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EXHIBIT 2.1
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: ) Chapter 11
)
PennCorp Financial Group, Inc., ) Case No. 00-888 (PJW)
)
Debtor. )
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PLAN OF REORGANIZATION
OF PENNCORP FINANCIAL GROUP, INC.
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
PROPOSED BY THE COMPANY AND THE UNOFFICIAL
COMMITTEE OF PREFERRED SHAREHOLDERS
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Jeffrey L. Tanenbaum
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
Facsimile: (212) 310-8007
Martin Sosland
WEIL, GOTSHAL & MANGES LLP
100 Crescent Court
Suite 1300
Dallas, Texas 75201-6950
Thomas L. Ambro
Mark Collins
RICHARDS, LAYTON & FINGER
One Rodney Square
P.O. Box 551
Wilmington, Delaware 19899
Facsimile: (302) 658-6548
Co-Counsel to PennCorp Financial Group, Inc.
James H.M. Sprayregen
Lena Mandel
KIRKLAND & ELLIS
200 E. Randolph Drive
Chicago, Illinois 60601
Facsimile: (312) 861-2200
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Laura Davis Jones
PACHULSKI, STANG, ZIEL, YOUNG & JONES
919 North Market Street
Wilmington, Delaware 19801
Facsimile: (302) 652-4400
Co-Counsel to Inverness/Phoenix Capital
LLC., lead member of the Unofficial
Committee of Preferred Shareholders
Dated: April 25, 2000
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TABLE OF CONTENTS
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ARTICLE I.
DEFINED TERMS, RULES OF INTERPRETATION,
COMPUTATION OF TIME AND GOVERNING LAW........................................................ 1
A. Rules of Interpretation, Computation of Time and Governing Law......................... 1
B. Defined Terms.......................................................................... 1
ARTICLE II.
ADMINISTRATIVE AND PRIORITY TAX CLAIMS....................................................... 8
A. Administrative Claims.................................................................. 8
B. Professional Compensation.............................................................. 8
C. Priority Tax Claims.................................................................... 9
ARTICLE III.
CLASSIFICATION AND TREATMENT
OF CLASSIFIED CLAIMS AND EQUITY INTERESTS.................................................... 9
A. Summary................................................................................ 9
B. Classification and Treatment of Claims and Equity Interests............................ 10
C. Special Provision Governing Unimpaired Claims.......................................... 12
ARTICLE IV.
ACCEPTANCE OR REJECTION OF THE PLAN.......................................................... 13
A. Voting Classes......................................................................... 13
B. Acceptance by Impaired Classes......................................................... 13
C. Presumed Acceptance of Plan............................................................ 13
D. Presumed Rejection of Plan............................................................. 13
E. Non-Consensual Confirmation............................................................ 13
ARTICLE V.
MEANS FOR IMPLEMENTATION OF THE PLAN......................................................... 13
A. Continued Corporate Existence and Vesting of Assets in the Reorganized Debtor.......... 13
B. Cancellation of Notes, Instruments and Common Stock.................................... 13
C. Issuance of New Securities; Execution of Related Documents............................. 14
D. Terms of the Rights Offering........................................................... 14
E. Terms of the Rapoport/Sharpe Investment................................................ 14
F. Terms of the New Common Stock ......................................................... 15
G. Corporate Governance, Directors and Officers, and Corporate Action..................... 15
H. Sources of Cash for Plan Distribution.................................................. 16
I. Change of Corporate Name............................................................... 16
ARTICLE VI.
TREATMENT OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES......................................................................... 16
A. Assumption of Executory Contracts and Unexpired Leases................................. 16
B. Claims Based on Rejection of Executory Contracts or Unexpired Leases................... 16
C. Cure of Defaults for Executory Contracts and Unexpired Leases Assumed.................. 17
D. Indemnification of Directors, Officers and Employees................................... 17
E. Compensation and Benefit Programs...................................................... 17
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ARTICLE VII.
PROVISIONS GOVERNING DISTRIBUTIONS........................................................... 17
A. Distributions for Claims Allowed as of the Effective Date.............................. 17
B. Distributions by the Reorganized Debtor; Distributions with Respect to Old Notes....... 18
C. Delivery and Distributions and Undeliverable or Unclaimed Distributions................ 18
D. Distribution Record Date............................................................... 19
E. Timing and Calculation of Amounts to be Distributed.................................... 19
F. No Fractional Shares .................................................................. 19
G. Setoffs................................................................................ 19
H. Surrender of Canceled Instruments or Securities........................................ 19
I. Lost, Stolen, Mutilated or Destroyed Securities........................................ 20
ARTICLE VIII.
PROCEDURES FOR RESOLVING DISPUTED CLAIMS..................................................... 20
A. Prosecution of Objections to Claims.................................................... 20
B. Estimation of Claims................................................................... 20
C. Payments and Distributions on Disputed Claims or Interests............................. 21
ARTICLE IX.
CONDITIONS PRECEDENT TO CONSUMMATION OF THE PLAN............................................. 21
A. Conditions Precedent to Consummation................................................... 21
B. Effect of Non-Occurrence of Conditions to Consummation................................. 22
ARTICLE X.
RELEASE, INJUNCTIVE AND RELATED PROVISIONS................................................... 22
A. Subordination.......................................................................... 22
B. Limited Releases by the Debtor......................................................... 22
C. Preservation of Rights of Action....................................................... 22
D. Exculpation............................................................................ 23
E. Injunction............................................................................. 23
ARTICLE XI.
RETENTION OF JURISDICTION.................................................................... 23
ARTICLE XII.
MISCELLANEOUS PROVISIONS..................................................................... 24
A. Dissolution of Committee(s)............................................................ 24
B. Payment of Statutory Fees.............................................................. 24
C. Fees and Expenses of the Unofficial Preferred Shareholders' Committee.................. 24
D. Discharge of Debtor.................................................................... 24
E. Modification of Plan................................................................... 25
F. Revocation of Plan..................................................................... 25
G. Successors and Assigns................................................................. 25
H. Reservation of Rights.................................................................. 25
I. Section 1145 Exemption................................................................. 25
J. Section 1146 Exemption................................................................. 25
K Further Assurances..................................................................... 25
L. Service of Documents................................................................... 26
M. Filing of Additional Documents......................................................... 27
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PLAN OF REORGANIZATION
OF PENNCORP FINANCIAL GROUP, INC. UNDER CHAPTER 11 OF
THE BANKRUPTCY CODE PROPOSED BY THE COMPANY AND THE
UNOFFICIAL COMMITTEE OF PREFERRED SHAREHOLDERS
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Pursuant to chapter 11, title 11 of the United States Code, 11
U.S.C.(S)(S) 101 et seq., PennCorp Financial Group, Inc., the debtor and
debtor-in-possession in the above-captioned and numbered case, and the
Unofficial Preferred Shareholders' Committee hereby respectfully propose the
following Plan of Reorganization under chapter 11 of the Bankruptcy Code:
ARTICLE I.
DEFINED TERMS, RULES OF INTERPRETATION,
COMPUTATION OF TIME AND GOVERNING LAW
A. Rules of Interpretation, Computation of Time and Governing Law
1. For purposes of the Plan: (a) whenever from the context it is
appropriate, each term, whether stated in the singular or the plural, shall
include both the singular and the plural, and pronouns stated in the masculine,
feminine or neuter gender shall include the masculine, feminine and the neuter
gender; (b) any reference in the Plan to a contract, instrument, release,
indenture or other agreement or document being in a particular form or on
particular terms and conditions means that such document shall be substantially
in such form or substantially on such terms and conditions; (c) any reference in
the Plan to an existing document or exhibit Filed, or to be Filed, shall mean
such document or exhibit, as it may have been or may be amended, modified or
supplemented; (d) unless otherwise specified, all references in the Plan to
Sections or Articles are references to Sections or Articles of the Plan; (e) the
words "herein" and "hereto" refer to the Plan in its entirety rather than to a
particular portion of the Plan; (f) captions and headings to Articles and
Sections are inserted for convenience of reference only and are not intended to
be a part of or to affect the interpretation of the Plan; (g) the rules of
construction set forth in section 102 of the Bankruptcy Code shall apply; and
(h) any term used in capitalized form in the Plan that is not defined herein but
that is used in the Bankruptcy Code or the Bankruptcy Rules shall have the
meaning assigned to such term in the Bankruptcy Code or the Bankruptcy Rules, as
the case may be.
2. In computing any period of time prescribed or allowed by the Plan, the
provisions of Bankruptcy Rule 9006(a) shall apply.
3. Except to the extent that the Bankruptcy Code or Bankruptcy Rules are
applicable, and subject to the provisions of any contract, instrument, release,
indenture or other agreement or document entered into in connection with the
Plan, the rights and obligations arising under the Plan shall be governed by,
and construed and enforced in accordance with, the laws of the State in which
the Bankruptcy Court resides, without giving effect to the principles of
conflict of laws thereof.
B. Defined Terms
Unless the context otherwise requires, the following terms shall have the
following meanings when used in capitalized form in the Plan:
1. "Administrative Claim" means a Claim for costs and expenses of
administration under section 503(b), 507(b) or 1114(e)(2) of the Bankruptcy
Code, including: (a) the actual and necessary costs and expenses incurred after
the Petition Date of preserving the Estate and operating the business of the
Debtor (such as wages, salaries or commissions for services and payments for
goods and other services and leased premises); (b) compensation for legal,
financial advisory, accounting and other services and reimbursement of expenses
awarded or allowed under
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section 330(a) or 331 of the Bankruptcy Code; and (c) all fees and charges
assessed against the Estate under chapter 123 of title 28 United States Code, 28
U.S.C. (S)(S) 1911-1930.
2. "Allowed" means, with respect to any Claim or Equity Interest, except
as otherwise provided herein: a Claim or Equity Interest (a) that has been
scheduled by the Debtor in its schedules of liabilities as other than disputed,
contingent or unliquidated, (b) as to which the Debtor or other party in
interest have not Filed an objection on or before the Confirmation Date or such
other applicable period of limitation fixed by the Bankruptcy Code, the
Bankruptcy Rules, or the Bankruptcy Court, or as to which any objection has been
determined by a Final Order to the extent such objection is determined in favor
of the relevant Holder, (c) as to which the liability of the Debtor and the
amount thereof are determined by a Final Order of a court of competent
jurisdiction other than the Bankruptcy Court; or (d) that is expressly allowed
pursuant to the terms of this Plan.
3. "Allowed ... Claim" means an Allowed Claim in the particular Class
described.
4. "Allowed ... Equity Interest" means an Allowed Equity Interest in the
particular Class described.
5. "Amended Certificate of Incorporation" means the Certificate of
Incorporation of the Reorganized Debtor, as restated as described in Article
V.G.1 of the Plan, the form of which shall be Filed on or before the
Confirmation Date.
6. "Ballot Date" means the date stated in the Voting Instructions by
which all Ballots must be received.
7. "Ballots" mean the ballots accompanying the Disclosure Statement upon
which Holders of Impaired Claims and Impaired Interests entitled to vote shall
indicate their acceptance or rejection of the Plan in accordance with the Plan
and the Voting Instructions.
8. "Bank Secured Claims" means all Claims arising from or relating to the
Prepetition Bank Credit Facility, including Claims for accrued and unpaid
interest at the non-default contract rate through the Effective Date, which
Claims shall be deemed Allowed without the need to file any proof of Claim.
9. "Bankruptcy Code" means title I of the Bankruptcy Reform Act of 1978,
as amended from time to time, as set forth in sections 101 et seq. of title 11
of the United States Code, and applicable portions of titles 18 and 28 of the
United States Code.
10. "Bankruptcy Court" means the United States District Court having
jurisdiction over the Chapter 11 Case and, to the extent of any reference made
pursuant to section 157 of title 28 of the United States Code and/or the General
Order of such District Court pursuant to section 151 of title 28 of the United
States Code, the bankruptcy unit of such District Court.
11. "Bankruptcy Rules"means the Federal Rules of Bankruptcy Procedure, as
amended from time to time, as applicable to the Chapter 11 Cases, promulgated
under 28 U.S.C.(S) 2075 and the General, Local and Chambers Rules of the
Bankruptcy Court.
12. "Beneficial Holder" means the Person or Entity holding the beneficial
interest in a Claim or Equity Interest.
13. "Business Day" means any day, other than a Saturday, Sunday or legal
holiday (as defined in Bankruptcy Rule 9006(a)).
14. "By-Laws" mean the By-Laws of the Reorganized Debtor, the form of
which shall be Filed on or before the Confirmation Date.
15. "Cash" means cash and cash equivalents.
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16. "Causes of Action" mean all actions, causes of action, suits, debts,
dues, sums of money, accounts, reckonings, bonds, bills, specialities,
covenants, contracts, controversies, agreements, promises, variances,
trespasses, damages or judgments.
17. "Chapter 11 Case" means the case under chapter 11 of the Bankruptcy
Code, commenced by the Debtor in the Bankruptcy Court.
18. "Claim" means a claim (as defined in section 101(5) of the Bankruptcy
Code) against the Debtor, including, but not limited to: (a) any right to
payment from the Debtor whether or not such right is reduced to judgment,
liquidated, unliquidated, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured; or (b) any right to an equitable remedy
for breach of performance if such performance gives rise to a right of payment
from the Debtor, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.
19. "Claim Holder" or "Claimant" means the Holder of a Claim.
20. "Class" means a category of Holders of Claims or Equity Interests as
set forth in Article III of the Plan.
21. "Class Action Suit" means that certain suit pending against PennCorp
in the United States District Court for the Southern District of New York under
the caption "In re PennCorp Financial Group, Inc. Securities Litigation, Master
File No. 98 Civ. 5998 (LAP)."
22. "Class Action Suit Claims" means the Claims of the Settling Members of
the class on whose behalf the Class Action Suit was instituted based on the
causes of action asserted in the Class Action Suit.
23. "Committee" or "Committees" means a statutory official committee (or
committees, if more than one) appointed in the Chapter 11 Cases pursuant to
section 1102 of the Bankruptcy Code.
24. "Committee Releasees" means all members of the Committee, as well as
all officers, directors, employees, attorneys, financial advisors, accountants,
investment bankers, agents and representatives of each such member.
25. "Common Stock" means the authorized common stock of PennCorp.
26. "Confirmation" means the entry of the Confirmation Order.
27. "Confirmation Date" means the date upon which the Confirmation Order
is entered by the Bankruptcy Court in its docket, within the meaning of
Bankruptcy Rules 5003 and 9021.
28. "Confirmation Order" means the order of the Bankruptcy Court
confirming the Plan pursuant to section 1129 of the Bankruptcy Code.
29. "Consummation" means the occurrence of the Effective Date.
30. "Creditor" means any Holder of a Claim.
31. "D&O Releasees" means all officers and directors of the Debtor and
their present and future subsidiaries who served in such capacity on or after
the Petition Date in each case in their capacity as such.
32. "Debtor" means PennCorp Financial Group, Inc., as debtor in the
Chapter 11 Case.
33. "Debtor in Possession" means PennCorp Financial Group, Inc., as debtor
in possession in the Chapter 11 Case.
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34. "Delaware General Corporation Law" means title 8 of the Delaware Code,
as now in effect or hereafter amended.
35. "Disclosure Statement" means the Disclosure Statement for the Plan of
Reorganization for PennCorp under chapter 11 of the Bankruptcy Code, as amended,
supplemented, or modified from time to time, describing the Plan, that is
prepared and distributed in accordance with sections 1125, 1126(b) and/or 1145
of the Bankruptcy Code and Bankruptcy Rule 3018 and/or other applicable law.
36. "Disputed" means, with respect to any Claim or Equity Interest, any
Claim or Equity Interest: (a) listed on the Schedules as unliquidated, disputed
or contingent and which has not been resolved by written agreement of the
parties or a Final Order of the Bankruptcy Court; or (b) which was Filed with
the Bankruptcy Court and as to which the Debtor or any other party in interest
have interposed a timely objection or request for estimation in accordance with
the Bankruptcy Code and the Bankruptcy Rules or is otherwise disputed by the
Debtor in accordance with applicable law, which objection, request for
estimation or dispute has not been withdrawn or determined by a Final Order.
Prior to (i) the time an objection has been Filed and (ii) the expiration of the
time within which an objection may be filed as set forth herein or as otherwise
established by an order of the Bankruptcy Court, a Claim or an Equity Interest
shall be considered a Disputed Claim or a Disputed Equity Interest to the extent
that the amount of the Claim or Equity Interest specified in a proof of Claim or
Equity Interest exceeds the amount of the Claim or Equity Interest scheduled by
the Debtor as not disputed, contingent or unliquidated.
37. "Distribution Record Date" means the close of business on the Business
Day immediately preceding the Effective Date.
38. "Effective Date" means the date selected by the Debtor and the
Unofficial Preferred Shareholders' Committee which is a Business Day after the
Confirmation Date on which: (a) no stay of the Confirmation Order is in effect,
and (b) all conditions specified in both Article IX.A and IX.B of the Plan have
been satisfied.
39. "Entity" means an entity as defined in section 101(15) of the
Bankruptcy Code.
40. "Equity Interest" means any equity interest of the Debtor, including,
but not limited to, all issued, unissued, authorized or outstanding shares of
stock (including the Preferred Stock and the Common Stock), together with any
warrants, options or contract rights to purchase or acquire such interests at
any time.
41. "Estate" means the estate of the Debtor created by section 541 of the
Bankruptcy Code upon the commencement of the Chapter 11 Case.
42. "Executive Agreements" mean those certain Executive Stock and
Employment Agreements to be executed by the Reorganized Debtor on the Effective
Date with certain senior executives as set forth in Section VI.B.8. of the
Disclosure Statement.
43. "Exit Credit Facility" means that certain $95 million secured senior
revolving credit facility pursuant to the Senior Credit Agreement among
Southwestern Life Holdings, Inc., the lenders parties thereto and ING (U.S.)
Capital LLC, as agent dated as of the Effective Date.
44. "Expiration Date" means, in connection with the Rights Offering, the
meaning ascribed to it in the Disclosure Statement.
45. "Extraordinary Distribution" means an extraordinary distribution to
PennCorp of an aggregate amount of approximately $55 million by SFC in
connection with the Consummation of the Plan, as more fully described in Section
VI.B.9.e. of the Disclosure Statement.
46. "File" or "Filed" means file or filed with the Bankruptcy Court in the
Chapter 11 Case.
47. "Final Decree" means the decree contemplated under Bankruptcy Rule
3022.
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48. "Final Order" means an order or judgment of the Bankruptcy Court, or
other court of competent jurisdiction with respect to the subject matter, which
has not been reversed, stayed, modified or amended, and as to which the time to
appeal or seek certiorari has expired and no appeal or petition for certiorari
has been timely taken, or as to which any appeal that has been taken or any
petition for certiorari that has been or may be filed has been resolved by the
highest court to which the order or judgment was appealed or from which
certiorari was sought.
49. "General Unsecured Claim" means any Unsecured Claim that is not an Old
Note Claim, including any Opt-out Old Note Claim.
50. "Holder" means a Person or Entity holding an Equity Interest or Claim,
and with respect to a vote on the Plan, means a Beneficial Holder as of the
Voting Record Date or any authorized signatory who has completed and executed a
Ballot or on whose behalf a Master Ballot has been completed and executed in
accordance with the Voting Instructions.
51. "Impaired Claim" means a Claim classified in an Impaired Class.
52. "Impaired Class" means each of Classes 7 and 8 as set forth in Article
III of the Plan.
53. "Inverness" means Inverness /Phoenix Capital, LLC, a Delaware limited
liability company, together with its affiliates.
54. "Inverness Releasees" means all officers, directors, employees,
attorneys, financial advisors, accountants, investment bankers, agents and
representatives of Inverness.
55. "Master Ballots" mean the master ballots accompanying the Disclosure
Statement upon which the Nominees of the Beneficial Holders of the Old Notes and
Preferred Stock shall indicate acceptances or rejections of the Plan by the
Beneficial Holders in accordance with the Voting Instructions.
56. "Memorandum of Understanding" means that certain Memorandum of
Understanding entered into by PennCorp and the other defendants and the lead
plaintiffs in the Class Action Suit dated as of November 11, 1999 with respect
to the settlement of the Class Action Suit.
57. "New Common Stock" means the 15,000,000 shares of common stock of the
Reorganized Debtor authorized pursuant to the Amended Certificate of
Incorporation.
58. "Nominee" means any Beneficial Holder whose securities were registered
or held of record in the name of his broker, dealer, commercial bank, trust
company, savings and loan or other nominee.
59. "Non-Settling Common Stock Claims" mean all Claims arising from
rescission of a purchase or sale of Common Stock or for damages arising from the
purchase or sale of Common Stock, except such Claims that are subject to the
Memorandum of Understanding. Pursuant to Section 510(b) of the Bankruptcy Code,
the holders of Non- Settling Common Stock Claims are accorded the same treatment
as the holders of the Common Stock.
60. "Non-Settling Old Note Claims" mean all Claims based on the causes
of action asserted in the Class Action Suit held by those class members who (a)
were members of the plaintiff class on the basis of their ownership of Old Notes
and (b) either (i) opted out of the plaintiff class in the Class Action Suit or
(ii) do not agree to a settlement based on the terms of the Memorandum of
Understanding. Pursuant to Section 510(b) of the Bankruptcy Code, the holders of
Non-Settling Old Note Claims are accorded the same treatment as the holders of
the General Unsecured Claims.
61. "Old Note Claims" means all Claims arising from or related to the Old
Notes or the Old Note Indenture (excluding the Class Action Suit Claims and the
Non-Settling Old Note Claims), which Claims shall be deemed Allowed without the
need to file any proofs of Claim.
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62. "Old Notes" mean the 9.25% senior subordinated notes due 2003, issued
by PennCorp under the Old Note Indenture.
63. "Old Note Indenture" means the Indenture, dated as of December 23,
1993, between PennCorp and HSBC Bank USA as trustee, relating to the Old Notes,
as amended.
64. "Old Note Indenture Trustee" means HSBC Bank USA, as trustee under the
Old Note Indenture.
65. "Other Priority Claims" mean any Claim accorded priority in right of
payment under section 507(a) of the Bankruptcy Code, other than a Priority Tax
Claim or an Administrative Claim.
66. "Other Secured Claims" mean, collectively, all Secured Claims against
the Debtor held by any Person or Entity, other than Claims classified in Class
2.
67. "PennCorp" means PennCorp Financial Group, Inc., a Delaware
corporation.
68. "Person" means a person as defined in section 101(41) of the
Bankruptcy Code.
69. "Petition Date" means the date on which the Debtor filed its petition
for relief commencing the Chapter 11 Case.
70. "Plan" means this Chapter 11 Plan of Reorganization, either in its
present form or as it may be altered, amended, modified or supplemented from
time to time in accordance with its terms, the Bankruptcy Code and the
Bankruptcy Rules.
71. "Preferred Stock" means, collectively, $3.375 Convertible Preferred
Stock of PennCorp and $3.50 Series II Convertible Preferred Stock of PennCorp.
72. "Prepetition Bank Credit Facility" means that certain Credit Agreement
dated March 12, 1997 by and among PennCorp, the Lenders designated therein, the
Chase Manhattan Bank, the First National Bank of Chicago, and Nationsbank, N.A.,
as Managing Agents, Fleet National Bank, Mellon Bank, N.A., Bank of Montreal,
CIBC Inc. and Dresdner Bank AG, as Co-Agents and the Bank of New York as
Administrative Agent together with all related notes, certificates, security
agreements, mortgages, pledges, indemnities, collateral assignments,
undertakings, guaranties, and other instruments and documents, as each may have
been amended or modified from time to time.
73. "Priority Tax Claim" means a Claim of a governmental unit of the kind
specified in section 507(a)(8) of the Bankruptcy Code.
74. "Professionals" means a Person or Entity (a) employed pursuant to a
Final Order in accordance with sections 327 and 1103 of the Bankruptcy Code and
to be compensated for services rendered prior to the Effective Date, pursuant to
sections 327, 328, 329, 330 and 331 of the Bankruptcy Code, or (b) for which
compensation and reimbursement has been allowed by the Bankruptcy Court pursuant
to section 503(b)(4) of the Bankruptcy Code.
75. "Rapoport" means Bernard Rapoport, an individual residing at 1200
Wooded Acres Drive, Waco, Texas 76710.
76. "Rapoport Releasees" means Rapoport, and all of his employees,
attorneys, financial advisors, accountants, investment bankers, agents and
representatives.
77. "Rapoport /Sharpe Investment" means the terms and conditions governing
the purchase and sale of the Rapoport/Sharpe Shares pursuant to, respectively,
(i) that certain commitment letter from Rapoport to PennCorp dated March 15,
2000 for the purchase of 1,600,000 shares of New Common Stock, and (ii) that
certain commitment letter from Sharpe to PennCorp dated March 15, 2000 for the
purchase of 240,000 shares of New Common Stock.
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78. "Rapoport/Sharpe Shares" means the 1,840,000 shares of New Common
Stock purchased by Rapoport and Sharpe pursuant to the Rapoport/Sharpe
Investment for an aggregate purchase price of $23,000,000.
79. "Reinsurance Transactions" means the reinsurance by each of SW Life
and SLT of all of their existing deferred annuity blocks of business as set
forth in that certain Reinsurance Agreement between SW Life and RGA Reinsurance
Company to be dated as of or about the Effective Date.
80. "Reorganized Debtor" means the Debtor and Debtor in Possession, or any
successor thereto, by merger, consolidation, or otherwise, on and after the
Effective Date.
81. "Rights" means the rights issued pursuant to the Rights Offering to
subscribe for and to acquire in the aggregate 1,960,000 shares of New Common
Stock for an aggregate purchase price of $24,500,000.
82. "Rights Offering" means the terms and conditions governing the
issuance and exercise of the Rights as described in Section VI.B.5. of the
Disclosure Statement.
83. "Rights Record Date" means the Voting Record Date as such term is
defined in the Disclosure Statement.
84. "Schedules" mean the schedules of assets and liabilities, schedules of
executory contracts, and the statement of financial affairs Filed by the Debtor
pursuant to section 521 of the Bankruptcy Code, the Official Bankruptcy Forms
and the Bankruptcy Rules, as they may be amended and supplemented from time to
time.
85. "Secured Claim" means (a) a Claim that is secured by a lien on
property in which the Estate has an interest, which lien is valid, perfected and
enforceable under applicable law or by reason of a Final Order, 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 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 (b) a Claim Allowed under
this Plan as a Secured Claim.
86. "Securities Act" means the Securities Act of 1933, 15 U.S.C. sections
77a-77aa, as now in effect or hereafter amended.
87. "Settlement Fund" means the $9.0 million fund established in
accordance with the Memorandum of Understanding (the Debtor's contribution to
which is $1.5 million), together with any interest accrued through the date of
the consummation of the settlement of the Class Action Suit.
88. "Settling Members" means those members of the class on whose behalf
the Class Action Suit was instituted who are subject to a settlement pursuant to
the terms of the Memorandum of Understanding.
89. "SFC" means Southwestern Financial Corporation, a wholly owned direct
subsidiary of PennCorp.
90. "Sharpe" means John Sharpe, an individual residing at 2305 Cedar
Spring Road, Suite 410, Dallas, Texas 75201.
91. "Sharpe Releasees" means Sharpe, and all of his employees, attorneys,
financial advisors, accountants, investment bankers, agents and representatives.
92. "SLT" means Security Life and Trust Insurance Company, a wholly owned
indirect subsidiary of PennCorp.
93. "Standby Purchase Agreement" means that certain Letter Agreement dated
as of March 22, 2000 among PennCorp, Inverness and Vicuna, whereby Inverness and
Vicuna have agreed to purchase all New Common Stock as to which the Rights
associated therewith remain unexercised at the expiration of the Rights
Offering.
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94. "SW Life" means Southwestern Life Insurance Company, a wholly owned
indirect subsidiary of PennCorp.
95. "Unimpaired Claim" means an unimpaired Claim within the meaning of
section 1124 of the Bankruptcy Code.
96. "Unimpaired Class" means an unimpaired Class within the meaning of
section 1124 of the Bankruptcy Code.
97. "Unofficial Preferred Shareholders' Committee" means the ad hoc
committee formed by certain Holders of the Preferred Stock prior to the Petition
Date, consisting of AIG - Soundshore Partners, Camden Assets Management, Forest
Investment Management, Highbridge Capital Management LLC, Inverness/Phoenix
Capital LLC, Executive Capital Partners I, L.P., Brown's Dock, L.L.C., Loeb
Partners, Paloma Securities LLC, Paloma Strategic Securities Limited, Q
Investments, LP, Steadfast Financial LLC, Vicuna Advisors L.L.C., W.G. Trading
and William M. McCormick.
98. "Unofficial Preferred Shareholders' Committee Releasees" means each
member of the Unofficial Preferred Shareholders' Committee, as well as all
officers, directors, employees, attorneys, financial advisors, accountants,
investment bankers, agents and representatives of each such member.
99. "Unsecured Claim" means any Claim against the Debtor that is not a
Secured Claim, Administrative Claim, Priority Tax Claim or Other Priority Claim.
100. "Vicuna" means Vicuna Advisors, L.L.C., a Delaware limited liability
company, in its capacity as investment manager to certain Delaware entities.
101. "Vicuna Releasees" means all officers, directors, employees,
attorneys, financial advisors, accountants, investment bankers, agents and
representatives of Vicuna and its affiliates.
ARTICLE II.
ADMINISTRATIVE AND PRIORITY TAX CLAIMS
A. Administrative Claims
Subject to the provisions of section 330(a) and 331 of the Bankruptcy Code,
each Holder of an Allowed Administrative Claim will be paid the full unpaid
amount of such Allowed Administrative Claim in Cash on the later of the
Effective Date and the date such claim becomes an Allowed Administrative Claim,
or upon such other terms as may be agreed upon by such Holder and the
Reorganized Debtor or otherwise upon order of the Bankruptcy Court; provided,
however, that Allowed Administrative Claims representing obligations incurred in
the ordinary course of business or otherwise assumed by the Debtor pursuant to
the Plan will be assumed on the Effective Date and paid or performed by the
Reorganized Debtor when due in accordance with the terms and conditions of the
particular agreements governing such obligations.
B. Professional Compensation
Professionals or other entities asserting Claims based on professional
services rendered before the Effective Date must File and serve on the
Reorganized Debtor, the Committee(s) and such other entities who are designated
by the Bankruptcy Rules, the Confirmation Order or other order of the Bankruptcy
Court an application for final allowance of such Claim no later than 60 days
after the Effective Date, provided, however, that Professionals engaged by the
Unofficial Preferred Shareholders' Committee need not file fee applications in
accordance with Article XII.C. of this Plan. Objections to any applications for
final allowance of compensation by Professionals must be Filed and served on the
Reorganized Debtor, the Committee(s) and the requesting party by the later of
(a) 90 days after the Effective Date or (b) 30 days after the Filing of the
applicable application. To the extent necessary, the Confirmation Order will
amend
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<PAGE>
and supersede any previously entered orders of the Bankruptcy Court regarding
the payment of Claims by professionals in respect of services rendered to the
Debtor's estate.
C. Priority Tax Claims
On the Effective Date, each Holder of a Priority Tax Claim due and payable
on or prior to the Effective Date shall be paid Cash in an amount equal to the
amount of such Allowed Claim, or shall be paid on account of its Allowed Claim
on such other terms as have been or may be agreed upon by such Holder and the
Debtor. The amount of any Priority Tax Claim that is not an Allowed Claim or
that is not otherwise due and payable on or prior to the Effective Date, and the
rights of the Holder of such Claim, if any, to payment in respect thereof shall
(i) be determined in the manner in which the amount of such Claim and the rights
of the Holder of such Claim would have been resolved or adjudicated if the
Chapter 11 Case had not been commenced, (ii) survive the Effective Date and
Consummation of the Plan as if the Chapter 11 Case had not been commenced, and
(iii) not be discharged pursuant to section 1141 of the Bankruptcy Code. In
accordance with section 1124 of the Bankruptcy Code, the Plan shall leave
unaltered the legal, equitable, and contractual rights of each Holder of a
Priority Tax Claim.
ARTICLE III.
CLASSIFICATION AND TREATMENT
OF CLASSIFIED CLAIMS AND EQUITY INTERESTS
A. Summary
The categories of Claims and Equity Interests listed below classify Claims
and Equity Interests for all purposes, including voting, confirmation and
distribution pursuant to the Plan and pursuant to sections 1122 and 1123(a)(1)
of the Bankruptcy Code. A Claim or Equity Interest shall be deemed classified in
a particular Class only to the extent that the Claim or Equity Interest
qualifies within the description of that Class and shall be deemed classified in
a different Class to the extent that any remainder of such Claim or Equity
Interest qualifies within the description of such different Class. A Claim or
Equity Interest is in a particular Class only to the extent that such Claim or
Equity Interest is Allowed in that Class and has not been paid or otherwise
settled prior to the Effective Date.
The classification of Claims and Equity Interests pursuant to this Plan is
as follows:
<TABLE>
<CAPTION>
Class Status Voting Rights
----- ------ -------------
<S> <C> <C> <C>
Class 1 -- Other Priority Claims Unimpaired -- not entitled to vote
Class 2 -- Bank Secured Claims Unimpaired -- not entitled to vote
Class 3 -- Other Secured Claims Unimpaired -- not entitled to vote
Class 4 -- Old Notes Unimpaired -- not entitled to vote
Class 5 -- General Unsecured Claims Unimpaired -- not entitled to vote
Class 6 -- Class Action Suit Claims Unimpaired -- not entitled to vote
Class 7 -- Interests of Holders of Preferred Stock Impaired -- entitled to vote
Class 8 -- Common Equity Interests and Opt-out Impaired -- not entitled to vote
Common Stock Claims
</TABLE>
B. Classification and Treatment of Claims and Equity Interests
1. Class 1 -- Other Priority Claims
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(a) Classification: Class 1 consists of all Other Priority Claims.
(b) Treatment: The legal, equitable and contractual rights of the
Holders of Class 1 Claims are unaltered by the Plan. Unless the Holder of
such Claim and the Debtor and Unofficial Preferred Shareholders' Committee
agree to a different treatment, each Holder of an Allowed Class 1 Claim
shall receive one of the following alternative treatments, at the election
of the Debtor:
(i) to the extent then due and owing on the Effective Date,
such Claim will be paid in full in Cash by the Reorganized Debtor;
(ii) to the extent not due and owing on the Effective Date, such
Claim will be paid in full in Cash by the Reorganized Debtor when and
as such Claim becomes due and owing in the ordinary course of
business; or
(iii) such Claim will be otherwise treated in any other manner so
that such Claim shall otherwise be rendered unimpaired pursuant to
section 1124 of the Bankruptcy Code.
(c) Voting: Class 1 is not impaired and the Holders of Class 1 Claims
are conclusively deemed to have accepted the Plan pursuant to section
1126(f) of the Bankruptcy Code. Therefore, the Holders of Claims in Class 1
are not entitled to vote to accept or reject the Plan.
2. Class 2 -- Bank Secured Claims
(a) Classification: Class 2 consists of the Bank Secured Claims.
(b) Treatment: All Bank Secured Claims will be paid by the
Reorganized Debtor in full in Cash on the Effective Date in accordance with
the terms of the Prepetition Bank Credit Facility
(c) Voting: Class 2 is not impaired the Holders of Class 2 Claims are
conclusively deemed to have accepted the Plan pursuant to section 1126(f)
of the Bankruptcy Code. Therefore, the Holders of Claims in Class 2 are not
entitled to vote to accept or reject the Plan.
3. Class 3 -- Other Secured Claims
(a) Classification: Class 3 consists of the Other Secured Claims.
(b) Treatment: The legal, equitable and contractual rights of the
Holders of Class 3 Claims are unaltered by the Plan. Unless the Holder of
such Claim and the Debtor and the Unofficial Preferred Shareholders'
Committee agree to a different treatment, each Holder of an Allowed Class 3
Claim shall receive one of the following alternative treatments, at the
election of the Debtor:
(i) the legal, equitable and contractual rights to which such
Claim entitles the Holder thereof shall be unaltered by the Plan;
(ii) the Debtor shall surrender all collateral securing such
Claim to the Holder thereof, without representation or warranty by or
recourse against the Debtor or Reorganized Debtor; or
(iii) such Claim will be otherwise treated in any other manner so
that such Claim shall otherwise be rendered unimpaired pursuant to
section 1124 of the Bankruptcy Code.
(c) Voting: Class 3 is not impaired and the Holders of Class 3 Claims
are conclusively deemed to have accepted the Plan pursuant to section
1126(f) of the Bankruptcy Code. Therefore, the Holders of Claims in Class 3
are not entitled to vote to accept or reject the Plan.
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<PAGE>
4. Class 4 -- Old Notes Claims
(a) Classification: Class 4 consists of the Claims of Holders of the
Old Notes.
(b) Treatment: On the Effective Date, the Reorganized Debtor will pay
all Old Notes Claims in Cash at 101% of the principal amount of each Old
Note, plus accrued and unpaid interest through the Effective Date at the
non-default contract rate, plus any fees and expenses due and owing to the
Old Note Indenture Trustee under the terms of the Old Note Indenture.
(c) Voting: Class 4 is unimpaired and the Holders of Class 4 Claims
are conclusively deemed to have accepted the Plan pursuant to section
1126(f) of the Bankruptcy Code. Therefore, the Holders of Claims in Class 4
are not entitled to vote to accept or reject the Plan.
5. Class 5 -- General Unsecured Claims
(a) Classification: Class 5 consists of the Claims of Holders of
General Unsecured Claims, including the Non-Settling Old Note Claims.
(b) Treatment: The legal, equitable and contractual rights of the
Holders of Class 5 Claims are unaltered by the Plan. Unless the Holder of
such Claim and the Debtor and the Unofficial Preferred Shareholders'
Committee agree to a different treatment, each Holder of an Allowed Class 5
Claim shall receive one of the following alternative treatments, at the
election of the Debtor:
(i) to the extent then due and owing on the Effective Date,
such Claim will be paid in full in Cash by the Reorganized Debtor;
(ii) to the extent not due and owing on the Effective Date, such
Claim will be paid in full in Cash by the Reorganized Debtor when and
as such Claim becomes due and owing in the ordinary course of
business; or
(iii) such Claim will be otherwise treated in any other manner so
that such Claim shall otherwise be rendered unimpaired pursuant to
section 1124 of the Bankruptcy Code.
(c) Voting: Class 5 is not impaired and the Holders of Class 5 Claims
are conclusively deemed to have accepted the Plan pursuant to section
1126(f) of the Bankruptcy Code. Therefore, the Holders of Claims in Class 5
are not entitled to vote to accept or reject the Plan.
6. Class 6 -- Class Action Suit Claims
(a) Classification: Class 6 consists of the Claims of the Settling
Members of the class on whose behalf the Class Action Suit was instituted
based on the causes of action asserted in the Class Action Suit.
(b) Treatment: Unless the Holder of such Claim and the Debtor and the
Unofficial Preferred Shareholders' Committee agree to a different
treatment, each Holder of an Allowed Class 6 Claim shall receive its
portion of the Settlement Fund, as determined in accordance with the
Memorandum of Understanding or as provided by a Final Order of the court
having jurisdiction over the Class Action Suit.
(c) Voting: Class 6 is unimpaired and the Holders of Class 6 Claims
are conclusively deemed to have accepted the Plan pursuant to section
1126(f) of the Bankruptcy Code. Therefore, the Holders of Claims in Class 6
are not entitled to vote to accept or reject the Plan.
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<PAGE>
7. Class 7 -- Interests of Holders of Preferred Stock
(a) Classification: Class 7 consists of all Interests of Holders of
Preferred Stock.
(b) Treatment: On the Effective Date, each Holder of Preferred Stock
shall receive one share of New Common Stock and one Right for each share of
Preferred Stock then held by such Holder. All Preferred Stock issued before
the Petition Date will be canceled.
(c) Voting: Class 7 is impaired and the Holders of Class 7 Interests
are entitled to vote to accept or reject the Plan.
8. Class 8 -- Common Equity Interests and Non-Settling Common Stock
Claims
(a) Classification: Class 8 consists of all Interests of Holders of
Equity Interests other than Preferred Stock and all Non-Settling Common
Stock Claims.
(b) Treatment: On the Effective Date, the members of Class 8 shall
neither receive any distributions nor retain any property under the Plan.
All Common Stock issued before the Petition Date will be canceled.
(c) Voting: Class 8 is impaired, but because no distributions will be
made to Holders of Class 8 Equity Interests or Opt-out Common Stock Claims,
nor will such Holders retain any property, such Holders are deemed to
reject the Plan pursuant to section 1126(g) of the Bankruptcy Code. Class 8
is not entitled to vote to accept or reject the Plan.
C. Special Provision Governing Unimpaired Claims
Except as otherwise provided in the Plan, including as provided in Article
X, nothing under the Plan shall affect the Debtor's or the Reorganized Debtor's
rights in respect of any Unimpaired Claims, including, but not limited to, all
rights in respect of legal and equitable defenses to or setoffs or recoupments
against such Unimpaired Claims or the Holders thereof.
ARTICLE IV.
ACCEPTANCE OR REJECTION OF THE PLAN
A. Voting Classes
Each Holder of an Allowed Equity Interest in Class 7 shall be entitled to
vote to accept or reject the Plan.
B. Acceptance by Impaired Classes
An Impaired Class of Equity Interests shall have accepted the Plan if the
Holders (other than any Holder designated under section 1126(e) of the
Bankruptcy Code) of at least two-thirds in amount of the Allowed Equity
Interests actually voting in such Class have voted to accept the Plan.
C. Presumed Acceptance of Plan
Classes 1, 2, 3, 4, 5 and 6 are unimpaired under the Plan, and, therefore,
conclusively are presumed to have accepted the Plan pursuant to section 1126(f)
of the Bankruptcy Code.
D. Presumed Rejection of Plan
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<PAGE>
Class 8 is impaired and shall receive no distributions, and, therefore, is
presumed to have rejected the Plan pursuant to section 1126(g) of the Bankruptcy
Code.
E. Non-Consensual Confirmation
The Debtor will seek Confirmation of the Plan under section 1129(b) of the
Bankruptcy Code in view of the deemed rejection of the Plan by Class 8.
ARTICLE V.
MEANS FOR IMPLEMENTATION OF THE PLAN
A. Continued Corporate Existence and Vesting of Assets in the Reorganized
Debtor
The Reorganized Debtor shall continue to exist after the Effective Date
with all the powers of a corporation under the laws of the State of Delaware and
without prejudice to any right to alter or terminate such existence (whether by
merger or otherwise) under such applicable state law. As of the Effective Date,
except as otherwise provided in the Plan, all property of the Estate, and any
property acquired by the Debtor or the Reorganized Debtor under the Plan, shall
vest in the Reorganized Debtor, free and clear of all Claims, liens, charges, or
other encumbrances, except as those created pursuant to the Exit Credit
Facility. On and after the Effective Date, the Reorganized Debtor may operate
its business and may use, acquire or dispose of property and compromise or
settle any Claims, without supervision or approval by the Bankruptcy Court and
free of any restrictions of the Bankruptcy Code or Bankruptcy Rules, other than
those restrictions expressly imposed by the Plan and the Confirmation Order. In
accordance with section 1109(b) of the Bankruptcy Code, nothing in this Article
V shall preclude any party in interest from appearing and being heard on any
issue in the Chapter 11 Case.
B. Cancellation of Notes, Instruments and Common Stock
On the Effective Date, except to the extent provided otherwise in the Plan,
(i) all notes, instruments, certificates, and other documents of the Debtor
evidencing the Other Secured Claims and Prepetition Bank Secured Claims, (ii)
the Old Notes, and (iii) all Equity Interests, including all Common Stock and
Preferred Stock, shall be canceled and the obligations of the Debtor thereunder,
shall be discharged. On the Effective Date, except to the extent provided
otherwise in the Plan, any indenture relating to any of the foregoing,
including, without limitation, the Old Note Indenture, shall be deemed to be
canceled, and the obligations of the debtors thereunder, except for the
obligation to indemnify the Old Notes Indenture Trustee, shall be discharged;
provided however, that the indenture or other agreement that governs the rights
of the Holder of a Claim and that is administered by the Old Notes Indenture
Trustee, an agent or servicer shall, continue in effect solely for the purposes
of (i) allowing such Old Notes Indenture Trustee, agent or servicer to make the
distributions to be made on account of such Claims under the Plan and (ii)
permitting such Old Note Indenture Trustee, agent or servicer to maintain any
rights or liens it may have for fees, costs, and expenses under such indenture
or other agreement. Upon payment in full of the fees and expenses of the Old
Notes Indenture Trustee pursuant to Articles III.B.4 and VII.B hereof, the liens
(if any) of the Old Notes Indenture Trustee shall terminate.
C. Issuance of New Securities; Execution of Related Documents
On the Effective Date, the Reorganized Debtor shall issue all securities,
notes, instruments, certificates, and other documents required to be issued
pursuant to the Plan, including, without limitation, the Exit Credit Facility
and the New Common Stock, each of which shall be distributed as provided in the
Plan. The Reorganized Debtor shall execute and deliver such other agreements,
documents and instruments, as are required to be executed pursuant to the terms
of the Plan, the Exit Credit Facility, the Standby Purchase Agreement and the
Rapoport/Sharpe Investment.
D. Terms of the Rights Offering
Issuer: Reorganized Debtor.
------
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<PAGE>
Underlying
Security: New Common Stock, par value $.01 per share.
--------
Rights per Share: Each Holder of Preferred Stock as of the Rights Record
---------------- Date will receive one Right for each share of Preferred
Stock.
Exercise: .3787 shares of New Common Stock will be issued for
-------- each Right that is exercised. The election to exercise
each Right shall be made at the time the Holders of
Class 7 Equity Interests vote to accept or reject the
Plan.
Aggregate Shares
of New Common
Stock Offered: 1,960,000
-------------
Transfers: The Rights will not be transferable.
---------
Subscription Price: $12.50 per share of New Common Stock.
------------------
Standby Purchase
Agreement: On the Effective Date, Inverness and Vicuna, pursuant
--------- to the terms of the Standby Purchase Agreement, will
purchase or cause to be purchased and fully exercise
any unexercised Rights.
E. Terms of the Rapoport/Sharpe Investment
Issuer: Reorganized Debtor.
------
Security: New Common Stock, par value $.01 per share.
--------
Aggregate Shares
of New Common
Stock Offered: 1,840,000
-------------
Subscription Price: $12.50 per share of New Common Stock.
------------------
Listing: The Debtor will use reasonable efforts to cause the
------- Rapoport/Sharpe Shares to be listed on a national
securities exchange or the NASDAQ National Market.
Registration The Rapoport/Sharpe Investment will be effected through
Rights: a private placement under Rule 506 of the Securities
------ Act, and, in connection therewith, the Debtor will
grant each of Rapoport and Sharpe the right to cause
the Reorganized Debtor to register the New Common Stock
purchased by him, in each case, beginning six months
after the Effective Date.
F. Terms of the New Common Stock
Authorization: The Amended Certificate of Incorporation of The
------------- Reorganized Debtor shall authorize the issuance of
15,000,000 shares of New Common Stock. Of such
authorized shares, 9,059,000 shares shall be retained
and issued directly under the Plan (i) to the Holders
of Preferred Stock, (ii) upon the exercise of the
Rights and/or the purchase of New Common Stock under
the Standby Purchase Agreement, (iii) pursuant to the
terms of the Rapoport/Sharpe Investment, and (iv) to
Msrs. Steve Johnson and David Little pursuant to the
Executive Agreements. 640,000 shares shall be reserved
for issuance to the Reorganized Debtor's officers and
directors. Except as otherwise provided by the Plan, no
additional shares of
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New Common Stock may be issued other than as directed
by the board of directors of the Reorganized Debtor
after the Effective Date.
Par Value: The New Common Stock shall have a par value of $0.01
--------- per share.
Attributes: The New Common Stock shall have such attributes as to
---------- voting, dividends, liquidation and otherwise as are set
forth in the Amended Certificate of Incorporation and
as are otherwise provided by Delaware law.
Listing: The Reorganized Debtor will use reasonable efforts to
------- cause the New Common Stock to be listed on a national
securities exchange or the NASDAQ National Market.
G. Corporate Governance, Directors and Officers, and Corporate Action
1. Amended Certificate of Incorporation
On the Effective Date, the Reorganized Debtor will file its Amended
Certificate of Incorporation with the Secretary of the State of Delaware in
accordance with sections 102 and 103 of the Delaware General Corporation Law.
The Amended Certificate of Incorporation will, among other things, prohibit the
issuance of nonvoting equity securities to the extent required by section
1123(a) of the Bankruptcy Code, provide for at least 15,000,000 authorized
shares of New Common Stock, and authorize the issuance of preferred stock. After
the Effective Date, the Reorganized Debtor may amend and restate its Amended
Certificate of Incorporation and other constituent documents as permitted by the
Delaware General Corporation Law.
2. Directors and Officers of the Reorganized Debtor
Subject to any requirement of Bankruptcy Court approval, pursuant to
section 1129(a)(5), the Debtor and/or the Unofficial Preferred Shareholders'
Committee will disclose, on or prior to the Confirmation Date, the identity and
affiliations of any Person proposed to serve on the initial board of directors
of The Reorganized Debtor. To the extent any such Person is an Insider, the
nature of any compensation for such Person will also be disclosed. The
classification and composition of the board of directors shall be consistent
with the Amended Certificate of Incorporation and as set forth in the Disclosure
Statement. Each such director and officer shall serve from and after the
Effective Date pursuant to the terms of the Amended Certificate of
Incorporation, other constituent documents and the Delaware General Corporation
Law. The Reorganized Debtor will have a seven-person board of directors
consisting initially of the following designations: (1) Bernard Rapoport, (2)
James C. Comis III, (3) John T, Sharpe, (4) Robert N. Sheehy, Jr., (5) Larry D.
Jaynes, and (6) Steve R. Johnson. On the Effective Date, one vacancy will remain
on the Reorganized Debtor's board of directors that may or may not be filled
after the Effective Date but prior to the next annual meeting of the
shareholders of the Reorganized Debtor.
3. Corporate Action
On the Effective Date, the adoption of the Amended Certificate of
Incorporation and of new By-laws, the selection of directors and officers for
the Reorganized Debtor, and all actions contemplated by the Plan shall be
authorized and approved in all respects (subject to the provisions of the Plan).
All matters provided for in the Plan involving the corporate structure of the
Debtor or the Reorganized Debtor, and any corporate action required by the
Debtor or the Reorganized Debtor in connection with the Plan, shall be deemed to
have occurred and shall be in effect, without any requirement of further action
by the security holders or directors of the Debtor or the Reorganized Debtor. On
the Effective Date, the appropriate officers and members of the Reorganized
Debtor and members of the board of directors of the Reorganized Debtor are
authorized and directed to issue, execute and deliver the agreements, documents,
securities and instruments contemplated by the Plan in the name of and on behalf
of the Reorganized Debtor.
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<PAGE>
H. Sources of Cash for Plan Distribution
All Cash necessary for the Reorganized Debtor to make payments pursuant to
the Plan shall be obtained from existing Cash balances, the operations of the
Debtor or Reorganized Debtor, proceeds of the Extraordinary Distribution,
proceeds of the Rights Offering and/or of the Standby Purchase Agreement,
proceeds of the Rapoport/Sharpe Investment, and post-confirmation borrowing
under available facilities of the Debtor or Reorganized Debtor including,
without limitation, the Exit Credit Facility. The Reorganized Debtor may also
make such payments using Cash received from principal and interest payments
under surplus notes and advances or dividends from its subsidiaries.
I. Change of Corporate Name
On the Effective Date, the Debtor's corporate name shall be changed to
"Southwestern Life Holdings, Inc." Such change of corporate name shall be
effected by operation of section 303 of the Delaware General Corporation Law
without effecting any corporate action otherwise required thereby.
ARTICLE VI.
TREATMENT OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES
A. Assumption of Executory Contracts and Unexpired Leases
Immediately prior to the Effective Date, all executory contracts or
unexpired leases of the Debtor (including, to the extent applicable, that
certain Release and Indemnity Agreement dated December 24, 1998 and that certain
Escrow Agreement dated January 18, 2000) will be deemed assumed in accordance
with the provisions and requirements of sections 365 and 1123 of the Bankruptcy
Code except those executory contracts and unexpired leases that (1) have been
rejected by order of the Bankruptcy Court, (2) are the subject of a motion to
reject pending on the Effective Date, (3) are identified on a list to be Filed
with the Bankruptcy Court on or before the Confirmation Date, as to be rejected,
or (4) are rejected pursuant to the terms of the Plan. Entry of the Confirmation
Order by the Bankruptcy Court shall constitute approval of such assumptions and
rejections pursuant to sections 365(a) and 1123 of the Bankruptcy Code.
B. Claims Based on Rejection of Executory Contracts or Unexpired Leases
All proofs of claim with respect to Claims arising from the rejection of
executory contracts or unexpired leases, if any, must be Filed with the
Bankruptcy Court within sixty (60) days after the date of entry of an order of
the Bankruptcy Court approving such rejection. Any Claims arising from the
rejection of an executory contract or unexpired lease not Filed within such
times will be forever barred from assertion against the Debtor or Reorganized
Debtor, its estate and property unless otherwise ordered by the Bankruptcy Court
or provided in this Plan, all such Claims for which proofs of claim are required
to be Filed will be, and will be treated as, General Unsecured Claims subject to
the provisions of Article VIII hereof.
C. Cure of Defaults for Executory Contracts and Unexpired Leases Assumed
Any monetary amounts by which each executory contract and unexpired lease
to be assumed pursuant to the 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 such
executory contracts or unexpired leases may otherwise agree. In the event of a
dispute regarding: (1) the amount of any cure payments, (2) the ability of the
Reorganized Debtor or any assignee to provide "adequate assurance of future
performance" (within the meaning of section 365 of the Bankruptcy Code) under
the contract or lease to be assumed, or (3) 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.
D. Indemnification of Directors, Officers and Employees
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<PAGE>
The obligations of the Debtor to indemnify any Person or Entity serving at
any time on or prior to the Effective Date as one of their directors, officers
or employees by reason of such Person's or Entity's service in such capacity, or
as a director, officer, member or employee of any other corporation or legal
entity, to the extent provided in the Debtor's constituent documents, by a
written agreement with the Debtor or the Delaware General Corporation Law, shall
be deemed and treated as executory contracts that are assumed by the Debtor
pursuant to the Plan and section 365 of the Bankruptcy Code as of the Effective
Date. Accordingly, such indemnification obligations shall be treated as General
Unsecured Claims, and shall survive unimpaired and unaffected by entry of the
Confirmation Order, irrespective of whether such indemnification is owed for an
act or event occurring before or after the Petition Date.
E. Compensation and Benefit Programs
Except as otherwise expressly provided hereunder, all employment and
severance policies, and all compensation and benefit plans, policies, and
programs of the Debtor applicable to its employees, retirees and non- employee
directors and the employees and retirees of its subsidiaries, including, without
limitation, all savings plans, retirement plans, health care plans, disability
plans, severance benefit plans, incentive plans, and life, accidental death, and
dismemberment insurance plans are treated as executory contracts under the Plan
and on the Effective Date will be assumed pursuant to the provisions of sections
365 and 1123 of the Bankruptcy Code.
ARTICLE VII.
PROVISIONS GOVERNING DISTRIBUTIONS
A. Distributions for Claims Allowed as of the Effective Date
1. Except as otherwise provided in this Article VII or as may be ordered
by the Bankruptcy Court, distributions to be made on the Effective Date on
account of Claims and Equity Interests that are Allowed as of the Effective Date
and are entitled to receive distributions under the Plan shall be made on the
Effective Date, or as soon as practicable thereafter. Distributions on account
of Claims and Equity Interests that become Allowed Claims or Allowed Equity
Interests after the Effective Date shall be made pursuant to Articles VII.C and
VIII.C below.
2. For purposes of determining the accrual of interest or rights in
respect of any other payment from and after the Effective Date, the Exit Credit
Facility and the New Common Stock to be issued under the Plan shall be deemed
issued as of the Effective Date regardless of the date on which they are
actually dated, authenticated or distributed; provided, however, that the
Reorganized Debtor shall withhold any actual payment until such distribution is
made and no interest shall accrue or otherwise be payable on any such withheld
amounts.
B. Distributions by the Reorganized Debtor; Distributions with Respect to Old
Notes
Except as provided herein, the Reorganized Debtor shall make all
distributions required under the Plan. Notwithstanding the provisions of Article
V.B above regarding the cancellation of the Old Note Indenture, the Old Note
Indenture shall continue in effect to the extent necessary to allow the Old
Notes Indenture Trustee to receive Cash on behalf of the Holders of the Old
Notes and make distributions pursuant to the Plan on account of the Old Notes as
agent for the Reorganized Debtor. The Old Notes Indenture Trustee providing
services related to distributions to the Holders of Allowed Old Note Claims
shall receive, from the Reorganized Debtor, reasonable compensation for such
services and reimbursement of reasonable expenses incurred in connection with
such services and upon the presentation of invoices to the Reorganized Debtor.
These payments shall be made on terms agreed to with the Reorganized Debtor.
C. Delivery and Distributions and Undeliverable or Unclaimed Distributions
1. Delivery of Distributions in General
Distributions to Holders of Allowed Claims and Allowed Equity Interests
shall be made at the address of the Holder of such Claim or Equity Interest as
indicated on records of the Debtor. Except as otherwise provided by the Plan or
the Bankruptcy Code with respect to undeliverable distributions, distributions
to Holders of Bank Secured Claims, and Old Note Claims shall be made in
accordance with the provisions of the applicable indenture, participation
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agreement, letter of transmittal, loan agreement or analogous instrument or
agreement, and distributions will be made to Holders of record as of the
Distribution Record Date.
2. Undeliverable Distributions
(a) Holding of Undeliverable Distributions. If any Allowed Claim or
Equity Interest Holder's distribution is returned to the Reorganized Debtor
as undeliverable, no further distributions shall be made to such Holder
unless and until the Reorganized Debtor is notified in writing of such
Holder's then-current address. Undeliverable distributions shall remain in
the possession of the Reorganized Debtor pursuant to this Article VII.C
until such time as a distribution becomes deliverable. Undeliverable Cash
shall not be entitled to any interest, dividends or other accruals of any
kind.
(b) After Distributions Become Deliverable. Within 20 days after the
end of each calendar quarter following the Effective Date, the Reorganized
Debtor shall make all distributions that become deliverable during the
preceding calendar quarter.
(c) Failure to Claim Undeliverable Distributions. In an effort to
ensure that all holders of valid claims receive their allocated
distributions, the Reorganized Debtor will maintain a listing of unclaimed
distribution holders. Any Holder of an Allowed Claim or Equity Interest
that does not assert a claim pursuant to the Plan for an undeliverable
distribution within five years after the Effective Date shall have its
Claim for such undeliverable distribution discharged and shall be forever
barred from asserting any such Claim against the Reorganized Debtor or its
property. In such cases: (i) any Cash held for distribution on account of
such Claims shall be property of the Reorganized Debtor, free of any
restrictions thereon; and (ii) any New Common Stock held for distribution
on account of such Equity Interests shall be canceled and of no further
force or effect. Nothing contained in the Plan shall require the
Reorganized Debtor to attempt to locate any Holder of an Allowed Claim or
Allowed Equity Interest.
(d) Compliance with Tax Requirements. In connection with the Plan, to
the extent applicable, the Reorganized Debtor shall comply with all tax
withholding and reporting requirements imposed on it by any governmental
unit, and all distributions pursuant to the Plan shall be subject to such
withholding and reporting requirements.
D. Distribution Record Date
As of the close of business on the Distribution Record Date, the transfer
registers for the Old Notes and for the Preferred Stock as maintained by the
Debtor, the Old Notes Indenture Trustee, or their respective agents, shall be
closed and there shall be no further changes in the Record Holders of any Old
Notes or Preferred Stock. Moreover, the Reorganized Debtor shall have no
obligation to recognize the transfer of any Old Notes or Preferred Stock
occurring after the Distribution Record Date, and shall be entitled for all
purposes herein to recognize and deal only with those Holders of record as of
the close of business on the Distribution Record Date.
E. Timing and Calculation of Amounts to be Distributed
Unless otherwise provided for in Section III of the Plan or agreed to by
the Holder of a Claim or Equity Interest and the Debtor and the Unofficial
Preferred Shareholders' Committee, on the Effective Date, each Holder of an
Allowed Claim and Allowed Equity Interest shall receive the full amount of the
distributions that the Plan provides for Allowed Claims and Allowed Equity
Interests in the applicable Class. Beginning on the date that is 20 calendar
days after the end of the calendar quarter following the Effective Date and 20
calendar days after the end of each calendar quarter thereafter, distributions
shall also be made, pursuant to Article VIII.C. below, to Holders of Disputed
Claims or Disputed Equity Interests in any such Class whose Claims or Equity
Interests were allowed during the preceding calendar quarter. Such quarterly
distributions shall also be in the full amount that the Plan provides for
Allowed Claims and Allowed Equity Interests in the applicable Class.
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F. No Fractional Shares
No fractional shares of New Common Stock will be issued. In the event a
Holder of an Allowed Class 7 Equity Interest is entitled to distribution of a
fraction of one share of New Common Stock, the actual issuance will reflect a
rounding of such fraction down to the nearest whole share.
G. Setoffs
The Reorganized Debtor may, pursuant to section 553 of the Bankruptcy Code
or applicable non-bankruptcy law, set off against any Allowed Claim and the
distributions to be made pursuant to the Plan on account of such Claim (before
any distribution is made on account of such Claim), the claims, rights and
causes of action of any nature that the Debtor or Reorganized Debtor may hold
against the Holder of such Allowed Claim; provided, however, that neither the
failure to effect such a setoff nor the allowance of any Claim hereunder shall
constitute a waiver or release by the Debtor or Reorganized Debtor of any such
claims, rights and causes of action that the Debtor or Reorganized Debtor may
possess against such Holder.
H. Surrender of Canceled Instruments or Securities
Except as set forth in subsection VII.I below, as a condition precedent to
receiving any distribution pursuant to the Plan on account of an Allowed Claim
or Allowed Equity Interest evidenced by the instruments, securities or other
documentation canceled pursuant to Article V.B above, the Holder of such Claim
or Equity Interest shall tender the applicable instruments, securities or other
documentation evidencing such Claim or Equity Interest to the Reorganized
Debtor. Any Cash or New Common Stock to be distributed pursuant to the Plan on
account of any such Claim or Equity Interest shall, pending such surrender, be
treated as an undeliverable distribution pursuant to Article VII.C above.
1. Surrender of Instruments
Each Holder of (a) an Old Note Claim and (b) Equity Interest based on
Preferred Stock shall tender its Old Note relating to such Claim or any
certificate relating to its Preferred Stock to the Reorganized Debtor in
accordance with written instructions to be provided to such Holders by the
Reorganized Debtor as promptly as practicable following the Effective Date. Such
instructions shall specify that delivery of such Old Note or such certificate
will be effected, and risk of loss and title thereto will pass, only upon the
proper delivery of such Old Notes or such certificates with a letter of
transmittal in accordance with such instructions. All surrendered Old Notes and
Preferred Stock certificates shall be marked as canceled.
2. Failure to Surrender Canceled Instruments
Any Holder of Old Notes or Preferred Stock that fails to surrender or is
deemed to have failed to surrender the applicable Old Notes or certificates for
Preferred Stock required to be tendered hereunder within five years after the
Effective Date shall have its Claim for a distribution pursuant to the Plan on
account of such Old Note or Preferred Stock discharged and shall be forever
barred from asserting any such Claim against the Reorganized Debtor or its
property. In such cases, any Cash or shares of New Common Stock held for
distribution on account of such Claim shall be disposed of pursuant to the
provisions set forth above in Article VII.C.
I. Lost, Stolen, Mutilated or Destroyed Securities
In addition to any requirements under the Old Note Indenture or any other
agreement (including the Prepetition Bank Credit Facility, if required), any
Holder of a Claim or Equity Interest evidenced by an Old Note, a note issued
under the Prepetition Bank Credit Facility or a certificate for Preferred Stock
that has been lost, stolen, mutilated or destroyed shall, in lieu of
surrendering such Old Note, a note issued under the Prepetition Bank Credit
Facility or a certificate for Preferred Stock, deliver to the Reorganized
Debtor: (1) an affidavit of loss reasonably satisfactory to the Reorganized
Debtor or the Old Notes Indenture Trustee, as applicable, setting forth the
unavailability of note or instrument; and (2) such additional security or
indemnity as may reasonably be required by the Reorganized Debtors to hold the
Reorganized Debtor or the Old Notes Indenture Trustee, as applicable, harmless
from any damages, liabilities or costs incurred in treating such individual as a
Holder of an Allowed Claim or Allowed Equity Interest. Upon
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compliance with this Article VII.I by a Holder of a Claim or Equity Interest
evidenced by an Old Note, a note issued under the Prepetition Bank Credit
Facility or a certificate for Preferred Stock, such Holder shall, for all
purposes under the Plan, be deemed to have surrendered such note or instrument.
ARTICLE VIII.
PROCEDURES FOR RESOLVING DISPUTED CLAIMS
A. Prosecution of Objections to Claims
1. Holders of Claims and Equity Interests need not file proofs of Claim
or Equity Interest with the Bankruptcy Court and shall be subject to Bankruptcy
Court process only to the extent provided in the Plan. On and after the
Consummation Date, except as otherwise provided herein, all Claims shall be paid
in the ordinary course of business of the Reorganized Debtor. If the Debtor
disputes any Claim (including any Administrative Claim, Priority Tax Claim,
Other Secured Claim, General Unsecured Claim, Opt-out Old Note Claim or Opt-out
Common Stock Claim), such dispute shall be determined, resolved or adjudicated,
as the case may be, in a manner as if the Chapter 11 Case has not been
commenced. The Debtor may elect, at its sole option (upon consultation with the
Unofficial Preferred Shareholders' Committee), to object under Section 502 of
the Bankruptcy Code with respect to any proof of Claim or Equity Interest,
provided, however, that the Debtor's failure to object to any proof of Claim or
Equity Interest shall not constitute a waiver, release or any admission as to
validity with respect to the underlying Claim or Equity Interest.
2. After the Confirmation Date, the Debtor and the Reorganized Debtor
shall have the exclusive authority to File objections, settle, compromise,
withdraw or litigate to judgment objections to Claims or Equity Interests. From
and after the Confirmation Date, the Debtor and the Reorganized Debtor may
settle or compromise any Disputed Claim or Disputed Equity Interest without
approval of the Bankruptcy Court.
B. Estimation of Claims
The Debtor or the Reorganized Debtor may, at any time, request that the
Bankruptcy Court estimate any contingent or unliquidated Claim pursuant to
section 502(c) of the Bankruptcy Code regardless of whether the Debtor or the
Reorganized Debtor has previously objected to such Claim or whether the
Bankruptcy Court has ruled on any such objection, and the Bankruptcy Court will
retain jurisdiction to estimate any Claim at any time during litigation
concerning any objection to any Claim, including during the pendency of any
appeal relating to any such objection. In the event that the Bankruptcy Court
estimates any contingent or unliquidated Claim, that estimated amount will
constitute either the allowed amount of such Claim or a maximum limitation on
such Claim, as determined by the Bankruptcy Court. If the estimated amount
constitutes a maximum limitation on such Claim, the Debtor or Reorganized Debtor
may elect to pursue any supplemental proceedings to object to any ultimate
payment on such Claim. All of the aforementioned Claims objection, estimation
and resolution procedures are cumulative and not necessarily exclusive of one
another. Claims may be estimated and subsequently compromised, settled,
withdrawn or resolved by any mechanism approved by the Bankruptcy Court.
C. Payments and Distributions on Disputed Claims or Interests
Notwithstanding any provision in the Plan to the contrary, except as
otherwise agreed by the Reorganized Debtor in its sole discretion, no partial
payments and no partial distributions will be made with respect to a Disputed
Claim or Disputed Equity Interest until the resolution of such disputes by
settlement or Final Order. Subject to the provisions of this Article VIII.C, as
soon as practicable after a Disputed Claim or Disputed Equity Interest becomes
an Allowed Claim or an Allowed Equity Interest, the Holder of such Allowed Claim
or Allowed Equity Interest will receive all payments and distributions to which
such Holder is then entitled under the Plan. Notwithstanding the foregoing, any
Person or Entity who holds both an Allowed Claim(s) or Equity Interests(s) and a
Disputed Claim(s) or Equity Interests(s) will receive the appropriate payment or
distribution on the Allowed Claim(s) or Equity Interest(s), although, except as
otherwise agreed by the Reorganized Debtor in its sole discretion, no payment or
distribution will be made on the Disputed Claim(s) or Disputed Equity
Interest(s) until such dispute is resolved by settlement or Final Order. In the
event there are Disputed Claims or Disputed Equity Interests requiring
adjudication and resolution, the Debtor reserves the right, or upon order of the
Court, to establish appropriate reserves for potential payment of such claims.
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ARTICLE IX.
CONDITIONS PRECEDENT TO CONSUMMATION OF THE PLAN
A. Conditions Precedent to Consummation
The following events shall occur prior to or concurrently with the
Consummation of the Plan:
1. the Confirmation Order shall have been signed by the Bankruptcy Court
and duly entered on the docket for the Chapter 11 Case by the Clerk of the
Bankruptcy Court in form and substance acceptable to the Debtor, the Committee
and the Unofficial Preferred Shareholders' Committee;
2. the Confirmation Order has been entered and has not been reversed or
stayed;
3. the Exit Credit Facility shall be available to the Reorganized Debtor
in an amount not less than $90 million and on such terms and conditions as set
forth in the Exit Credit Facility;
4. the Reinsurance Transactions will have occurred;
5. the Extraordinary Distribution will have been paid;
6. the Standby Purchase Agreement shall be in full force and effect, all
conditions precedent to the obligations of Inverness and Vicuna under the
Standby Purchase Agreement shall have been satisfied in accordance therewith;
7. the Expiration Date with respect to the Rights Offering shall have
occurred;
8. the Rapoport/Sharpe Investment shall have been consummated; and
9. all regulatory approvals necessary for the transactions contemplated
herein shall have been received.
B. Effect of Non-Occurrence of Conditions to Consummation
If the Confirmation Order is vacated, the Plan shall be null and void in
all respects and nothing contained in the Plan or the Disclosure Statement
shall: (1) constitute a waiver or release of any Claims by or against, or any
Equity Interests in, the Debtor; (2) prejudice in any manner the rights of the
Debtor, or (3) constitute an admission, acknowledgment, offer or undertaking by
the Debtor in any respects.
ARTICLE X.
RELEASE, INJUNCTIVE AND RELATED PROVISIONS
A. Subordination
The classification and manner of satisfying all Claims and Equity Interests
and the respective distributions and treatments under the Plan take into account
and/or conform to the relative priority and rights of the Claims and Equity
Interests in each Class in connection with any contractual, legal and equitable
subordination rights relating thereto whether arising under general principles
of equitable subordination, section 510(b) of the Bankruptcy Code or otherwise,
and any and all such rights are settled, compromised and released pursuant to
the Plan. The Confirmation Order shall permanently enjoin, effective as of the
Effective Date, all Persons and Entities from enforcing or attempting to enforce
any such contractual, legal and equitable subordination rights satisfied,
compromised and settled pursuant to this Article X.A.
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B. Limited Releases by the Debtor
Except as otherwise specifically provided in the Plan, for good and
valuable consideration, including, but not limited to, the commitment and
obligation of Inverness, Vicuna, Rapoport and Sharpe to provide financial
support necessary for consummation of the Plan (including the obligations and
undertakings of Inverness and Vicuna under the Standby Purchase Agreement, and
the obligations and undertakings of each of Rapoport and Sharpe under the
Rapoport/Sharpe Investment), and the services of the Committee, the Unofficial
Preferred Shareholders' Committee and the D&O Releasees to facilitate the
expeditious reorganization of the Debtor and the implementation of the
restructuring contemplated by the Plan, the Inverness Releasees, the Vicuna
Releasees, the Rapoport Releasees, the Sharpe Releasees, the D&O Releasees, the
Committee Releasees, and the Unofficial Preferred Shareholders' Committee
Releasees, on and after the Effective Date, are released by the Debtor and the
Reorganized Debtor and their subsidiaries from any and all claims (as defined in
section 101(5) of the Bankruptcy Code), obligations, rights, suits, damages,
causes of action, remedies and liabilities whatsoever, whether known or unknown,
foreseen or unforeseen, existing or hereafter arising, in law, equity or
otherwise, that the Debtor or its subsidiaries would have been legally entitled
to assert in their own right (whether individually or collectively) or that any
Holder of a Claim or Equity Interest or other Person or Entity would have been
legally entitled to assert on behalf of the Debtor or its subsidiaries, based in
whole or in part upon any act or omission, transaction, agreement, event or
other occurrence taking place on or before the Effective Date, except in the
case of the D&O Releasees, for claims or liabilities (i) in respect of any loan,
advance or similar payment by the Debtor or its subsidiaries to any such Person
which is outstanding on the Effective Date, (ii) in respect of any contractual
obligation owed by such Person to the Debtor or its subsidiaries on the
Effective Date, or (iii) resulting from intentional misconduct or bad faith.
C. Preservation of Rights of Action
Except as otherwise provided in the Plan or in any contract, instrument,
release, indenture or other agreement entered into in connection with the Plan,
in accordance with section 1123(b) of the Bankruptcy Code, the Reorganized
Debtor shall retain and may exclusively enforce any claims, rights and Causes of
Action that the Debtor or Estate may hold against any Person or Entity. The
Reorganized Debtor may pursue such retained claims, rights or causes of action,
as appropriate, in accordance with the best interests of the Reorganized Debtor.
On the Effective Date, the Reorganized Debtors shall be deemed to waive and
release any claims, rights or Causes of Action arising under sections 544, 547,
548, 549 and 550 of the Bankruptcy Code held by the Reorganized Debtor against
any Person or Entity.
D. Exculpation
The Debtor, the Reorganized Debtor (and their Professionals acting in such
capacity), the Unofficial Preferred Shareholders Committee Releasees, the
Committee Releasees, the Inverness Releasees, the Vicuna Releasees, the Rapoport
Releasees, the Sharpe Releasees and the D&O Releasees, shall neither have nor
incur any liability to any Person or Entity for any act taken or omitted to be
taken in connection with or related to the formulation, preparation,
dissemination, implementation, administration, Confirmation or Consummation of
the Plan, the Disclosure Statement or any contract, instrument, release or other
agreement or document created or entered into in connection with the Plan,
including the Standby Purchase Agreement and the Rapoport/Sharpe Investment, or
any other act taken or omitted to be taken in connection with the Chapter 11
Case; provided, however, that the foregoing provisions of this Article X.D shall
have no effect on the liability of any Person or Entity that results from any
such act or omission that is determined in a Final Order to have constituted
gross negligence or willful misconduct.
E. Injunction
From and after the Effective Date, all Persons and Entities are permanently
enjoined from commencing or continuing in any manner, any suit, action or other
proceeding, on account of or respecting any claim, obligation, debt, right,
Cause of Action, remedy or liability released or to be released pursuant to this
Article X.
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ARTICLE XI.
RETENTION OF JURISDICTION
Notwithstanding the entry of the Confirmation Order and the occurrence of
the Effective Date, the Bankruptcy Court shall retain such jurisdiction over the
Chapter 11 Case after the Effective Date as legally permissible, including
jurisdiction to:
A. allow, disallow, determine, liquidate, classify, estimate or establish
the priority or secured or unsecured status of any Claim, including the
resolution of any request for payment of any Administrative Claim and the
resolution of any and all objections to the allowance or priority of Claims;
B. grant or deny any applications for allowance of compensation or
reimbursement of expenses authorized pursuant to the Bankruptcy Code or the
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
the Debtor is a party or with respect to which the Debtors may be liable and to
hear, determine and, if necessary, liquidate, any Claims arising therefrom,
including those matters related to the amendment after the Effective Date
pursuant to Article VI above to add any executory contracts or unexpired leases
to the list of executory contracts and unexpired leases to be rejected;
D. ensure that distributions to Holders of Allowed Claims are
accomplished pursuant to the provisions of the Plan, including ruling on any
motion Filed pursuant to Article VII;
E. decide or resolve any motions, adversary proceedings, contested or
litigated matters and any other matters and grant or deny any applications
involving the Debtor 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 the Plan and all contracts, instruments, releases,
indentures and other agreements or documents created in connection with the Plan
or the Disclosure Statement;
G. resolve any cases, controversies, suits or disputes that may arise in
connection with the Consummation, interpretation or enforcement of the Plan or
any Person's or Entity's obligations incurred in connection with the Plan;
H. issue injunctions, enter and implement other orders or take such other
actions as may be necessary or appropriate to restrain interference by any
Person or Entity with Consummation or enforcement of the Plan, except as
otherwise provided herein;
I. resolve any cases, controversies, suits or disputes with respect to
the releases, injunction and other provisions contained in Article X and enter
such orders as may be necessary or appropriate to implement such releases,
injunction and other provisions;
J. enter and implement such orders as are necessary or appropriate if the
Confirmation Order is for any reason modified, stayed, reversed, revoked or
vacated;
K. determine any other matters that may arise in connection with or
relate to the Plan, the Disclosure Statement, the Confirmation Order or any
contract, instrument, release, indenture or other agreement or document created
in connection with the Plan or the Disclosure Statement; and
L. enter an order and/or final decree concluding the Chapter 11 Case.
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ARTICLE XII.
MISCELLANEOUS PROVISIONS
A. Dissolution of Committee(s)
On the Effective Date, the Committee(s) shall dissolve and members shall be
released and discharged from all rights and duties arising from, or related to,
the Chapter 11 Case, except that the Committee(s) shall continue in existence
for the limited purpose of reviewing and, if it so determines, prosecuting any
objections to, the final fee applications filed by Professionals in the Chapter
11 Case.
B. Payment of Statutory Fees
All fees payable pursuant to section 1930 of title 28 of the United States
Code, as determined by the Bankruptcy Court at the hearing pursuant to section
1128 of the Bankruptcy Code, shall be paid on or before the Effective Date.
C. Fees and Expenses of the Unofficial Preferred Shareholders' Committee
The reasonable fees and expenses incurred after the Petition Date by the
Unofficial Preferred Shareholders' Committee's counsel and financial advisor
(together with the reasonable fees and expenses of local counsel) shall be paid
(without application by or on behalf of any such professionals to the Bankruptcy
Court and without notice and a hearing) by the Reorganized Debtor as an
Administrative Claim under the Plan. If the Reorganized Debtors and any such
professional retained by the Unofficial Preferred Shareholders' Committee cannot
agree on the amount of fees and expenses to be paid to such professional, the
amount of any such fees and expenses shall be determined by the Bankruptcy
Court.
D. Discharge of Debtor
Except as otherwise provided herein: (1) the rights afforded in the Plan
and the treatment of all Claims and Equity Interests therein, shall be in
exchange for and in complete satisfaction, discharge and release of Claims and
Equity Interests of any nature whatsoever, including any interest accrued on
such Claims from and after the Petition Date, against the Debtor and the Debtor
in Possession, or any of their assets or properties, (2) on the Effective Date,
all such Claims against, and Equity Interests in the Debtor shall be satisfied,
discharged and released in full and (3) all Persons and Entities shall be
precluded from asserting against the Reorganized Debtor, its successors or its
assets or properties any other or further Claims or Equity Interests based upon
any act or omission, transaction or other activity of any kind or nature that
occurred prior to the Confirmation Date. The Plan does not impair the rights of
any Holders of Class 5 Claims, including, but not limited to: (i) Holders of
Claims under executory and nonexecutory contracts and leases; (ii) persons or
entities entitled to contractual or common law rights of indemnity, contribution
and/or reimbursement; or (iii) claims of any party or entity relating to any
environmental condition as to which the Debtor is or may be liable.
E. Modification of Plan
Subject to the limitations contained herein, (1) the Debtor and the
Unofficial Preferred Shareholders' Committee reserve the right, in accordance
with the Bankruptcy Code and the Bankruptcy Rules, to amend or modify the Plan
prior to the entry of the Confirmation Order and (2) after the entry of the
Confirmation Order, the Debtor and the Unofficial Preferred Shareholders'
Committee or the Reorganized Debtor, as the case may be, may, upon order of the
Bankruptcy Court, amend or modify the Plan, in accordance with section 1127(b)
of the Bankruptcy Code, or remedy any defect or omission or reconcile any
inconsistency in the Plan in such manner as may be necessary to carry out the
purpose and intent of the Plan.
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F. Revocation of Plan
The Debtor and the Unofficial Preferred Shareholders' Committee reserve the
right, at any time prior to the entry of the Confirmation Order, to revoke and
withdraw the Plan.
G. Successors and Assigns
The rights, benefits and obligations of any Person or Entity named or
referred to in the Plan shall be binding on, and shall inure to the benefit of
any heir, executor, administrator, successor or assign of such Person or Entity.
H. Reservation of Rights
Except as expressly set forth herein, this Plan shall have no force or
effect unless the Bankruptcy Court shall enter the Confirmation Orders. None of
the filing of this Plan, any statement or provision contained herein, the taking
of any action by the Debtor with respect to this Plan, or the Debtor's failure
to object to any proof of Claim or Equity Interest shall be or shall be deemed
to be an admission or waiver of any rights of the Debtor with respect to the
Holders of Claims or Equity Interests.
I. Section 1145 Exemption
Pursuant to Section 1145 of the Bankruptcy Code, the shares of the New
Common Stock issued to any of the Holders of the Preferred Stock hereunder are
exempt from registration under the Securities Act.
J. Section 1146 Exemption
Pursuant to section 1146(c) of the Bankruptcy Code, the issuance, transfer,
or exchange of any security under the Plan, or the making or delivery of an
instrument of transfer under this Plan, may not be taxed under any law imposing
a stamp tax or similar tax.
K. Further Assurances
The Debtor, the Reorganized Debtor and all Holders of Claims and Equity
Interests receiving distributions under the Plan and all other parties in
interest shall, from time to time, prepare, execute and deliver any agreements
or documents and take any other actions as may be necessary or advisable to
effectuate the provisions and intent of this Plan.
L. Service of Documents
Any pleading, notice or other document required by the Plan to be served on
or delivered to the Reorganized Debtor shall be sent by first class U.S. mail,
postage prepaid to:
PennCorp Financial Group, Inc.
c/o Southwestern Financial Services Corp.
717 North Harwood Street
Dallas, Texas 75201
Attn: Scott D. Silverman, Esq.
with copies to:
Weil, Gotshal & Manges LLP
100 Crescent Court, Suit 1300
Dallas, Texas 75201-6950
Attn: Martin Sosland, Esq.
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Inverness/Phoenix Capital, LLC
660 Steamboat Road
Greenwich, Connecticut 06830
Attn: James C. Comis
with copies to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: James L. Learner, Esq.
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M. Filing of Additional Documents
On or before the Effective Date, the Debtor may file with the Bankruptcy
Court such agreements and other documents as may be necessary or appropriate to
effectuate and further evidence the terms and conditions of the Plan.
Respectfully Submitted,
PENNCORP FINANCIAL GROUP, INC.
By: /s/ Keith A. Maib
----------------------------------
Name:
Title:
INVERNESS/PHOENIX CAPITAL, LLC,
lead member of THE UNOFFICIAL
PREFERRED SHAREHOLDERS' COMMITTEE
By: /s/ James C. Comis III
----------------------------------
Name:
Title:
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