under this Plan, no payment or distribution need be made in respect of
such Claim until the Bankruptcy Court resolves the dispute pursuant to a Final
Order. Notwithstanding anything in this Plan to the contrary, Reorganized USi
and each transfer or distribution agent will be entitled to use other reasonable
means to determine the identity of the Holders of Claims in respect of any
registered security. Without limiting the foregoing, Reorganized USi, Bank of
New York (as trustee under the Convertible Subordinated Note Indenture) and each
depository, transfer agent and distribution agent, as applicable, may reasonably
rely on registration forms or certificates delivered by direct or indirect
participants in any depository and other beneficial owners of the Convertible
Subordinated Notes in order to determine who is the Holder of any such Claim and
who is entitled to any distribution in respect thereof.
10.07 Distribution of Unclaimed Property. Any distribution of property
under this Plan that is unclaimed after two years following the Effective Date
shall irrevocably revert to Reorganized USi, without regard to state escheatment
laws.
ARTICLE 11.
RESOLUTION OF DISPUTED CLAIMS
11.01 Objections to Claims. After the Effective Date, only the Debtors or
Reorganized USi may object to Claims, except a Claim that is Allowed as set
forth in this Plan. Any such objection must be filed and served no later than
the later of (a) the 60th day following the Effective Date, (b) 30 days after
the filing of the proof of claim of such Claim, or (c) any later day set by
order of the Bankruptcy Court, which the Debtors or Reorganized USi may at any
time request, whether before or after any of the otherwise applicable deadlines,
on notice to the United States Trustee and all other parties in interest that
have filed a request for notice pursuant to Bankruptcy Rule 2002 in the Case.
11.02 Procedure. Unless otherwise ordered by the Bankruptcy Court, the
Debtors or Reorganized USi shall litigate the merits of each Disputed Claim
until it is abandoned by the Holder, determined by Final Order or compromised
and settled by the Debtors or Reorganized USi, subject to any required approval
of the Bankruptcy Court. After the Effective Date, Reorganized USi shall be
authorized to compromise and settle Disputed Claims without seeking further
Bankruptcy Court approval and such Disputed Claims shall be Allowed in the
amount that is agreed upon pursuant to such compromise or settlement.
11.03 No Distributions on Disputed Claims. No payments or distributions
shall be made in respect of any Disputed Claim.
33
11.04 Estimation; Partial Allowance. In order to effectuate distributions
pursuant to the Plan and avoid undue delay in the administration of the Estate,
the Debtors (prior to the Effective Date) and Reorganized USi (after the
Effective Date) shall have the right to seek an order of the Bankruptcy Court,
after notice and a hearing (which notice may be limited to the Holder of such
Disputed Claim and which hearing may be held on an expedited basis), estimating
a Disputed Claim pursuant to Section 502(c) of the Bankruptcy Code or providing
that a Disputed Claim shall be Allowed in part, with the rest to remain
Disputed.
ARTICLE 12.
DISCHARGE, RELEASE AND PRESERVATION OF CLAIMS
12.01 Discharge and Termination. Except for the Reorganized Debtors'
obligations under the Plan, if the Plan becomes effective as set forth in
Section 13.02, the confirmation of this Plan shall (i) discharge the Debtors,
the Estate and the Reorganized Debtors from any debt or liability that arose
before the Confirmation Date, or which might at any time on or after the
Confirmation Date arise out of or relate, directly or indirectly, to any
pre-Confirmation Date acts or omissions, any debt of the kind specified in
Section 502(g), Section 502(h) or Section 502(i) of the Bankruptcy Code, all
Claims treated in this Plan, all contingent and unliquidated liabilities of
every type and description to the fullest extent discharge of such liabilities
is permitted under the Bankruptcy Code, and all other Claims against the
Debtors, the Estate or the Reorganized Debtors that were outstanding, accrued or
existing, or might reasonably have been asserted, on the Confirmation Date, in
each instance whether or not a proof of such Claim is filed or deemed filed,
whether or not such Claim is Allowed, and whether or not the Holder of such
Claim has voted on this Plan, (ii) terminate all Interests in USi and all rights
and interests and claims of the Holders of all Interests in USi, and (iii)
terminate all LLC Interests and all rights and interests and claims of the
Holders of all LLC Interests.
12.02 Distributions in Complete Satisfaction. If this Plan becomes
effective as set forth in Section 13.02, the distributions and rights provided
under this Plan shall be in complete satisfaction, discharge and release,
effective as of the Confirmation Date, of all Claims against and Interests in
the Debtors, the Estate and the Reorganized Debtors and all liens upon any
property of the Debtors, the Estate or the Reorganized Debtors.
12.03 Injunction. The discharge provided in Section 12.01 shall also
operate as an injunction restraining any Entity from commencing or continuing
any action, suit or proceeding, or employing any process, or otherwise acting,
to collect, offset or recover any Claim or Interest discharged under this Plan
to the fullest extent authorized or provided by the Bankruptcy Code, including
Section 524 and Section 1141 thereof. The Confirmation Order shall constitute an
injunction enjoining any Entity from enforcing or attempting to enforce any
Cause of Action against any present or former shareholder, director, officer,
employee, attorney or agent of the Debtors based on, arising from or relating to
any failure to pay, or make provision for payment of, any amount payable in
respect of any Priority Tax Claim on which the payments due under Section 3.01
have been made or are not yet due under Section 3.01.
12.04 Release and Injunction. If this Plan becomes effective as set forth
in Section 13.02, each of the Debtors, in its individual capacity and as Debtors
in Possession, for and on
34
behalf of the Estate, and the Reorganized Debtors hereby releases and
discharges, absolutely, unconditionally, irrevocably and forever:
(a) Certain Bankruptcy Causes of Action. Any and all Causes of Action
that may be enforceable by the Debtors or the Debtors in Possession under
Section 510, Section 544, Section547, Section548 and Section 550 of the
Bankruptcy Code, provided that (i) any and all Reserved Causes of Action shall
be reserved and preserved, and (ii) such discharge and waiver shall not waive or
otherwise prejudice the rights of the Debtors and/or the Reorganized Debtors to
invoke the provisions of Section 502(d) of the Bankruptcy Code with respect to
the assertion of any claim by an Entity from which property otherwise may have
been recoverable absent such release and discharge; and
(b) Causes of Action Against Directors and Officers. Any and all Causes
of Action against any Directors and Officers, in their capacity as such, from
any claim or Cause of Action (i) arising from the beginning of time through the
Confirmation Date related to acts or omissions to act (including, but not
limited to, any claims or Causes of Action arising out of any alleged fiduciary
or other duty), or (ii) which might at any time after the Confirmation Date
arise out of or relate, directly or indirectly, to any pre-Confirmation Date
acts or omissions, provided, that, any and all Reserved Causes of Action shall
be reserved and preserved; and
(c) Causes of Action Against Representatives. Any and all Causes of
Action against any Representative arising from or related to such
Representative's acts or omissions to act in the Chapter 11 Case or in
connection with the Transactions, except that Representatives shall not be
released from any liability relating to acts or omissions to act of gross
negligence or willful misconduct.
To the fullest extent permitted by applicable law, each Holder of a Claim
(whether or not Allowed) against or Interest in the Debtors, the Estate or the
Reorganized Debtors shall be enjoined from commencing or continuing any action,
employment of process or act to collect, offset or recover and shall be deemed
to release any Claim against (i) any Directors and Officers arising from the
beginning of time through the Confirmation Date or which might at any time after
the Confirmation Date arise out of or relate, directly or indirectly, to any
pre-Confirmation Date acts or omissions related to his or her acts or omissions
to act (including, but not limited to, any claims arising out of any alleged
fiduciary or other duty), or (ii) any Representative arising from or related to
such Representative's acts or omissions to act in the Chapter 11 Case or in
connection with the Transactions.
12.05 Exculpation. Neither any of the Debtors, nor the Estate, nor the
Reorganized Debtors, nor Investor nor any affiliates of Investor, or its
transferees or successors, nor any past, present or future members of the
Official Committee, nor any Holders of Claims or Interests treated in this Plan,
nor any officer, director, shareholder, employee, agent, attorney, accountant or
advisor acting for any of them, shall (i) be obligated in any manner under this
Plan or in respect of or by reason of the filing, negotiation, prosecution,
confirmation, consummation or implementation of this Plan or any action taken or
not taken in connection therewith, or (ii) have or incur any liability to any
Holder of any Claim or Interest or any other Entity in respect of any such
matters or any information provided or statement made in the Disclosure
Statement or omitted therefrom, except that (a) the Debtors and the Reorganized
Debtors shall fulfill the obligations expressly set forth in this Plan, (b) any
obligation imposed by law that may not
35
lawfully be disclaimed or waived as set forth herein shall remain enforceable to
the extent required by law, (c) Investor shall fulfill its obligations as and to
the extent set forth in the Conditional Subscription Agreement, and (d) any
obligation or liability arising out of willful misconduct or gross negligence
shall remain enforceable. Each of the Entities identified in the foregoing
sentence shall be entitled to rely upon the advice of counsel with respect to
its duties and responsibilities under the Plan and shall be fully protected in
acting or in refraining from acting in accordance with such advice or in any
manner approved or ratified by the Bankruptcy Court and is intended to be an
express third party beneficiary of the provisions of this Section 12.05.
12.06 Termination of Indemnification Obligations. All obligations of the
Debtors, the Estate or the Reorganized Debtors to indemnify, or to pay
contribution or reimbursement to the Directors and Officers, any of the Debtors'
agents, employees and representatives or any Holder of a Claim or Interest
treated in this Plan, or any trustee or agent acting for any such Holder, or any
person in any manner engaged, employed or indemnified in connection with the
issuance or sale of any Cancelled Securities or any agent, attorney, advisor,
financial advisor, investment banker, employee or representative or any heirs,
representatives, successors or assigns of any indemnified person that may be
outstanding, accrued or existing, or might reasonably have been asserted, on the
Confirmation Date or which might at any time after the Confirmation Date arise
out of or relate, directly or indirectly, to any pre-Confirmation Date acts or
omissions (whether pursuant to a certificate of incorporation, bylaws,
contractual obligations or any applicable law or otherwise) in respect of any
past, present or future action, suit or proceedings ("Prepetition
Indemnification Claims") shall be discharged under this Plan and all
undertakings and agreements for or relating to any such indemnification,
contribution or reimbursement ("Indemnification Contracts") are hereby rejected
and terminated, provided, however, that such discharge of obligations and such
rejection and termination of undertaking, and agreements are not intended and
shall not be construed to prohibit or in any manner limit the right or ability
of any present or former directors, officers, agents, employees or
representatives of the Debtors or any of its affiliates (or any the right or
ability of any other Entity) to enforce his, her or its rights against the
insurer under any and all applicable policies of insurance (whether the such
policies were arranged and paid for by the Debtors or by the Reorganized Debtors
or by any other Entity or otherwise) and any and all such rights shall be and
hereby are expressly preserved.
12.07 Preservation of Insurance. The Debtors' discharge and other
provisions provided in this Plan shall not diminish or impair the enforceability
of any insurance policies that may cover Claims against the Debtors or any other
Entity.
12.08 Subordination. Distributions under this Plan take into account the
relative priorities of the Claims and Interests in each Class in connection with
any and all contractual, legal or equitable subordination provisions or rights
relating thereto. Accordingly, (a) any distributions under this Plan shall be
received and retained free of and from any obligations to hold or transfer the
same to any other creditor and shall not be subject to levy, garnishment,
attachment or other legal process by any Holder by reason of claimed contractual
subordination rights and (b) the Confirmation Order shall constitute an
injunction enjoining any Entity from enforcing or attempting to enforce any
contractual, legal or equitable subordination rights to property distributed
under this Plan.
36
ARTICLE 13.
CONDITIONS TO CONSUMMATION OF THE PLAN
13.01 Conditions. This Plan shall not become effective, and no obligations
and rights set forth in this Plan as of the Effective Date or thereafter shall
come into existence, unless each of the following conditions is met on the
Effective Date:
(a) Conditional Subscription Agreement. All conditions set forth in the
Conditional Subscription Agreement shall have been satisfied or waived,
including the condition that the Confirmation Order shall be a Final Order.
(b) Reorganized USi. USi shall remain a Delaware corporation existing
in good standing under the DGCL. The Amended Certificate of Incorporation and
the Amended Bylaws shall be its sole governing documents. Reorganized USi shall
have duly authorized, executed and delivered all New Common Stock, Amended
Equipment Lease Agreements, Substitute Equipment Lease Agreements, Plan Notes,
Substitute Plan Notes, Secondary Plan Notes and New Warrants to be issued,
delivered or distributed pursuant to this Plan. The consummation of this Plan
shall not be in any respect restrained by order of any court of competent
jurisdiction.
(c) Payment of the Subscription Price. The Investor shall have tendered
to Reorganized USi concurrent payment of the Subscription Price for the New
Common Stock.
(d) Delivery of Documents. All documents required to be delivered on or
prior to the Effective Date under this Plan or under the Conditional
Subscription Agreement shall have been executed and delivered by the parties
thereto.
(e) Trust Indenture Act. The Plan Notes, the Substitute Plan Notes and
the Secondary Plan Notes shall qualify under the Trust Indenture Act of 1939, as
amended.
13.02 Consummation. This Plan shall become effective when the conditions
set forth in Section 13.01 are met, but not earlier than the eleventh (11th) day
after the Confirmation Order is entered. The Reorganized Debtors shall thereupon
perform the obligations required under this Plan to be performed by them on the
Effective Date.
ARTICLE 14.
MISCELLANEOUS PROVISIONS
14.01 Bankruptcy Court to Retain Jurisdiction. The property of the Estate
and affairs of the Debtors shall remain subject to the jurisdiction of the
Bankruptcy Court until this Plan becomes effective as set forth in Section
13.02. After this Plan becomes effective, the Bankruptcy Court shall retain
jurisdiction over the Debtors and the Reorganized Debtors, with respect to the
administration of the Plan, and the consolidated Chapter 11 Case to the fullest
extent permitted by law, including for the purpose of hearing all requests for
relief and determining all disputes relating to (i) this Plan and the
implementation, interpretation and enforcement hereof (including, but not
limited to, the discharge, release and injunction provisions of Article 12
hereof) and any contract or agreement created in connection with the Plan, (ii)
the allowance, amount and classification of Claims and Interests treated in this
Plan,
37
(iii) the rights and obligations of any Holder of any such Claim or Interest,
whether as against the Debtors or the Reorganized Debtors or as against any
other Holder, (iv) compensation of professional persons, (v) any and all
applications, motions, adversary proceedings and contested or litigated matters
pending on the Effective Date and arising under Chapter 11 or arising in or
related to the Chapter 11 Case or this Plan, (vi) all Reserved Causes of Action,
(vii) the interpretation or enforcement of the Confirmation Order or any
proceedings or matters set forth or contemplated therein, and (viii) any other
matter within the continuing jurisdiction of the Bankruptcy Court. To the
fullest extent of applicable law, such jurisdiction shall be exclusive until the
Bankruptcy Court enters an order closing the Chapter 11 Case and non-exclusive
thereafter. The Reorganized Debtors shall have sole authority, from and after
the Effective Date, to commence litigation with respect to and to settle and
release all Reserved Causes of Action.
14.02 Binding Effect of this Plan. The provisions of this Plan shall be
binding upon and inure to the benefit of the Debtors, the Estate, the
Reorganized Debtors, any Holder of any Claim or interest treated herein, and
each of their respective predecessors, successors, assigns, agents, officers and
directors and, to the fullest extent permitted under Section 1141(a) of the
Bankruptcy Code and other applicablE law, each other Entity affected by this
Plan.
14.03 Nonvoting Stock. In accordance with Section 1123(a)(6) of the
Bankruptcy Code, the certificatE of incorporation of Reorganized USi shall
contain a provision prohibiting the issuance of nonvoting equity securities by
Reorganized USi.
14.04 Authorization of Corporate Action. The entry of the Confirmation
Order shall constitute authorization for the Debtors and the Reorganized Debtors
to take or cause to be taken all corporate actions necessary or appropriate to
consummate and implement the provisions of this Plan prior to, on and after the
Effective Date, and all such actions taken or caused to be taken shall be deemed
to have been authorized and approved by the Bankruptcy Court. All such actions
shall be deemed to have occurred and shall be in effect pursuant to Section 303
of the DGCL and the Bankruptcy Code, without any requirement of further action
by thE stockholders or directors of the Debtors or the Reorganized Debtors. On
the Effective Date, the appropriate officers of Reorganized USi and members of
its board of directors are authorized and directed to execute and deliver the
agreements, documents and instruments contemplated by this Plan in the name of
and on behalf of Reorganized USi.
14.05 Retiree Benefits. On and after the Effective Date, the Reorganized
Debtors shall continue to pay all retiree benefits, as that term is defined in
Section 1114 of the Bankruptcy Code, to the extent requireD by Section
1129(a)(13) of the Bankruptcy Code, without prejudice to the Reorganized
Debtors' rights undeR applicable non-bankruptcy law to modify, amend or
terminate the foregoing arrangements.
14.06 Withdrawal of this Plan. The Debtors reserve the right to revoke or
withdraw this Plan at any time prior to the Effective Date. If they do so, this
Plan shall be null and void.
14.07 Final Order. Except as otherwise expressly provided in this Plan, any
requirement in this Plan for a Final Order may be waived by the Debtors or,
after the Effective Date, Reorganized USi upon written notice to the Bankruptcy
Court. No such waiver shall prejudice
38
the right of any party in interest to seek a stay pending appeal of any order
that is not a Final Order.
14.08 Notice. All notices required to be given under this Plan, if any,
shall be in writing and shall be sent by first class mail, postage prepaid, or
by overnight courier to the Debtors and the Investor:
If to the Debtors to:
USinternetworking, Inc.
One USi Plaza
Annapolis, Maryland 21401
Attn: William T. Price, General Counsel
(410) 897-4400
with copies to:
Willkie Farr & Gallagher
787 7th Avenue
New York, NY 10019
Attn: Marc Abrams, Esq.
Paul Shalhoub, Esq.
(212) 728-8000
and
Latham & Watkins
555 11th Street N.W.
Washington, D.C. 20004
Attn: James F. Rogers, Esq.
(202) 637-2200
If to the Investor to:
USinternetworking Holdings, Inc.
111 Huntington Avenue
Boston, MA 02199
Attn: Andrew Balson
39
with a copy to:
Ropes & Gray
One International Place
Boston, MA 02110-2624
Attn: James M. Wilton, Esq.
Patrick Diaz, Esq.
Any of the above may, from time to time, change its address for future notices
and other communications hereunder by filing a notice of the change of address
with the Bankruptcy Court. Any and all notices given under this Plan shall be
effective when received.
14.09 Dissolution of Committee. When this Plan becomes effective as set
forth in Section 13.02, the Official Committee shall cease to exist and their
members and employees or agents (including attorneys, investment bankers,
financial advisors, accountants and other professionals) shall be released and
discharged from all further authority, duties, responsibilities and obligations
relating to, arising from or in connection with the Chapter 11 Case.
14.10 Amendments and Modifications. To the fullest extent permitted under
Section 1127 of the Bankruptcy Code, this Plan may be altered, amended or
modified by the Debtors with the consent of the Investor, upon the Debtors' good
faith consultation with the Committee, at any time prior to the Effective Date
and by Reorganized USi anytime thereafter.
14.11 Time. Unless otherwise specified herein, in computing any period of
time prescribed or allowed by the Plan, the day of the act or event from which
the designated period begins to run shall not be included. The last day of the
period so computed shall be included, unless it is not a Business Day, in which
event the period runs until the end of the next succeeding day that is a
Business Day.
14.12 Section 1145 Exemption. To the fullest extent permitted under Section
1145 of the Bankruptcy Code, the offer or sale of the Plan Notes, the Substitute
Plan Notes, the Secondary Plan Notes and the New Warrants and transactions in
such securities shall be and are exempt from the registration requirements of
Section 5 of the Securities Act of 1933, as amended, and any state or local law
requiring registration for offer or sale of a security or registration or
licensing of an issuer of, underwriter of, or broker or dealer in, such
securities.
14.13 Section 1146 Exemption. To the fullest extent permitted under Section
1146(c) of the Bankruptcy Code, the issuance, transfer or exchange of any
security under the Plan, or the execution, delivery or recording of an
instrument of transfer pursuant to, in implementation of or as contemplated by
the Plan, or the revesting, transfer or sale of any real property of the Debtor
pursuant to, in implementation of or as contemplated by the Plan shall not be
taxed under any state or local law imposing a stamp tax, transfer tax or similar
tax or fee. Consistent with the foregoing, each recorder of deeds or similar
official for any county, city or governmental unit in which any instrument
hereunder is to be recorded shall, pursuant to the Confirmation Order, be
ordered and directed to accept such instrument, without requiring the payment of
any documentary stamp tax, deed stamps, stamp tax, transfer tax, intangible tax
or similar tax.
40
14.14 No Admissions. If the Plan is not confirmed or the Effective Date
does not occur, nothing contained herein, in documents filed in connection with
the Plan, or in the Disclosure Statement shall be deemed an admission or release
by the Debtors or any other Person or Entity with respect to any matter set
forth herein.
41
Dated: Annapolis, Maryland
March 19, 2002
USINTERNETWORKING, INC.
By: /s/ William Washecka
------------------------------------
Its: Executive Vice President and CFO
ADMIRAL MANAGEMENT COMPANY LLC
By: /s/ Mark McEneaney
------------------------------------
Its: General Manager
GEMC PROPERTIES LLC
By: /s/ Mark McEneaney
------------------------------------
Its: General Manager
RIVA CANYON LLC
By: /s/ Mark McEneaney
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Its: General Manager
SHORE SERVICES LLC
By: /s/ Mark McEneaney
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Its: General Manager
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