IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
(EASTERN DIVISION)
- - - - - - - - - - - - - - - - -x
:
In re: : Chapter 11
:
McLEODUSA INCORPORATED, : Case No.: 05-63230
et al., : (Jointly Administered)
:
Debtors. : Honorable John H. Squires
:
- - - - - - - - - - - - - - - - -x
JOINT PREPACKAGED PLAN OF REORGANIZATION
OF McLEODUSA INCORPORATED AND ITS AFFILIATE DEBTORS
---------------------------------------------------
Timothy R. Pohl (ARDC No. 06208157)
Peter C. Krupp (ARDC No. 06193707)
Felicia Gerber Perlman (ARDC No. 06210753)
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
(312) 407-0700
Attorneys for Debtors and
Debtors-in-Possession
Dated: October 19, 2005
TABLE OF CONTENTS
Page
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ARTICLE I DEFINED TERMS AND RULES OF INTERPRETATION
1.1 Administrative Claim............................................................................2
1.2 Affiliate Debtor(s).............................................................................2
1.3 Allowed.........................................................................................2
1.4 Allowed Claim...................................................................................2
1.5 Allowed Interest................................................................................2
1.6 Amended Certificate of Incorporation and By-Laws................................................2
1.7 AT&T Settlement Agreement.......................................................................2
1.8 Authorized Asset Sale...........................................................................2
1.9 Ballot..........................................................................................3
1.10 Bankruptcy Code.................................................................................3
1.11 Bankruptcy Court................................................................................3
1.12 Bankruptcy Rules................................................................................3
1.13 Business Day....................................................................................3
1.14 Cash............................................................................................3
1.15 Chapter 11 Cases................................................................................3
1.16 Claim...........................................................................................3
1.17 Class...........................................................................................3
1.18 Confirmation Date...............................................................................3
1.19 Confirmation Hearing............................................................................3
1.20 Confirmation Order..............................................................................3
1.21 Debtor(s).......................................................................................3
1.22 DIP Credit Agreement............................................................................3
1.23 DIP Facility Claims.............................................................................3
1.24 DIP Lenders.....................................................................................3
1.25 Disbursing Agent................................................................................4
1.26 Disclosure Statement............................................................................4
1.27 Disputed Claim..................................................................................4
1.28 Disputed Claim Amount...........................................................................4
1.29 Disputed Interest...............................................................................4
1.30 Distribution Date...............................................................................4
1.31 Distribution Record Date........................................................................4
1.32 Effective Date..................................................................................4
1.33 Equity Interests in Debtors' Subsidiaries.......................................................4
1.34 Estate(s).......................................................................................4
1.35 Exchange Act....................................................................................4
1.36 Exhibit.........................................................................................4
1.37 Exit Facility Credit Agreement..................................................................4
1.38 Exit Facility Collateral........................................................................4
1.39 Exit Lenders....................................................................................5
1.40 File, Filed, or Filing..........................................................................5
1.41 Final Order.....................................................................................5
1.42 First Reorganization Proceedings................................................................5
1.43 Fronting Lender.................................................................................5
1.44 General Unsecured Claim.........................................................................5
1.45 Holder..........................................................................................5
1.46 Impaired........................................................................................5
1.47 Interest........................................................................................5
1.48 IRC.............................................................................................5
1.49 IRS.............................................................................................5
1.50 Junior Prepetition Credit Agreement.............................................................5
1.51 Junior Prepetition Lender Claims................................................................5
1.52 Junior Prepetition Lenders......................................................................6
1.53 Junior Prepetition Notes........................................................................6
1.54 Lease Claim Order...............................................................................6
1.55 Lease Rejection Claim Amount....................................................................6
1.56 Lease Rejection Claims..........................................................................6
1.57 Litigation Claims...............................................................................6
1.58 Majority Prepetition Lenders....................................................................6
1.59 Management Stock Plan...........................................................................6
1.60 Management Stock Plan Awards....................................................................6
1.61 MCI Settlement Agreement........................................................................6
1.62 McLeodUSA.......................................................................................6
1.63 Mutual Release..................................................................................6
1.64 New Common Stock................................................................................6
1.65 New Stockholders Agreement......................................................................6
1.66 New Term Loan Notes.............................................................................6
1.67 Non-Tax Priority Claims.........................................................................6
1.68 Old Common Stock................................................................................6
1.69 Old Preferred Stock.............................................................................7
1.70 Other Secured Claim.............................................................................7
1.71 Pending Shareholder Litigation..................................................................7
1.72 Permitted Distribution Date.....................................................................7
1.73 Petition Date...................................................................................7
1.74 Plan............................................................................................7
1.75 Plan Schedule...................................................................................7
1.76 Plan Supplement.................................................................................7
1.77 Prepetition Agents..............................................................................7
1.78 Prepetition Credit Agreements...................................................................7
1.79 Prepetition Junior Agent........................................................................7
1.80 Prepetition Lender Claims.......................................................................7
1.81 Prepetition Lenders.............................................................................7
1.82 Prepetition Senior Agent........................................................................8
1.83 Priority Tax Claim..............................................................................8
1.84 Professional....................................................................................8
1.85 Professional Fees...............................................................................8
1.86 Registration Rights Agreement...................................................................8
1.87 Reinstated or Reinstatement.....................................................................8
1.88 Releasing Officers and Directors................................................................8
1.89 Reorganized Debtors.............................................................................8
1.90 Reorganized McLeodUSA...........................................................................8
1.91 Restructuring Transactions......................................................................8
1.92 Securities Act..................................................................................8
1.93 Senior Prepetition Credit Agreement.............................................................9
1.94 Senior Prepetition Lender Claims................................................................9
1.95 Senior Prepetition Lenders......................................................................9
1.96 Senior Prepetition Notes........................................................................9
1.97 Solicitation Order..............................................................................9
1.98 Stock Distributions.............................................................................9
1.99 Subordinated Claims.............................................................................9
1.100 Substantive Consolidation Order.................................................................9
1.101 Unimpaired Claim................................................................................9
1.102 Voting Deadline.................................................................................9
1.103 Voting Record Date..............................................................................9
ARTICLE II CLASSIFICATION OF CLAIMS AND INTERESTS
2.1 Unclassified Claims............................................................................10
2.2 Unimpaired Classes of Claims...................................................................10
2.3 Impaired Classes of Claims.....................................................................10
2.4 Unimpaired Class of Interests..................................................................11
2.5 Impaired Classes of Interests..................................................................11
ARTICLE III TREATMENT OF CLAIMS AND INTERESTS
3.1 Unclassified Claims............................................................................11
3.2 Unimpaired Classes of Claims...................................................................12
3.3 Impaired Classes of Claims.....................................................................12
3.4 Unimpaired Class of Interests..................................................................12
3.5 Impaired Classes of Interests..................................................................12
3.6 Special Provision Regarding Unimpaired Claims..................................................13
ARTICLE IV ACCEPTANCE OR REJECTION OF THE PLAN
4.1 Impaired Classes of Claims Entitled to Vote....................................................13
4.2 Acceptance by an Impaired Class................................................................13
4.3 Presumed Acceptances by Unimpaired Classes.....................................................13
4.4 Classes Deemed to Reject Plan..................................................................13
4.5 Summary of Classes Voting on the Plan..........................................................13
4.6 Confirmation Pursuant to Section 1129(b) of the Bankruptcy Code................................13
ARTICLE V MEANS FOR IMPLEMENTATION OF THE PLAN
5.1 Substantive Consolidation for Purposes of Treating Impaired Claims.............................13
5.2 Transactions Authorized Under the Plan.........................................................14
5.3 Continued Corporate Existence and Vesting of Assets in the Reorganized Debtors.................15
5.4 Corporate Governance, Directors, Officers, and Corporate Action................................15
5.5 Cancellation of Notes, Instruments, Debentures, Preferred Stock and Common Stock...............16
5.6 Issuance of New Securities and Related Matters.................................................16
5.7 Exit Financing.................................................................................17
5.8 Management Stock Plan Awards...................................................................17
5.9 Sources of Cash for Plan Distributions.........................................................17
5.10 Professional Fees..............................................................................17
5.11 MCI Settlement.................................................................................18
5.12 AT&T Settlement................................................................................18
ARTICLE VI PROVISIONS GOVERNING DISTRIBUTIONS
6.1 Distributions for Claims Allowed as of the Effective Date......................................18
6.2 Distributions for Claims that Become Allowed after the Effective Date..........................18
6.3 Interest on Claims.............................................................................18
6.4 Distributions by Disbursing Agent..............................................................18
6.5 Delivery of Distributions and Undeliverable or Unclaimed Distributions.........................18
6.6 Record Date for Distributions..................................................................19
6.7 Allocation of Plan Distributions Between Principal and Interest................................19
6.8 Means of Cash Payment..........................................................................19
6.9 Withholding and Reporting Requirements.........................................................19
6.10 Setoffs........................................................................................20
6.11 Fractional Shares..............................................................................20
ARTICLE VII TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
7.1 Assumption of Executory Contracts and Unexpired Leases.........................................20
7.2 Claims Based on Rejection of Unexpired Leases..................................................20
7.3 Assumption and Assignment of Executory Contracts and Unexpired Leases in Conjunction with
Authorized Asset Sales.........................................................................20
7.4 Cure of Defaults of Assumed Executory Contracts and Unexpired Leases...........................21
7.5 Compensation and Benefit Programs..............................................................21
7.6 Release and Disallowance of Certain Claims.....................................................21
ARTICLE VIII PROCEDURES FOR RESOLVING DISPUTED, CONTINGENT AND UNLIQUIDATED CLAIMS
8.1 Objection Deadline; Prosecution of Objections..................................................21
8.2 No Distributions Pending Allowance.............................................................21
8.3 Disputed Claims Reserve........................................................................22
8.4 Distribution After Allowance...................................................................22
8.5 Reservation of Right to Object to Allowance or Asserted Priority of Claims.....................22
ARTICLE IX CONFIRMATION AND CONSUMMATION OF THE PLAN
9.1 Conditions to Confirmation.....................................................................22
9.2 Conditions to Effective Date...................................................................22
9.3 Waiver of Conditions...........................................................................23
9.4 Consequences of Non-Occurrence of Effective Date...............................................23
ARTICLE X EFFECT OF PLAN CONFIRMATION
10.1 Binding Effect.................................................................................24
10.2 Releases.......................................................................................24
10.3 Discharge of Claims and Termination of Interests...............................................25
10.4 Preservation of Rights of Action and Settlement of Litigation Claims...........................25
10.5 Exculpation and Limitation of Liability........................................................25
10.6 Injunction.....................................................................................26
10.7 Term of Bankruptcy Injunction or Stays.........................................................26
10.8 Termination of Subordination Rights and Settlement of Related Claims...........................26
ARTICLE XI RETENTION OF JURISDICTION
ARTICLE XII MISCELLANEOUS PROVISIONS
12.1 Effectuating Documents and Further Transactions................................................28
12.2 Corporate Action...............................................................................28
12.3 Exemption from Transfer Taxes..................................................................28
12.4 Payment of Statutory Fees......................................................................28
12.5 Amendment or Modification of the Plan..........................................................28
12.6 Severability of Plan Provisions................................................................29
12.7 Successors and Assigns.........................................................................29
12.8 Revocation, Withdrawal, or Non-Consummation....................................................29
12.9 Notice.........................................................................................29
12.10 Governing Law..................................................................................30
12.11 Tax Reporting and Compliance...................................................................30
12.12 Exhibits.......................................................................................30
12.13 Filing of Additional Documents.................................................................30
EXHIBITS
EXHIBIT A AMENDED CERTIFICATE OF INCORPORATION OF
REORGANIZED McLEODUSA
EXHIBIT B RESTATED BY-LAWS OF REORGANIZED McLEODUSA
EXHIBIT C EXIT FACILITY TERM SHEET
EXHIBIT D MUTUAL RELEASE
EXHIBIT E NEW STOCKHOLDERS AGREEMENT
EXHIBIT F REGISTRATION RIGHTS AGREEMENT
PLAN SCHEDULES
SCHEDULE 7.2 SCHEDULE OF REJECTED LEASES
INTRODUCTION
McLeodUSA Incorporated ("McLeodUSA" or the "Company"),
McLeodUSA Holdings, Inc., McLeodUSA Information Services, Inc., McLeodUSA
Network Services, Inc., McLeodUSA Purchasing, L.L.C. and McLeodUSA
Telecommunications, Inc. propose the following joint prepackaged plan of
reorganization for the resolution of the outstanding claims against and
interests in the Debtors. Reference is made to the Disclosure Statement (as
that term is defined herein), distributed contemporaneously herewith, for a
discussion of the Debtors' history, business, properties and operations,
projections for those operations, risk factors, a summary and analysis of this
Plan (as that term is defined herein), and certain related matters including,
among other things, the securities to be issued under this Plan and the
proposed substantive consolidation of the Debtors' cases for certain limited
purposes. Subject to certain restrictions and requirements set forth in 11
U.S.C. ss. 1127 and Fed. R. Bankr. P. 3019, the Debtors reserve the right, upon
the written consent of the Majority Prepetition Lenders, to alter, amend,
modify, revoke or withdraw this plan prior to its substantial consummation.
ARTICLE I
DEFINED TERMS AND RULES OF INTERPRETATION
Defined Terms. As used herein, capitalized terms shall have
the meanings set forth below. Any term that is not otherwise defined herein,
but that is used in the Bankruptcy Code or the Bankruptcy Rules, will have the
meaning given to that term in the Bankruptcy Code or the Bankruptcy Rules, as
applicable.
1.1 Administrative Claim means a Claim for costs and expenses
of administration of the Chapter 11 Cases Allowed under section 503(b), 507(b),
or 1114(e)(2) of the Bankruptcy Code, including: (a) any actual and necessary
costs and expenses incurred after the Petition Date of preserving the Debtors'
Estates and operating the businesses of the Debtors (such as wages, salaries,
and commissions for services and payments for inventory, leased equipment, and
premises) and Claims of governmental units for taxes (including tax audit
Claims related to tax years commencing after the Petition Date, but excluding
Claims relating to tax periods, or portions thereof, ending on or before the
Petition Date); (b) compensation for legal, financial, advisory, accounting,
and other services and reimbursement of expenses Allowed by the Bankruptcy
Court under section 330, 331, or 503(b) of the Bankruptcy Code to the extent
incurred prior to the Effective Date; (c) all fees and charges assessed against
the Debtors' Estates under section 1930, chapter 123, of title 28, United
States Code; and (d) Claims under the DIP Credit Agreement.
1.2 Affiliate Debtor(s) means, individually or collectively,
a Debtor or Debtors other than McLeodUSA, as applicable.
1.3 Allowed means, with respect to a Claim or Interest in any
Class, an Allowed Claim or Allowed Interest in the particular Class or category
specified. Any reference herein to a particular Allowed Claim includes both the
secured and unsecured portions of such Claim.
1.4 Allowed Claim means a Claim (a) not listed as disputed,
contingent or unliquidated on the Debtors' schedules, if any, and as to which
no objection or request for estimation has been filed on or before any Claim
objection deadline, if any, set by the Bankruptcy Court or the expiration of
such other applicable period fixed by the Bankruptcy Court; (b) as to which any
objection has been settled, waived, withdrawn, or denied by a Final Order; or
(c) that is Allowed (i) by a Final Order, (ii) by an agreement between the
Holder of such Claim and the Debtors or Reorganized Debtors, or (iii) pursuant
to the terms of this Plan.
The term "Allowed Claim" shall not, for purposes of computing
distributions under this Plan, include interest on such Claim from and after
the Petition Date, except as provided in section 506(b) of the Bankruptcy Code
or as otherwise expressly set forth in this Plan.
1.5 Allowed Interest means any Interest that (a) is
registered as of the Distribution Record Date in a stock register maintained by
or on behalf of the Debtors and (b) is not a Disputed Interest, together with
any Allowed Subordinated Claims arising out of or relating to such Interest
1.6 Amended Certificate of Incorporation and By-Laws means
the amended certificate of incorporation and restated by-laws of Reorganized
McLeodUSA, in substantially the forms attached to this Plan as Exhibits A and
B, respectively.
1.7 AT&T Settlement Agreement means that certain settlement
agreement entered into in principle by the Company and AT&T Corp.
1.8 Authorized Asset Sale means any sale of assets pursuant
to a contract of sale approved by the board of directors of each Debtor party
to such contract and consented to by the Majority Prepetition Lenders, provided
that such contract of sale has been included in the Plan Supplement.
1.9 Ballot means each of the ballot forms distributed to a
Holder of an Impaired Claim on which such Holder is to indicate acceptance or
rejection of this Plan.
1.10 Bankruptcy Code means title 11 of the United States
Code, as now in effect or hereafter amended.
1.11 Bankruptcy Court means the United States Bankruptcy
Court for the Northern District of Illinois (Eastern Division), or any other
court with jurisdiction over the Chapter 11 Cases.
1.12 Bankruptcy Rules means the Federal Rules of Bankruptcy
Procedure and the local rules of the Bankruptcy Court, as now in effect or
hereafter amended.
1.13 Business Day means any day, other than a Saturday,
Sunday, or "legal holiday" (as defined in Bankruptcy Rule 9006(a)).
1.14 Cash means legal tender of the United States of America
and equivalents thereof.
1.15 Chapter 11 Cases means (a) when used with reference to a
particular Debtor, the case under chapter 11 of the Bankruptcy Code commenced
by the Debtor in the Bankruptcy Court and (b) when used with reference to all
Debtors, the cases under chapter 11 of the Bankruptcy Code commenced by Debtors
in the Bankruptcy Court.
1.16 Claim means a "claim," as defined in section 101(5) of
the Bankruptcy Code.
1.17 Class means a category of Holders of Claims or
Interests, as described in Article II hereof.
1.18 Confirmation Date means the date on which the Clerk of
the Bankruptcy Court enters the Confirmation Order on the docket of the
Bankruptcy Court.
1.19 Confirmation Hearing means the hearing held by the
Bankruptcy Court pursuant to section 1128 of the Bankruptcy Code to consider
confirmation of this Plan, as such hearing may be adjourned or continued from
time to time.
1.20 Confirmation Order means the order of the Bankruptcy
Court confirming this Plan pursuant to section 1129 of the Bankruptcy Code,
which order shall be in form and substance satisfactory to the Debtors and the
Majority Prepetition Lenders.
1.21 Debtor(s) means, individually or collectively,
McLeodUSA, McLeodUSA Holdings, Inc., McLeodUSA Information Services, Inc.,
McLeodUSA Network Services, Inc., McLeodUSA Purchasing, L.L.C. and McLeodUSA
Telecommunications, Inc.
1.22 DIP Credit Agreement means a debtor-in-possession credit
facility to be entered into, with the consent of the Majority Prepetition
Lenders, by McLeodUSA, as borrower, and the Affiliate Debtors, as guarantors,
and those entities identified as "Lenders" therein (as amended, modified, or
supplemented), as approved by the Bankruptcy Court.
1.23 DIP Facility Claims means all Claims held by DIP Lenders
pursuant to the DIP Credit Agreement.
1.24 DIP Lenders means those entities identified as "Lenders"
in the DIP Credit Agreement and their respective successors and assigns.
1.25 Disbursing Agent means the Reorganized Debtors, or any
party designated by the Reorganized Debtors, to serve as disbursing agent under
this Plan.
1.26 Disclosure Statement means that certain disclosure
statement (including all appendices and schedules thereto) dated October 19,
2005, relating to this Plan.
1.27 Disputed Claim means any Claim as to which the Debtors
have interposed a timely objection or request for estimation in accordance with
the Bankruptcy Code and the Bankruptcy Rules, or any claim otherwise disputed
by the Debtors in accordance with applicable law, which objection has not been
withdrawn or determined by a Final Order.
1.28 Disputed Claim Amount means with respect to (a)
contingent or unliquidated Claims, the amount estimated by the Bankruptcy Court
for purposes of distributions in respect of such Claim in accordance with
section 502(c) of the Bankruptcy Code; or (b) any Disputed Claim that is not
contingent or unliquidated, the amount set forth in a timely Filed proof of
claim.
1.29 Disputed Interest means any Interest as to which the
Debtors have interposed a timely objection or request for estimation in
accordance with the Bankruptcy Code and the Bankruptcy Rules, or any claim
otherwise disputed by the Debtors in accordance with applicable law, which
objection has not been withdrawn or determined by a Final Order.
1.30 Distribution Date means the date upon which the initial
distributions will be made to Holders of Allowed Claims pursuant to Article VI
of this Plan.
1.31 Distribution Record Date means the Confirmation Date.
1.32 Effective Date means the Business Day this Plan becomes
effective as provided in Article IX hereof.
1.33 Equity Interests in Debtors' Subsidiaries means the
common stock of McLeodUSA's subsidiaries outstanding immediately prior to the
Petition Date, including all options, warrants, calls, rights, puts, awards,
commitments or any other agreements of any character to acquire such common
stock.
1.34 Estate(s) means, individually, the estate of McLeodUSA
or any of the Affiliate Debtors and collectively, the estates of all of the
Debtors created under section 541 of the Bankruptcy Code.
1.35 Exchange Act means the Securities Exchange Act of 1934,
15 U.S.C. ss.ss. 78a et seq., as amended.
1.36 Exhibit means an exhibit annexed to either this Plan or
as an appendix to the Disclosure Statement.
1.37 Exit Facility Credit Agreement means that certain
Revolving Credit and Term Loan Agreement dated as of the Effective Date (a)
providing for a secured, revolving credit facility in an amount not exceeding
$50 million, with a letter of credit sub-facility in an amount not exceeding
$15 million, and (b) governing the New Term Loan Notes to be entered into among
Reorganized McLeodUSA, as borrower, those entities identified therein as
guarantors, and the Exit Lenders, in a form consistent with the terms and
conditions set forth in Exhibit C to this Plan. Obligations under the Exit
Facility Credit Agreement will be secured by a first lien on the Exit Facility
Collateral.
1.38 Exit Facility Collateral means the collateral securing
the Obligations under the Exit Facility Credit Agreement, consisting of
substantially all of the assets of Reorganized McLeodUSA and its subsidiaries.
1.39 Exit Lenders means those entities identified as
"Lenders" in the Exit Facility Credit Agreement.
1.40 File, Filed, or Filing means file, filed, or filing with
the Bankruptcy Court or its authorized designee in the Chapter 11 Cases.
1.41 Final Order means an order of the Bankruptcy Court as to
which the time to appeal, petition for certiorari, or move for reargument or
rehearing has expired and as to which no appeal, petition for certiorari, or
other proceedings for reargument or rehearing shall then be pending or as to
which any right to appeal, petition for certiorari, reargue, or rehear shall
have been waived in writing in form and substance satisfactory to the Debtors
or the Reorganized Debtors, or, in the event that an appeal, writ of certiorari
or reargument, or rehearing thereof has been sought, such order of the
Bankruptcy Court shall have been determined by the highest court to which such
order was appealed, or certiorari, reargument or rehearing shall have been
denied and the time to take any further appeal, petition for certiorari, or
move for reargument or rehearing shall have expired; provided, however, that
the possibility that a motion under Rule 59 or Rule 60 of the Federal Rules of
Civil Procedure, or any analogous rule under the Bankruptcy Rules, may be filed
with respect to such order shall not preclude such order from being a Final
Order.
1.42 First Reorganization Proceedings means the proceedings
under Chapter 11 of the Bankruptcy Code commenced by McLeodUSA on January 31,
2002 in the United States Bankruptcy Court for the District of Delaware (Case
No. 02-10288).
1.43 Fronting Lender has the meaning ascribed thereto in the
DIP Credit Agreement.
1.44 General Unsecured Claim means a Claim that is not an
Administrative Claim, Priority Tax Claim, Non-Tax Priority Claim, Other Secured
Claim, Senior Prepetition Lender Clam, Junior Prepetition Lender Claim, Lease
Rejection Claim or Subordinated Claim, but shall not include Claims that are
disallowed or released, whether by operation of law or pursuant to order of the
Bankruptcy Court, written release or settlement, the provisions of this Plan or
otherwise. General Unsecured Claims shall include any Claims between or among
McLeodUSA and its affiliates.
1.45 Holder means an entity holding a Claim or Interest.
1.46 Impaired means, when used in reference to a Claim or
Interest, a Claim or Interest that is impaired within the meaning of section
1124 of the Bankruptcy Code.
1.47 Interest means the legal, equitable, contractual, and
other rights of the Holders of Old Preferred Stock, Old Common Stock or Equity
Interests in the Affiliate Debtors, including the rights of any entity to
purchase or demand the issuance of any of the foregoing, including (a)
conversion, exchange, voting, participation, and dividend rights; (b)
liquidation preferences; (c) stock options, warrants, and put rights; and (d)
share-appreciation rights.
1.48 IRC means the Internal Revenue Code of 1986, as amended.
1.49 IRS means Internal Revenue Service of the United States
of America.
1.50 Junior Prepetition Credit Agreement means the Credit
Agreement dated as of May 31, 2000, as amended, modified or supplemented, among
McLeodUSA, JPMorgan Chase Bank, N.A. as Administrative Agent and the Lenders
party thereto.
1.51 Junior Prepetition Lender Claims means all Claims of the
Junior Prepetition Lenders under the Junior Prepetition Credit Agreement as of
the Petition Date, which Claims shall be deemed Allowed pursuant to this Plan
in the aggregate principal amount of $677,277,945.57 plus (a) all unpaid
interest payable under the Junior Prepetition Credit Agreement accrued through
the Petition Date and (b) all fees and expenses payable under the Junior
Prepetition Credit Agreement.
1.52 Junior Prepetition Lenders means all lenders under the
Junior Prepetition Credit Agreement.
1.53 Junior Prepetition Notes means the promissory notes
issued pursuant to the Junior Prepetition Credit Agreement, evidencing the
loans outstanding thereunder.
1.54 Lease Claim Order has the meaning set forth in Section
9.1(b).
1.55 Lease Rejection Claim Amount means the amount of an
Allowed Claim held by a landlord with respect to each rejected non-residential
real property lease (determined in accordance with section 502(b)(6) of the
Bankruptcy Code), as set forth on Plan Schedule 7.2.
1.56 Lease Rejection Claims means, collectively, all Allowed
Claims held by the landlords with respect to the rejected non-residential real
property leases set forth on Plan Schedule 7.2.
1.57 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.
1.58 Majority Prepetition Lenders means Holders of more than
50% in principal amount of each of (a) the Senior Prepetition Lender Claims and
(b) the Junior Prepetition Lender Claims.
1.59 Management Stock Plan means any management stock plan,
option plan, restricted stock plan or other similar management incentive award
plan developed for the Reorganized Debtors and approved and implemented
pursuant to Section 5.8 of this Plan after the Effective Date.
1.60 Management Stock Plan Awards means any awards that may
be granted to participants under a Management Stock Plan.
1.61 MCI Settlement Agreement means that certain settlement
agreement entered into by the Company and MCI Network Services, Inc. dated as
of September 9, 2005.
1.62 McLeodUSA means McLeodUSA Incorporated, a Delaware
company, debtor in possession in these Chapter 11 Cases pending in the
Bankruptcy Court.
1.63 Mutual Release means a mutual release substantially in
the form of Exhibit D to this Plan.
1.64 New Common Stock means the shares of the new class of
new common stock of Reorganized McLeodUSA to be issued for distribution
pursuant to Section 5.6 of this Plan.
1.65 New Stockholders Agreement means the stockholders
agreement, to be dated as of the Effective Date, among Reorganized McLeodUSA
and each of the persons party thereto, substantially in the form of Exhibit E
to this Plan.
1.66 New Term Loan Notes means the new term loan promissory
notes in the aggregate principle amount of the amounts outstanding and unpaid
under the Senior Prepetition Credit Agreement as of the Effective Date, with
the principal terms set forth in Exhibit C to this Plan, and governed by the
Exit Facility Credit Agreement.
1.67 Non-Tax Priority Claims means all unsecured claims
specified in sections 507(a) and 507(b) of the Bankruptcy Code other than
Priority Tax Claims.
1.68 Old Common Stock means any common stock of McLeodUSA or
any predecessor company outstanding at any time prior to the Petition Date,
including without limitation (a) any common stock of McLeodUSA outstanding
prior to the First Reorganization Proceedings and (b) all options, warrants,
calls, rights, puts, awards, commitments or any other agreements of any
character to acquire any such common stock.
1.69 Old Preferred Stock means (a) the McLeodUSA Preferred
Series A, redeemable, convertible, $0.01 par value, (b) the McLeodUSA Preferred
Series B, $0.01 par value and (c) all options, warrants, calls, rights, puts,
awards, commitments or any other agreements of any character to acquire such
preferred stock.
1.70 Other Secured Claim means a Claim (other than an
Administrative Claim or Prepetition Lender Claim) that is secured by a lien on
property in which a Debtor's Estate has an interest or that is subject to
setoff under section 553 of the Bankruptcy Code, to the extent of the value of
the Claim holder's interest in the applicable Estate's interest in such
property or to the extent of the amount subject to setoff, as applicable, as
determined pursuant to section 506(a) of the Bankruptcy Code or, in the case of
the setoff, pursuant to section 553 of the Bankruptcy Code.
1.71 Pending Shareholder Litigation means (a) the federal
class action no. CO2-0001 filed in the United States District Court for the
Northern District of Iowa by New Millennium Growth Fund LLC and other lead
plaintiffs, individually and on behalf of a putative class of shareholders
against certain former officers and current and former directors of McLeodUSA
Incorporated, and (b) the two proofs of claim filed against McLeodUSA
Incorporated in the First Reorganization Proceedings by New Millennium Growth
Fund LLC, the first in its individual capacity and the second both individually
and as the representative of a putative class of shareholders.
1.72 Permitted Distribution Date has the meaning set forth in
Section 5.6(e).
1.73 Petition Date means the date on which the Debtors file
their petitions for relief commencing the Chapter 11 Cases.
1.74 Plan means this chapter 11 plan of reorganization,
including the Exhibits and Plan Schedules and all supplements, appendices, and
schedules thereto, either in its present form or as the same may be altered,
amended, or modified from time to time.
1.75 Plan Schedule means any schedule annexed to either this
Plan or as an appendix to the Disclosure Statement.
1.76 Plan Supplement means a supplement to this Plan in form
and substance satisfactory to the Debtors and the Majority Prepetition Lenders
filed with the Bankruptcy Court not later than 5 days prior to the Confirmation
Date for the purposes specified in this Plan.
1.77 Prepetition Agents means the Prepetition Senior Agent
and the Prepetition Junior Agent.
1.78 Prepetition Credit Agreements means, collectively, the
Senior Prepetition Credit Agreement and the Junior Prepetition Credit
Agreement.
1.79 Prepetition Junior Agent means the Administrative Agent
under the Junior Prepetition Credit Agreement.
1.80 Prepetition Lender Claims means, collectively, the
Senior Prepetition Lender Claims and the Junior Prepetition Lender Claims.
1.81 Prepetition Lenders means, collectively, the Senior
Prepetition Lenders and the Junior Prepetition Lenders.
1.82 Prepetition Senior Agent means the Administrative Agent
under the Senior Prepetition Credit Agreement.
1.83 Priority Tax Claim means a Claim of a governmental unit
of the kind specified in sections 502(i) and 507(a)(8) of the Bankruptcy Code.
1.84 Professional means (a) any professional employed in the
Chapter 11 Cases pursuant to section 327 or 1103 of the Bankruptcy Code or
otherwise and (b) any professional or other entity seeking compensation or
reimbursement of expenses in connection with the Chapter 11 Cases pursuant to
section 503(b)(4) of the Bankruptcy Code, and shall not include professionals
employed by any Prepetition Lender.
1.85 Professional Fees means an Administrative Claim of a
Professional for compensation for services rendered or reimbursement of costs,
expenses or other charges, and expenses incurred after the Petition Date and
prior to and including the Effective Date.
1.86 Registration Rights Agreement means the registration
rights agreement, to be dated as of the Effective Date, among Reorganized
McLeodUSA and each of the persons receiving shares of New Common Stock on or
after the Effective Date, substantially in the form of Exhibit F to this Plan.
1.87 Reinstated or Reinstatement means (a) leaving unaltered
the legal, equitable and contractual rights to which a Claim entitles the
Holder of such Claim so as to leave such Claim Unimpaired or (b)
notwithstanding any contractual provision or applicable law that entitles the
Holder of such 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 or Interest entitles the holder of such Claim; provided,
however, that any contractual right that does not pertain to the payment when
due of principal and interest on the obligation on which such Claim is based,
including, but not limited to, financial covenant ratios, negative pledge
covenants, covenants or restrictions on merger or consolidation, and
affirmative covenants regarding corporate existence, prohibiting certain
transactions or actions contemplated by the Plan, or conditioning such
transactions or actions on certain factors, shall not be required to be
reinstated in order to accomplish Reinstatement.
1.88 Releasing Officers and Directors means all persons who
were officers or directors of any Debtor as of August 11, 2005 or any time
thereafter up to immediately prior to the Effective Date.
1.89 Reorganized Debtors means the Debtors or any successors
thereto by merger, consolidation, or otherwise, on or after the Effective Date,
after giving effect to the transactions occurring on the Effective Date.
1.90 Reorganized McLeodUSA means McLeodUSA, on or after the
Effective Date, after giving effect to the transactions occurring on the
Effective Date.
1.91 Restructuring Transactions has the meaning ascribed
thereto in Section 5.2 of this Plan.
1.92 Securities Act means the Securities Act of 1933, 15
U.S.C. ss.ss. 77c-77aa, as now in effect or hereafter amended.
1.93 Senior Prepetition Credit Agreement means the Credit
Agreement dated as of April 16, 2002, as amended, modified or supplemented from
time to time, among McLeodUSA, JPMorgan Chase Bank, N.A. as Agent and the
Lenders party thereto.
1.94 Senior Prepetition Lender Claims means all Claims of the
Senior Prepetition Lenders under the Senior Prepetition Credit Agreement, which
Claims shall be deemed, pursuant to section 506 of the Bankruptcy Code, Allowed
pursuant to this Plan in the aggregate principal amount of $ 100 million, plus
(a) (i) any amounts drawn on letters of credit after the Petition Date
(including, without limitation, in respect of letters of credit that remain
undrawn and unexpired on the Effective Date), (ii) interest thereon through the
Effective Date at the non-default contract rate and (iii) all fees and expenses
payable in respect of such Claims under the Senior Pre-Petition Credit
Agreement and minus (b) amounts repaid prior to the Effective Date, if any,
from the sale of assets.
1.95 Senior Prepetition Lenders means all lenders under the
Senior Prepetition Credit Agreement.
1.96 Senior Prepetition Notes means the promissory notes
issued pursuant to the Senior Prepetition Credit Agreement, evidencing the
loans outstanding thereunder.
1.97 Solicitation Order means the order entered by the
Bankruptcy Court establishing procedures with respect to the solicitation and
tabulation of votes to accept or reject this Plan.
1.98 Stock Distributions has the meaning set forth in Section
5.6(e).
1.99 Subordinated Claims means any Claim, including without
limitation, claims under federal or state securities laws, arising from the
rescission of a purchase or sale of Old Preferred Stock or Old Common Stock,
any Claim for damages arising from the purchase or sale of Old Preferred Stock
or Old Common Stock, or any Claim for reimbursement, contribution, or
indemnification on account of any such Claim including without limitation, any
Claim in respect of the Pending Shareholder Litigation and any Claim for
reimbursement, contribution or indemnity on account or in respect thereof or
arising therefrom (including indemnification obligations assumed under the plan
of reorganization confirmed pursuant to the First Reorganization Proceedings).
1.100 Substantive Consolidation Order means the order, or
provision of the Confirmation Order, substantively consolidating the Chapter 11
Cases, as provided in Section 5.1 of this Plan.
1.101 Unimpaired Claim means a Claim that is not impaired
within the meaning of section 1124 of the Bankruptcy Code.
1.102 Voting Deadline means October 28, 2005.
1.103 Voting Record Date means October 14, 2005.
Rules of Interpretation and Computation of Time. For purposes
of this Plan, unless otherwise provided herein: (a) whenever from the context
it is appropriate, each term, whether stated in the singular or the plural,
will include both the singular and the plural; (b) unless otherwise provided in
this Plan, any reference in this Plan to a contract, instrument, release, or
other agreement or document being in a particular form or on particular terms
and conditions means that such document will be substantially in such form or
substantially on such terms and conditions; (c) any reference in this Plan to
an existing document or schedule Filed or to be Filed means such document or
schedule, as it may have been or may be amended, modified, or supplemented
pursuant to this Plan; (d) any reference to an entity as a Holder of a Claim or
Interest includes that entity's successors and assigns; (e) all references in
this Plan to Sections, Articles, and Schedules are references to Sections,
Articles, and Schedules of or to this Plan; (f) the words "herein,"
"hereunder," and "hereto" refer to this Plan in its entirety rather than to a
particular portion of this Plan; (g) captions and headings to Articles and
Sections are inserted for convenience of reference only and are not intended to
be a part of or to affect the interpretation of this Plan; (h) subject to the
provisions of any contract, certificates of incorporation, by-laws, instrument,
release, or other agreement or document entered into in connection with this
Plan, the rights and obligations arising under this Plan shall be governed by,
and construed and enforced in accordance with, federal law, including the
Bankruptcy Code and Bankruptcy Rules; (i) the rules of construction set forth
in section 102 of the Bankruptcy Code will apply; and (j) in computing any
period of time prescribed or allowed by this Plan, the provisions of Bankruptcy
Rule 9006(a) will apply.
Exhibits, Plan Schedules and Plan Supplement. All Exhibits
and Plan Schedules, as well as the Plan Supplement, are incorporated into and
are a part of this Plan as if set forth in full herein, and, to the extent not
annexed hereto, such Exhibits, Plan Schedules and Plan Supplement shall be
timely filed with the Bankruptcy Court in accordance with this Plan. Holders of
Claims and Interests may obtain a copy of the filed Exhibits, Plan Schedules
and Plan Supplement upon written request to the Debtors. Upon their filing, the
Exhibits, Plan Schedules and Plan Supplement may be inspected in the office of
the clerk of the Bankruptcy Court or its designee during normal business hours.
The documents contained in the Exhibits, Plan Schedules and Plan Supplement
shall be approved by the Bankruptcy Court pursuant to the Confirmation Order.
ARTICLE II
CLASSIFICATION OF CLAIMS AND INTERESTS
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.
This Plan constitutes a single plan of reorganization for all
Debtors. A Claim or Interest is placed in a particular Class only to the extent
that the Claim or Interest falls within the description of that Class and is
classified in other Classes to the extent that any portion of the Claim or
Interest falls within the description of such other Classes. A Claim or
Interest is also placed in a particular Class for the purpose of receiving
distributions pursuant to this Plan only to the extent that such Claim or
Interest is an Allowed Claim or Interest in that Class and such Claim or
Interest has not been paid, released, or otherwise settled prior to the
Effective Date.
2.1 Unclassified Claims (not entitled to vote on the Plan).
(a) Administrative Claims.
(b) Priority Tax Claims.
2.2 Unimpaired Classes of Claims (deemed to have accepted the
Plan and, therefore, not entitled to vote on the Plan).
(a) Class 1: Non-Tax Priority Claims. Class 1
consists of all Non-Tax Priority Claims.
(b) Class 2: Other Secured Claims. Class 2 consists
of all Other Secured Claims.
(c) Class 3: General Unsecured Claims. Class 3
consists of all General Unsecured Claims.
2.3 Impaired Classes of Claims (Classes 4 and 5 are entitled
to vote on the Plan; Class 6 shall be deemed to have rejected the Plan and
therefore not entitled to vote on the Plan).
(a) Class 4: Senior Prepetition Lender Claims. Class
4 consists of all Senior Prepetition Lender Claims.
(b) Class 5: Junior Prepetition Lender Claims. Class
5 consists of all Junior Prepetition Lender Claims.
(c) Class 6: Lease Rejection Claims. Class 6
consists of all Lease Rejection Claims.
2.4 Unimpaired Class of Interests (deemed to have accepted
the Plan and, therefore, not entitled to vote on the Plan).
Class 7: Equity Interests in Debtors' Subsidiaries.
Class 7 consists of all the Equity Interests in Debtors' Subsidiaries.
2.5 Impaired Classes of Interests (deemed to have rejected
the Plan and, therefore, not entitled to vote on the Plan).
(a) Class 8: Old Preferred Stock Interests. Class 8
consists of all Interests directly arising from, under, or relating in any way
to, the Old Preferred Stock, and all Subordinated Claims arising out of or
relating thereto.
(b) Class 9: Old Common Stock Interests. Class 9
consists of all Interests directly arising from, under, or relating in any way
to, the Old Common Stock, and all Subordinated Claims arising out of or
relating thereto.
ARTICLE III
TREATMENT OF CLAIMS AND INTERESTS
3.1 Unclassified Claims.
(a) Administrative Claims. Subject to the provisions
of sections 330(a), 331, and 503(b) of the Bankruptcy Code, each Allowed
Administrative Claim shall be paid by the Debtors, at their election, in full,
in Cash, upon the later of (i) the Effective Date, (ii) the due date thereof in
accordance with its terms, (iii) the date upon which such Administrative Claim
becomes an Allowed Claim, (iv) in respect of liabilities incurred in the
ordinary course of business, the date upon which such liabilities are payable
in the ordinary course of such Debtor's business, consistent with past
practices or (v) such other date as may be agreed upon between the Holder of
such Allowed Administrative Claim and the Debtors.
(b) Claims Under the DIP Credit Agreement. On the
Effective Date, all amounts owed by any Debtor under the DIP Credit Agreement
(including, without limitation, all loans and all fees and expenses payable
thereunder) shall be paid in full in Cash and the Commitments (as defined in
the DIP Credit Agreement) under the DIP Credit Agreement shall be cancelled. In
addition, on the Effective Date, any unexpired letters of credit outstanding
under the DIP Credit Agreement shall be either (i) returned to the Fronting
Lender and cancelled without having been drawn or (ii) replaced with
back-to-back letters of credit and/or cash collateralized in an amount equal to
105% of the aggregate letter of credit exposure (i.e., the sum of (x) the
aggregate undrawn amount of all outstanding letters of credit and (y) all
amounts drawn under such letters of credit and not then reimbursed), in each
case as provided for and in accordance with the DIP Credit Agreement.
(c) Priority Tax Claims. Unless the Holder of such
claim and the applicable Debtor (with the consent of the Prepetition Agents)
agree to a different treatment, on the Effective Date, each Holder of an
Allowed Priority Tax Claim shall have its Claim Reinstated.
3.2 Unimpaired Classes of Claims.
(a) Class 1: Non-Tax Priority Claims. Unless the
Holder of such Claim and the applicable Debtor agree to a different treatment,
on the Effective Date, each Holder of an Allowed Non-Tax Priority Claim shall
have its Claim Reinstated.
(b) Class 2: Other Secured Claims. Unless the Holder
of such Claim and the applicable Debtor agree to a different treatment, on the
Effective Date, each Holder of an Other Secured Claim shall have its Claim
Reinstated.
(c) Class 3: General Unsecured Claims. Unless the
Holder of such Claim and the applicable Debtor agree to a different treatment,
on the Effective Date, each Holder of a General Unsecured Claim shall have its
Claim Reinstated.
3.3 Impaired Classes of Claims.
(a) Class 4: Senior Prepetition Lender Claims. On
the Effective Date, each Holder of an Allowed Class 4 Claim shall receive its
pro rata share of the New Term Loan Notes. Obligations in respect of the New
Term Loan Notes, together with the other obligations under the Exit Facility
Credit Agreement, shall be secured by a first lien on the Exit Facility
Collateral. In addition, on the Effective Date, Reorganized McLeodUSA shall pay
each Holder of an Allowed Class 4 Claim Cash equal to (i) all unpaid interest
accrued as of the Effective Date on such Senior Prepetition Lender Claim at the
non-default contract rate in accordance with the Senior Prepetition Credit
Agreement, compounded on each interest payment date to the extent not paid when
due and (ii) all unpaid fees and expenses of the Prepetition Senior Agent and
the Prepetition Senior Lenders required to be paid pursuant to the Senior
Prepetition Credit Agreement. On the Effective Date, any unexpired letters of
credit outstanding under the Senior Prepetition Credit Agreement shall be
deemed to be replaced by letters of credit under the revolving credit facility
under the Exit Facility Credit Agreement.
(b) Class 5: Junior Prepetition Lender Claims. On
the Effective Date, each Holder of an Allowed Class 5 Claim shall be entitled
to receive its pro rata share of 100% of the New Common Stock (subject to
dilution by the Management Stock Plan Awards and the terms and conditions of
this Plan). The New Common Stock shall be subject to the terms of the New
Stockholders Agreement and the Registration Rights Agreement, which shall be,
and shall be deemed to be, binding upon and enforceable by all Holders of the
New Common Stock including the Holders of Class 5 Claims, and Reorganized
McLeodUSA, as of the Effective Date, without further action by any party.
Reorganized McLeodUSA shall also pay in Cash, on the Effective Date, all unpaid
fees and expenses of the Prepetition Junior Agent and the Prepetition Junior
Lenders required to be paid pursuant to the Junior Prepetition Credit
Agreement.
(c) Class 6: Lease Rejection Claims. Subject to the
provisions of Section 7.2 of this Plan, on the Distribution Date, each Holder
of an Allowed Class 6 Claim shall receive Cash equal to 100% of its Allowed
Lease Rejection Claim Amount.
3.4 Unimpaired Class of Interests. Class 7: Equity Interests
in Debtors' Subsidiaries. On the Effective Date, Reorganized McLeodUSA shall
retain the Equity Interests in Debtors' Subsidiaries.
3.5 Impaired Classes of Interests.
(a) Class 8: Old Preferred Stock Interests and
Subordinated Claims. On the Effective Date, Old Preferred Stock will be
cancelled and the Holders of Allowed Interests arising out of or relating to
the Old Preferred Stock (including, without limitation, any related
Subordinated Claims) shall not receive or retain any distribution on account of
such Allowed Interests.
(b) Class 9: Old Common Stock Interests and
Subordinated Claims. On the Effective Date, the Old Common Stock will be
cancelled, and the Holders of Allowed Interests arising out of or relating to
the Old Common Stock (including, without limitation, any related Subordinated
Claims) shall not receive or retain any distribution on account of such Allowed
Interests.
3.6 Special Provision Regarding Unimpaired Claims. Except as
otherwise explicitly provided in this Plan, nothing shall affect the Debtors'
or the Reorganized Debtors' rights and defenses, both legal and equitable, with
respect to any Unimpaired Claims, including, but not limited to, all rights
with respect to legal and equitable defenses to setoffs or recoupments against
Unimpaired Claims.
ARTICLE IV
ACCEPTANCE OR REJECTION OF THE PLAN
4.1 Impaired Classes of Claims Entitled to Vote. Subject to
Sections 4.3 and 4.4 of this Plan, Holders of Claims in each Impaired Class of
Claims are entitled to vote as a class to accept or reject this Plan.
4.2 Acceptance by an Impaired Class. In accordance with
section 1126(c) of the Bankruptcy Code and except as provided in section
1126(e) of the Bankruptcy Code, an Impaired Class of Claims shall have accepted
this Plan if this Plan is accepted by the Holders of at least two-thirds
((2)/3) in dollar amount and more than one-half (1/2) in number of the Allowed
Claims of such Class that have timely and properly voted to accept or reject
this Plan.
4.3 Presumed Acceptances by Unimpaired Classes. Classes 1, 2,
3 and 7 are Unimpaired by this Plan. Under section 1126(f) of the Bankruptcy
Code, Holders of such Claims or Interests are conclusively presumed to accept
this Plan, and the votes of the Holders of such Claims or Interests will not be
solicited.
4.4 Classes Deemed to Reject Plan. Upon entry of the
Solicitation Order, Class 6 will be deemed to have rejected the Plan and
therefore will not be entitled to vote to accept or reject the Plan. By
operation of law, Classes 8 and 9 are deemed to reject the Plan and are not,
therefore, entitled to vote to accept or reject the Plan.
4.5 Summary of Classes Voting on the Plan. As a result of the
provisions of Sections 4.3 and 4.4 of this Plan, only the votes of Holders of
Claims in Classes 4 and 5 will be solicited with respect to this Plan.
4.6 Confirmation Pursuant to Section 1129(b) of the
Bankruptcy Code. The Holders of Class 6 Claims, Class 8 Interests and Class 9
Interests are deemed under the Plan and under the Solicitation Order to have
rejected the Plan. Accordingly, the Debtor will seek confirmation of the Plan
with respect to such Holders of Class 6 Claims and the Holders of Class 8
Interests and Class 9 Interests pursuant to section 1129(b) of the Bankruptcy
Code.
ARTICLE V
MEANS FOR IMPLEMENTATION OF THE PLAN
5.1 Substantive Consolidation for Purposes of Treating
Impaired Claims.
(a) Substantive Consolidation. This Plan
contemplates and is predicated upon entry of an order substantively
consolidating the Debtors solely for the purposes of treating Classes 4, 5 and
6 Claims, including for voting, confirmation, and distribution purposes. This
Plan does not contemplate the substantive consolidation of the Debtors with
respect to the other Classes of Claims or Interests set forth in this Plan, or
for any other purpose. On the Effective Date, (i) all guaranties of any Debtor
of the payment, performance, or collection of another Debtor with respect to
Class 4, 5 and 6 Claims shall be deemed eliminated and cancelled, (ii) any
obligation of any Debtor and all guarantees with respect to Class 4, 5 and 6
Claims thereof executed by one (1) or more of the other Debtors shall be
treated as a single obligation and any obligation of two (2) or more Debtors,
and all multiple Impaired Claims against such entities on account of such joint
obligations shall be treated and Allowed only as a single Impaired Claim
against the consolidated Debtors, and (iii) each Class 4, 5 or 6 Claim filed or
to be filed against any Debtor shall be deemed filed against the consolidated
Debtors and shall be deemed a single Class 4, 5 or 6 Claim against and a single
obligation of the consolidated Debtors. On the Effective Date, and in
accordance with the terms of this Plan and the consolidation of the assets and
liabilities of the Debtors, all Class 4, 5 or 6 Claims based upon guarantees 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. Except
as set forth in this Section 5.1, such substantive consolidation shall not
(other than for purposes related to this Plan) (i) affect the legal and
corporate structures of the Reorganized Debtors, subject to the right of the
Reorganized Debtors or Reorganized McLeodUSA to effect Restructuring
Transactions as provided in Section 5.2 of this Plan, (ii) cause any Debtor to
be liable for any Impaired Claim or Unimpaired Claim under this Plan for which
it otherwise is not liable, and the liability for any such Claim shall not be
affected by such substantive consolidation, (iii) affect Claims of Debtors
against Debtors, (iv) affect Interests in Affiliate Debtors, (v) affect any
obligations under any leases or contracts assumed in this Plan or otherwise
subsequent to the filing of the Chapter 11 Cases, or (vi) affect any
obligations to pay quarterly fees to the United States Trustee. On the
Effective Date, except as otherwise expressly provided for in this Plan, the
Equity Interests in the Debtors' Subsidiaries.
(b) 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 as
provided in Section 5.1 hereof. If no objection to substantive consolidation is
timely filed and served by any Holder of an Impaired Claim affected by this
Plan as provided herein on or before the deadline for objection to confirmation
of this Plan, the Substantive Consolidation Order (which may be the
Confirmation 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 the objections thereto
shall be scheduled by the Bankruptcy Court, which hearing may, but is not
required to, coincide with the Confirmation Hearing.
5.2 Transactions Authorized Under the Plan
(a) On or after the Effective Date, the applicable
Reorganized Debtors are hereby authorized, without further corporate action, to
consummate any Authorized Asset Sale, and the officers of the applicable
Reorganized Debtors are hereby authorized to execute and deliver any
agreements, instruments or other documents necessary or appropriate to
effectuate such transactions. Upon consummation of a sale of assets in
connection with an Authorized Asset Sale, the assets sold shall vest in the
purchaser free and clear of all liens, Claims and encumbrances (with any such
liens, Claims and encumbrances to attach to the proceeds of such sale) except
as specified in the applicable contract of sale.
(b) On or after the Effective Date, subject to the
terms and conditions of the obligations of the Reorganized Debtors surviving
the Effective Date (including, without limitation, the terms and conditions of
the certificate of incorporation of Reorganized McLeodUSA and the Exit Facility
Credit Agreement), the applicable Reorganized Debtors may enter into such
transactions and may take such actions as may be necessary or appropriate to
effect a corporate restructuring of their respective businesses, to otherwise
simplify the overall corporate structure of the Reorganized Debtors, or to
reincorporate certain of the Affiliate Debtors under the laws of jurisdictions
other than the laws of which the applicable Affiliate Debtors are presently
incorporated. Such restructuring may include one or more mergers,
consolidations, restructures, dispositions, liquidations, or dissolutions, as
may be determined by the Debtors or Reorganized Debtors to be necessary or
appropriate (collectively, the "Restructuring Transactions"). The actions to
effect the Restructuring Transactions may include (i) the execution and
delivery of appropriate agreements or other documents of merger, consolidation,
restructuring, disposition, liquidation, or dissolution containing terms that
are consistent with the terms of the Plan and that satisfy the applicable
requirements of applicable state law and such other terms to which the
applicable entities may agree; (ii) the execution and delivery of appropriate
instruments of transfer, assignment, assumption, or delegation of any asset,
property, right, liability, duty, or obligation on terms consistent with the
terms of the Plan and having such other terms to which the applicable entities
may agree; (iii) the filing of appropriate certificates or articles of merger,
consolidation, or dissolution pursuant to applicable state law; and (iv) all
other actions that the applicable entities determine to be necessary or
appropriate, including making filings or recordings that may be required by
applicable state law in connection with such transactions. The Restructuring
Transactions may include one or more mergers, consolidations, restructures,
dispositions, liquidations, or dissolutions, as may be determined by the
Reorganized Debtors to be necessary or appropriate to result in substantially
all of the respective assets, properties, rights, liabilities, duties, and
obligations of certain of the Reorganized Debtors vesting in one or more
surviving, resulting, or acquiring corporations. In each case in which the
surviving, resulting, or acquiring corporation in any such transaction is a
successor to a Reorganized Debtor, such surviving, resulting, or acquiring
corporation will perform the obligations of the applicable Reorganized Debtor
pursuant to the Plan to pay or otherwise satisfy the Allowed Claims against
such Reorganized Debtor, except as provided in any contract, instrument, or
other agreement or document effecting a disposition to such surviving,
resulting, or acquiring corporation, which may provide that another Reorganized
Debtor will perform such obligations.
5.3 Continued Corporate Existence and Vesting of Assets in
the Reorganized Debtors. Subject to the Restructuring Transactions defined in
Section 5.2 of this Plan, after the Effective Date the Reorganized Debtors
shall continue to exist as separate corporate entities in accordance with the
applicable law in the respective jurisdiction in which they are incorporated
and pursuant to their respective certificates or articles of incorporation and
by-laws in effect prior to the Effective Date, except to the extent such
certificates or articles of incorporation and by-laws are amended under this
Plan. Notwithstanding anything to the contrary in this Plan, including Section
5.1 hereof as to substantive consolidation, the Unimpaired Claims of a
particular Debtor or Reorganized Debtor shall remain the obligations solely of
such Debtor or Reorganized Debtor and shall not become obligations of any other
Debtor or Reorganized Debtor by virtue of this Plan, the Chapter 11 Cases, or
otherwise. Except as otherwise provided in this Plan, on and after the
Effective Date, all property of the Estate of the Debtors, including all
claims, rights, and causes of action and any property acquired by the Debtors
or the Reorganized Debtors under or in connection with this Plan, shall vest in
the Reorganized Debtors free and clear of all Claims, liens, charges, other
encumbrances, and Interests, subject to the Restructuring Transactions defined
in Section 5.2 of this Plan. On and after the Effective Date, the Reorganized
Debtors may operate their businesses and may use, acquire, and dispose of
property and compromise or settle any Claims without supervision of or approval
by the Bankruptcy Court and free and clear of any restrictions of the
Bankruptcy Code or the Bankruptcy Rules, other than restrictions expressly
imposed by this Plan or the Confirmation Order. Without limiting the foregoing,
the Reorganized Debtors may pay the charges that they incur on or after the
Effective Date for professionals' fees, disbursements, expenses, or related
support services without application to the Bankruptcy Court.
5.4 Corporate Governance, Directors, Officers, and Corporate
Action.
(a) Certificates of Incorporation and By-Laws.
Effective on the Effective Date, the certificate of incorporation and by-laws
of Reorganized McLeodUSA shall be amended substantially as set forth in
Exhibits A and B, respectively, to the Plan, which shall (i) include, among
other things, pursuant to section 1123(a)(6) of the Bankruptcy Code, a
provision prohibiting the issuance of non-voting equity securities, but only to
the extent required by section 1123(a)(6) of the Bankruptcy Code; and (ii)
authorize the issuance of New Common Stock in an amount not less than the
amount necessary to permit the distributions thereof required or contemplated
by this Plan. In addition, the certificates or articles of incorporation and
by-laws of the Affiliate Debtors shall be amended as necessary to satisfy the
provisions of this Plan and the Bankruptcy Code. After the Effective Date, the
Reorganized Debtors may amend and restate their certificates or articles of
incorporation and by-laws as permitted by applicable law.
(b) Directors and Officers of the Reorganized
Debtors. Subject to any requirement of Bankruptcy Court approval pursuant to
section 1129(a)(5) of the Bankruptcy Code, as of the Effective Date, the
initial directors and officers of Reorganized McLeodUSA shall be the persons
identified in the Plan Supplement. The board of directors of Reorganized
McLeodUSA shall have seven (7) members. The boards of directors of the
Reorganized Debtors other than Reorganized McLeodUSA shall be comprised of
members of the board of directors of Reorganized McLeodUSA, or such other
persons as are designated by the board of directors of Reorganized McLeodUSA.
Pursuant to section 1129(a)(5), the Debtors will disclose in the Plan
Supplement the identity and affiliations of any person proposed to serve on the
initial board of directors of Reorganized McLeodUSA, and, to the extent such
person is an insider other than by virtue of being a director, the nature of
any compensation for such person. The classification and composition of the
board of directors of each of the Reorganized Debtors shall be consistent with
the Amended Certificate of Incorporation; provided, however, that the length of
the initial term of each director shall be two (2) years. Each such director
and officer shall serve from and after the Effective Date pursuant to the terms
of the Amended Certificate of Incorporation, the other constituent documents of
the Reorganized Debtors, and applicable law. Each member of the board of
directors of each of the Debtors will be deemed to have resigned on the
Effective Date.
(c) Corporate Action. On the Effective Date, the
adoption of the Amended Certificate of Incorporation or similar constituent
documents, the adoption of the Amended By-Laws, the selection of directors and
officers for the Reorganized Debtors, and all other actions contemplated by
this Plan shall be authorized and approved in all respects (subject to the
provisions of this Plan). All matters provided for in this Plan involving the
corporate structure of the Debtors or the Reorganized Debtors, and any
corporate action required by the Debtors or the Reorganized Debtors in
connection with this Plan, shall be deemed to have timely occurred in
accordance with applicable law and shall be in effect, without any requirement
of further action by the security holders or directors of the Debtors or the
Reorganized Debtors. On the Effective Date, the appropriate officers of the
Reorganized Debtors and members of the boards of directors of the Reorganized
Debtors are authorized and directed to issue, execute, and deliver the
agreements, documents, securities, and instruments contemplated by this Plan in
the name of and on behalf of the Reorganized Debtors.
5.5 Cancellation of Notes, Instruments, Debentures, Preferred
Stock and Common Stock. On the Effective Date, except as otherwise provided for
herein, (a) the Senior Prepetition Credit Agreement, Junior Prepetition Credit
Agreement, Senior Prepetition Notes, Junior Prepetition Notes, Old Common
Stock, Old Preferred Stock and any other notes, bonds (with the exception of
surety bonds outstanding), indentures, or other instruments or documents
evidencing or creating any indebtedness or obligations of a Debtor that are
Impaired under this Plan shall be cancelled, and (b) the obligations of the
Debtors under any agreements, indentures, or certificates of designation
governing the Senior Prepetition Lender Claims, Junior Prepetition Lender
Claims, Lease Rejection Claims, Old Common Stock, Old Preferred Stock and any
other Claims or any notes, bonds, indentures, or other instruments or documents
evidencing or creating any Claims against a Debtor that are Impaired under this
Plan shall be discharged. As of the Effective Date, all Old Common Stock and
Old Preferred Stock that has been authorized to be issued but that has not been
issued shall be deemed cancelled and extinguished without any further action of
any party.
5.6 Issuance of New Securities and Related Matters.
(a) Issuance of New Securities. On or as soon as
reasonably practicable after the Effective Date, the Reorganized Debtors shall
issue (subject to Section 5.6(e) of this Plan), all instruments, certificates
and other documents, including the New Common Stock and the New Term Loan Notes
required to be issued or distributed pursuant to this Plan without further act
or action under applicable law, regulation, order, or rule. The issuance of the
New Common Stock and the New Term Loan Notes and the distribution thereof under
this Plan shall be exempt from registration under applicable securities laws
pursuant to section 1145(a) of the Bankruptcy Code. Without limiting the effect
of Section 1145 of the Bankruptcy Code, all documents, agreements, and
instruments entered into on or as of the Effective Date contemplated by or in
furtherance of this Plan, including, without limitation, the Exit Facility
Credit Agreement, the New Stockholders Agreement, the Registration Rights
Agreement, and any other agreement entered into in connection with the
foregoing, shall become effective and binding in accordance with their
respective terms and conditions upon the parties thereto.
(b) Registration Rights Agreement. Without limiting
the effect of section 1145 of the Bankruptcy Code, on the Effective Date,
Reorganized McLeodUSA will enter into the Registration Rights Agreement for the
benefit of the Holders of New Common Stock substantially in the form attached
to this Plan as Exhibit F.
(c) Termination of Registration. Subject to any
requirements of law, promptly following the Effective Date, Reorganized
McLeodUSA shall terminate the registration of its securities and suspend all
reporting obligations pursuant to the Exchange Act.
(d) Stock Exchange Listing. If and when the
Reorganized Debtors complete an initial public offering of the New Common Stock
or other registration of New Common Stock for public sale, the Reorganized
Debtors shall use their best efforts, subject to the New Stockholders
Agreement, to list the New Common Stock on a United States national stock
exchange.
(e) Execution and Delivery of the New Stockholders
Agreement and Registration Rights Agreement and Distribution of the New Common
Stock. On or as soon as reasonably practicable after the Effective Date, all of
the shares of New Common Stock to which any Holder of a Class 5 Claim shall
become entitled pursuant to the Plan shall be issued in the name of such Holder
subject to the terms and conditions of the New Stockholders Agreement, the
Registration Rights Agreement and the other terms and conditions of this Plan
and distributed to such Holder following (but only upon) the execution and
delivery to McLeodUSA by such Holder of the New Stockholders Agreement and the
Registration Rights Agreement. In the period pending distribution of New Common
Stock to any Holder of a Class 5 Claim, such Holder shall be bound by, have the
benefit of and be entitled to enforce the terms and conditions of the New
Stockholders Agreement and Registration Rights Agreement and shall be entitled
to vote, receive any dividends or other distributions payable in respect of
such Holder's New Common Stock (including, receiving any proceeds of any
transfer of such New Common Stock), and to exercise all other rights in respect
of the New Common Stock (so that such Holder shall be deemed for tax purposes
to be the owner of the New Common Stock issued in the name of such Holder)
5.7 Exit Financing. On the Effective Date, without any
requirement of further action by security holders or directors of the Debtors
or Reorganized Debtors, the Reorganized Debtors shall be authorized and
directed to enter into the Exit Facility Credit Agreement, as well as any
notes, documents, or agreements in connection therewith, including, without
limitation, any documents required in connection with creation or perfection of
the liens on the Exit Facility Collateral.
5.8 Management Stock Plan Awards. On the Effective Date,
there shall be authorized and reserved for issuance a number of shares of New
Common Stock equal to 10% of the New Common Stock (on a fully diluted basis,
after giving effect to the issuance of New Common Stock to holders of claims
hereunder) for the purpose of awards of New Common Stock, restricted stock,
options or warrants (or similar instruments) thereon, to officers and other
employees of the Reorganized Debtors pursuant to a Management Stock Plan (which
may grant awards of any amount up to the 10% of the New Common Stock authorized
and reserved for issuance) approved after the Effective Date by the board of
directors of Reorganized McLeodUSA in its sole discretion, and without further
action by security holders of the Reorganized Debtors.
5.9 Sources of Cash for Plan Distributions. Except as
otherwise provided in this Plan or the Confirmation Order, all Cash necessary
for Reorganized Debtors to make payments pursuant to this Plan shall be
obtained from existing Cash balances, the operations of the Debtors and the
Reorganized Debtors, sales of assets or the Exit Facility Credit Agreement. The
Reorganized Debtors may also make such payments using Cash received from their
subsidiaries through the Reorganized Debtors' consolidated cash management
systems.
5.10 Professional Fees. All unpaid Professional fees incurred
prior to the Effective Date shall be subject to final allowance or disallowance
upon application to the Bankruptcy Court pursuant to sections 330 or 503(b)(4)
of the Bankruptcy Code. Final applications for Professional Fees for services
rendered in connection with the Chapter 11 Cases shall be filed with the
Bankruptcy Court no later than thirty (30) days after the Effective Date.
5.11 MCI Settlement. Pursuant to Sections 1123(b)(3) and (6)
of the Bankruptcy Code, and Bankruptcy Rule 9019, on the Effective Date, the
MCI Settlement Agreement shall be deemed ratified and binding on the Debtors
and the Reorganized Debtors.
5.12 AT&T Settlement. Pursuant to Sections 1123(b)(3) and (6)
of the Bankruptcy Code, and Bankruptcy Rule 9019, on the Effective Date, the
AT&T Settlement Agreement shall be deemed ratified and binding on the Debtors
and the Reorganized Debtors.
ARTICLE VI
PROVISIONS GOVERNING DISTRIBUTIONS
6.1 Distributions for Claims Allowed as of the Effective
Date. Except as otherwise provided herein or as ordered by the Bankruptcy
Court, distributions to be made on account of Allowed Claims as of the
Effective Date, shall be made on the Effective Date or as soon thereafter as is
practicable. Any distribution to be made on the Effective Date pursuant to this
Plan shall be deemed as having been made on the Effective Date if such
distribution is made on the Effective Date or as soon thereafter as is
practicable. Any payment or distribution required to be made under this Plan on
a day other than a Business Day shall be made on the next succeeding Business
Day. Notwithstanding the date on which any distribution of securities is made
to a Holder of an Allowed Claim, as of the date of the distribution such Holder
shall be deemed to have the rights of a Holder of such securities (subject to
the terms and conditions of this Plan) distributed as of the Effective Date.
6.2 Distributions for Claims that Become Allowed after the
Effective Date. Distributions on account of Allowed Claims that first become
Allowed Claims after the Effective Date shall be made pursuant to Section 8.4
of this Plan.
6.3 Interest on Claims. Unless otherwise specifically
provided for in this Plan, the Confirmation Order or other order of the
Bankruptcy Court, 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.
6.4 Distributions by Disbursing Agent. Other than as
specifically set forth below, the Disbursing Agent shall make all distributions
required to be made under this Plan. Distributions on account of Prepetition
Lender Claims shall be made by the Disbursing Agent directly to the individual
Holders of Prepetition Lender Claims. The Reorganized Debtors may act as
Disbursing Agent or may employ or contract with other entities to assist in or
make the distributions required by this Plan.
6.5 Delivery of Distributions and Undeliverable or Unclaimed
Distributions.
(a) Delivery of Distributions in General.
Distributions to Holders of Allowed Claims shall be made at the addresses set
forth in the Debtors' records unless such addresses are superseded by proofs of
claim or transfers of claim filed pursuant to Bankruptcy Rule 3001.
(b) Undeliverable and Unclaimed Distributions.
(i) Holding and Investment of Undeliverable
and Unclaimed Distributions. If the distribution to any Holder of an
Allowed Claim is returned to the Reorganized Debtors or the Disbursing
Agent as undeliverable or is otherwise unclaimed, no further
distributions shall be made to such Holder unless and until the
Reorganized Debtors or the Disbursing Agent is notified in writing of
such Holder's then current address.
(ii) After Distributions Become
Deliverable. The Disbursing Agent shall make all distributions that
have become deliverable or have been claimed since the Distribution
Date as soon as practicable after such distribution has become
deliverable.
(iii) Failure to Claim Undeliverable
Distributions. Any Holder of an Allowed Claim that does not assert a
claim pursuant to this Plan for an undeliverable or unclaimed
distribution within one (1) year after the Effective 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 or their Estates, the Reorganized Debtors or their
property. In such cases, any Cash for distribution on account of such
claims for undeliverable or unclaimed distributions shall become the
property of the Estates free of any restrictions thereon and
notwithstanding any federal or state escheat laws to the contrary
subject to the liens of the Prepetition Lenders. Any New Common Stock
held for distribution on account of such Claim shall be canceled and
of no further force or effect. Nothing contained in this Plan shall
require any Disbursing Agent, including, but not limited to, the
Reorganized Debtors, to attempt to locate any Holder of an Allowed
Claim. This section 6.5(b) shall not apply to New Common Stock held
for distribution pending satisfaction of the conditions set forth in
Section 5.6(e) of this Plan.
6.6 Record Date for Distributions. The Reorganized Debtors
and the Disbursing Agent will have no obligation to recognize the transfer of,
or the sale of any participation in, any Allowed Claim that occurs after the
close of business on the Distribution Record Date, and will be entitled for all
purposes herein to recognize and distribute only to those Holders of Allowed
Claims that are Holders of such Claims, or participants therein, as of the
close of business on the Distribution Record Date. The Reorganized Debtors and
the Disbursing Agent shall instead be entitled to recognize and deal for all
purposes under this Plan with only those record holders stated on the official
claims register as of the close of business on the Distribution Record Date.
6.7 Allocation of Plan Distributions Between Principal and
Interest. To the extent that any Allowed Claim entitled to a distribution under
this Plan is comprised of indebtedness and accrued but unpaid interest thereon,
such distribution shall, for all income tax purposes, be allocated to the
principal amount of the Claim first and then, to the extent that the
consideration exceeds the principal amount of the Claim, to the portion of such
Claim representing accrued but unpaid interest.
6.8 Means of Cash Payment. Payments of Cash made pursuant to
this Plan shall be in U.S. dollars and shall be made, at the option and in the
sole discretion of the Reorganized Debtors, by (a) checks drawn on or (b) wire
transfer from a domestic bank selected by the Reorganized Debtors. Cash
payments to foreign creditors may be made, at the option of the Reorganized
Debtors, in such funds and by such means as are necessary or customary in a
particular foreign jurisdiction.
6.9 Withholding and Reporting Requirements. In connection
with this Plan and all distributions thereunder, the Reorganized Debtors shall
comply with all withholding and reporting requirements imposed by any federal,
state, local, or foreign taxing authority, and all distributions hereunder
shall be subject to any such withholding and reporting requirements. The
Reorganized Debtors shall be authorized to take any and all actions that may be
necessary or appropriate to comply with such withholding and reporting
requirements. All persons holding Claims or Interests shall be required to
provide any information necessary to effect information reporting and the
withholding of such taxes. Notwithstanding any other provision of this Plan,
(a) each Holder of an Allowed Claim that is to receive a distribution pursuant
to this Plan shall have sole and exclusive responsibility for the satisfaction
and payment of any tax obligations imposed by any governmental unit, including
income, withholding, and other tax obligations, on account of such
distribution, and (b) no distribution shall be made to or on behalf of such
Holder pursuant to this Plan unless and until such Holder has made arrangements
satisfactory to the Reorganized Debtors for the payment and satisfaction of
such tax obligations.
6.10 Setoffs. The Reorganized Debtors may, pursuant to
section 553 of the Bankruptcy Code or applicable nonbankruptcy laws, but shall
not be required to, set off against any Claim, the payments or other
distributions to be made pursuant to this Plan in respect of such Claim, or
claims of any nature whatsoever that the Debtors or the Reorganized Debtors may
have against the Holder of such Claim; provided, however, that neither the
failure to do so nor the allowance of any Claim hereunder shall constitute a
waiver or release by the Reorganized Debtors of any such claim that the Debtors
or the Reorganized Debtors may have against such Holder.
6.11 Fractional Shares. No fractional shares of New Common
Stock shall be distributed. Where a fractional share would otherwise be called
for, the actual issuance shall reflect a rounding up (in the case of .50 or
more than .50) of such fraction to the nearest whole New Common Stock share or
a rounding down of such fraction (in the case of less than .50).
ARTICLE VII
TREATMENT OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES
7.1 Assumption of Executory Contracts and Unexpired Leases.
On the Effective Date, all executory contracts or unexpired leases of the
Debtors will be deemed assumed in accordance with, and subject to, the
provisions and requirements of sections 365 and 1123 of the Bankruptcy Code,
except those executory contracts and unexpired leases that (a) have been
rejected by order of the Bankruptcy Court or (b) are the subject of a motion to
reject pending on the Effective Date. Entry of the Confirmation Order by the
Bankruptcy Court shall constitute approval of such assumptions pursuant to
sections 365(a) and 1123 of the Bankruptcy Code. Each executory contract and
unexpired lease assumed pursuant to this Article VII shall revest in and be
fully enforceable by the respective Reorganized Debtor in accordance with its
terms, except as modified by the provisions of this Plan, or any order of the
Bankruptcy Court authorizing and providing for its assumption or applicable
federal law.
7.2 Claims Based on Rejection of Unexpired Leases. Plan
Schedule 7.2 lists the non-residential real property leases to be rejected by
the Debtors pursuant to an order of the Bankruptcy Court and the Lease
Rejection Claim Amount with respect to each such lease. Plan Schedule 7.2 shall
be filed not later than five (5) Business Days after the Petition Date and
shall be updated prior to the Confirmation Date (if necessary) to reflect
changes required as a result of the process set forth below. The Debtors shall
provide each Holder of a Class 6 Lease Rejection Claim with notice of its
Allowed Lease Rejection Claim Amount. If a Holder of a Class 6 Lease Rejection
Claim disagrees with the Allowed Lease Rejection Claim Amount set forth by the
Debtors, such Holder shall file a proof of claim with respect to Claims arising
from the rejected unexpired lease within twenty (20) days after the date of
entry of an order of the Bankruptcy Court approving such rejection, or such
other period as ordered by the Bankruptcy Court. If a proof of claim is filed
within such time, any Claims arising from the rejected unexpired lease and not
included in such proof of claim (other than those claims set forth on Plan
Schedule 7.2) will be forever barred from assertion against the Debtors or
Reorganized Debtors, their Estates, or property unless otherwise ordered by the
Bankruptcy Court or provided for in this Plan. If a proof of claim is received,
then the Debtors will attempt to reconcile the Allowed Lease Rejection Claim
Amount set forth on Plan Schedule 7.2 with the amount set forth in the proof of
claim. If the Debtor and the party filing a proof of claim are unable to reach
a resolution, the Debtors shall set a hearing date, which hearing may be the
Confirmation Hearing, at which time the Bankruptcy Court will determine the
Allowed Lease Rejection Claim Amount.
7.3 Assumption and Assignment of Executory Contracts and
Unexpired Leases in Conjunction with Authorized Asset Sales. In conjunction
with any Authorized Asset Sale, the Debtors shall designate unexpired leases
and/or executory contracts assumed pursuant to Section 7.1 of this Plan to be
assigned to asset purchasers under an Authorized Asset Sale. All such executory
contracts and unexpired leases shall be assumed and assigned pursuant to the
respective Authorized Asset Sale documentation and the Confirmation Order, in
accordance with and subject to the provisions and requirements of sections 365
and 1123 of the Bankruptcy Code. The Confirmation Order or another order
entered by the Bankruptcy Court will contain provisions providing for notice of
such proposed assumptions and assignments to the counterparties to such
executory contracts and/or unexpired leases, and procedures to resolve
disputes, if any, related thereto.
7.4 Cure of Defaults of Assumed Executory Contracts and
Unexpired Leases. Any monetary amounts by which each executory contract and
unexpired lease to be assumed pursuant to this Plan is in default shall be
satisfied, pursuant to section 365(b)(1) of the Bankruptcy Code, by payment of
the default amount in Cash on the Effective Date or on such other terms as the
parties to each such executory contract or unexpired lease may otherwise agree.
In the event of a dispute regarding (a) the amount of any cure payments, (b)
the ability of the Reorganized Debtors or any assignee to provide "adequate
assurance of future performance" (within the meaning of section 365 of the
Bankruptcy Code) under the contract or lease to be assumed, or (c) any other
matter pertaining to assumption, the cure payments required by section
365(b)(1) of the Bankruptcy Code shall be made following the entry of a Final
Order resolving the dispute and approving the assumption.
7.5 Compensation and Benefit Programs. Except as otherwise
expressly provided hereunder, all employment and severance contracts and
policies, and all compensation and benefit plans, policies, and programs of the
Debtors applicable to their employees, retirees, and non-employee directors and
the employees and retirees of its subsidiaries, including, without limitation,
all savings plans, retirement plans, healthcare plans, disability plans,
severance benefit plans, incentive plans, life, and accidental death and
dismemberment insurance plans and contracts are treated as executory contracts
under this Plan and on the Effective Date will be assumed pursuant to the
provisions of sections 365 and 1123 of the Bankruptcy Code.
7.6 Release and Disallowance of Certain Claims. Pursuant to
the Mutual Releases and section 502(e) of the Bankruptcy Code, all claims,
causes of action or other rights against the Debtors, based upon acts,
omissions, transactions, events or other occurrences taking place on or prior
to the Effective Date, including without limitation claims for indemnification
or contribution, held by each of the Releasing Officers and Directors (whether
pursuant to contract, the charter or by-laws of any Debtor, or otherwise),
shall be released and disallowed, except as provided in Section 7.5 of this
Plan, the Amended Certificate of Incorporation or By-Laws, or to the extent the
survival of any such claim, cause of action or other right is expressly
provided for under a contract assumed on or prior to the Effective Date under
this Plan or pursuant to order of the Bankruptcy Court with the consent of the
Majority Prepetition Lenders.
ARTICLE VIII
PROCEDURES FOR RESOLVING DISPUTED,
CONTINGENT AND UNLIQUIDATED CLAIMS
8.1 Objection Deadline; Prosecution of Objections. No later
than 60 days after the Effective Date (unless extended by an order of the
Bankruptcy Court), the Debtors or the Reorganized Debtors, as the case may be,
shall file objections to Claims with the Bankruptcy Court and serve such
objections upon the Holders of each of the Claims to which objections are made;
provided, however, the Debtors and Reorganized Debtors shall not object to
Claims Allowed pursuant to this Plan. The Debtors and the Reorganized Debtors
shall be authorized to, and shall, resolve all Disputed Claims through settling
or by litigating to judgment in the Bankruptcy Court or such other court having
jurisdiction the validity, nature, and/or amount thereof. After the Effective
Date, the Reorganized Debtors shall have the exclusive authority to object,
settle, compromise, withdraw, assign or litigate to judgment any and all
claims, including Administrative Claims.
8.2 No Distributions Pending Allowance. Notwithstanding any
other provision of this 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.
8.3 Disputed Claims Reserve. The Disbursing Agent may, in its
sole discretion, establish an appropriate reserve for Disputed Claims in Class
6 in an amount up to the amount which Holders of Disputed Claims in Class 6
would be entitled under this Plan if such Disputed Claims were Allowed Claims
in their Disputed Claim Amount.
8.4 Distribution After Allowance. The Disbursing Agent shall
make payment to the Holder of any Disputed Claim that has become an Allowed
Claim as soon as practicable after the date such Disputed Claim becomes an
Allowed Claim.
8.5 Reservation of Right to Object to Allowance or Asserted
Priority of Claims. Nothing in this Plan shall waive, prejudice or otherwise
affect the rights of the Debtors, the Reorganized Debtors or the Holders of any
Claim to object at any time, including after the Effective Date, to the
allowance or asserted priority of any Claim, including without limitation,
whether any such Claim should be treated as a Subordinated Claim.
ARTICLE IX
CONFIRMATION AND CONSUMMATION OF THE PLAN
9.1 Conditions to Confirmation. Confirmation of the Plan
shall be subject to satisfaction of the following conditions at or prior to the
time the Confirmation Order is entered:
(a) The Confirmation Order shall be reasonably
acceptable in form and substance to the Debtors and the Majority Prepetition
Lenders.
(b) The Bankruptcy Court shall have entered an
order, which may be the Confirmation Order (the "Lease Claim Order"), in form
and substance reasonably satisfactory to the Majority Prepetition Lenders,
fixing each Allowed Lease Rejection Claim at the amount set forth in Plan
Schedule 7.2, or such other amount satisfactory to the Majority Prepetition
Lenders, pursuant to section 502(b)(6) of the Bankruptcy Code, and disallowing
any other Claims of landlords under the leases listed on Plan Schedule 7.2.
(c) Each director of McLeodUSA as of August 11, 2005
or any time thereafter up to immediately prior to the Effective Date and the
Majority Prepetition Lenders as of the Confirmation Date shall have executed
the Mutual Release.
(d) The Confirmation Date shall have occurred not
later than the ninetieth (90th) day following the Petition Date.
9.2 Conditions to Effective Date. The following are
conditions precedent to the occurrence of the Effective Date:
(a) The Confirmation Order confirming this Plan, as
such Plan may have been modified with the consent of the Majority Prepetition
Lenders, shall have been entered and become a Final Order in form and substance
reasonably satisfactory to the Debtors and the Majority Prepetition Lenders.
(b) The following agreements, in form and substance
satisfactory to the Debtors and the Majority Prepetition Lenders, shall have
been executed and delivered by all parties thereto, and all conditions
precedent thereto shall have been satisfied:
(i) the Amended Certificate of
Incorporation and By-Laws, and the amended certificates of
incorporation of all of the Affiliate Debtors;
(ii) the Exit Facility Credit Agreement and
all related documents provided for therein or contemplated thereby;
and
(iii) the New Term Loan Notes.
(c) The Amended Certificate of Incorporation and
By-Laws, as necessary, and the amended certificates of incorporation of the
Affiliate Debtors, shall have been filed with the applicable authorities of the
relevant jurisdictions of incorporation in accordance with such jurisdictions'
corporation laws.
(d) The Lease Claim Order shall have become a Final
Order.
(e) All authorizations, consents, certifications,
approvals, rulings, no-action letters, opinions or other documents or actions
required by any law, regulation or order to be received or to occur in order to
implement the Plan on the Effective Date, including by the Federal
Communications Commission and state communications regulatory agencies, shall
have been obtained or shall have occurred unless failure to do so will not have
a material adverse effect on Reorganized McLeodUSA.
(f) Six (6) members of the board of directors of
Reorganized McLeodUSA (not including the new Chief Executive Officer) shall
have been selected and shall have expressed a willingness to serve on the board
of directors of Reorganized McLeodUSA.
(g) All other documents and agreements necessary to
implement this Plan on the Effective Date shall have been executed and
delivered and all other actions required to be taken in connection with the
Effective Date shall have occurred.
(h) The Effective Date shall have occurred not later
than the one hundred and twentieth (120th) day following the Petition Date;
provided that, upon notice to the Agent under the DIP Credit Agreement and the
Prepetition Agents by the Debtors, such date shall be automatically extended
for thirty (30) days if any of the conditions in Sections 9.2(b), (e), (f) and
(g) of this Plan have not been satisfied.
9.3 Waiver of Conditions. Each of the conditions set forth in
Section 9.1 or 9.2 of this Plan may be waived in whole or in part by the
Debtors, with consent of the Majority Prepetition Lenders, without any other
notice to parties in interest or the Bankruptcy Court and without a hearing.
9.4 Consequences of Non-Occurrence of Effective Date. If the
Effective Date has not occurred within the time period provided in Section
9.2(h) of this Plan (as may be extended by the proviso of such Section), upon
notice to such parties in interest as the Bankruptcy Court may direct, the
Confirmation Order will be vacated by the Bankruptcy Court. If the Confirmation
Order is vacated, (a) this Plan shall be null and void in all respects; (b) any
settlement of Claims or Interests provided for hereby shall be null and void
without further order of the Bankruptcy Court; and (c) the time within which
the Debtors may assume and assign or reject all executory contracts and
unexpired leases shall be extended for a period of thirty (30) days after the
date the Confirmation Order is vacated.
ARTICLE X
EFFECT OF PLAN CONFIRMATION
10.1 Binding Effect. This Plan shall be binding upon and
inure to the benefit of the Debtors, all present and former Holders of Claims
and Interests, and their respective successors and assigns, including, but not
limited to, the Reorganized Debtors.
10.2 Releases.
(a) Releases by the Debtors. As of the Effective
Date, for good and valuable consideration, the adequacy of which is hereby
confirmed, the Debtors and Reorganized Debtors in their individual capacities
and as debtors in possession will be deemed to release forever, waive, and
discharge all claims, obligations, suits, judgments, damages, demands, debts,
rights, causes of action, and liabilities (other than (x) the rights of the
Debtors or Reorganized Debtors to enforce this Plan and the contracts,
instruments, releases, indentures, and other agreements or documents delivered
hereunder, (y) any claims or causes of action against the directors, officers,
employees, agents, and the Debtors' Professionals arising out of the willful
misconduct of any such person or entity and (z) claims, obligations, suits,
judgments, damages, demands, debts, rights, causes of action, and liabilities
arising in the ordinary course of business) whether liquidated or unliquidated,
fixed or contingent, matured or unmatured, known or unknown, foreseen, or
unforeseen, then existing or thereafter arising, in law, equity, or otherwise
that are based in whole or part on any act, omission, transaction, event, or
other occurrence taking place on or prior to the Effective Date in any way
relating to the Debtors, the Reorganized Debtors, the Chapter 11 Cases, this
Plan, or the Disclosure Statement, and that could have been asserted by or on
behalf of the Debtors or their Estates or the Reorganized Debtors against (i)
the directors, officers, employees, agents of the Debtors, and the Debtors'
Professionals, in each case as of August 11, 2005 or any time thereafter up to
immediately prior to the Effective Date, (ii) the Holders of Prepetition Lender
Claims and the Prepetition Agents, (iii) the agent under the DIP Credit
Agreement and the Holders of DIP Facility Claims and (iv) the respective
current professionals (as of the Petition Date and thereafter) of the entities
released in subclauses (i) - (iii) acting in such capacity; provided, however,
that such release, waiver and discharge shall not be effective as to any
director of any Debtor as of August 11, 2005 or any time thereafter up to
immediately prior to the Effective Date (in whatever capacity, including,
without limitation, as an officer of any Debtor, if applicable), who has not
executed and delivered the Mutual Release (notwithstanding any waiver of the
condition to confirmation set forth in Section 9.1(c) with respect to such
director).
(b) Releases by Prepetition Lenders. As of the
Effective Date, to the fullest extent permitted by law, each Prepetition Lender
shall in consideration for the obligations of the Debtors and the Reorganized
Debtors under this Plan and the Cash and the securities, contracts,
instruments, releases, and other agreements or documents to be delivered in
connection with this Plan, be deemed to have forever released, waived, and
discharged all claims, demands, debts, rights, causes of action, or liabilities
(other than (x) the right to enforce the Debtors' or the Reorganized Debtors'
obligations under, and the contracts, instruments, releases, agreements, and
documents delivered, reinstated or assumed under, and (y) any claims or causes
of action arising out of willful misconduct), whether liquidated or
unliquidated, fixed or contingent, matured or unmatured, known or unknown,
foreseen or unforeseen, then existing or thereafter arising, in law, equity, or
otherwise that are based in whole or in part on any act or omission,
transaction, event, or other occurrence taking place on or prior to the
Effective Date in any way relating to the Debtors, the Reorganized Debtors, the
Chapter 11 Cases, this Plan, or the Disclosure Statement against (i) the
Debtors and the Reorganized Debtors, (ii) the directors, officers, employees,
agents of the Debtors, and the Debtors' Professionals, in each case as of
August 11, 2005 or any time thereafter up to immediately prior to the Effective
Date (excluding, for the avoidance of doubt, claims with respect to or relating
to any personal banking or investment relationships), (iii) the Holders of
Prepetition Lender Claims and the Prepetition Agents, (iv) the agent under the
DIP Credit Agreement and the Holders of DIP Facility Claims and (v) the
respective current professionals (as of the Petition Date and thereafter) of
the entities released in subclauses (i) - (iv) acting in such capacity;
provided, however, that such release, waiver and discharge shall not be
effective as to any director of any Debtor as of August 11, 2005 or any time
thereafter up to immediately prior to the Effective Date (in whatever capacity,
including, without limitation, as an officer of any Debtor, if applicable), who
has not executed and delivered the Mutual Release (notwithstanding any waiver
of the condition to confirmation set forth in Section 9.1(c) with respect to
such director).
(c) Injunction Related to Releases. The Confirmation
Order will permanently enjoin the commencement or prosecution by any entity,
whether directly, derivatively or otherwise, of any claims, obligations, suits,
judgments, damages, demands, debts, rights, causes of action, or liabilities
released pursuant to this Plan, including but not limited to the claims,
obligations, suits, judgments, damages, demands, debts, rights, causes of
action, or liabilities released in this Section 10.2.
(d) Special Provisions Regarding Releases.
Notwithstanding anything in Section 7.6, Section 10.2 or the Mutual Releases
(the "Release Provisions") to the contrary, any person or entity may assert any
claim released or purported to be released in the Release Provisions as a
defense or counterclaim (but no affirmative recovery may be obtained) to any
suit or action that (i) is commenced by a person or entity that grants or that
was purported to be deemed to have granted a release under the Release
Provisions and (ii) asserts a claim or cause of action released or purported to
be released under the Release Provisions.
10.3 Discharge of Claims and Termination of Interests. Except
as otherwise provided herein or in the Confirmation Order, all consideration
distributed under this Plan shall be in exchange for, and in complete
satisfaction, settlement, discharge, and release of, all Claims and Interests
(other than those Claims that are Unimpaired under this Plan) of any nature
whatsoever against the Debtors or any of their assets or properties, and
regardless of whether any property shall have been distributed or retained
pursuant to this Plan on account of such Claims and Interests. Upon the
Effective Date, the Debtors, and each of them, shall be deemed discharged and
released under section 1141(d)(1)(A) of the Bankruptcy Code from any and all
Claims and Interests (other than Claims that are not Impaired), including, but
not limited to, demands and liabilities that arose before the Confirmation
Date, and all debts of the kind specified in section 502(g), 502(h), or 502(i)
of the Bankruptcy Code, and the Old Preferred Stock and the Old Common Stock
shall be terminated.
10.4 Preservation of Rights of Action and Settlement of
Litigation Claims. Except as otherwise provided in this Plan, the Confirmation
Order, or in any document, instrument, release, or other agreement entered into
in connection with this Plan, in accordance with section 1123(b) of the
Bankruptcy Code, the Debtors and their Estates shall retain the Litigation
Claims. The Reorganized Debtors, as the successors in interest to the Debtors
and the Estates, may enforce, sue on, settle, or compromise (or decline to do
any of the foregoing) any or all of the Litigation Claims. Notwithstanding the
foregoing, the Debtors and the Reorganized Debtors shall not file, commence, or
pursue any claim, right, or cause of action under sections 544 through 550 of
the Bankruptcy Code; provided, however, that, notwithstanding any statute of
limitations (including, without limitation, section 546 of the Bankruptcy
Code), the Debtors and Reorganized Debtors shall have the right to assert or
raise such causes of action (a) as defenses or counterclaims (up to the amount
asserted in the Claims against the Debtors), and (b) in connection with the
Claims objection process, in which case such causes of action can be raised as
an objection to a Claim and not as defenses or counterclaims.
10.5 Exculpation and Limitation of Liability. Neither the
Debtors, the Reorganized Debtors, Holders of DIP Facility Claims, the agent
under the DIP Credit Agreement, the Holders of Prepetition Lender Claims, the
Prepetition Agents nor any of their respective present or former members,
officers, directors, employees, advisors, or attorneys shall have or incur any
liability to, or be subject to any right of action by, any Holder of a Claim or
an Interest, or any other party in interest, or any of their respective agents,
employees, representatives, financial advisors, attorneys, or agents acting in
such capacity, or affiliates, or any of their successors or assigns, for any
act or omission in connection with, relating to, or arising out of, the Chapter
11 Case, formulating, negotiating, or implementing this Plan, the solicitation
of acceptances of this Plan, the pursuit of confirmation of this Plan, the
confirmation of this Plan, the consummation of this Plan, or the administration
of this Plan or the property to be distributed under this Plan, except for
their gross negligence or willful misconduct, and in all respects shall be
entitled to reasonably rely upon the advice of counsel with respect to their
duties and responsibilities under this Plan.
10.6 Injunction.
(a) Except as otherwise provided in this Plan, the
Confirmation Order shall provide, among other things, that from and after the
Confirmation Date all Persons who have held, hold, or may hold Claims against
or Interests in the Debtors are (i) permanently enjoined from taking any of the
following actions against the Estate(s), or any of their property, on account
of any such Claims or Interests and (ii) permanently enjoined from taking any
of the following actions against any of the Debtors, the Reorganized Debtors or
their property on account of such Claims or Interests: (A) commencing or
continuing, in any manner or in any place, any action, or other proceeding; (B)
enforcing, attaching, collecting, or recovering in any manner any judgment,
award, decree or order; (C) creating, perfecting, or enforcing any lien or
encumbrance; (D) asserting a setoff, right of subrogation, or recoupment of any
kind against any debt, liability or obligation due to the Debtors; and (E)
commencing or continuing, in any manner or in any place, any action that does
not comply with or is inconsistent with the provisions of this Plan; provided,
however, that nothing contained herein shall preclude such persons from
exercising their rights pursuant to and consistent with the terms of this Plan.
(b) By accepting distributions pursuant to this
Plan, each Holder of an Allowed Claim will be deemed to have specifically
consented to the injunctions set forth in this Section 10.6.
10.7 Term of Bankruptcy Injunction or Stays. All injunctions
or stays provided for in the Chapter 11 Cases under section 105 or 362 of the
Bankruptcy Code, or otherwise, and in existence on the Confirmation Date, shall
remain in full force and effect until the Effective Date.
10.8 Termination of Subordination Rights and Settlement of
Related Claims. The classification and manner of satisfying all Claims and
Interests under this Plan take into consideration all subordination rights,
whether arising by contract or under general principles of equitable
subordination, section 510(b) or 510(c) of the Bankruptcy Code, or otherwise.
Except as provided in Section 8.5 of this Plan, all subordination rights that a
Holder of a Claim or Interest may have with respect to any distribution to be
made pursuant to this Plan will be discharged and terminated, and all actions
related to the enforcement of such subordination rights will be permanently
enjoined. Accordingly, distributions pursuant to this Plan to Holders of
Allowed Claims will not be subject to payment to a beneficiary of such
terminated subordination rights, or to levy, garnishment, attachment, or other
legal process by a beneficiary of such terminated subordination rights.
ARTICLE XI
RETENTION OF JURISDICTION
Pursuant to sections 105(c) and 1142 of the Bankruptcy Code
and notwithstanding entry of the Confirmation Order and the occurrence of the
Effective Date, the Bankruptcy Court will retain exclusive jurisdiction over
all matters arising out of, and related to, the Chapter 11 Cases and this Plan
to the fullest extent permitted by law, including, among other things,
jurisdiction to:
(a) allow, disallow, determine, liquidate, classify,
estimate, or establish the priority or secured or unsecured status of any Claim
or Interest, including the resolution of any request for payment of any
Administrative Claim or Priority Tax Claim and the resolution of any objections
to the allowance or priority of Claims or Interests;
(b) grant or deny any applications for allowance of
compensation or reimbursement of expenses authorized pursuant to the Bankruptcy
Code or this Plan for periods ending on or before the Effective Date;
(c) resolve any matters related to the assumption,
assumption, and assignment, or rejection of any executory contract or unexpired
lease to which any Debtor is a party or with respect to which any Debtor or the
Reorganized Debtor may be liable and to hear, determine, and, if necessary,
liquidate any Claims arising therefrom;
(d) ensure that distributions to Holders of Allowed
Claims are accomplished pursuant to the provisions of this Plan;
(e) decide or resolve any motions, adversary
proceedings, contested, or litigated matters and any other matters and grant or
deny any applications involving the Debtors that may be pending on the
Effective Date;
(f) enter such orders as may be necessary or
appropriate to implement or consummate the provisions of this Plan and all
contracts, instruments, releases, and other agreements or documents created in
connection with this Plan, the Disclosure Statement, or the Confirmation Order;
(g) resolve any cases, controversies, suits, or
disputes that may arise in connection with the consummation, interpretation ,or
enforcement of this Plan or any contract, instrument, release, or other
agreement or document that is executed or created pursuant to this Plan, or any
entity's rights arising from or obligations incurred in connection with this
Plan or such documents;
(h) approve any modification of this Plan before or
after the Effective Date pursuant to section 1127 of the Bankruptcy Code or
approve any modification of the Disclosure Statement, the Confirmation Order,
or any contract, instrument, release, or other agreement or document created in
connection with this Plan, the Disclosure Statement or the Confirmation Order,
or remedy any defect or omission or reconcile any inconsistency in any
Bankruptcy Court order, this Plan, the Disclosure Statement, the Confirmation
Order, or any contract, instrument, release, or other agreement or document
created in connection with this Plan, the Disclosure Statement, or the
Confirmation Order, in such manner as may be necessary or appropriate to
consummate this Plan;
(i) hear and determine all applications for
compensation and reimbursement of expenses of Professionals under this Plan or
under sections 330, 331, 503(b), 1103, and 1129(c)(9) of the Bankruptcy Code,
which shall be payable by the Debtors only upon allowance thereof pursuant to
the order of the Bankruptcy Court, provided, however, that the fees and
expenses of the Reorganized Debtors, incurred after the Effective Date,
including counsel fees, may be paid by the Reorganized Debtors in the ordinary
course of business and shall not be subject to the approval of the Bankruptcy
Court;
(j) 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 consummation, implementation, or
enforcement of this Plan or the Confirmation Order;
(k) hear and determine causes of action by or on
behalf of the Debtors or the Reorganized Debtors;
(l) hear and determine matters concerning state,
local and federal taxes in accordance with sections 346, 505, and 1146 of the
Bankruptcy Code; (m) enter and implement such orders as are necessary or
appropriate if the Confirmation Order is for any reason or in any respect
modified, stayed, reversed, revoked, or vacated, or distributions pursuant to
this Plan are enjoined or stayed;
(n) determine any other matters that may arise in
connection with or relate to this Plan, the Disclosure Statement, the
Confirmation Order, or any contract, instrument, release, or other agreement,
or document created in connection with this Plan, the Disclosure Statement or
the Confirmation Order;
(o) enforce all orders, judgments, injunctions,
releases, exculpations, indemnifications, and rulings entered in connection
with the Chapter 11 Cases;
(p) hear and determine all matters related to (i)
the property of the Estates from and after the Confirmation Date and (ii) the
activities of the Reorganized Debtors;
(q) hear and determine disputes with respect to
compensation of the Reorganized Debtors' professional advisors;
(r) hear and determine such other matters as may be
provided in the Confirmation Order or as may be authorized under the Bankruptcy
Code; and
(s) enter an order closing the Chapter 11 Cases.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Effectuating Documents and Further Transactions. Each of
the Debtors or the Reorganized Debtors is authorized to execute, deliver, file,
or record such contracts, instruments, releases, and other agreements or
documents and take such actions as may be necessary or appropriate to
effectuate, implement, and further evidence the terms and conditions of this
Plan and any notes or securities issued pursuant to this Plan.
12.2 Corporate Action. Prior to, on, or after the Effective
Date (as appropriate), all matters expressly provided for under this Plan that
would otherwise require approval of the stockholders or directors of one (1) or
more of the Debtors or the Reorganized Debtors shall be deemed to have occurred
and shall be in effect prior to, on, or after the Effective Date (as
appropriate) pursuant to the applicable general corporation law of the states
in which the Debtors or the Reorganized Debtors are incorporated without any
requirement of further action by the stockholders or directors of the Debtors
or the Reorganized Debtors.
12.3 Exemption from Transfer Taxes. Pursuant to section
1146(c) of the Bankruptcy Code, (a) the issuance, transfer, or exchange of
notes or equity securities under this Plan; (b) the creation of any mortgage,
deed of trust, lien, pledge, or other security interest; (c) the making or
assignment of any lease or sublease; or (d) the making or delivery of any deed
or other instrument of transfer under, in furtherance of, or in connection
with, this Plan, including, without limitation, any Authorized Asset Sales;
merger agreements; agreements of consolidation, restructuring, disposition,
liquidation, or dissolution; deeds; bills of sale; and transfers of tangible
property, will not be subject to any stamp tax, recording tax, personal
property tax, real estate transfer tax, sales, or use tax or other similar tax.
Unless the Bankruptcy Court orders otherwise, all sales, transfers, and
assignments of owned and leased property approved by the Bankruptcy Court on or
prior to the Effective Date, shall be deemed to have been in furtherance of, or
in connection with, this Plan.
12.4 Payment of Statutory Fees. All fees payable pursuant to
section 1930 of title 28, United States Code, as determined by the Bankruptcy
Court at the Confirmation Hearing, shall be paid on the Effective Date.
12.5 Amendment or Modification of the Plan. Subject to
section 1127 of the Bankruptcy Code and, to the extent applicable, sections
1122, 1123, and 1125 of the Bankruptcy Code, the Debtors may, with the written
consent of the Majority Prepetition Lenders, alter, amend, or modify this Plan
at any time prior to or after the Confirmation Date but prior to the
substantial consummation of this Plan. A Holder of a Claim that has accepted
this Plan shall be deemed to have accepted the Plan, as altered, amended or
modified, if the proposed alteration, amendment or modification does not
materially and adversely change the treatment of the Claim of such Holder.
12.6 Severability of Plan Provisions. If, prior to the
Confirmation Date, any term or provision of this Plan is determined by the
Bankruptcy Court to be invalid, void, or unenforceable, the Bankruptcy Court
will 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 will then be applicable as altered or
interpreted. Notwithstanding any such holding, alteration or interpretation,
the remainder of the terms and provisions of this Plan will remain in full
force and effect and will in no way be affected, impaired, or invalidated by
such holding, alteration, or interpretation. The Confirmation Order will
constitute a judicial determination and will provide that each term and
provision of this Plan, as it may have been altered or interpreted in
accordance with the foregoing, is valid and enforceable pursuant to its terms.
12.7 Successors and Assigns. This Plan shall be binding upon
and inure to the benefit of the Debtors, and their respective successors and
assigns, including, without limitation, the Reorganized Debtors. The rights,
benefits, and obligations of any entity named or referred to in this Plan shall
be binding on, and shall inure to the benefit of, any heir, executor,
administrator, successor, or assign of such entity.
12.8 Revocation, Withdrawal, or Non-Consummation. The Debtors
reserve the right to revoke or withdraw this 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 this 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) this Plan shall be null
and void in all respects, (b) any settlement or compromise embodied in this
Plan (including the fixing or limiting to an amount certain any Claim or
Interest or Class of Claims or Interests), assumption or rejection of executory
contracts or leases affected by this Plan, and any document or agreement
executed pursuant to this Plan shall be deemed null and void, and (c) nothing
contained in this Plan shall (i) constitute a waiver or release of any Claims
by or against, or any Interests in, such Debtors or any other Person, (ii)
prejudice in any manner the rights of such Debtors or any other Person, or
(iii) constitute an admission of any sort by the Debtors or any other Person.
12.9 Notice. All notices, requests, and demands to or upon
the Debtors or the Reorganized Debtors to be effective shall be in writing and,
unless otherwise expressly provided herein, shall be deemed to have been duly
given or made when actually delivered or, in the case of notice by facsimile
transmission, when received and telephonically confirmed, addressed as follows:
McLEODUSA INCORPORATED
6400 C Street SW
P.O. Box 3177
Cedar Rapids, IA 52406-3177
Telephone: (319) 790-7775
Facsimile: (319) 790-7008
Attn: James E. Thompson, Esq.
with a copy to:
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
Telephone: (312) 407-0700
Facsimile: (312) 407-0411
Attn: Timothy R. Pohl, Esq.
Counsel to the Debtors
with a copy to:
DAVIS POLK & WARDWELL
450 Lexington Avenue
New York, NY 10017
Telephone: (212) 450-4000
Facsimile: (212) 450-3800
Attn: Donald S. Bernstein, Esq.
Counsel to the Prepetition Agents
12.10 Governing Law. Except to the extent that the Bankruptcy
Code, the Bankruptcy Rules or other federal law is applicable, or to the extent
that an exhibit or schedule to this Plan provides otherwise, the rights and
obligations arising under this Plan shall be governed by, and construed and
enforced in accordance with, the laws of Illinois, without giving effect to the
principles of conflicts of law of such jurisdiction.
12.11 Tax Reporting and Compliance. The Reorganized Debtors
are hereby authorized, on behalf of each of the Debtors, to request an
expedited determination under section 505(b) of the Bankruptcy Code of the tax
liability of the Debtors for all taxable periods ending after the Petition Date
through, and including, the Effective Date.
12.12 Exhibits. All exhibits to this Plan, including the
Exhibits and Plan Schedules, are incorporated and are a part of this Plan as if
set forth in full herein.
12.13 Filing of Additional Documents. On or before substantial consummation of
this Plan, the Debtors shall File such agreements and other documents as may be
necessary or appropriate to effectuate and further evidence the terms and
conditions of this Plan.
Dated: October 19, 2005
Respectfully Submitted,
McLEODUSA INCORPORATED
(for itself and on behalf of the Affiliate
Debtors)
By: /s/ Stanford Springel
-----------------------------------
Name: Stanford Springel
Title: Chief Restructuring Officer
Counsel:
Timothy R. Pohl (ARDC No. 06208157)
Peter C. Krupp (ARDC No. 06193707)
Felicia Gerber Perlman (ARDC No. 06210753)
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
(312) 407-0700
Attorneys for Debtors and
Debtors-in-Possession
EXHIBIT A
Amended Certificate of Incorporation of Reorganized McLeodUSA
EXHIBIT B
Restated By-Laws of Reorganized McLeodUSA
EXHIBIT C
Exit Facility Term Sheet
EXHIBIT D
Mutual Release
EXHIBIT E
New Stockholders Agreement
EXHIBIT F
Registration Rights Agreement
PLAN SCHEDULE 7.2
Schedule of Rejected Unexpired Leases
To be filed within five (5) days after the Petition Date