EXHIBIT 2.1
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
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In re :
:
PHYCOR, INC., et al., : Chapter 11
: Case Nos. 02-40278 (PCB)
: (Jointly Administered)
Debtors. :
:
:
- - - - - - - - - - - - - - - - - - - - - - - - - x
SECOND AMENDED JOINT REORGANIZATION PLAN
OF PHYCOR, INC. AND DEBTOR SUBSIDIARIES
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM LLP
Kayalyn A. Marafioti
Thomas J. Matz
Mark M. Brown
Four Times Square
New York, New York 10036-6522
(212) 735-3000
Attorneys for PhyCor, Inc., et al.
Dated: New York, New York
June 6, 2002
TABLE OF CONTENTS
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INTRODUCTION
ARTICLE I
DEFINITIONS, RULES OF INTERPRETATION, AND COMPUTATION OF TIME
A. SCOPE OF DEFINITIONS; RULES OF CONSTRUCTION..............................1
B. DEFINITIONS..............................................................1
C. RULES OF INTERPRETATION..................................................8
D. COMPUTATION OF TIME......................................................8
ARTICLE II
CLASSIFICATION OF CLAIMS AND INTERESTS
A. INTRODUCTION.............................................................8
B. UNCLASSIFIED CLAIMS (NOT ENTITLED TO VOTE ON THE PLAN)...................9
1. Administrative Claims...........................................9
2. Priority Tax Claims.............................................9
C. UNIMPAIRED CLASSES OF CLAIMS (DEEMED TO HAVE ACCEPTED THE PLAN AND,
THEREFORE, NOT ENTITLED TO VOTE).........................................9
1. Class 1: Other Priority Claims.................................9
2. Class 2a: AmSouth Secured Claim.................................9
3. Class 2b: Other Secured Claims..................................9
D. IMPAIRED CLASSES OF CLAIMS OR INTERESTS..................................9
1. Class 3: Convenience Claims....................................9
2. Class 4: General Unsecured Claims..............................9
3. Class 5: Preferred Stock Interests.............................9
4. Class 6: Common Stock Interests................................9
5. Class 7: Shareholder Litigation Claims.........................9
6. Class 8: Warrants Interests....................................9
ARTICLE III
TREATMENT OF CLAIMS AND INTERESTS
A. UNCLASSIFIED CLAIMS.....................................................10
1. Administrative Claims..........................................10
2. Priority Tax Claims............................................10
B. UNIMPAIRED CLASSES OF CLAIMS ...........................................10
1. Class 1: Other Priority Claims................................10
2. Class 2a: AmSouth Secured Claim................................10
3. Class 2b: Other Secured Claims.................................10
C. IMPAIRED CLASSES OF CLAIMS .............................................11
1. Class 3: Convenience Claims...................................11
2. Class 4: General Unsecured Claims.............................11
3. Class 5: Preferred Stock Interests............................11
4. Class 6: Common Stock Interests...............................11
5. Class 7: Shareholder Litigation Claims........................12
6. Class 8: Warrants Interests...................................12
ARTICLE IV
MEANS FOR IMPLEMENTATION OF THE PLAN
A. SUBSTANTIVE CONSOLIDATION...............................................12
1. Consolidation Of The Chapter 11 Cases..........................12
2. Substantive Consolidation Order................................12
B. CONTINUED CORPORATE EXISTENCE; CHANGE OF NAME...........................12
C. AMENDED AND RESTATED CHARTER AND BY-LAWS................................12
D. CORPORATE ACTION........................................................13
1. Cancellation Of Existing Securities And Agreements.............13
E. RESTRUCTURING TRANSACTIONS..............................................13
1. New Securities.................................................13
F. DIRECTORS AND OFFICERS..................................................13
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G. EFFECTUATING DOCUMENTS; FURTHER TRANSACTIONS............................14
H. VESTING OF ASSETS.......................................................14
I. PRESERVATION OF RIGHTS OF ACTION; SETTLEMENT OF LITIGATION CLAIMS.......14
1. Preservation Of Rights Of Action...............................14
2. Settlement Of Litigation Claims................................14
J. CREDITORS' COMMITTEE....................................................14
K. SOURCES OF CASH FOR PLAN DISTRIBUTIONS..................................14
L. RELEASE OF LIENS........................................................15
M. EXEMPTION FROM CERTAIN TRANSFER TAXES...................................15
ARTICLE V
ACCEPTANCE OR REJECTION OF THE PLAN
A. CLASSES ENTITLED TO VOTE................................................15
B. ACCEPTANCE BY IMPAIRED CLASSES..........................................15
C. CRAMDOWN................................................................15
ARTICLE VI
SECURITIES TO BE ISSUED IN CONNECTION WITH THE PLAN
A. DESCRIPTION OF SECURITIES TO BE ISSUED IN CONNECTION WITH THE PLAN......15
ARTICLE VII
PROVISIONS GOVERNING DISTRIBUTIONS
A. CLASS 4: DELIVERY OF 4.5% CONVERTIBLE SUBORDINATED DEBENTURES BY
CLAIMANTS WHO ELECT TO REDUCE THEIR CLAIMS TO $50,000...................16
B. DISTRIBUTIONS FOR CLAIMS ALLOWED AS OF THE CONSUMMATION DATE............16
C. INTEREST ON CLAIMS......................................................16
D. DISTRIBUTIONS BY DISBURSING AGENT.......................................16
E. DELIVERY OF DISTRIBUTIONS AND UNDELIVERABLE OR UNCLAIMED DISTRIBUTIONS..16
1. Delivery Of Distributions In General...........................16
2. Undeliverable And Unclaimed Distributions......................17
F. RECORD DATE FOR DISTRIBUTIONS...........................................17
G. MEANS OF CASH PAYMENT...................................................17
H. WITHHOLDING AND REPORTING REQUIREMENTS..................................17
I. SETOFF..................................................................17
J. SURRENDER OF CANCELLED DEBT INSTRUMENTS OR SECURITIES...................18
K. FRACTIONAL DOLLARS; DE MINIMIS DISTRIBUTIONS............................18
L. SERVICES OF INDENTURE TRUSTEE, AGENTS, AND SERVICERS....................18
M. CALCULATION OF DISTRIBUTION AMOUNTS OF NEW SECURITIES...................18
ARTICLE VIII
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
A. REJECTED CONTRACTS AND LEASES...........................................19
B. BAR TO REJECTION DAMAGES................................................19
C. ASSUMED CONTRACTS AND LEASES............................................19
D. PAYMENTS RELATED TO ASSUMPTION OF CONTRACTS AND LEASES..................19
E. CERTAIN EMPLOYMENT CONTRACTS............................................19
F. COMPENSATION AND BENEFIT PLANS AND TREATMENT OF RETIREMENT PLAN.........20
ARTICLE IX
PROCEDURES FOR RESOLVING DISPUTED, CONTINGENT, AND UNLIQUIDATED CLAIMS
A. OBJECTION DEADLINE; PROSECUTION OF OBJECTIONS...........................20
B. NO DISTRIBUTIONS PENDING ALLOWANCE......................................20
C. DISPUTED CLAIMS RESERVE.................................................20
D. DISTRIBUTIONS AFTER ALLOWANCE...........................................21
ARTICLE X
CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION OF THE PLAN
A. CONDITIONS TO CONFIRMATION..............................................21
B. CONDITIONS TO CONSUMMATION DATE.........................................21
C. WAIVER OF CONDITIONS....................................................23
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ARTICLE XI
MODIFICATIONS AND AMENDMENTS
A. AUTHORIZATION FOR DEBTORS TO MODIFY AND AMEND THE PLAN..................23
ARTICLE XII
RETENTION OF JURISDICTION
A. RETENTION OF EXCLUSIVE JURISDICTION BY THE BANKRUPTCY COURT.............23
ARTICLE XIII
EFFECTS OF CONFIRMATION
A. BINDING EFFECT..........................................................24
B. DISCHARGE OF THE DEBTORS................................................25
C. INJUNCTION..............................................................25
D. DEBTOR RELEASES ........................................................25
E. OTHER RELEASES..........................................................25
ARTICLE XIV
COMPROMISES AND SETTLEMENTS
A. AUTHORIZATION FOR DEBTORS TO COMPROMISE AND SETTLE CLAIMS...............26
B. CLASS ACTION SETTLEMENT.................................................26
ARTICLE XV
MISCELLANEOUS PROVISIONS
A. BAR DATES FOR CERTAIN CLAIMS............................................26
1. Administrative Claims..........................................26
2. Professional Fee Claims; Substantial Contribution Claims.......27
3. Other Claims...................................................27
B. PAYMENT OF STATUTORY FEES...............................................27
C. REVOCATION, WITHDRAWAL, OR NON-CONSUMMATION.............................27
D. SEVERABILITY OF PLAN PROVISIONS.........................................27
E. SUCCESSORS AND ASSIGNS..................................................28
F. PLAN SUPPLEMENT.........................................................28
G. NOTICES.................................................................28
H. INDEMNIFICATION OBLIGATIONS.............................................29
I. TERM OF INJUNCTIONS OR STAYS............................................29
J. GOVERNING LAW...........................................................30
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TABLE OF EXHIBITS
Exhibit A New Common Stock Terms
Exhibit B Management Incentive Plan
Exhibit C Schedule Of Executory Contracts And Unexpired Leases To Be Assumed
Exhibit D Schedule Of Causes Of Action To Be Retained By Reorganized PhyCor
Exhibit E Plan And Agreement Of Merger
Exhibit F Section 382(1)(5) Affirmation
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INTRODUCTION
PhyCor, Inc. ("PhyCor" or the "Company") and certain of its Debtor
Subsidiaries, debtors and debtors-in-possession (collectively, the "Debtors"),
hereby propose the following second amended joint plan of reorganization (the
"Plan"). Reference is made to the Disclosure Statement (as that term is defined
herein), distributed contemporaneously herewith, for a discussion of the
Debtors' history, businesses, properties, and operations, a summary and analysis
of the Plan, and certain related matters including, among others, the proposed
substantive consolidation of the Debtors' cases. The Debtors are proponents of
this Plan within the meaning of section 1129 of the Bankruptcy Code (as that
term is defined herein). Subject to certain restrictions and requirements set
forth in section 1127 of the Bankruptcy Code and Fed. R. Bankr. P. 3019, the
Debtors reserve the right to alter, amend, modify, revoke, or withdraw this Plan
prior to its substantial consummation.
ARTICLE I
DEFINITIONS, RULES OF INTERPRETATION,
AND COMPUTATION OF TIME
A. SCOPE OF DEFINITIONS; RULES OF CONSTRUCTION
For purposes of this Plan, except as expressly provided or unless the
context otherwise requires, all capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in Article I of this Plan. Any term
used in this Plan that is not defined herein, but is defined in the Bankruptcy
Code or the Bankruptcy Rules, shall have the meaning ascribed to that term in
the Bankruptcy Code or the Bankruptcy Rules. Whenever the context requires, such
terms shall include the plural as well as the singular number, the masculine
gender shall include the feminine, and the feminine gender shall include the
masculine.
B. DEFINITIONS
1.1 "Administrative Claim" means a Claim for payment of an
administrative expense of a kind specified in section 503(b), 507(a), or
1114(e)(2) of the Bankruptcy Code and entitled to priority pursuant to section
507(a)(1) of the Bankruptcy Code, including, but not limited to, (a) the actual,
necessary costs and expenses, incurred after the Petition Date, of preserving
the Estates and operating the businesses of the Debtors, including wages,
salaries, or commissions for services rendered after the commencement of the
Chapter 11 Cases, (b) Professional Fee Claims, (c) all fees and charges assessed
against the Estates under chapter 123 of title 28, United States Code, and (d)
all Allowed Claims that are entitled to be treated as Administrative Claims
pursuant to a Final Order of the Bankruptcy Court under section 546(c)(2)(A) of
the Bankruptcy Code.
"Affirmation" means under Section 382(i)(5) of the Internal Revenue
Code of 1986, as amended, substantially in the form attached hereto as
Exhibit F.
1.2 "Allowed" means, when used in reference to a Claim within a
particular Class, an Allowed Claim of the type described in such Class.
1.3 "Affirmation" means an affirmation under section 382(l)(5) of the
Internal Revenue Code of 1986, as amended, substantially in the form attached
hereto as Exhibit F.
1.4 "Allowed Claim" means a Claim or any portion thereof (a) that has
been allowed by a Final Order, (b) that either (x) has been Scheduled as a
liquidated, non-contingent, undisputed Claim in an amount greater than zero in
any of the Debtors' Schedules, as the same may from time to time be amended in
accordance with the Bankruptcy Code, Bankruptcy Rules, or orders of the
Bankruptcy Court or (y) is the subject of a timely filed proof of claim as to
which either (i) no objection to its allowance has been filed (either by way of
objection or amendment to the Schedules) within the periods of limitation fixed
by the Bankruptcy Code or by any order of the Bankruptcy Court or (ii) any
objection to its allowance has been settled, waived through payment, or
withdrawn, or has been denied by a Final Order, or (c) that is expressly allowed
in a liquidated amount in the Plan; provided, however, that with respect to an
Administrative Claim, "Allowed Claim" means an Administrative Claim as to which
a timely request for payment has been made in accordance with Article IX.A of
this Plan (if such written request is required) or other Administrative Claim,
in each case as to which the Debtors (y) have not interposed a
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timely objection or (z) have interposed a timely objection and such objection
has been settled, waived through payment, or withdrawn, or has been denied by a
Final Order.
1.5 "Allowed Class . . . Claim" means an Allowed Claim in the
particular Class described.
1.6 "Amended and Restated Charter and By-laws" means Reorganized
PhyCor's amended and restated charter and by-laws in effect under the laws of
the State of Tennessee, as amended pursuant to the Plan.
1.7 "AmSouth Secured Claim" means the secured claim of AmSouth Bank
based on the terms of the Credit and Security Agreement between PhyCor, certain
of its debtor subsidiaries, and AmSouth Bank, dated as of October 9, 2001.
1.8 "Ballots" means each of the ballot forms distributed with the
Disclosure Statement to holders of Impaired Claims entitled to vote under
Article II hereof in connection with the solicitation of acceptances of the
Plan.
1.9 "Bankruptcy Code" means title 11 of the United States Code, 11
U.S.C. ss.ss. 101-1330, as in effect on the date hereof and as it may thereafter
be amended.
1.10 "Bankruptcy Court" means the United States Bankruptcy Court for
the Southern District of New York or such other court as may have jurisdiction
over the Chapter 11 Cases.
1.11 "Bankruptcy Rules" means, collectively, the Federal Rules of
Bankruptcy Procedure and the Official Bankruptcy Forms, as amended, the Federal
Rules of Civil Procedure, as amended, as applicable to the Chapter 11 Cases or
proceedings therein, and the Local Rules of the Bankruptcy Court, as applicable
to the Chapter 11 Cases or proceedings therein, as the case may be.
1.12 "Bar Date" means the date(s), if any, designated by the Bankruptcy
Court as the last date for filing proofs of Claim (including Administrative
Claims other than Professional Fee Claims) against or Interests in the Debtors.
1.13 "Benefit Plans" means all benefit plans, policies, and programs
sponsored by the Debtors, including, without limitation, all such benefits
plans, policies, and programs pertaining to wages, overtime pay, fees, salaries,
board of directors' fees and expenses, relocation assistance pay, holiday and
vacation pay, sick leave pay, other excused leave pay, workers' compensation
claims, reimbursable business expenses, the Debtors' group health care, COBRA,
the Debtors' employee life insurance, short-term and long-term employee
disability, 401(k) savings and retirement, severance, flexible spending
accounts, payments pursuant to garnishment orders, and miscellaneous other
benefits.
1.14 "Business Day" means any day, excluding Saturdays, Sundays or
"legal holidays" (as defined in Fed. R. Bankr. P. 9006(a)), on which commercial
banks are open for business in New York, New York.
1.15 "Case Interest Rate" means the federal judgment rate provided in
28 U.S.C. ss. 1961 in effect on the Petition Date, compounded annually on each
anniversary of the Petition Date.
1.16 "Cash" means lawful currency of the United States or equivalents
thereof.
1.17 "Chapter 11 Case(s)" means, individually, the Chapter 11 case of
any of PhyCor or the Debtor Subsidiaries, and, collectively, the Chapter 11
cases of PhyCor and the Debtor Subsidiaries.
1.18 "Claim" means a claim against any Debtor, whether or not asserted,
as defined in section 101(5) of the Bankruptcy Code.
1.19 "Class" means a category of holders of Claims or Interests, as
described in Article II below.
1.20 "Class Action Settlement" means the settlement of the Shareholder
Litigation Claims as they pertain to the defendants other than KPMG.
1.21 "Collateral" means any property or interest in property of the
Debtors' Estates subject to a Lien to secure the payment or performance of a
Claim, which Lien is not subject to avoidance under the Bankruptcy Code or
otherwise invalid
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under the Bankruptcy Code or applicable state law.
1.22 "Common Stock" means the common stock of PhyCor outstanding or
reserved for issuance and authorized as of the Petition Date.
1.23 "Common Stock Interest" means any Interest from or under the
Common Stock.
1.24 "Confirmation" means entry by the Bankruptcy Court of the
Confirmation Order.
1.25 "Confirmation Date" means the date of entry by the Bankruptcy
Court of the Confirmation Order.
1.26 "Confirmation Hearing" means the hearing to consider confirmation
of the Plan under section 1128 of the Bankruptcy Code.
1.27 "Confirmation Order" means the order entered by the Bankruptcy
Court confirming the Plan.
1.28 "Consummation Date" means the Business Day on which all conditions
to the consummation of the Plan set forth in Article X.B hereof have been
satisfied or waived as provided in Article X.C hereof and which is the effective
date of the Plan.
1.29 "Convenience Claim" means a Claim, including any unpaid interest
accrued through the Petition Date, that would otherwise be classified as a Class
4 General Unsecured Claim that is (a) $50,000 or less or (b) more than $50,000
if the holder has elected, on a timely cast Ballot, to reduce its Claim to
$50,000 and accept the distribution set out in Article III.C.1 hereof in full
satisfaction, discharge, and release of such Claim.
1.30 "Creditor" means any Person who holds a Claim against a Debtor.
1.31 "Creditors' Committee" means the official committee of unsecured
creditors appointed by the United States Trustee in these Chapter 11 Cases on
February 11, 2002, as it may be constituted from time to time.
1.32 "Cure" means the distribution within a reasonable period of time
following the Consummation Date of Cash, or such other property as may be agreed
upon by the parties or ordered by the Bankruptcy Court, with respect to the
assumption of an executory contract or unexpired lease, pursuant to section
365(b) of the Bankruptcy Code, in an amount equal to all unpaid monetary
obligations, without interest, or such other amount as may be agreed upon by the
parties, under such executory contract or unexpired lease, to the extent such
obligations are enforceable under the Bankruptcy Code and applicable
non-bankruptcy law.
1.33 "Debt Securities" means, collectively, the 4.5% Convertible
Subordinated Debentures and the Zero Coupon Notes.
1.34 "Debt Securities Claim" means a Claim arising from one of the Debt
Securities.
1.35 "Debtor(s)" means, individually, PhyCor or any of the Debtor
Subsidiaries and, collectively, PhyCor and the Debtor Subsidiaries.
1.36 "Debtor Subsidiaries" means, collectively, First Physician Care,
Inc.; First Physician Care of Riverbend, Inc.; First Physician Care of South
Florida, Inc.; First Physician Care of Tampa Bay, Inc.; FPCNT, Inc.; IPA
Management Associates L.P. (d/b/a NAMM-Texas a/k/a NAMM-Houston); Manhattan
Physicians IPA No. 1, Inc.; NAMM-Texas Investments, L.P.; North American Medical
Management, Inc.; Managed Care Management Associates, Inc.; North American
Medical Management - New York City, Inc.; PhyCor-Texas Gulf Coast, L.P.; PhyCor
Management Corporation; PhyCor Management Corporation-Florida, Inc. (f/k/a
NAMM-Florida, Inc.); PMC of Colorado, Inc.; PhyCor of Northern Michigan Medical
Management, Inc.; PhyCor of Charlotte, LLC; PhyCor of Coachella Valley, Inc.;
PhyCor of Conroe, L.P.; PhyCor of Corsicana, L.P.; PhyCor of Dallas, L.P.;
PhyCor of Denver, Inc.; FHS, Inc. (f/k/a Focus Health Services, P.C.); Front
Range Medical Management, Inc.; PhyCor of Fort Smith, Inc; PhyCor of Irving,
L.P.; PhyCor of Jacksonville, Inc.; PhyCor of Kentucky, LLC.; PhyCor of
Kingsport, Inc.; PhyCor-Lafayette, LLC; PhyCor of Mesa, Inc.; PhyCor of Minot,
Inc; PhyCor of Murfreesboro, Inc.; PhyCor of Northeast Arkansas, Inc.; PhyCor of
Northern California, Inc.; PhyCor of Northern Michigan,
3
Inc.; PhyCor of Olean, Inc.; PhyCor of Richmond, Inc.; PhyCor of Roanoke, Inc.;
PhyCor of San Antonio, L.P.; PhyCor of Vero Beach, Inc.; PhyCor of West Houston,
L.P.; PhyCor of Wichita Falls, L.P.; St. Petersburg Medical Clinic, Inc.; The
Member Corporation, Inc.; SynerPhy of Rome, Inc. (f/k/a PhyCor of Rome, Inc.);
and HPMdirect, Inc.
1.37 "Debtor Subsidiary Interests" means, collectively, the issued and
outstanding shares of stock of the Debtor Subsidiaries, all of which are
directly or indirectly owned by PhyCor, as of the Petition Date.
1.38 "Disallowed Claim" means a Claim, or any portion thereof, other
than a Claim or any portion thereof deemed Allowed under the Plan, that (a) has
been disallowed by a Final Order, (b) is Scheduled at zero or as contingent,
disputed, or unliquidated and as to which a Bar Date has been established but no
proof of claim has been filed or deemed timely filed with the Bankruptcy Court
pursuant to either the Bankruptcy Code or any Final Order of the Bankruptcy
Court or otherwise deemed timely filed under applicable law, (c) is not
Scheduled and as to which a Bar Date has been established but no proof of claim
has been filed or deemed timely filed with the Bankruptcy Court pursuant to
either the Bankruptcy Code or any Final Order of the Bankruptcy Court or
otherwise deemed timely filed under applicable law, or (d) is the subject of an
objection filed by the Debtors with the Bankruptcy Court, which objection has
not been withdrawn or overruled by a Final Order of the Bankruptcy Court.
1.39 "Disbursing Agent" means Reorganized PhyCor or any party
designated by Reorganized PhyCor, in its sole discretion, to serve as a
disbursing agent under the Plan.
1.40 "Disclosure Statement" means the written disclosure statement
and/or the summary plan and disclosure statement, as applicable, that relates to
the Plan, as approved by the Bankruptcy Court pursuant to section 1125 of the
Bankruptcy Code and Fed. R. Bankr. P. 3017, as such disclosure statement may be
amended, modified, or supplemented from time to time.
1.41 "Disputed Claim" means, as applicable, any Claim not otherwise
Allowed or paid pursuant to the Plan or an order of the Bankruptcy Court (i)
which has been or hereafter is listed on the Schedules as unliquidated,
contingent, or disputed, and which has not been resolved by written agreement of
the parties or an order of the Bankruptcy Court, (ii) proof of which was
required to be filed by order of the Bankruptcy Court but as to which a proof of
Claim was not timely or properly filed, (iii) proof of which was timely and
properly filed and which has been or hereafter is listed on the Schedules as
unliquidated, disputed, or contingent, (iv) that is disputed in accordance with
the provisions of this Plan, or (v) as to which any Debtor has interposed a
timely objection or request for estimation in accordance with the Plan, the
Bankruptcy Code, the Bankruptcy Rules, and any orders of the Bankruptcy Court,
or is otherwise disputed by the Debtor in accordance with applicable law, which
objection, request for estimation, or dispute has not been withdrawn or
determined by a Final Order; provided, however, that for purposes of determining
whether a particular Claim is a Disputed Claim prior to the expiration of any
period of limitation fixed for the interposition by the Debtor of objections to
the allowance of Claims, any Claim that is not identified by the Debtor as an
Allowed Claim shall be deemed a Disputed Claim.
1.42 "Disputed Claims Reserve" means the reserve established and
maintained by Reorganized PhyCor into which Reorganized PhyCor shall deposit the
amount of Cash or New Common Stock that would have been distributed by
Reorganized PhyCor on the Distribution Date to holders of (a) Disputed Claims,
(b) contingent liquidated Claims, if such Claims had been undisputed or
noncontingent Claims on the Distribution Date, pending (i) the allowance of such
Claims, (ii) the estimation of such Claims for purposes of allowance, or (iii)
the realization of the contingencies, and (c) unliquidated Claims, if such
Claims had been liquidated on the Distribution Date, such amount to be estimated
by the Bankruptcy Court or agreed upon by the Debtors and the Creditors'
Committee as sufficient to satisfy such unliquidated Claim upon such Claim's (x)
allowance, (y) estimation for purposes of allowance, or (z) liquidation, pending
the occurrence of such estimation or liquidation.
1.43 "Distribution Date" means the date, occurring as soon as
practicable after the Consummation Date, upon which distributions from
Reorganized PhyCor are made to holders of Allowed Class 1, 2a, 2b, 3, and 4
Claims, provided, however, that in no event shall the Distribution Date occur
sooner than five Business Days after the Consummation Date.
1.44 "Distribution Record Date" means the record date for purposes of
making distributions under the Plan on account of Allowed General Unsecured
Claims, which date shall be the seventh Business Day following entry of the
Confirmation Order.
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1.45 "District Court" means the United States District Court for the
Middle District of Tennessee or such other court as may have jurisdiction over
the Shareholder Litigation Claims.
1.46 "DTC" means the Depositary Trust Company.
1.47 "Estate(s)" means, individually, the estate of PhyCor or any of
the Debtor Subsidiaries, and, collectively, the estates of PhyCor and all of the
Debtor Subsidiaries, created under section 541 of the Bankruptcy Code.
1.48 "Existing Securities" means, collectively, the 4.5% Convertible
Subordinated Debentures, Zero Coupon Notes, Common Stock, Preferred Stock, and
Warrants.
1.49 "Face Amount" means (a) when used in reference to a Disputed or
Disallowed Claim, the full stated amount claimed by the holder of such Claim in
any proof of Claim timely filed with the Bankruptcy Court or otherwise deemed
timely filed by any Final Order of the Bankruptcy Court or other applicable
bankruptcy law, (b) when used in reference to an unliquidated Claim, the amount
of the Claim as estimated by the Bankruptcy Court pursuant to section 502(c) of
the Bankruptcy Code, and (c) when used in reference to an Allowed Claim, the
allowed amount of such Claim.
1.50 "Final Order" means an order or judgment of the Bankruptcy Court,
or other court of competent jurisdiction, as entered on the docket in any
Chapter 11 Case, the operation or effect of which has not been stayed, reversed,
or amended and as to which order or judgment (or any revision, modification, or
amendment thereof) the time to appeal or seek review or rehearing has expired
and as to which no appeal or petition for review or rehearing was filed or, if
filed, remains pending.
1.51 "4.5% Convertible Subordinated Debenture Claim" means a Claim of a
holder of 4.5% Convertible Subordinated Debentures, arising from or under the
4.5% Convertible Subordinated Debentures.
1.52 "4.5% Convertible Subordinated Debentures" means the 4.5%
Convertible Subordinated Debentures due February 15, 2003 and outstanding under
the 4.5% Convertible Subordinated Debentures Indenture, dated as of February 15,
1996.
1.53 "General Unsecured Claim" means a Claim that is not an
Administrative Claim, Priority Tax Claim, Other Priority Claim, AmSouth Secured
Claim, Other Secured Claim, Convenience Claim, or Shareholder Litigation Claim.
1.54 "Information Agent" means the balloting and noticing agent for the
Debtors whose retention was authorized by an order of the Bankruptcy Court dated
February 1, 2002.
1.55 "Impaired . . ." means, when used with reference to a Claim or
Interest, a Claim or Interest that is impaired within the meaning of section
1124 of the Bankruptcy Code.
1.56 "Indenture Trustee" means SunTrust Bank, Nashville, N.A.,
successor to First American Trust Company, in its capacity as indenture trustee
under the 4.5% Convertible Subordinated Debentures Indenture, dated as of
February 15, 1996.
1.57 "Intercompany Claim" means any Claim held by a Debtor against
another Debtor, including, without limitation, (a) any account reflecting
intercompany book entries by one Debtor with respect to any other Debtor, (b)
any such Claim not reflected in such book entries that is held by a Debtor
against another Debtor, and (c) any derivative Claim asserted by or on behalf of
one Debtor against another.
1.58 "Interest" means (i) the interest of any holder of equity
securities of PhyCor represented by any issued and outstanding shares of common
stock, preferred stock, or other instrument evidencing a current ownership
interest in the Debtor, whether or not transferable and (ii) any option,
warrant, or right, contractual or otherwise, to acquire or receive any such
interest.
1.59 "Lien" means a charge against or interest in property to secure
payment of a debt or performance of an obligation.
1.60 "Litigation Claims" means the claims, rights of action, suits, or
proceedings, whether in law or in equity, whether known or unknown, that any
Debtor or Estate may hold against any Person, including, but not limited to the
claims,
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rights of action, suits and proceedings described in Exhibit D attached hereto,
to be retained by Reorganized PhyCor pursuant to Article IV.I of this Plan.
1.61 "Management Incentive Options" means the stock grants and options
to be issued by Reorganized PhyCor to key employees pursuant to the Management
Incentive Plan.
1.62 "Management Incentive Plan" means the management incentive plan
pursuant to which the Management Incentive Options will be issued, substantially
in the form attached hereto as Exhibit B.
1.63 "Management Incentive Plan Participants" means those PhyCor
employees eligible to participate in the Management Incentive Plan, under the
terms thereof.
1.64 "New Common Stock" means the shares of common stock of Reorganized
PhyCor authorized under Article IV.A hereof and the Amended Certificate of
Incorporation.
1.65 "New Securities" means, collectively, the New Common Stock and
Management Incentive Options.
1.66 "Noteholders' Committee" means the informal committee of holders
of approximately 59% principal value of 4.5% Convertible Subordinated
Debentures, the members of which include Creedon Capital Management, Magten
Asset Management Corp., Pyramid Trading Ltd., Zazove Associates, Whitebox,
Liberty View, and Convertible Desk, LLC.
1.67 "Other Priority Claim" means a Claim entitled to priority pursuant
to section 507(a) of the Bankruptcy Code other than a Priority Tax Claim or an
Administrative Claim.
1.68 "Other Secured Claims" means, collectively, all Secured Claims
against a Debtor other than the AmSouth Secured Claim.
1.69 "Person" means an individual, corporation, partnership,
governmental unit, joint venture, association, joint stock company, limited
liability company, limited liability partnership, trust, estate, unincorporated
organization, or other entity.
1.70 "Petition Date" means January 31, 2002, the date on which the
Debtors filed their petitions for reorganization relief commencing the Chapter
11 Cases.
1.71 "Plan" means this joint plan of reorganization proposed by the
Debtors for the resolution of their outstanding Claims and Interests in these
Chapter 11 Cases, as such plan may be amended from time to time in accordance
with the Bankruptcy Code and Bankruptcy Rules.
1.72 "Plan Supplement" means the compilation of documents and forms of
documents specified in the Plan which will be filed with the Bankruptcy Court on
or before the date that is seven days prior to the Confirmation Hearing and
which documents and forms of documents shall be in form and substance reasonably
acceptable to the Debtors, Warburg, Pincus, the Noteholders' Committee, and any
statutory committee, if appointed.
1.73 "Preferred Stock" means the preferred stock, no par value, of
PhyCor, authorized but not issued as of the Petition Date.
1.74 "Preferred Stock Interest" means any Interest from or under the
Preferred Stock.
1.75 "Priority Tax Claim" means a Claim that is entitled to priority
pursuant to section 507(a)(8) of the Bankruptcy Code.
1.76 "Professional" means any professional employed in the Chapter 11
Cases pursuant to sections 327 or 1103 of the Bankruptcy Code or otherwise and
any professionals seeking compensation or reimbursement of expenses in
connection with the Chapter 11 Cases pursuant to section 503(b)(4) or 1129(a)(4)
of the Bankruptcy Code.
6
1.77 "Professional Fee Claim" means a Claim of a Professional for
compensation for services rendered, and/or reimbursement of costs and expenses
incurred, after the Petition Date and prior to and including the Consummation
Date.
1.78 "Professional Fee Order" means the order entered by the Bankruptcy
Court on February 15, 2002, establishing procedures for the payment of
Professional Fee Claims in the Debtors' Chapter 11 Cases.
1.79 "Pro Rata" means, at any time, the proportion that the Face Amount
of a Claim in a particular Class bears to the aggregate Face Amount of all
Claims (including Disputed Claims, but excluding Disallowed Claims) in such
Class, unless the Plan provides otherwise.
1.80 "Reinstated" or "Reinstatement" means, notwithstanding any
contractual provision or applicable law that entitles the holder of a Claim to
demand or receive accelerated payment of such Claim after the occurrence of a
default, (i) curing any such default that occurred before or after the Petition
Date, other than a default of a kind specified in section 365(b)(2) of the
Bankruptcy Code, (ii) reinstating the maturity of such Claim as such maturity
existed before such default, (iii) compensating the holder of such Claim for any
damages incurred as a result of any reasonable reliance by such holder on such
contractual provision or such applicable law, and (iv) not otherwise altering
the legal, equitable, or contractual rights to which such Claim entitles the
holder of such Claim.
1.81 "Reorganized PhyCor" means PhyCor, Inc., a Tennessee corporation,
on and after the Consummation Date, as substantively consolidated with all of
the Debtor Subsidiaries and as merged with and into all the Debtor Subsidiaries
except The Member Corporation, Inc. and SynerPhy of Rome.
1.82 "Scheduled" means, with respect to any Claim or Interest, the
characterization, and amount, if any, of such Claim or Interest as set forth in
the Schedules.
1.83 "Schedules" means the schedules of assets and liabilities and the
statements of financial affairs filed in the Bankruptcy Court by each of the
Debtors on January 31, 2002, as such schedules or statements have been or may be
further amended or supplemented from time to time in accordance with Fed. R.
Bankr. P. 1009 or orders of the Bankruptcy Court.
1.84 "Secured Claim" means a Claim, other than a Setoff Claim, that is
secured by a security interest in or lien upon property, or the proceeds of the
sale of such property, in which the Debtors have an interest, to the extent of
the value, as of the Consummation Date or such later date as is established by
the Bankruptcy Court, of such interest or lien as determined by a Final Order of
the Bankruptcy Court pursuant to section 506 of the Bankruptcy Code or as
otherwise agreed upon in writing by any Debtor or Reorganized PhyCor and the
holder of such Claim.
1.85 "Securities Act" means the Securities Act of 1933, 15 U.S.C.
ss.ss. 77a-77aa, as now in effect or hereafter amended.
1.86 "Setoff Claim" means a Claim of a holder that has a valid right of
setoff with respect to such Claim, which right is enforceable under section 553
of the Bankruptcy Code as determined by a Final Order or as otherwise agreed in
writing by any Debtor, to the extent of the amount subject to such right of
setoff.
1.87 "Shareholder Litigation Claims" means claims based on the
purported securities class actions originally filed in state and federal courts
in Tennessee and New York in 1998 and 1999 against PhyCor and certain of its
current and former officers and directors, such claims being set forth in the
following proceedings: James Meyer, et al. v. Joseph C. Hutts, et al., Civil
Action No. 3-98-0834, United States District Court for the Middle District of
Tennessee; John Butler, et al. v. Joseph C. Hutts, et al., Civil Action No.
3-98-0911, United States District Court for the Middle District of Tennessee;
Louis J. D'Ambrosio, et al. v. Joseph C. Hutts, et al., Civil Action No.
3-98-0948, United States District Court for the Middle District of Tennessee;
Christopher Cimino, et al. v. Joseph C. Hutts, et al., Civil Action No.
3-98-1008, United States District Court for the Middle District of Tennessee;
Dr. Stuart Siegal, et al. v. Joseph C. Hutts, et al., Civil Action No.
3-98-09734, United States District Court for the Middle District of Tennessee;
Albert Zucker, et al. v. Joseph C. Hutts, et al., Civil Action No. 98-CV-6191,
United States District Court for the Eastern District of New York; Malcolm
Rosenwald, et al. v. Joseph C. Hutts, et al., Civil Action No. 98-CV-5642,
United States District Court for the Eastern District of New York; Robert H.
Leonard, et al. v. Joseph C. Hutts, et al., Civil Action No. 98-2813-I, Chancery
Court for Davidson County, Tennessee; James W. Bryant, et al. v. Joseph C.
Hutts, et al., Civil Action No. 98-2719-III, Chancery Court for Davidson County,
Tennessee; Stanley Gale, et al. v. Joseph C. Hutts, et al., Civil Action No.
3:99-0561, United States District Court for the Middle District of Tennessee;
Robert H. Leonard, et al. v. PhyCor, Inc. and KPMG, LLP, Civil Action No.
3:99-0807, United States District Court for the
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Middle District of Tennessee; and Parul Patel, et al. v. Hutts, Civil Action No.
99-2353-I, Chancery Court for Davidson County, Tennessee.
1.88 "Substantive Consolidation Order" means the order, which may be
the Confirmation Order, substantively consolidating the Chapter 11 Cases, as
provided in Article IV.A of the Plan.
1.89 "Unimpaired Claim" means a Claim that is not an Impaired Claim.
1.90 "Voting Deadline" means the date and time, as fixed by an order of
the Bankruptcy Court and set forth in the Disclosure Statement, by which all
Ballots to accept or reject the Plan must be received by the Information Agent.
1.91 "Warburg, Pincus" means Warburg, Pincus Equity Partners, L.P.;
Warburg, Pincus Netherlands Equity Partners I, C.V.; Warburg, Pincus Netherlands
Equity Partners II, C.V.; and Warburg, Pincus Netherlands Equity Partners III,
C.V.
1.92 "Warrants" means all incentive stock options, non-qualified stock
options, and stock appreciation rights granted under PhyCor-sponsored stock
option plans, and any other options, warrants, or rights, contractual or
otherwise, if any, to acquire or receive an Interest, authorized as of the
Petition Date.
1.93 "Warrants Interest" means any Interest arising from or under the
Warrants.
1.94 "Zero Coupon Note Claim" means a Claim of a holder of Zero Coupon
Notes, arising from or under the Zero Coupon Notes.
1.95 "Zero Coupon Notes" means the Zero Coupon Convertible Subordinated
Notes due September 3, 2014 and outstanding under the Zero Coupon Notes
Securities Purchase Agreement, dated as of June 15, 1999, as amended August 23,
1999 and June 9, 2000.
C. RULES OF INTERPRETATION
For purposes of the Plan (a) any reference in the Plan to a contract,
instrument, release, indenture, or other agreement or document's being in a
particular form or on particular terms and conditions means that such document
shall be substantially in such form or substantially on such terms and
conditions, (b) any reference in the Plan to an existing document or exhibit
filed or to be filed means such document or exhibit as it may have been or may
be amended, modified, or supplemented, (c) unless otherwise specified, all
references in the Plan to Sections, Articles, Schedules, and Exhibits are
references to Sections, Articles, Schedules, and Exhibits of or to the Plan, (d)
the words "herein" and "hereto" refer to the Plan in its entirety rather than to
a particular portion of the Plan, (e) captions and headings to Articles and
Sections are inserted for convenience of reference only and are not intended to
be a part of or to affect the interpretation of the Plan, and (f) the rules of
construction set forth in section 102 of the Bankruptcy Code and in the
Bankruptcy Rules shall apply.
D. COMPUTATION OF TIME
In computing any period of time prescribed or allowed by the Plan, the
provisions of Fed. R. Bankr. P. 9006(a) shall apply.
ARTICLE II
CLASSIFICATION OF CLAIMS AND INTERESTS
A. INTRODUCTION
All Claims and Interests, except Administrative Claims and Priority Tax
Claims, are placed in the Classes set forth below. In accordance with section
1123(a)(1) of the Bankruptcy Code, Administrative Claims and Priority Tax
Claims, as described below, have not been classified.
8
A Claim or Interest is placed in a particular Class only to the extent
that the Claim or Interest falls within the description of that Class, and is
classified in other Classes to the extent that any portion of the Claim or
Interest falls within the description of such other Classes. A Claim is also
placed in a particular Class for the purpose of receiving distributions pursuant
to the Plan only to the extent that such Claim is an Allowed Claim in that Class
and such Claim has not been paid, released, or otherwise settled prior to the
Consummation Date.
B. UNCLASSIFIED CLAIMS (NOT ENTITLED TO VOTE ON THE PLAN)
1. Administrative Claims
2. Priority Tax Claims
C. UNIMPAIRED CLASSES OF CLAIMS (DEEMED TO HAVE ACCEPTED THE PLAN AND,
THEREFORE, NOT ENTITLED TO VOTE)
1. Class 1: Other Priority Claims
Class 1 consists of all Other Priority Claims.
2. Class 2a: AmSouth Secured Claim
Class 2a consists of the AmSouth Secured Claim.
3. Class 2b: Other Secured Claims
Class 2b consists of all Secured Claims other than the AmSouth Secured
Claim.
D. IMPAIRED CLASSES OF CLAIMS OR INTERESTS (CLASSES 3 AND 4 ARE ENTITLED
TO VOTE ON THE PLAN; CLASSES 5, 6, 7 AND 8 ARE DEEMED TO HAVE REJECTED
THE PLAN AND, THEREFORE, ARE NOT ENTITLED TO VOTE)
1. Class 3: Convenience Claims
Class 3 consists of all Convenience Claims.
2. Class 4: General Unsecured Claims
Class 4 consists of all General Unsecured Claims.
3. Class 5: Preferred Stock Interests
Class 5 consists of all Preferred Stock Interests.
4. Class 6: Common Stock Interests
Class 6 consists of all Common Stock Interests.
5. Class 7: Shareholder Litigation Claims
Class 7 consists of all Shareholder Litigation Claims.
6. Class 8: Warrants Interests
Class 8 consists of all Warrants Interests.
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ARTICLE III
TREATMENT OF CLAIMS AND INTERESTS
A. UNCLASSIFIED CLAIMS
1. Administrative Claims
Except as otherwise provided for herein, and subject to the
requirements of Article XV.A hereof, on, or as soon as reasonably practicable
after, the later of (a) the Distribution Date or (b) the date which is 30 days
after the date such Administrative Claim becomes an Allowed Administrative
Claim, each holder of an Allowed Administrative Claim shall, in full
satisfaction, settlement, and release of and in exchange for such Allowed
Administrative Claim, receive (i) Cash equal to the unpaid portion of such
Allowed Administrative Claim, or (ii) such other treatment as to which the
Debtors or Reorganized PhyCor and such holder shall have agreed upon in writing;
provided, however, that Allowed Administrative Claims with respect to
liabilities incurred by the Debtors in the ordinary course of business during
the Chapter 11 Cases shall be paid in the ordinary course of business in
accordance with the terms and conditions of any agreements relating thereto.
2. Priority Tax Claims
On, or as soon as reasonably practicable after, the later of (a) the
Distribution Date or (b) the date which is 30 days after the date such Priority
Tax Claim becomes an Allowed Priority Tax Claim in the sole discretion of the
Debtors or Reorganized PhyCor, either (i) each Allowed Priority Tax Claim shall
remain unaltered with respect to all the legal, equitable, and contractual
rights to which such Allowed Priority Tax Claim entitles the holder thereof,
(ii) each holder of an Allowed Priority Tax Claim shall, in full satisfaction,
settlement, and release of and in exchange for such Allowed Priority Tax Claim,
receive (A) Cash equal to the amount of such Allowed Priority Tax Claim, (B)
Cash payments over a period not exceeding six years from the date of assessment
of such Allowed Priority Tax Claim as provided in section 1129(a)(9)(C) of the
Bankruptcy Code, plus interest on the unpaid portion thereof at the Case
Interest Rate, or (iii) such other treatment as to which the Debtors or
Reorganized PhyCor and such holder shall have agreed upon in writing; provided,
however, that any Claim or demand for payment of a penalty (other than a penalty
of the type specified in section 507(a)(8)(G) of the Bankruptcy Code) shall be
disallowed pursuant to this Plan, and the holder of an Allowed Priority Tax
Claim shall not assess or attempt to collect such penalty from the Debtors,
their Estates, Reorganized PhyCor, or their property.
B. UNIMPAIRED CLASSES OF CLAIMS
1. Class 1: Other Priority Claims
On, or as soon as reasonably practicable after, the later of (a) the
Distribution Date or (b) the date which is 30 days after the date such Other
Priority Claim becomes an Allowed Other Priority Claim, the holder of an Allowed
Other Priority Claim shall, in full satisfaction, settlement, release, and
discharge of and in exchange for such Allowed Class 1 Other Priority Claim, in
the sole discretion of PhyCor, receive (i) Cash in an amount equal to such
Allowed Class 1 Other Priority Claim, or (ii) such other treatment as the
Debtors or Reorganized PhyCor and such holder shall have agreed upon in writing.
2. Class 2a: AmSouth Secured Claim
On as reasonably practicable after, the later of (a) the Distribution
Date or (b) the date which is 30 days after such AmSouth Secured Claim becomes
an Allowed AmSouth Secured Claim, the holder of the Allowed AmSouth Secured
Claim shall, in full satisfaction, settlement, release, and discharge of and in
exchange for such Allowed Class 2a AmSouth Secured Claim, in the sole discretion
of PhyCor, (i) receive Cash in an amount equal to such Allowed Class 2a AmSouth
Secured Claim, (ii) upon abandonment by Reorganized PhyCor, receive the
collateral securing such holder's Allowed Class 2a AmSouth Secured Claim, plus
any interest, in Cash, required to be paid under section 506(b) of the
Bankruptcy Code, (iii) have its Allowed Class 2a AmSouth Secured Claim
Reinstated, or (iv) receive such other treatment as the Debtors or Reorganized
PhyCor and such holder shall have agreed upon in writing.
3. Class 2b: Other Secured Claims
On, or as reasonably practicable after the later of (a) the
Distribution Date or (b) the date which is 30 days after the date such Other
Secured Claim becomes an Allowed Other Secured Claim, the holder of an Allowed
Other Secured Claim shall, in full satisfaction, settlement, release, and
discharge of and in exchange for such Allowed Class 2b Other Secured Claim, in
the sole discretion of PhyCor, (i) receive Cash in an amount equal to such
Allowed Class 2b Other Secured Claim,
10
(ii) upon abandonment by Reorganized PhyCor, receive the collateral securing
such holder's Allowed Class 2b Other Secured Claim, plus any interest, in Cash,
required to be paid under section 506(b) of the Bankruptcy Code, (iii) have its
Allowed Class 2b Other Secured Claim Reinstated, or (iv) receive such other
treatment as the Debtors or Reorganized PhyCor and such holder shall have agreed
upon in writing.
C. IMPAIRED CLASSES OF CLAIMS
1. Class 3: Convenience Claims
a. Distributions
On, or as soon as reasonably practicable after, the later of (a) the
Distribution Date or (b) the date which is 30 days after the date such
Convenience Claim becomes an Allowed Convenience Claim, the holder of an Allowed
Convenience Claim shall, in full satisfaction, settlement, and release of and in
exchange for such Allowed Convenience Claim, receive Cash equal to 12.2% of the
amount of such Allowed Convenience Claim.
b. Election To Be Treated As Convenience Claim
By checking the appropriate box on a timely cast Ballot and by
returning the 4.5% Convertible Subordinated certificate(s) to SunTrust Bank, the
Indenture Trustee, as provided herein, the holder of an Allowed Class 4 General
Unsecured Claim in an amount greater than $50,000 (including any accrued and
unpaid interest) may elect to reduce the total amount of such holder's Allowed
Class 4 General Unsecured Claim to $50,000 and to receive treatment as an
Allowed Class 3 Convenience Claim in the total amount of $50,000, as described
in Article III.C.1.a above, and such election shall be binding upon any
subsequent holder of the Claim. Such an election shall constitute a waiver of
the right to collect, and a release of, the amount of the Allowed Class 4
Unsecured Claim in excess of $50,000, and the holder of such Allowed Class 3
Convenience Claim shall be deemed to have released the Debtors, their Estates,
Reorganized PhyCor, and their respective property from any and all liability for
such excess amount. The holder of an Allowed Class 4 General Unsecured Claim
that timely elects to reduce the amount of its Allowed Claim shall be deemed to
be the holder of an Allowed Class 3 Convenience Claim for classification,
voting, and all other purposes under this Plan.
Class 4 claimants holding in excess of $50,000 (including both
principal and unpaid interest accrued through January 31, 2002) of PhyCor's 4.5%
Convertible Subordinated Debentures who elect to reduce their claims to a total
of $50,000 and therefore receive distributions of Cash as Class 3 claimants,
shall (i) vote on the Plan using the Class 4 Ballot and (ii) deliver the 4.5%
Convertible Subordinated Debenture certificate(s) to SunTrust Bank, the
Indenture Trustee, by 5:00 p.m. on the Voting Deadline.
2. Class 4: General Unsecured Claims
On, or as soon as reasonably practicable after, the later of (a) the
Distribution Date or (b) the date which is 30 days after the date such General
Unsecured Claim becomes an Allowed General Unsecured Claim, the holder of an
Allowed Class 4 General Unsecured Claim shall, in full satisfaction, settlement,
release, and discharge of and in exchange for such Allowed Class 4 General
Unsecured Claim, receive its pro rata share of 5.8 million shares of the New
Common Stock, such number being equivalent to 96.5% of the outstanding shares of
New Common Stock.
On the Consummation Date, the (i) 4.5% Convertible Subordinated
Debenture Claims shall be deemed Allowed Class 4 General Unsecured Claims in the
aggregate amount of $196.5 million, plus accrued interest at the non-default
rate through the Petition Date and fees and expenses owing in respect thereof
and (ii) the Zero Coupon Note Claims shall be deemed Allowed Class 4 General
Unsecured Claims in the aggregate accreted amount of $117.2 million as of
January 31, 2002, plus fees and expenses owing in respect thereof through the
Petition Date.
3. Class 5: Preferred Stock Interests
Each holder of a Class 5 Preferred Stock Interest shall not be entitled
to, and shall not receive or retain, any property or interest in property on
account of such Interests, which shall be cancelled on the Consummation Date.
4. Class 6: Common Stock Interests
11
Each holder of a Class 6 Common Stock Interest shall not be entitled
to, and shall not receive or retain, any property or interest in property on
account of such Interests, which shall be cancelled on the Consummation Date.
5. Class 7: Shareholder Litigation Claims
Each holder of a Class 7 Shareholder Litigation Claim shall not be
entitled to, and shall not receive or retain, any property or interest in
property on account of such Claim, which shall be discharged on the Consummation
Date.
6. Class 8: Warrants Interests
Each holder of a Class 8 Warrants Interest shall not be entitled to,
and shall not receive or retain, any property or interest in property on account
of such Interests, which shall be cancelled on the Consummation Date.
ARTICLE IV
MEANS FOR IMPLEMENTATION OF THE PLAN
A. SUBSTANTIVE CONSOLIDATION
1. Consolidation Of The Chapter 11 Cases
The Plan contemplates and is predicated upon entry of an order
substantively consolidating the Debtors' Estates and Chapter 11 Cases for the
purposes of all actions associated with Confirmation and consummation of the
Plan. As a result of such consolidation, (i) all Intercompany Claims by,
between, and among the Debtors shall be eliminated, (ii) all assets and
liabilities of the Debtor Subsidiaries shall be merged or treated as if they
were merged with the assets and liabilities of PhyCor, (iii) any obligation of a
Debtor and all guarantees thereof by one or more of the other Debtors shall be
deemed to be one obligation of PhyCor, (iv) the Debtor Subsidiary Interests
shall be cancelled, and (v) each Claim filed or to be filed against any Debtor
shall be deemed filed only against PhyCor and shall be deemed a single Claim
against and a single obligation of PhyCor. On the Confirmation Date, and in
accordance with the terms of the Plan and the consolidation of the assets and
liabilities of the Debtors, all Claims based upon guaranties of collection,
payment, or performance made by the Debtors as to the obligations of another
Debtor shall be released and of no further force and effect. On the Consummation
Date, all of the Debtor Subsidiaries other than The Member Corporation, Inc. and
SynerPhy of Rome, Inc. (f/k/a PhyCor of Rome, Inc.) shall be merged with and
consolidated into PhyCor pursuant to the terms of a plan and agreement of merger
attached hereto as Exhibit E.
2. Substantive Consolidation Order
Unless the Bankruptcy Court has approved the substantive consolidation
of the Chapter 11 Cases by a prior order, this Plan shall serve as, and shall be
deemed to be, a motion for entry of an order substantively consolidating the
Debtors' Chapter 11 Cases. If no objection to substantive consolidation is
timely filed and served by any holder of an Impaired Claim affected by the Plan
as provided herein on or before the Voting Deadline or such other date as may be
established by the Bankruptcy Court, the Substantive Consolidation Order may be
entered by the Bankruptcy Court. If any such objections are timely filed and
served, a hearing with respect to the substantive consolidation of the Chapter
11 Cases and any objections thereto shall be scheduled by the Bankruptcy Court,
which hearing may be prior to, or may but is not required to coincide with, the
Confirmation Hearing.
B. CONTINUED CORPORATE EXISTENCE; CHANGE OF NAME
PhyCor shall continue to exist as Reorganized PhyCor after the
Consummation Date in accordance with the laws of the State of Tennessee and
pursuant to the amended and restated charter and by-laws in effect prior to the
Consummation Date, except to the extent such amended and restated charter and
by-laws are amended under this Plan. Effective upon the Consummation Date, the
Company shall change its name to Aveta Health, Inc.
C. AMENDED AND RESTATED CHARTER AND BY-LAWS
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The amended and restated charter and by-laws of PhyCor shall be amended
as necessary to satisfy the provisions of the Plan and the Bankruptcy Code. The
amended and restated charter of Reorganized PhyCor shall be amended, among other
things: (i) to authorize 25 million shares of New Common Stock, $0.01 par value
per share, (ii) pursuant to section 1123(a)(6) of the Bankruptcy Code, to
prohibit the issuance of non-voting equity securities, and (iii) change the
Company's name to Aveta Health, Inc. The Amended and Restated Charter and
By-laws shall be included in the Plan Supplement.
D. CORPORATE ACTION
1. Cancellation Of Existing Securities And Agreements
On the Consummation Date, except as otherwise provided for herein, (i)
the Existing Securities, to the extent not already cancelled, shall be cancelled
and (ii) the obligations of PhyCor under the Existing Securities and under
PhyCor's amended and restated charter or any agreements, indentures, or
certificates of designations governing the Existing Securities shall be
discharged; provided, however, that each indenture or other agreement that
governs the rights of the holder of a Claim based on the Existing Securities and
that is administered by an indenture trustee, agent, or servicer shall continue
in effect solely for the purposes of (a) allowing such indenture trustee, agent,
or servicer to make the distributions to be made on account of such Claims under
the Plan as provided in Article III hereof and (b) permitting such indenture
trustee, agent, or servicer to maintain any rights it may have for fees, costs,
and expenses under such indenture or other agreement.
Any actions taken by an indenture trustee, agent, or servicer that are
not for the purposes authorized in this Article IV.D.1 shall not be binding upon
the Debtors. Notwithstanding the foregoing, the Debtor may terminate any
indenture or other governing agreement and the authority of any indenture
trustee, agent, or servicer to act thereunder at any time, with or without
cause, by giving five days' written notice of termination to the indenture
trustee, agent, or servicer. If distributions under the Plan have not been
completed at the time of termination of the indenture or other governing
agreement, the Debtors shall designate a Disbursing Agent to act in place of the
indenture trustee, agent, or servicer, and the provisions of this Article IV.D.1
shall be deemed to apply to the new distribution agent.
E. RESTRUCTURING TRANSACTIONS
1. New Securities
a. Authorization
As of the Consummation Date, the authorization by Reorganized PhyCor of
(i) 25 million shares of New Common Stock and (ii) Management Incentive Options
in accordance with the Management Incentive Plan, is hereby authorized without
further act or action under applicable law, regulation, order, or rule.
b. Issuance
The New Securities authorized pursuant to this Article IV.E.1 shall be
issued by Reorganized PhyCor pursuant to the Plan without further act or action
under applicable law, regulation, order, or rule, as follows: (i) 5.7 million
shares of New Common Stock, representing 95% of the initial issued shares of New
Common Stock, subject to dilution by the Management Incentive Options, shall be
issued to the holders of Class 4 General Unsecured Claims and (ii) the
Management Incentive Options shall be issued to the Management Incentive Plan
Participants in accordance with the Management Incentive Plan.
F. DIRECTORS AND OFFICERS
On the Consummation Date, the term of the current board of directors of
the PhyCor shall expire. The initial board of directors of the Reorganized
PhyCor after the Consummation Date shall consist of five members, which shall
include the Chief Executive Officer of the Reorganized PhyCor, Tarpley B. Jones,
who shall be the Chairman of the Board; one person who shall be designated by
Warburg, Pincus; and three people who shall be designated by the Noteholders'
Committee. In the event that Warburg, Pincus fails to designate a board member,
the Noteholders' Committee shall succeed to Warburg, Pincus' right to so
designate a board member. The Debtors and the Noteholders' Committee intend to
announce prior to the Confirmation Date the identities of all individuals
proposed to serve as directors or officers of Reorganized PhyCor by inclusion of
a list of
13
proposed directors and/or officers in the Plan Supplement. The board of
directors of Reorganized PhyCor shall have the responsibility for the
management, control, and operation of Reorganized PhyCor on and after the
Consummation Date.
G. EFFECTUATING DOCUMENTS; FURTHER TRANSACTIONS
The chairman of the board of directors, president, chief financial
officer, or any other appropriate officer of Reorganized PhyCor shall be
authorized to execute, deliver, file, or record such contracts, instruments,
releases, indentures, and other agreements or documents, and take such actions,
as may be necessary or appropriate to effectuate and further evidence the terms
and conditions of the Plan. The secretary or assistant secretary of Reorganized
PhyCor shall be authorized to certify or attest to any of the foregoing actions.
H. VESTING OF ASSETS
The property of the Debtors' Estates that is not specifically disposed
of pursuant to the Plan shall vest in PhyCor on the Confirmation Date.
Thereafter, PhyCor may operate its business and may use, acquire, and dispose of
property free of any restrictions of the Bankruptcy Code, the Bankruptcy Rules,
and the Bankruptcy Court. As of the Confirmation Date, all property of PhyCor
and the Debtor Subsidiaries shall be free and clear of all Claims and interests,
except as specifically provided in the Plan or the Confirmation Order. Without
limiting the generality of the foregoing, PhyCor may, without application to or
approval by the Bankruptcy Court, pay professional fees and expenses that it
incurs after the Confirmation Date.
I. PRESERVATION OF RIGHTS OF ACTION; SETTLEMENT OF LITIGATION CLAIMS
1. Preservation Of Rights Of Action
Except as otherwise provided in the Plan, the Confirmation Order, or in
any document, instrument, release, or other agreement entered into in connection
with the Plan, in accordance with section 1123(b) of the Bankruptcy Code, the
Debtors and their Estates shall retain the Litigation Claims. Reorganized
PhyCor, as the successor in interest to the Debtors, may enforce, sue on, settle
or compromise (or decline to do any of the foregoing) any or all of the
Litigation Claims. The failure of the Debtors to list a claim, right of action,
suit, or proceeding on Exhibit D shall not constitute a waiver or release by the
Debtors or their Estates of such claim, right of action, suit, or proceeding.
2. Settlement Of Litigation Claims
At any time after the Confirmation Date and before the Consummation
Date, notwithstanding anything in this Plan to the contrary, the Debtors, in
consultation with the Creditors' Committee, may settle some or all of the
Litigation Claims with the approval of the Bankruptcy Court pursuant to Fed. R.
Bankr. P. 9019.
J. CREDITORS' COMMITTEE
The Creditors' Committee shall continue in existence until the date
which is 30 days after the Consummation Date, to exercise those powers and
perform those duties specified in section 1103 of the Bankruptcy Code, and shall
perform such other duties as it may have been assigned by the Bankruptcy Court
prior to the Consummation Date. On the date which is 30 days after the
Consummation Date, the Creditors' Committee shall be dissolved and its members
shall be deemed released of all their duties, responsibilities, and obligations
in connection with the Chapter 11 Cases or the Plan and its implementation, and
the retention or employment of the Creditors' Committee's attorneys,
accountants, and other agents shall terminate. All expenses of Creditors'
Committee members and the fees and expenses of their professionals through the
Confirmation Date shall be paid in accordance with the terms and conditions of
the Professional Fee Order.
K. SOURCES OF CASH FOR PLAN DISTRIBUTIONS
Except as otherwise provided in the Plan or the Confirmation Order, all
Cash necessary for Reorganized PhyCor to make payments pursuant to the Plan
shall be obtained from the Debtors' cash balances and the liquidation of the
Debtors' remaining non-Cash assets, if any. Cash payments to be made pursuant to
the Plan shall be made by Reorganized PhyCor (or any successor thereto) or, if
the Disbursing Agent is an entity other than Reorganized PhyCor, the Disbursing
Agent.
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L. RELEASE OF LIENS
Except as otherwise provided in the Plan, the Confirmation Order, or in
any document, instrument, or other agreement created in connection with, or
authorized by, the Plan, on the Consummation Date, all mortgages, deeds of
trust, liens or other security interests against the property of the Estates
shall be released.
M. EXEMPTION FROM CERTAIN TRANSFER TAXES
Pursuant to section 1146(c) of the Bankruptcy Code, any transfers from
the Debtors to Reorganized PhyCor or any other Person or entity pursuant to the
Plan shall not be subject to any document recording tax, stamp tax, conveyance
fee, intangibles or similar tax, mortgage tax, stamp act, real estate transfer
tax, mortgage recording tax, or other similar tax or governmental assessment and
the Confirmation Order shall direct the appropriate state or local governmental
officials or agents to forego the collection of any such tax or governmental
assessment and to accept for filing and recordation any of the foregoing
instruments or other documents without the payment of any such tax or
governmental assessment.
ARTICLE V
ACCEPTANCE OR REJECTION OF THE PLAN
A. CLASSES ENTITLED TO VOTE
Each Impaired Class of Claims that will (or may) receive or retain
property or any interest in property under the Plan shall be entitled to vote to
accept or reject the Plan. Ballots shall be cast and tabulated on a consolidated
basis, in accordance with the expected substantive consolidation of the Debtors'
Estates and Chapter 11 Cases. By operation of law, each Unimpaired Class of
Claims is deemed to have accepted the Plan and, therefore, is not entitled to
vote to accept or reject the Plan. Because holders of Class 5 Preferred Stock
Interests, Class 6 Common Stock Interests, Class 7 Shareholder Litigation
Claims, and Class 8 Warrants Interests are not entitled to receive or retain any
property under the Plan, Classes 5, 6, 7, and 8 are presumed to have rejected
the Plan and, therefore, are not entitled to vote on the Plan.
B. ACCEPTANCE BY IMPAIRED CLASSES
An Impaired Class of Claims shall have accepted the Plan if (i) the
holders (other than any holder designated under section 1126(e) of the
Bankruptcy Code) of at least two-thirds in amount of the Allowed Claims actually
voting in such Class have voted to accept the Plan and (ii) the holders (other
than any holder designated under section 1126(e) of the Bankruptcy Code) of more
than one-half in number of the Allowed Claims actually voting in such Class have
voted to accept the Plan.
C. CRAMDOWN
To the extent necessary, the Debtors request Confirmation of the Plan,
as it may be modified from time to time, under section 1129(b) of the Bankruptcy
Code. The Debtors reserve the right to modify the Plan to the extent, if any,
that Confirmation pursuant to section 1129(b) of the Bankruptcy Code requires
modification.
ARTICLE VI
SECURITIES TO BE ISSUED
IN CONNECTION WITH THE PLAN
A. DESCRIPTION OF SECURITIES TO BE ISSUED IN CONNECTION WITH THE PLAN
On or before the Distribution Date, Reorganized PhyCor shall issue for
distribution, in accordance with the provisions of Article IV.E hereof, the New
Common Stock and Management Incentive Options required for distribution or sale
pursuant to the provisions of the Plan. All securities to be issued will be
deemed issued as of the Distribution Date regardless of the date on which they
are actually distributed. A description of the terms of the New Common Stock is
attached hereto as Exhibit A. The Management Incentive Plan is attached hereto
as Exhibit B.
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ARTICLE VII
PROVISIONS GOVERNING DISTRIBUTIONS
A. CLASS 4: DELIVERY OF 4.5% CONVERTIBLE SUBORDINATED DEBENTURES BY
CLAIMANTS WHO ELECT TO REDUCE THEIR CLAIMS TO $50,000
Class 4 claimants holding in excess of $50,000 (including unpaid
interest accrued through January 31, 2002) of PhyCor's 4.5% Convertible
Subordinated Debentures who elect to reduce their claims to $50,000 and
therefore receive distributions of Cash as Class 3 claimants, shall (i) vote on
the Plan using the Class 4 Ballot and (ii) deliver the 4.5% Convertible
Subordinated Debenture certificate(s) to SunTrust Bank, the Indenture Trustee,
by 5:00 p.m. on the Voting Deadline. DELIVERY OF A CLASS 4 BALLOT TO THE
INFORMATION AGENT SHALL NOT CONSTITUTE VALID DELIVERY OF THE 4.5% CONVERTIBLE
SUBORDINATED DEBENTURES TO SUNTRUST BANK, THE INDENTURE TRUSTEE.
B. DISTRIBUTIONS FOR CLAIMS ALLOWED AS OF THE CONSUMMATION DATE
Except as otherwise provided herein or as ordered by the Bankruptcy
Court, distributions to be made on account of Claims that are Allowed Claims as
of the Consummation Date shall be made on the Distribution Date. The New
Securities to be issued under this Plan shall be deemed issued as of the
Distribution Date regardless of the date on which they are actually distributed.
Distributions on account of Claims that first become Allowed Claims after the
Consummation Date shall be made pursuant to Articles III, VII, and IX of this
Plan.
C. INTEREST ON CLAIMS
Unless otherwise specifically provided for in the Plan or Confirmation
Order, or required by applicable bankruptcy law, postpetition interest shall not
accrue or be paid on any Claims, and no holder of a Claim shall be entitled to
interest accruing on or after the Petition Date on any Claim.
D. DISTRIBUTIONS BY DISBURSING AGENT
The Disbursing Agent shall make all distributions required under this
Plan (subject to the provisions of Articles III, VII, and IX hereof), except
with respect to a holder of a Claim whose distribution is governed by an
indenture or other agreement and is administered by an indenture trustee, agent,
or servicer, which distributions shall be deposited with the appropriate
indenture trustee, agent, or servicer, who shall deliver such distributions to
the holders of Claims in accordance with the provisions of this Plan and the
terms of the relevant indenture or other governing agreement.
If the Disbursing Agent is an independent third party designated by
Reorganized PhyCor to serve in such capacity (or, in the case of an indenture or
other agreement which governs distributions and is administered by an indenture
trustee, agent, or servicer), such Disbursing Agent, indenture trustee, agent,
or servicer shall receive, without further Bankruptcy Court approval, reasonable
compensation for distribution services rendered pursuant to the Plan and
reimbursement of reasonable out-of-pocket expenses incurred in connection with
such services from Reorganized PhyCor on terms acceptable to Reorganized PhyCor.
No Disbursing Agent shall be required to give any bond or surety or other
security for the performance of its duties unless otherwise ordered by the
Bankruptcy Court. If otherwise so ordered, all costs and expenses of procuring
any such bond shall be paid by Reorganized PhyCor.
E. DELIVERY OF DISTRIBUTIONS AND UNDELIVERABLE OR UNCLAIMED DISTRIBUTIONS
1. Delivery Of Distributions In General
Distributions to holders of Allowed Claims shall be made by the
Disbursing Agent or the appropriate indenture trustee, agent, or servicer, as
the case may be, (a) at the addresses set forth on the proofs of Claim filed by
such holders (or at the last known addresses of such holders if no proof of
Claim is filed or if the Debtor has been notified of a change of address), (b)
at the addresses set forth in any written notices of address changes delivered
to the Disbursing Agent after the date of any related proof of Claim, (c) at the
addresses reflected in the Schedules if no proof of Claim has been filed and the
Disbursing Agent has not received a written notice of a change of address, (d)
in the case of the holder of a Claim which is governed by
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an indenture or other agreement and is administered by an indenture trustee,
agent, or servicer, at the addresses contained in the official records of such
indenture trustee, agent, or servicer, or (e) at the addresses set forth in a
properly completed letter of transmittal accompanying securities properly
remitted to the Debtor.
2. Undeliverable And Unclaimed Distributions
a. Holding Of Undeliverable And Unclaimed
Distributions
If any holder's distribution is returned as undeliverable, no further
distributions to such holder shall be made unless and until the Disbursing Agent
or the appropriate indenture trustee, agent, or servicer is notified of such
holder's then-current address, at which time all missed distributions shall be
made to such holder without interest. Amounts in respect of undeliverable
distributions made through the Disbursing Agent or the indenture trustee, agent,
or servicer shall be returned to Reorganized PhyCor until such distributions are
claimed.
b. Failure To Claim Undeliverable Distributions
Any holder of an Allowed Claim which does not assert a claim pursuant
to the Plan for an undeliverable or unclaimed distribution within two years
after the Consummation Date shall be deemed to have forfeited its claim for such
undeliverable or unclaimed distribution and shall be forever barred and enjoined
from asserting any such claim for an undeliverable or unclaimed distribution
against the Debtors and the Estates, Reorganized PhyCor, or their property. In
such cases, (i) all Cash in respect of such undeliverable distribution,
including interest accrued thereon, shall become the property of Reorganized
PhyCor free of any restrictions thereon, and (ii) all New Common Stock in
respect of such undeliverable distribution shall be cancelled notwithstanding
any federal or state escheat laws to the contrary. Nothing contained in the Plan
shall require any Disbursing Agent, including, but not limited to, Reorganized
PhyCor, to attempt to locate any holder of an Allowed Claim.
F. RECORD DATE FOR DISTRIBUTIONS
The record date for distributions to holders of Allowed General
Unsecured Claims shall be the Distribution Record Date. At the close of business
on the Distribution Record Date, the transfer ledgers for the 4.5% Convertible
Subordinated Debentures and Zero Coupon Notes shall be closed, and there shall
be no further changes in the record holders of such securities. Reorganized
PhyCor, the Indenture Trustee, and the Disbursing Agent, if any, shall have no
obligation to recognize any transfer of any such securities occurring after the
Distribution Record Date and shall be entitled instead to recognize and deal for
all purposes hereunder with only those record holders stated on the transfer
ledgers as of the close of business on the Distribution Record Date.
G. MEANS OF CASH PAYMENT
Payments of Cash made pursuant to the Plan shall be in U.S. dollars and
shall be made, at the option and in the sole discretion of Reorganized PhyCor,
by (i) checks drawn on or (ii) wire transfer from, a domestic bank selected by
Reorganized PhyCor.
H. WITHHOLDING AND REPORTING REQUIREMENTS
In connection with the Plan and all distributions thereunder, the
Disbursing Agent shall comply with all withholding and reporting requirements
imposed by any federal, state, local, or foreign taxing authority, and all
distributions hereunder shall be subject to any such withholding and reporting
requirements. The Disbursing Agent shall be authorized to take any and all
actions as may be necessary or appropriate to comply with such withholding and
reporting requirements.
I. SETOFF
Reorganized PhyCor may, but shall not be required to, set off against
any Claim, other than any Claim deemed Allowed under the Plan, and the payments
or other distributions to be made pursuant to the Plan in respect of such Claim,
claims of any nature whatsoever that the Debtors or Reorganized PhyCor may have
against the holder of such Claim; provided, however, that neither the failure to
do so nor the allowance of any Claim hereunder shall constitute a waiver or
release by Reorganized PhyCor of any such claim that the Debtors or Reorganized
PhyCor may have against such holder.
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The holder of a Disputed Claim who asserts a right of setoff shall
retain such right, subject to any defenses of the Debtor or Reorganized Debtor,
until the earlier of the time when (i) such Disputed Claim becomes Allowed, in
whole or in part, or (ii) such claim is expunged by entry of an order of the
Bankruptcy Court.
J. SURRENDER OF CANCELLED DEBT INSTRUMENTS OR SECURITIES
On or before the Distribution Date, or as soon thereafter as
practicable, each holder of an instrument evidencing a Claim on account of an
Existing Security (a "Certificate"), except in the case of certain Class 4
claimants who have previously delivered debt instruments to the Indenture
Trustee, shall surrender such Certificate to the Disbursing Agent or, with
respect to indebtedness that is governed by an indenture or other agreement, the
respective indenture trustee, agent, or servicer, as the case may be, and such
Certificate shall be cancelled. In the case of a Class 4 claimant who holds at
least $17,500,000 in principal amount of 4.5% Convertible Subordinated
Debentures, the Certificate shall be accompanied by an Affirmation in the
applicable form attached hereto as Exhibit F. The Affirmation will be included
with the letter of transmittal regarding the surrender of Certificates that will
be forwarded to each Class 4 claimant by the Information Agent as soon as
practicable after Confirmation.
No distribution of property hereunder shall be made to or on behalf of
any such holder unless and until such Certificate and Affirmation are received
by the Disbursing Agent or the respective indenture trustee, agent, or servicer,
as the case may be, or the unavailability of such Certificate is reasonably
established to the satisfaction of the Disbursing Agent or the respective
indenture trustee, agent, or servicer, as the case may be. Any such holder who
fails to surrender or cause to be surrendered such Certificate or fails to
execute and deliver an affidavit of loss and indemnity reasonably satisfactory
to the Disbursing Agent or the respective indenture trustee, agent, or servicer,
as the case may be, prior to the second anniversary of the Confirmation Date,
shall be deemed to have forfeited all rights and Claims or Interests in respect
of such Certificate and shall not participate in any distribution hereunder, and
all property in respect of such forfeited distribution, including interest
accrued thereon, shall revert to Reorganized PhyCor notwithstanding any federal
or state escheat laws to the contrary.
K. FRACTIONAL DOLLARS; DE MINIMIS DISTRIBUTIONS
Notwithstanding any other provision of the Plan, Reorganized PhyCor
shall not be required to make distributions or payments of fractions of dollars,
and whenever any payment of a fraction of a dollar under the Plan would
otherwise be called for, the actual payment made shall reflect a rounding of
such fraction to the nearest whole dollar (up or down), with half dollars being
rounded down. The Disbursing Agent, or any indenture trustee, agent, or
servicer, as the case may be, shall not make any payment of less than $25.00
with respect to any Claim unless a request therefor is made in writing to such
Disbursing Agent, indenture trustee, agent, or servicer, as the case may be.
L. SERVICES OF INDENTURE TRUSTEE, AGENTS, AND SERVICERS
The services, with respect to consummation of the Plan, of the
Indenture Trustee, agents, and servicers under indentures and other agreements
that govern the rights of holders of Claims, shall be as set forth in the Plan.
M. CALCULATION OF DISTRIBUTION AMOUNTS OF NEW SECURITIES
No fractional shares of New Common Stock shall be issued or distributed
under the Plan or by Reorganized PhyCor or any Disbursing Agent, indenture
trustee, agent, or servicer. Each Person entitled to receive New Common Stock
shall receive the total number of whole shares of New Common Stock to which such
Person is entitled. Whenever any distribution to a particular Person would
otherwise call for distribution of a fraction of a share of New Common Stock,
the Disbursing Agent shall allocate separately one whole share or option, as the
case may be, to such Person and other Persons similarly entitled, in order of
the fractional portion of their entitlements, starting with the largest such
fractional portion, until all remaining whole shares or warrants have been
allocated. Upon the allocation of a whole share to a Person in respect of the
fractional portion of its entitlement, such fractional portion shall be
cancelled. If two or more Persons are entitled to equal fractional entitlements
and the number of Persons so entitled exceeds the number of whole shares or
options which remain to be allocated, the Disbursing Agent shall allocate the
remaining whole shares or options to such holders by random lot or such other
impartial method as the Disbursing Agent deems fair. Upon the allocation of all
of the whole shares or options authorized under the Plan, all remaining
fractional portions of the entitlements shall be cancelled and shall be of no
further force and effect. The Disbursing Agent, or any indenture trustee, agent,
or servicer shall not make any distribution of fewer than five shares of New
Common Stock with respect to any Claim unless a request therefor is made in
writing to such Disbursing Agent, indenture trustee, agent, or servicer, as the
case may be.
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ARTICLE VIII
TREATMENT OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES
A. REJECTED CONTRACTS AND LEASES
Except as otherwise provided in the Plan, or in any contract,
instrument, release, or other agreement or document entered into in connection
with the Plan, each of the executory contracts and unexpired leases to which any
Debtor is a party, to the extent such contracts or leases are executory
contracts or unexpired leases, shall be deemed to have been rejected by the
applicable Debtor on the Confirmation Date, unless such contract or lease (i)
previously (a) shall have been assumed or rejected by the Debtors or (b) shall
have expired or terminated pursuant to its own terms or (ii) is listed on the
schedule of assumed contracts and leases attached hereto as Exhibit C; provided,
however, that neither the inclusion by the Debtors of a contract or lease on
Exhibit C nor anything contained in this Article VIII.A shall constitute an
admission by any Debtor that such contract or lease is an executory contract or
unexpired lease or that any Debtor or its successors and assigns has any
liability thereunder. The Confirmation Order shall constitute an order of the
Bankruptcy Court approving the rejections described in this Article VIII.A,
pursuant to section 365 of the Bankruptcy Code, as of the Confirmation Date.
B. BAR TO REJECTION DAMAGES
If the rejection of an executory contract or unexpired lease pursuant
to Article VIII.A above or otherwise gives rise to a Claim by the other party or
parties to such contract or lease, such Claim shall be forever barred and shall
not be enforceable against the applicable Debtor or its Estate, Reorganized
PhyCor, or their respective successors or properties unless a proof of Claim is
filed with the Clerk of the Bankruptcy Court and served on Reorganized PhyCor
and counsel for Reorganized PhyCor within 30 days after service of the earlier
of (i) notice of entry of the Confirmation Order or (ii) other notice that the
executory contract or unexpired lease has been rejected.
C. ASSUMED CONTRACTS AND LEASES
Except as otherwise provided in the Plan or in any contract,
instrument, release, or other agreement or document entered into in connection
with the Plan, the Debtors shall assume each of the executory contracts and
unexpired leases listed on Exhibit C hereto. The Confirmation Order shall
constitute an order of the Bankruptcy Court approving the assumptions described
in this Article VIII.C, pursuant to section 365 of the Bankruptcy Code, as of
the Confirmation Date.
D. PAYMENTS RELATED TO ASSUMPTION OF CONTRACTS AND LEASES
Any monetary amounts by which each executory contract and unexpired
lease to be assumed under the Plan may be in default shall be satisfied, under
section 365(b)(1) of the Bankruptcy Code, by cure payments to be made on the
Distribution Date. In the event of a dispute regarding (i) the nature or amount
of any cure payments, (ii) the ability of the Debtors or any assignee of the
Debtors to provide "adequate assurance of future performance" (within the
meaning of section 365 of the Bankruptcy Code) under the contract or lease to be
assumed, or (iii) any other matter pertaining to assumption or assignment, the
Debtors or Reorganized PhyCor shall make such cure payments following the entry
of a Final Order resolving the dispute and approving the assumption and
assignment, as the case may be.
E. CERTAIN EMPLOYMENT CONTRACTS
PhyCor shall assume the separation agreement of Thompson S. Dent and
the employment contract of Tarpley B. Jones. Confirmation shall not constitute a
"change of control" under the employment contract of Tarpley B. Jones.
PhyCor shall also assume all other employment contracts with its
employees existing on the Petition Date (to the extent such contracts have not
terminated by their own terms or by agreement with the Debtors prior to the
Consummation Date) as well as certain separation agreements.
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F. COMPENSATION AND BENEFIT PLANS AND TREATMENT OF RETIREMENT PLAN
Except and to the extent previously assumed by an order of the
Bankruptcy Court, on or before the Confirmation Date, and except as set forth
below, all employee compensation and Benefit Plans of the Debtor, including
programs subject to sections 1114 and 1129(a)(13) of the Bankruptcy Code,
entered into before or after the Petition Date and not since terminated, shall
be deemed to be, and shall be treated as if they were, executory contracts that
are assumed under Article VIII.A hereof, but only to the extent that rights
under such programs are held by the Debtors or Persons who are employees of the
Debtors as of the Confirmation Date, and the Debtors' obligations under such
programs to Persons who are employees of the Debtors on the Confirmation Date
shall survive confirmation of this Plan, except for (i) executory contracts or
Benefit Plans specifically rejected pursuant to the Plan (to the extent such
rejection does not violate sections 1114 and 1129(a)(13) of the Bankruptcy Code)
and (ii) such executory contracts or Benefit Plans as have previously been
rejected, are the subject of a motion to reject, or have been specifically
waived by the beneficiaries of any Benefit Plans or contracts; provided,
however, that the Debtors' obligations, if any, to pay all "retiree benefits" as
defined in section 1114(a) of the Bankruptcy Code shall continue.
ARTICLE IX
PROCEDURES FOR RESOLVING DISPUTED,
CONTINGENT, AND UNLIQUIDATED CLAIMS
A. OBJECTION DEADLINE; PROSECUTION OF OBJECTIONS
As soon as practicable, but in no event later than 120 days after the
Consummation Date (unless extended by an order of the Bankruptcy Court), the
Debtors or Reorganized PhyCor, as the case may be, shall file objections to
Claims, including any Administrative Claim, Priority Tax Claim, Other Priority
Claim, Secured Claim, and General Unsecured Claim, with the Bankruptcy Court and
serve such objections upon the holders of each of the Claims to which objections
are made. Nothing contained herein, however, shall limit Reorganized PhyCor's
right to object to Claims, if any, filed or amended more than 120 days after the
Consummation Date. Reorganized PhyCor shall be authorized to, and shall, resolve
all Disputed Claims by withdrawing or settling such objections thereto, or by
litigating to judgment in the Bankruptcy Court or other court of appropriate
jurisdiction the validity, nature, and/or amount thereof.
The foregoing shall apply to any and all Claims, other than a Claim or
any portion thereof deemed Allowed under the Plan, that are listed in the
Schedules as disputed, contingent, and/or unliquidated only if the holder of any
such Claim filed a proof of Claim on account of such Claim. The Debtors reserve
their right to seek an order expunging and disallowing any Claim that is listed
in the Schedules as disputed, contingent, and/or unliquidated, and for which no
proof of Claim was timely filed.
Except as otherwise provided in the Plan, nothing shall affect the
Debtors' or Reorganized PhyCor's rights and defenses, both legal and equitable,
with respect to any Claims, including, but not limited to, all rights with
respect to legal and equitable defenses to setoff or recoupments against Claims.
B. NO DISTRIBUTIONS PENDING ALLOWANCE
Notwithstanding any other provision of the Plan, no payments or
distributions shall be made with respect to all or any portion of a Disputed
Claim unless and until all objections to such Disputed Claim have been settled
or withdrawn or have been determined by Final Order, and the Disputed Claim, or
some portion thereof, has become an Allowed Claim.
C. DISPUTED CLAIMS RESERVE
1. The Disbursing Agent shall withhold the Disputed Claims Reserve from
the Cash, New Common Stock, or other property to be distributed under the Plan.
As to any Disputed Claim, upon a request for estimation by the Debtors, the
Bankruptcy Court shall determine what amount is sufficient to withhold as the
Disputed Claims Reserve. The Debtors may request estimation for every Disputed
Claim that is unliquidated and the Disbursing Agent shall withhold the Disputed
Claims Reserve based upon the estimated amount of such Claim as set forth in a
Final Order. If the Debtors elect not to request such an estimation from the
Bankruptcy Court with respect to a Disputed Claim that is liquidated, the
Disbursing Agent shall withhold the Disputed Claims Reserve based upon the Face
Amount of such Claim.
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2. Neither the Disbursing Agent nor any other party shall be entitled
to vote any shares of New Common Stock held in the Disputed Claims Reserve. In
the event that any matter requires approval by the shareholders of Reorganized
PhyCor prior to the distribution or cancellation of all shares of New Common
Stock from the Disputed Claims Reserve, the shares of New Common Stock held by
the Disbursing Agent shall, for voting purposes only, be deemed not to have been
issued.
3. If practicable, the Disbursing Agent shall invest any Cash that is
withheld as the Disputed Claims Reserve in a manner that shall yield a
reasonable net return, taking into account the safety of the investment.
D. DISTRIBUTIONS AFTER ALLOWANCE
The Reorganized Debtor or the Disbursing Agent, as the case may be,
shall make payments and distributions from the Disputed Claims Reserve to each
holder of a Disputed Claim that has become an Allowed Claim in accordance with
the provisions of the Plan governing the class of Claims to which such holder
belongs. On the date which is 30 days after the date that the order or judgment
of the Bankruptcy Court allowing all or part of such Claim becomes a Final
Order, the Disbursing Agent shall distribute to the holder of such Claim any
Cash, New Common Stock, or other property in the Disputed Claims Reserve as
would have been distributed on the Distribution Date had such Allowed Claim been
allowed on the Distribution Date. After a Final Order has been entered, or other
final resolution has been reached, with respect to each Disputed Claim, (i) any
New Common Stock held in the Disputed Claims Reserve shall be distributed Pro
Rata to holders of Allowed Claims entitled thereto under the terms of this Plan
and (ii) any Cash or other property remaining in the Disputed Claims Reserve
shall become property of Reorganized PhyCor. All distributions made under this
Article IX.D on account of an Allowed Claim shall be made together with any
dividends, payments, or other distributions made on account of, as well as any
obligations arising from, the distributed property, as if such Allowed Claim had
been an Allowed Claim on the Distribution Date. Notwithstanding the foregoing,
the Disbursing Agent shall not be required to make distributions under this
Article IX.D more frequently than once every 180 days.
ARTICLE X
CONDITIONS PRECEDENT TO CONFIRMATION
AND CONSUMMATION OF THE PLAN
A. CONDITIONS TO CONFIRMATION
The following are conditions precedent to confirmation of the Plan:
1. The Bankruptcy Court shall have entered an order approving the
Disclosure Statement with respect to the Plan as containing adequate information
within the meaning of section 1125 of the Bankruptcy Code.
2. The Substantive Consolidation Order shall be in form and substance
reasonably acceptable to the Debtors, Warburg, Pincus, the Noteholders'
Committee, and the Creditors' Committee, and shall have been entered by the
Bankruptcy Court prior to or contemporaneously with the Confirmation Order.
B. CONDITIONS TO CONSUMMATION DATE
The following are conditions precedent to the occurrence of the
Consummation Date, each of which may be satisfied or waived in accordance with
Article X.C of the Plan:
1. The Confirmation Date shall have occurred and the Confirmation
Order, in form and substance reasonably acceptable to the Debtors, Warburg,
Pincus, the Noteholders' Committee, and the Creditors' Committee, confirming the
Plan, as the same may have been modified, shall have been entered and shall,
among other things, provide that:
a. the Debtors and Reorganized PhyCor shall be
authorized and directed to take all actions necessary or appropriate to enter
into, implement, and consummate the instruments, releases, and other agreements
or documents created in connection with the Plan;
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b. the provisions of the Confirmation Order
shall be nonseverable and mutually dependent;
c. all executory contracts or unexpired leases
assumed or assumed and assigned by the Debtors during the Chapter 11 Cases or
under the Plan shall remain in full force and effect for the benefit of
Reorganized PhyCor or its assignee(s) thereof, notwithstanding any provision in
such contract or lease (including those described in sections 365(b)(2) and (f)
of the Bankruptcy Code) that prohibits such assignment or transfer or that
enables, permits, or requires termination of such contract or lease;
d. the Debtors and Reorganized PhyCor shall
have purchased, at their sole expense, extended reporting period (tail) coverage
under the current directors and officers liability insurance in the amount of $5
million to be effective for a period of six years from and after the
Consummation Date;
e. the transfers of property by the Debtors
(i) to Reorganized PhyCor (a) are or will be legal, valid, and effective
transfers of property, (b) vest or will vest Reorganized PhyCor with good title
to such property free and clear of all liens, charges, Claims, encumbrances, or
interests, except as expressly provided in the Plan or Confirmation Order, (c)
do not and will not constitute avoidable transfers under the Bankruptcy Code or
under applicable bankruptcy or nonbankruptcy law, and (d) do not and will not
subject Reorganized PhyCor to any liability by reason of such transfer under the
Bankruptcy Code or under applicable nonbankruptcy law, including, without
limitation, any laws affecting successor, transferee, or stamp or recording tax
liability and (ii) to holders of Claims under the Plan are for good
consideration and value;
f. except as expressly provided in the Plan,
the Debtors shall be discharged effective upon the Confirmation Date from any
"debt" (as that term is defined in section 101(12) of the Bankruptcy Code), and
the Debtors' liability in respect thereof shall be extinguished completely,
whether or not reduced to judgment, liquidated or unliquidated, contingent or
noncontingent, asserted or unasserted, fixed or unfixed, matured or unmatured,
disputed or undisputed, legal or equitable, or known or unknown, or arising from
any agreement of the Debtors that has either been assumed or rejected in the
Chapter 11 Cases or pursuant to the Plan, or obligation of the Debtor incurred
before the Confirmation Date, or from any conduct of the Debtors prior to the
Confirmation Date, or otherwise arising before the Confirmation Date, including,
without limitation, all interest, if any, on any such debts, whether such
interest accrued before or after the Petition Date;
g. the Plan does not provide for the
liquidation of all or substantially all of the property of the Debtors and its
Confirmation is not likely to be followed by the liquidation of the Reorganized
PhyCor or the need for further financial reorganization;
h. all Existing Securities and Interests shall
be cancelled effective upon the Consummation Date;
i. the New Common Stock issued under the Plan
in exchange for Claims shall be exempt from registration under the Securities
Act of 1933 pursuant to section 1145 of the Bankruptcy Code, except to the
extent that any holders of New Common Stock are "underwriters," as that term is
defined in section 1145 of the Bankruptcy Code; and
j. the waivers, exculpations, releases, and
injunctions described in Article XIII of the Plan are approved.
2. Reorganized PhyCor shall have access to Cash, in the form of
dividends, intercompany advances, or otherwise from its subsidiaries, in an
amount acceptable to Reorganized PhyCor, to provide it with working capital to
meet ordinary and peak requirements.
3. All authorizations, consents, and regulatory approvals required, if
any, in connection with the consummation of the Plan shall have been obtained.
4. The following documents and agreements, in form satisfactory to the
Debtors, shall have been executed and delivered, and all conditions precedent
thereto shall have been satisfied:
a. Reorganized PhyCor's Amended and Restated
Charter and By-laws; and
22
b. Management Incentive Plan.
5. All other actions, documents, and agreements necessary to implement
the Plan shall have been effected or executed.
6. The Confirmation Order shall have become a Final Order.
C. WAIVER OF CONDITIONS
Each of the conditions set forth in Articles X.A and X.B above, other
than those set forth in Article X.A.1, X.B.1, and X.B.2, may be waived in whole
or in part by the Debtors or Reorganized PhyCor without any notice to parties in
interest or the Bankruptcy Court and without a hearing. The failure to satisfy
or waive any condition to the Consummation Date may be asserted by the Debtors
or Reorganized PhyCor regardless of the circumstances giving rise to the failure
of such condition to be satisfied (including any action or inaction by the
Debtors or Reorganized PhyCor). The failure of the Debtors or Reorganized PhyCor
to exercise any of the foregoing rights shall not be deemed a waiver of any
other rights, and each such other right shall be deemed an ongoing right that
may be asserted at any time.
ARTICLE XI
MODIFICATIONS AND AMENDMENTS
A. AUTHORIZATION FOR DEBTORS TO MODIFY AND AMEND THE PLAN
With the consent of Warburg, Pincus and the Creditors' Committee, the
Debtors may alter, amend, or modify the Plan or any Exhibits thereto under
section 1127(a) of the Bankruptcy Code at any time prior to the Confirmation
Date. After the Confirmation Date and prior to substantial consummation of the
Plan as defined in section 1101(2) of the Bankruptcy Code, the Debtors may,
under section 1127(b) of the Bankruptcy Code, institute proceedings in the
Bankruptcy Court to remedy any defect or omission or reconcile any
inconsistencies in the Plan, the Disclosure Statement approved with respect to
the Plan, or the Confirmation Order, and such matters as may be necessary to
carry out the purpose and effect of the Plan so long as such proceedings do not
adversely affect the treatment of holders of Claims or Interests under the Plan;
provided, however, that prior notice of such proceedings shall be served in
accordance with the Federal Rules of Bankruptcy Procedure or order of the
Bankruptcy Court.
ARTICLE XII
RETENTION OF JURISDICTION
A. RETENTION OF EXCLUSIVE JURISDICTION BY THE BANKRUPTCY COURT
Under sections 105(a) and 1142 of the Bankruptcy Code, and
notwithstanding entry of the Confirmation Order and occurrence of the
Consummation Date, the Bankruptcy Court shall retain exclusive jurisdiction over
all matters arising out of, and related to, the Chapter 11 Cases and the Plan to
the fullest extent permitted by law, including, among other things, jurisdiction
to:
1. Allow, disallow, determine, liquidate, classify, estimate, or
establish the priority or secured or unsecured status of any Claim, including
the resolution of any request for payment of any Administrative Claim and the
resolution of any objections to the allowance or priority of Claims;
2. Hear and determine all applications for compensation and
reimbursement of expenses of Professionals under the Plan or under sections 330,
331, 503(b), 1103, and 1129(a)(4) of the Bankruptcy Code; provided, however,
that, from and after the Confirmation Date the payment of the fees and expenses
of the retained and ordinary course professionals of Reorganized PhyCor shall be
made in the ordinary course of business and shall not be subject to the approval
of the Bankruptcy Court;
23
3. Hear and determine all matters with respect to the assumption or
rejection of any executory contract or unexpired lease to which a Debtor is a
party or with respect to which a Debtor may be liable, including, if necessary,
the liquidation or allowance of any Claims arising therefrom;
4. Effectuate performance of and payments under the provisions of the
Plan;
5. Hear and determine any and all pending adversary proceedings,
motions, applications, and contested or litigated matters arising out of, under,
or related to, the Chapter 11 Cases;
6. Enter such orders as may be necessary or appropriate to execute,
implement, or consummate the provisions of the Plan and all contracts,
instruments, releases, and other agreements or documents created in connection
with the Plan, the Disclosure Statement, or the Confirmation Order;
7. Hear and determine disputes arising in connection with the
interpretation, implementation, consummation, or enforcement of the Plan,
including disputes arising under agreements, documents, or instruments executed
in connection with the Plan;
8. Consider any modifications to the Plan, cure any defect or omission,
or reconcile any inconsistency in any order of the Bankruptcy Court, including,
without limitation, the Confirmation Order;
9. Issue injunctions, enter and implement other orders, or take such
other actions as may be necessary or appropriate to restrain interference by any
entity with implementation, consummation, or enforcement of the Plan or the
Confirmation Order;
10. Enter and implement such orders as may be necessary or appropriate
if the Confirmation Order is for any reason reversed, stayed, revoked, modified,
or vacated or distributions pursuant to the Plan are enjoined or stayed;
11. Hear and determine any matters arising in connection with or
relating to the Plan, the Disclosure Statement, the Confirmation Order, or any
contract, instrument, release, or other agreement or document created in
connection with the Plan, the Disclosure Statement, or the Confirmation Order;
12. Enforce all orders, judgments, injunctions, releases, exculpations,
indemnifications, and rulings entered in connection with the Chapter 11 Cases;
13. Recover all assets of the Debtors and property of the Debtors'
Estates, wherever located;
14. Hear and determine matters concerning state, local, and federal
taxes in accordance with sections 346, 505, and 1146 of the Bankruptcy Code;
15. Hear and determine all disputes involving the existence, nature, or
scope of the Debtors' discharge;
16. Hear and determine such other matters as may be provided in the
Confirmation Order or as may be authorized under provisions of the Bankruptcy
Code; and
17. Enter final decrees closing the Chapter 11 Cases.
ARTICLE XIII
EFFECTS OF CONFIRMATION
A. BINDING EFFECT
The Plan shall be binding upon and inure to the benefit of the Debtors,
all present and former holders of Claims against and Interests in the Debtors,
and their respective successors and assigns, including, but not limited to,
Reorganized PhyCor and all other parties in interest in these Chapter 11 Cases.
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B. DISCHARGE OF THE DEBTORS
All consideration distributed and treatment of Claims under the Plan
shall be in exchange for, and in complete satisfaction, settlement, discharge,
and release of, all Claims against and Interests in the Debtors of any nature
whatsoever or against any of the Debtors' assets or properties. Except as
otherwise expressly provided in the Plan, entry of the Confirmation Order shall
act as a discharge of all Claims against, liens on, and Interests in each of the
Debtors, their assets, and their properties, arising at any time before the
entry of the Confirmation Order, regardless of whether a proof of Claim or proof
of Interest therefor was filed, whether the Claim or Interest is Allowed, or
whether the holder thereof votes to accept the Plan or is entitled to receive a
distribution thereunder, subject to the occurrence of the Distribution Date.
Upon entry of the Confirmation Order, and subject to the occurrence of the
Distribution Date, any holder of such discharged Claim or Interest shall be
precluded from asserting against the Debtor or any of its assets or properties
any other or further Claim or Interest based upon any document, instrument, act,
omission, transaction, or other activity of any kind or nature that occurred
before the date of entry of the Confirmation Order. The Confirmation Order shall
be a judicial determination of discharge of all liabilities of the Debtor,
subject to the occurrence of the Distribution Date.
C. INJUNCTION
In accordance with section 524 of the Bankruptcy Code, the discharge
provided by this section and section 1141 of the Bankruptcy Code shall act as an
injunction against the commencement or continuation of any action, employment of
process, or act to collect, offset, or recover the Claims and Interests
discharged under the Plan. Except as otherwise expressly provided in the Plan or
the Confirmation Order, all entities who have held, hold, or may hold Claims
against, or Interests in, the Debtors will be permanently enjoined, on and after
the Consummation Date, subject to the occurrence of the Distribution Date, from
(i) commencing or continuing in any manner any action or other proceeding of any
kind with respect to any such Claim or Interest, (ii) the enforcement,
attachment, collection, or recovery by any manner or means of any judgment,
award, decree, or order against the Debtors on account of any such Claim or
Interest, (iii) creating, perfecting, or enforcing any encumbrance of any kind
against the Debtors or against the property or interests in property of the
Debtors on account of any such Claim or Interest, and (iv) asserting any right
of setoff, subrogation, or recoupment of any kind against any obligation due
from the Debtors or against the property or interests in property of the Debtors
on account of any such Claim or Interest. The foregoing injunction will extend
to successors of the Debtors (including, without limitation, Reorganized PhyCor)
and their respective properties and interests in property.
D. DEBTOR RELEASES
Effective as of the Confirmation Date, but subject to the occurrence of
the Distribution Date, the Debtors shall release and be permanently enjoined
from any prosecution or attempted prosecution of any and all causes of action
which any of them has, may have, or may claim to have against (i) any current or
former director, officer, or employee of the Debtors, including any claims that
were or could have been asserted in the action entitled Parul Patel et al. v.
Hutts, Civil Action No. 99-2353-I, Chancery Court for Davidson County,
Tennessee, (ii) any member of the Noteholders' Committee and the Noteholders'
Committee's attorneys, (iii) any member of the Creditors' Committee and the
Creditors' Committee's attorneys, and (iv) Warburg, Pincus and/or its general
and/or limited partners, in any way relating to the Debtors, the Chapter 11
Cases, or the Plan; provided, however, that the foregoing shall not operate as a
waiver of or release from any causes of action arising out of (x) the rights of
the Debtors or Reorganized PhyCor to enforce the Plan and the contracts,
instruments, releases, and other agreements or documents delivered thereunder,
(y) any express written contractual obligation owing by any such director,
officer, or employee of the Debtors, or (z) the willful misconduct, gross
negligence, or breach of fiduciary duty of any of the foregoing released parties
in connection with, related to, or arising out of the Chapter 11 Cases, the
pursuit of confirmation of the Plan, the consummation of the Plan, the
administration of the Plan, or the property to be distributed under the Plan.
E. OTHER RELEASES
Effective as of the Confirmation Date, but subject to the occurrence of
the Distribution Date, and except as otherwise provided herein or in the
Confirmation Order, each of the Debtors', Reorganized PhyCor's, Noteholders'
Committee's, Creditors' Committee's, Indenture Trustee's, and Warburg, Pincus'
respective current and former members, officers, directors, agents,
subsidiaries, affiliates, general and limited partners, financial advisors,
independent accountants, attorneys, employees, and representatives and their
respective property shall be released from any and all claims, obligations,
rights, causes of action, and liabilities which the Debtors, Reorganized PhyCor,
or any holder of a Claim against or Interest in the Debtors may be entitled to
assert, whether for tort, contract, violations of federal or state securities
laws, or otherwise, whether known or
25
unknown, foreseen or unforeseen, existing or hereafter arising, based in whole
or in part upon any act or omission, transaction, or other occurrence taking
place on or before the Confirmation Date in any way relating to the Chapter 11
Cases or the Plan; provided, however, that nothing in this Section E shall
release any Person from any claims, obligations, rights, causes of action, or
liabilities based upon any act or omission in connection with, relating to, or
arising out of, the Chapter 11 Cases, the solicitation of acceptances of the
Plan, the pursuit of Confirmation of the Plan, the Consummation of the Plan, the
administration of the Plan, or the property to be distributed under the Plan
arising out of such Person's gross negligence, willful misconduct, or breach of
fiduciary duty.
ARTICLE XIV
COMPROMISES AND SETTLEMENTS
A. AUTHORIZATION FOR DEBTORS TO COMPROMISE AND SETTLE CLAIMS
Pursuant to Fed. R. Bankr. P. 9019(a), the Debtors may compromise and
settle various Claims (a) against them and (b) that they have against other
Persons. The Debtors expressly reserve the right (with Bankruptcy Court
approval, following appropriate notice and opportunity for a hearing) to
compromise and settle Claims against them and Claims that they may have against
other Persons up to and including the Consummation Date. After the Consummation
Date, such right shall pass to Reorganized PhyCor, pursuant to Articles IV.I and
IV.J of the Plan.
B. CLASS ACTION SETTLEMENT
PhyCor, Joseph C. Hutts, Derril W. Reeves, Richard D. Wright, John K.
Crawford, and Thompson S. Dent (the "Settling Defendants") and the plaintiffs in
the various actions comprising the Shareholder Litigation Claims (the
"Litigation") other than Parul Patel (the "Class Plaintiffs") have agreed in
principle to settle their respective claims as they pertain to the Settling
Defendants as follows: (i) the Settling Defendants (through their insurer) shall
deposit the sum of $3.4 million into an interest bearing escrow account for
distribution in accordance with the order of the District Court and (ii) the
Class Plaintiffs shall dismiss with prejudice all claims pending in the
Litigation against the Settling Defendants. The settlement is subject to the
occurrence of certain conditions, the approval of all of its material terms by
the District Court, and the expiration of the time for appeal from such
approval.
Reorganized PhyCor shall take whatever steps are necessary on its part
to complete the settlement of the Litigation.
Parul Patel's interest as a holder of a Class 6 Common Stock Claim
shall be cancelled and his interest as a holder of a Class 7 Shareholder
Litigation Claim shall be discharged. PhyCor shall release any claims against
its current and former officers and directors that it may have in respect of the
Patel action.
ARTICLE XV
MISCELLANEOUS PROVISIONS
A. BAR DATES FOR CERTAIN CLAIMS
1. Administrative Claims
The Confirmation Order shall establish an Administrative Claims Bar
Date for filing Administrative Claims (except for Professional Fee Claims and
the expenses of the members of the Creditors' Committee), which date shall be 30
days after the Confirmation Date. Holders of asserted Administrative Claims,
except for Professional Fee Claims, United States Trustee fees, or the expenses
of the members of the Creditors' Committee, not paid prior to the Confirmation
Date must submit proofs of Claim on or before such Administrative Claims Bar
Date or forever be barred from doing so. The notice of Confirmation to be
delivered pursuant to Fed. R. Bankr. P. 3020(c) and 2002(f) shall set forth such
date and constitute notice of this Administrative Claims Bar Date. The Debtors,
or Reorganized PhyCor, as the case may be, shall have 30 days (or such longer
period as may be allowed by order of the Bankruptcy Court) following the
Administrative Claims Bar Date to review and object to such Administrative
Claims before a hearing for determination of allowance of such Administrative
Claims.
26
2. Professional Fee Claims; Substantial Contribution Claims
All requests for compensation or reimbursement of Professional Fee
Claims pursuant to sections 327, 328, 330, 331, 503(b), or 1103 of the
Bankruptcy Code for services rendered to the Debtors or the Creditors'
Committee, prior to the Confirmation Date (including requests under section
503(b)(4) of the Bankruptcy Code by any Professional or other entity for making
a substantial contribution in the Chapter 11 Cases) shall be filed and served
upon Reorganized PhyCor and counsel for Reorganized PhyCor with an application
for final allowance of compensation and reimbursement of expenses no later than
60 days after the Confirmation Date, unless otherwise ordered by the Bankruptcy
Court. Objections to applications of such Professionals or other entities for
compensation or reimbursement of expenses must be filed and served upon
Reorganized PhyCor, counsel for Reorganized PhyCor, and the requesting
Professional or other entity no later than 15 days (or such longer period as may
be allowed by order of the Bankruptcy Court) after the date on which the
applicable application for compensation or reimbursement was served.
3. Other Claims
By order dated February 7, 2002, the Bankruptcy Court entered an order
(the "Bar Date Order") setting March 5, 2002 (the "Bar Date") as the last date
for the filing of proofs of Claim against the Debtors on account of any Claim,
other than Claims deemed Allowed under the Plan, against the Debtors, which
arose prior to the Petition Date. On March 11, 2002, the Debtors filed
amendments to certain of their Schedules, thereby establishing a supplemental
Bar Date of April 17, 2002 for only the creditors affected by such amendments.
Pursuant to the Bar Date Order and Fed. R. Bankr. P. 3003(c)(2), any entity or
person who is required to file a timely proof of Claim in the form and manner
specified by the Bar Date Order and who fails to do so on or before the Bar Date
(or, in the case of a Claim based upon the Debtors' rejection of an unexpired
lease or executory contract, before the Rejection Damages Bar Date, as defined
in the Bar Date Order), shall not be entitled to vote on the Plan and shall not
receive or retain, or be entitled to receive or retain, any property or any
payment or distribution of property from the Debtors or their successors or
assigns with respect to such Claim.
B. PAYMENT OF STATUTORY FEES
All fees payable by the Debtors under 28 U.S.C. ss. 1930, as determined
by the Bankruptcy Court at the Confirmation Hearing pursuant to section 1128 of
the Bankruptcy Code, shall be paid on or before the Consummation Date. Any such
fees arising after the Consummation Date but prior to the closing of the Chapter
11 Cases shall be paid by Reorganized PhyCor.
C. REVOCATION, WITHDRAWAL, OR NON-CONSUMMATION
The Debtors reserve the right to revoke or withdraw the Plan as to any
or all of the Debtors prior to the Confirmation Date and to file subsequent
plans of reorganization. If the Debtors revoke or withdraw the Plan as to any or
all of the Debtors, or if Confirmation or Consummation as to any or all of the
Debtors does not occur, then, with respect to such Debtors, (a) the Plan shall
be null and void in all respects, (b) any settlement or compromise embodied in
the Plan (including the fixing or limiting to an amount certain any Claim or
Class of Claims), assumption or rejection of executory contracts or leases
affected by the Plan, and any document or agreement executed pursuant to the
Plan, shall be deemed null and void, and (c) nothing contained in the Plan, and
no acts taken in preparation for consummation of the Plan, shall (i) constitute
or be deemed to constitute a waiver or release of any Claims by or against, or
any Interests in, such Debtors or any other Person, (ii) prejudice in any manner
the rights of such Debtors or any other Person in any further proceedings
involving the Debtors, or (iii) constitute an admission of any sort by the
Debtors or any other Person.
D. SEVERABILITY OF PLAN PROVISIONS
If, prior to Confirmation, any term or provision of the Plan is held by
the Bankruptcy Court to be invalid, void, or unenforceable, the Bankruptcy
Court, at the request of the Debtors, shall have the power to alter and
interpret such term or provision to make it valid or enforceable to the maximum
extent practicable, consistent with the original purpose of the term or
provision held to be invalid, void, or unenforceable, and such term or provision
shall then be applicable as altered or interpreted. Notwithstanding any such
holding, alteration, or interpretation, the remainder of the terms and
provisions of the Plan shall remain in full force and effect and shall in no way
be affected, impaired, or invalidated by such holding, alteration, or
interpretation. The Confirmation Order shall constitute a judicial determination
and shall provide that each term and provision of the Plan, as it may have been
altered or interpreted in accordance with the foregoing, is valid and
enforceable pursuant to its terms.
27
E. SUCCESSORS AND ASSIGNS
The rights, benefits, and obligations of any entity named or referred
to in the Plan shall be binding on, and shall inure to the benefit of, any heir,
executor, administrator, successor, or assign of such entity.
F. PLAN SUPPLEMENT
Any and all exhibits, lists, or schedules not filed with the Plan shall
be contained in the Plan Supplement. Upon its filing with the Bankruptcy Court,
the Plan Supplement may be inspected in the office of the Clerk of the
Bankruptcy Court during normal court hours or may be viewed on the Bankruptcy
Court's website at <www.nysb.uscourts.gov>. A password is needed to gain access
to case files. Details on how to obtain a password are available on the
Bankruptcy Court's website. Holders of Claims or Interests may obtain a copy of
the Plan Supplement upon written request to the Debtors in accordance with
Article XV.G hereof.
G. NOTICES
Any notice, request, or demand required or permitted to be made or
provided to or upon the Debtors or Reorganized PhyCor hereunder shall be (i) in
writing, (ii) served by (a) certified mail, return receipt requested, (b) hand
delivery, (c) overnight delivery service, or (d) first class mail, or (e)
facsimile transmission, and (iii) deemed to have been duly given or made when
actually delivered or, in the case of notice by facsimile transmission, when
received and telephonically confirmed, addressed as follows:
PhyCor, Inc.
30 Burton Hills Boulevard
Suite 400
Nashville, Tennessee 37215
Att'n: General Counsel
Telephone: (615) 665-9066
Facsimile: (615) 665-7870
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036-6522
Att'n: Kayalyn A. Marafioti, Esq.
Telephone: (212) 735-3000
Facsimile: (212) 735-2000
-and-
Waller Lansden Dortch & Davis
A Professional Limited Liability Company
Nashville City Centre
511 Union Street, Suite 2100
Nashville, Tennessee 37219
Att'n: Michael R. Paslay, Esq.
Telephone: (615) 244-6380
Facsimile: (615) 244-6804
-and-
28
Milbank, Tweed, Hadley & Mccloy LLP
601 South Figueroa Street
Los Angeles, California 90017
Att'n: Robert J. Moore, Esq.
Att'n: Fred Neufeld, Esq.
Telephone: (213) 892-4000
Facsimile: (213) 629-5063
-and-
Willkie Farr & Gallagher
The Equitable Center
787 Seventh Avenue
New York, New York 10019
Att'n: Michael J. Kelly, Esq.
Telephone: (212) 728-8000
Facsimile: (212) 728-8111
H. INDEMNIFICATION OBLIGATIONS
Any claims of any of the Debtors' current or former directors or
officers for indemnification based upon any obligations or rights of any of the
Debtors to defend, indemnify, or limit the liability of its current and former
directors or officers pursuant to any Debtors' charter, by-laws, applicable
state law, or specific agreement in respect of any claims, demands, suits,
causes of action, or proceedings against such directors or officers based upon
any act or omission related to such current or former directors' or officers'
services with, for, or on behalf of any of the Debtors prior to the Consummation
Date, and any reimbursement obligations arising in respect of the foregoing
(collectively, the "Indemnity Claims") shall be treated as follows, regardless
of whether such directors or officers filed proofs of claim by the applicable
Bar Date, if any: (i) the Indemnity Claims shall be discharged on the date that
is six years after the Consummation Date and (ii) during the period between the
Consummation Date and the sixth anniversary thereof, Reorganized PhyCor shall
pay the Indemnity Claims in the same manner and on the same legal bases as
PhyCor would have done prior to the Petition Date under applicable
non-bankruptcy law, provided, however, that (a) for the first three years of
such six-year period, the holders of the Indemnity Claims shall look first to
and recover from the extended reporting period (tail) coverage under the
directors and officers liability insurance purchased in accordance with Article
X.B.1.d hereof and secondly, if such insurance coverage has been exhausted, then
from Reorganized PhyCor,whose aggregate liability on account of all such
Indemnity Claims hereunder shall not exceed $2,500,000; and (b) for the second
three years of such six-year period, the holders of the Indemnity Claims shall
look only to and recover from the extended reporting period (tail) coverage
under the directors and officers liability insurance purchased in accordance
with Article X.B.1.d hereof and Reorganized PhyCor shall have no further
liability for the payment of Indemnity Claims. Notwithstanding the foregoing,
Reorganized PhyCor shall be liable for and shall pay any insurance deductible
payable in respect of any Indemnity Claim made under the provisions of clauses
(ii)(a) and (ii)(b) above.
I. TERM OF INJUNCTIONS OR STAYS
Unless otherwise provided herein or in the Confirmation Order, all
injunctions or stays provided for in the Chapter 11 Cases under sections 105 or
362 of the Bankruptcy Code or otherwise, and extant on the Confirmation Date
(excluding any injunctions or stays contained in this Plan or the Confirmation
Order), shall remain in full force and effect until the Consummation Date.
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J. GOVERNING LAW
Unless a rule of law or procedure is supplied by federal law (including
the Bankruptcy Code and Bankruptcy Rules), the laws of (i) the State of New York
shall govern the construction and implementation of the Plan and any agreements,
documents, and instruments executed in connection with this Plan and (ii) the
laws of the state of Tennessee shall govern corporate governance matters with
respect to the Debtors, in either case without giving effect to the principles
of conflicts of law thereof.
Dated: New York, New York
June 6, 2002
PHYCOR, INC., et al.
Debtors and Debtors-in-Possession
By: /s/ Tarpley B. Jones
-----------------------------------------
Name: Tarpley B. Jones
Title: President and Chief Executive Officer
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
Attorneys for PhyCor, Inc., et al.
By: /s/ Kayalyn A. Marafioti
-----------------------------------------
Kayalyn A. Marafioti (KM 9362)
(A Member Of The Firm)
Thomas J. Matz (TM 5986)
Mark M. Brown (MB 1716)
Four Times Square
New York, New York 10036-6522
(212) 735-3000
30