Document:

Exhibit 10.1

 

EXECUTION VERSION

 

RESTRUCTURING SUPPORT AGREEMENT

 

This RESTRUCTURING SUPPORT AGREEMENT (this “Agreement”) is made and entered into as of April 25, 2018, by and among (i) HCR ManorCare, Inc., a Delaware corporation (the “Debtor”), (ii) Carlyle MC Partners, L.P., a Delaware limited partnership, Carlyle Partners V-A MC, L.P., a Delaware limited partnership, Carlyle Partners V MC, L.P., a Delaware limited partnership, CP V Coinvestment A, L.P., a Delaware limited partnership, and CP V Coinvestment B, L.P., a Delaware limited partnership (collectively, the “Majority Holders”), ProMedica Health System, Inc., an Ohio non-profit corporation (“ProMedica” or the “Alternative Plan Sponsor”), and MC Operations Investments, LLC (the “QCP Holder,” together with ProMedica and the Majority Holders, the “Supporting Parties,” and together with the Debtor, the “Parties”).

 

RECITALS

 

WHEREAS, the Parties have engaged in arm’s length, good faith discussions regarding a restructuring of the Debtor and certain of its subsidiaries (the “Restructuring”);

 

WHEREAS, on the date hereof, the Debtor, ProMedica, Quality Care Properties, Inc. (“QCP”), and certain other parties, have entered into an Alternative Plan Sponsor Agreement (the “Alternative PSA”), which, among other things, contemplates the acquisition by a subsidiary of the Alternative Plan Sponsor of 100% of the equity of the reorganized Debtor through the attached First Amended Chapter 11 Plan of Reorganization for HCR ManorCare, Inc. (the “Plan”; capitalized terms not otherwise defined in this Agreement shall have the meaning given to such terms in the Alternative PSA); and

 

WHEREAS, the Supporting Parties intend to support the Restructuring and the Plan upon the terms and conditions set forth herein:

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the conditional promises and mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

 

1.                                      Representations and Warranties

 

a.                                      Representations and Warranties of the Debtor. The Debtor represents and warrants to the Supporting Parties that, as of the date hereof:

 

i.                                          It has all requisite power and authority to enter into this Agreement and to carry out the transactions contemplated by, and perform its obligations under, this Agreement.

 

ii.                                       The execution and delivery of this Agreement and the performance of its obligations hereunder have been duly authorized by all necessary action on its part.

 

iii.                                    Subject to the provisions of sections 1125 and 1126 of the Bankruptcy Code, and except as set forth herein, this Agreement is the legally valid and binding obligation of it, enforceable against it in accordance with its terms, except as enforcement may be limited by applicable laws relating

 

 

to or limiting creditors’ rights generally or by equitable principles relating to enforceability.

 

b.                                      Representations and Warranties of the Supporting Parties. Each Supporting Party represents and warrants to the Debtor and to each other Supporting Party that, as of the date hereof:

 

i.                                          (A) Such Supporting Party is the sole record and beneficial owner of the shares of common stock of the Debtor set forth on its signature page hereto (“Debtor Shares”), (B) the Debtor Shares of such Supporting Party constitute the percentage of all shares of common stock of the Debtor set forth on such signature pages hereto, and (C) such Supporting Party has full power and authority to bind and act on behalf of, vote and consent to matters concerning such shares and to dispose of, exchange, assign and transfer such shares.

 

ii.                                       Such Supporting Party has made no prior assignment, sale, participation, grant, conveyance or other transfer of, and has not entered into any other agreement to assign, sell, participate, grant, convey or otherwise transfer, in whole or in part, any portion of its right, title or interest in any of its Debtor Shares that conflict with the representations and warranties of such Supporting Party herein or would render such Supporting Party otherwise unable to comply with this Agreement and perform its obligations hereunder.

 

iii.                                    This Agreement is the legally valid and binding obligation of each such Supporting Party, enforceable against it in accordance with its terms, except as enforcement may be limited by applicable laws relating to bankruptcy or limiting creditors’ rights generally or by equitable principles relating to enforceability.

 

2.                                      Covenants of the Majority Holders

 

Subject to the terms and conditions hereof and for so long as this Agreement has not been terminated in accordance with its terms, each Majority Holder, severally (and not jointly), agrees to, and to cause its direct and indirect subsidiaries, and its and their directors, officers, employees, agents and other representatives, to:

 

a.                                      Support of Plan. Support, and take all reasonable action necessary or reasonably requested by the Debtor to support and facilitate, the solicitation, confirmation and consummation of the Plan and the transactions contemplated by the Plan;

 

b.                                      Vote for Plan. (i) Vote all Equity Interests, Claims and other instruments carrying voting rights held or controlled, directly or indirectly, by such Majority Holder to accept the Plan (and any amendments, waivers, or consents required in connection with the Plan that are recommended or requested by the Debtor); (ii) timely deliver its duly executed and completed ballot promptly following the commencement of the solicitation of acceptances of the Plan, and (iii) not withdraw, change, or revoke (or cause to be withdrawn, changed, or revoked) its vote with respect to the Plan

 

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c.                                       No Competing Plans. Other than for the Plan, not pursue, propose or support, or encourage the pursuit, proposal or support of, any chapter 11 plan or other restructuring or reorganization for, or the liquidation of, the Debtor (directly or indirectly);

 

d.                                      No Actions Against Plan. (i) Not take any action that would reasonably be expected to prevent, interfere with, delay or impede the solicitation of votes in connection with the Plan or the confirmation or consummation of the Plan, and (ii) not object to or otherwise commence, or encourage, join in or support any other person to commence, any proceeding or other analogous action opposing the Plan; and

 

e.                                       Tax Matters. Not file any federal or state tax return, or any amendment to such a return, claiming any deduction for worthlessness of its Debtor Shares.

 

3.                                      Covenants of the QCP Holder

 

Subject to the terms and conditions hereof and for so long as this Agreement has not been terminated in accordance with its terms, the QCP Holder agrees to, and to cause its direct and indirect subsidiaries and affiliates to:

 

a.                                      support, and take all reasonable actions necessary or reasonably requested by the Debtor to facilitate the solicitation, confirmation and consummation of the Plan and the transactions contemplated by the Plan, including, without limitation, voting in favor of the Plan;

 

b.                                      not take any other action, directly or indirectly, that could prevent, interfere with, delay or impede the solicitation of votes in connection with the Plan or the confirmation or consummation of the Plan;

 

c.                                       not object to or otherwise commence, or encourage any other person to commence, any proceeding or take any action opposing the Plan or Disclosure Statement; and

 

d.                                      not file any federal or state tax return, or any amendment to such a return, claiming any deduction for worthlessness of its Debtor Shares.

 

4.                                      Information about the Majority Holders

 

Subject to the terms and conditions hereof and for so long as this Agreement has not been terminated in accordance with its terms, each Majority Holder, severally (and not jointly), agrees to:

 

a.                                      use its reasonable best efforts to provide such information requested by the Alternative Plan Sponsor, QCP or the Debtor as is necessary regarding such Majority Holder for the Alternative Plan Sponsor, QCP, the Debtor and their affiliates to make or obtain any filings, notices, consents, registrations, approvals, permits or authorizations (including those with respect to state licensing required to operate the Debtor’s businesses) in connection with the Plan or the transactions contemplated thereby; and

 

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b.                                      upon the reasonable request of the Debtor, QCP or the Alternative Plan Sponsor, use its reasonable best efforts to provide such information concerning such Majority Holder in connection with any filings, notices, consents, registrations, approvals, permits or authorizations (including those with respect to state licensing required to operate the Debtor’s businesses) in connection with the Plan or the transactions contemplated thereby.

 

5.                                      Transfer of Shares

 

Each Supporting Party agrees that, so long as this Agreement has not been terminated in accordance with its terms, it shall not directly or indirectly sell, pledge, hypothecate or otherwise transfer or dispose of or grant, issue or sell any option, right to acquire, voting, participation or other interest in any Debtor Shares (each a “Transfer”), unless the transferee thereof, prior to such Transfer, agrees in writing for the benefit of the Parties to become subject to the terms and conditions of this Agreement as a “Supporting Party” and to be bound by this Agreement by executing the joinder attached hereto as Exhibit B (the “Joinder Agreement”), and delivering an executed copy thereof, within two (2) business days of such execution, to the Debtor, in which event (i) the transferee shall be deemed to be a Supporting Party hereunder and (ii) the transferor shall be deemed to relinquish its rights and be released from its obligations under this Agreement to the extent of such transferred rights and obligations. Each Supporting Party agrees that any Transfer that does not comply with the foregoing shall be deemed void ab initio, and the Debtor and each other Supporting Party shall have the right to avoid such Transfer. This Agreement shall in no way be construed to preclude any shareholder from acquiring additional shares; provided that any such additional shares shall, upon acquisition, automatically be deemed to be subject to all the terms of this Agreement.

 

6.                                      ProMedica Support

 

ProMedica shall, and shall cause each of its Subsidiaries to, (i) support, and take all reasonable actions necessary or reasonably requested by the Debtor to facilitate, the solicitation, confirmation and consummation of the Plan and the transactions contemplated by the Plan; (ii) not take any other action, directly or indirectly, that could prevent, interfere with, delay or impede the solicitation of votes in connection with the Plan or the confirmation or consummation of the Plan; (iii) not object to or otherwise commence any proceeding or take any action opposing the Plan or Disclosure Statement; and (iv) otherwise use its reasonable best efforts to assist the Debtor in obtaining entry of the Confirmation Order by the Bankruptcy Court within the deadline set forth in Section 3.3(c) of the Alternative Plan Sponsor Agreement.

 

7.                                      Additional Supporting Parties

 

A shareholder that is not a Supporting Party as of the date of this Agreement will become a Party to this Agreement as a Supporting Party on the date that it agrees in writing, for the benefit of the Parties, to become subject to the terms and conditions of this Agreement as a “Supporting Party” and to be bound by this Agreement by executing the Joinder Agreement and delivering an executed copy thereof, within two (2) business days of such execution, to the

 

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Debtor. Upon such delivery, such Supporting Party shall immediately thereafter send a copy of such Joinder Agreement to all other Supporting Parties.

 

8.                                      Termination

 

This Agreement and all obligations of the Parties hereunder shall immediately terminate and be of no further force and effect as follows:

 

a.                                      upon the Effective Date of the Plan; and

 

b.                                      upon the termination of the Alternative PSA and the Original PSA.

 

Upon termination of this Agreement in accordance with its terms, this Agreement shall forthwith become void and of no further force or effect, each Party shall be released from its commitments, undertakings and agreements under or related to this Agreement, and there shall be no liability or obligation on the part of any Party.

 

9.                                      No Monetary Liability.

 

Notwithstanding anything to the contrary contained in this Agreement or provided for under any applicable law, no Party shall be liable to any other person, either in contract or in tort, for any money damages relating to any breach of this Agreement.

 

10.                               Specific Performance

 

It is understood and agreed by the Parties that money damages would not be a sufficient or appropriate remedy for any breach of this Agreement by any Party and each non-breaching Party shall be entitled to specific performance and injunctive or other equitable relief as a remedy of any such breach. Each Party agrees to waive any requirement for the securing or posting of a bond in connection with such remedy.

 

11.                               Entire Agreement; Prior Negotiations

 

This Agreement, including all exhibits attached hereto, constitutes the entire agreement of the Parties and supersedes all prior negotiations and documents reflecting such prior negotiations between and among the Parties (and their respective advisors) with respect to the subject matter of this Agreement.

 

12.                               Amendments

 

Except as otherwise provided herein, this Agreement may not be modified, amended or supplemented without prior written agreement signed by the Debtor, each Supporting Party and the Alternative Plan Sponsor.

 

13.                               Governing Law

 

This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Delaware. By its execution and delivery of this Agreement, each of the parties hereto hereby irrevocably and unconditionally agrees for itself that any legal action, suit or proceeding against it with respect to any matter under or arising out of or in connection with this Agreement or for recognition or enforcement of any judgment rendered in any such action, suit or proceeding, may be brought in either a state or federal court of competent jurisdiction

 

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in the State of Delaware. By execution and delivery of this Agreement, each of the parties hereto hereby irrevocably accepts and submits itself to the nonexclusive jurisdiction of each such court, generally and unconditionally, with respect to any such action, suit or proceeding. Notwithstanding the foregoing, each of the parties hereto hereby agrees that, while the Bankruptcy Case is pending, the Bankruptcy Court shall have exclusive jurisdiction of all matters arising out of or in connection with this Agreement.

 

14.                               Effectiveness

 

This Agreement shall become effective and binding upon each Party upon the execution and delivery of this Agreement by such Party.

 

15.                               No Solicitation

 

Notwithstanding anything to the contrary, this Agreement is not and shall not be deemed to be (a) a solicitation of consents to the Plan or (b) an offer for the issuance, purchase, sale exchange, hypothecation or other transfer of securities or a solicitation of an offer to purchase or otherwise acquire securities for purposes of the Securities Act of 1933 and the Securities Exchange Act of 1934, each as amended.

 

16.                               Third-Party Beneficiary

 

This Agreement is intended for the benefit of the parties hereto and no other person shall have any rights hereunder; provided, however, that QCP shall be an express third party beneficiary of this Agreement, entitled to enforce this Agreement against the Parties as if it were itself a party hereto.

 

17.                               Counterparts

 

This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same agreement. Execution copies of this agreement may be delivered by electronic mail (in “.pdf” or “.tif” format), facsimile or otherwise, which shall be deemed to be an original for the purposes of this Agreement.

 

18.                               [Intentionally Omitted]

 

19.                               No Waiver of Participation and Preservation of Rights

 

Except as provided in this Agreement, nothing herein is intended to, does or shall be deemed in any manner to waive, limit, impair or restrict the ability of any Party to protect and preserve its rights, remedies and interests, including, but not limited to, claims against the Debtor, liens or security interests it may have in any assets of the Debtor, or its rights to participate fully in the Bankruptcy Case. Without limiting the foregoing sentence in any way, if this Agreement is terminated in accordance with its terms for any reason, the Parties each fully reserve any and all of their respective rights, remedies and interests.

 

20.                               Notices

 

All notices hereunder shall be deemed given if in writing and delivered, if sent by facsimile, courier or by registered or certified mail (return receipt requested) to the following

 

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addresses and facsimile numbers (or at such other addresses or facsimile numbers as shall be specified by like notice):

 

If to the Debtor, to counsel at the following address:

 

Sidley Austin LLP

One South Dearborn

Chicago, IL 60603

Attention: Larry Nyhan

Email: lnyhan@sidley.com

 

If to the Alternative Plan Sponsor to counsel at the following address:

 

Shumaker, Loop & Kendrick, LLP

1000 Jackson Street

Toledo, OH 43604

Attention: James I Rothschild

David Coyle

Email: jrothschild@slk-law.com dcoyle@slk-law.com

 

If to the Majority Holders, to counsel at the following address:

 

Latham & Watkins LLP

555 Eleventh Street, NW, Suite 1000

Washington, D.C. 20004-1304

Attention:           Daniel T. Lennon

Roger G. Schwartz

J. Cory Tull

Email:            daniel.lennon@lw.com

roger.schwartz@lw.com

cory.tull@lw.com

 

If to the QCP Holder, to counsel at the following address:

 

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

Attention: Adam O. Emmerich and Scott K. Charles

Email: aoemmerich@wlrk.com skcharles@wlrk.com

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered by their respective duly authorized officers or other agents, solely in their respective capacity as officers or other agents of the undersigned and not in any other capacity, as of the date first set forth above.

 

	
 
    	
HCR MANORCARE, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ John R. Castellano
    
	
 
    	
 
    	
Name:
    	
John R. Castellano
    
	
 
    	
 
    	
Title:
    	
Chief Restructuring Officer
    

 

[Signature Page to Restructuring Support Agreement]

 

 

	
 
    	
CARLYLE MC PARTNERS, L.P.
    
	
 
    	
 
    
	
 
    	
By: TC Group V, L.P., its general partner
    
	
 
    	
 
    
	
 
    	
By: TC Group V, L.L.C., its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jeremy Anderson
    
	
 
    	
 
    	
Name: Jeremy Anderson
    
	
 
    	
 
    	
Title:   Authorized Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
Debtor Shares:
    	
6,908,455
    
	
 
    	
 
    	
 
    
	
 
    	
Debtor Shares Percentage:
    	
15.377%
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CARLYLE PARTNERS V-A MC, L.P.
    
	
 
    	
 
    
	
 
    	
By: TC Group V, L.P., its general partner
    
	
 
    	
 
    
	
 
    	
By: TC Group V, L.L.C., its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jeremy Anderson
    
	
 
    	
 
    	
Name: Jeremy Anderson
    
	
 
    	
 
    	
Title:   Authorized Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
Debtor Shares:
    	
527,141
    
	
 
    	
 
    	
 
    
	
 
    	
Debtor Shares Percentage:
    	
1.173%
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CARLYLE PARTNERS V MC, L.P.
    
	
 
    	
 
    
	
 
    	
By: TC Group V, L.P., its general partner
    
	
 
    	
 
    
	
 
    	
By: TC Group V, L.L.C., its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jeremy Anderson
    
	
 
    	
 
    	
Name: Jeremy Anderson
    
	
 
    	
 
    	
Title:   Authorized Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
Debtor Shares:
    	
26,089,114
    
	
 
    	
 
    	
 
    
	
 
    	
Debtor Shares Percentage:
    	
58.072%
    
					

 

[Signature Page to Restructuring Support Agreement]

 

 

	
 
    	
CP V   COINVESTMENT A, L.P.
    
	
 
    	
 
    
	
 
    	
By: TC Group V, L.P., its   general partner
    
	
 
    	
 
    
	
 
    	
By: TC Group V, L.L.C.,   its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jeremy   Anderson
    
	
 
    	
 
    	
Name: Jeremy Anderson
    
	
 
    	
 
    	
Title:   Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
Debtor Shares:
    	
1,015,490
    
	
 
    	
 
    	
 
    
	
 
    	
Debtor Shares Percentage:
    	
2.260%
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CP V   COINVESTMENT B, L.P.
    
	
 
    	
 
    
	
 
    	
By: TC Group V, L.P., its   general partner
    
	
 
    	
 
    
	
 
    	
By: TC Group V, L.L.C.,   its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jeremy   Anderson
    
	
 
    	
 
    	
Name: Jeremy Anderson
    
	
 
    	
 
    	
Title:   Authorized Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
Debtor Shares:
    	
129,357
    
	
 
    	
 
    	
 
    
	
 
    	
Debtor Shares Percentage:
    	
0.288%
    
					

 

[Signature Page to Restructuring Support Agreement]

 

 

	
 
    	
PROMEDICA HEALTH SYSTEM, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Randy Oostra
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    	
Randy Oostra
    
	
 
    	
 
    	
Title:
    	
President & CEO
    

 

[Signature Page to Restructuring Support Agreement]

 

 

	
 
    	
MC OPERATIONS INVESTMENTS, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ C. Marc Richards
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
C. Marc Richards
    
	
 
    	
Title:
    	
Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
Debtor Shares:
    	
4,232,244
    
	
 
    	
 
    	
 
    
	
 
    	
Debtor Shares Percentage:
    	
 
    
					

 

[Signature Page to Restructuring Support Agreement]

 

 

EXHIBIT A

 

Plan

 

 

IN THE UNITED STATES BANKRUPTCY COURT

 

FOR THE DISTRICT OF DELAWARE

 

	
 
    	
 
    	
 
    
	
In re:
    	
 
    	
Chapter 11
    
	
 
    	
 
    	
 
    
	
HCR MANORCARE, INC.,(1)
    	
 
    	
Case No. 18-10467 (KG)
    
	
 
    	
 
    	
 
    
	
Debtor.
    	
 
    	
 
    

 

FIRST AMENDED CHAPTER 11 PLAN OF

REORGANIZATION FOR HCR MANORCARE, INC.

 

	
SIDLEY AUSTIN LLP
    	
 
    	
YOUNG CONAWAY STARGATT & TAYLOR, LLP
    
	
Larry J. Nyhan
    	
 
    	
Robert S. Brady (No. 2847)
    
	
Dennis M. Twomey
    	
 
    	
Edmon L. Morton (No. 3856)
    
	
William A. Evanoff
    	
 
    	
Justin H. Rucki (No. 5304)
    
	
Allison Ross Stromberg
    	
 
    	
Tara C. Pakrouh (No. 6192)
    
	
Matthew E. Linder
    	
 
    	
Rodney Square
    
	
One South Dearborn Street
    	
 
    	
1000 North King Street
    
	
Chicago, Illinois 60603
    	
 
    	
Wilmington, Delaware 19801
    
	
Facsimile: (312) 853-7036
    	
 
    	
Facsimile: (302) 571-1253
    

 

Attorneys for the Debtor and Debtor in Possession

 

Dated: April 25, 2018

 

(1) The last four digits of the Debtor’s federal tax identification number are 9231. The mailing address for the Debtor is 333 N. Summit St., Toledo, OH 43604.

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
PAGE
    
	
 
    	
 
    	
 
    
	
ARTICLE I: DEFINED TERMS   AND RULES OF INTERPRETATION
    	
1
    
	
 
    	
 
    	
 
    
	
ARTICLE II: TREATMENT OF   ADMINISTRATIVE EXPENSE CLAIMS AND PRIORITY TAX CLAIMS
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.1.
    	
Administrative Expense   Claims
    	
12
    
	
 
    	
2.2.
    	
Priority Tax Claims
    	
13
    
	
 
    	
2.3.
    	
Post-Effective Date   Fees and Expenses
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE III: CLASSIFICATION   AND TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
3.1.
    	
Summary of   Classification and Treatment of Classified Claims and Interests
    	
13
    
	
 
    	
3.2.
    	
Classification and   Treatment of Claims Against and Interests in the Debtor
    	
14
    
	
 
    	
3.3.
    	
Intercompany Claims
    	
18
    
	
 
    	
3.4.
    	
Unimpaired Claims
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE IV: ACCEPTANCE OR   REJECTION OF THE PLAN
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.1.
    	
Impaired Classes of   Claims Entitled to Vote on this Plan
    	
20
    
	
 
    	
4.2.
    	
Acceptance by an   Impaired Class of Claims and Interests
    	
20
    
	
 
    	
4.3.
    	
Presumed Acceptance by   Unimpaired Classes
    	
20
    
	
 
    	
4.4.
    	
Presumed Rejection by   Certain Impaired Classes
    	
20
    
	
 
    	
4.5.
    	
Confirmability of this   Plan and Reservation of Rights
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE V: MEANS FOR   IMPLEMENTATION OF THE PLAN
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.1.
    	
Alternative Transaction
    	
 
    
	
 
    	
5.2.
    	
Original Transaction
    	
21
    
	
 
    	
5.3.
    	
Operations Between the   Confirmation Date and Effective Date
    	
21
    
	
 
    	
5.4.
    	
Sources of Cash   Consideration for Plan Distributions
    	
21
    
	
 
    	
5.5.
    	
New Common Stock
    	
21
    
	
 
    	
5.6.
    	
Section 1145   Exemption
    	
21
    
	
 
    	
5.7.
    	
Master Lease Amendment
    	
22
    
	
 
    	
5.8.
    	
Release of Guaranty
    	
22
    
	
 
    	
5.9.
    	
Corporate Governance,   Directors, Officers and Corporate Action
    	
22
    
	
 
    	
5.10.
    	
Continued Corporate   Existence and Vesting of Assets in the Reorganized Debtor
    	
23
    
	
 
    	
5.11.
    	
Cancellation of Liens
    	
23
    
	
 
    	
5.12.
    	
Preservation of Rights   of Action and Settlement of Ordinary Litigation Claims
    	
23
    
	
 
    	
5.13.
    	
Registration of New   Common Stock
    	
23
    
	
 
    	
5.14.
    	
Additional Transactions   Authorized Under this Plan
    	
24
    

 

 

	
 
    	
5.15.
    	
Comprehensive   Settlement of Claims and Controversies
    	
24
    
	
 
    	
5.16.
    	
Tax Election
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE VI: TREATMENT OF   EXECUTORY CONTRACTS AND INSURANCE POLICIES
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.1.
    	
Assumption or Rejection   of Executory Contracts
    	
24
    
	
 
    	
6.2.
    	
No Cure Obligations
    	
25
    
	
 
    	
6.3.
    	
Insurance Policies and   Agreements
    	
25
    
	
 
    	
6.4.
    	
Postpetition Contracts   and Leases
    	
25
    
	
 
    	
6.5.
    	
Modifications,   Amendments, Supplements, Restatements or Other Agreements
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE VII: PROVISIONS   GOVERNING DISTRIBUTIONS
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.1.
    	
Distributions on   Account of Claims Allowed as of the Effective Date
    	
25
    
	
 
    	
7.2.
    	
Distributions on   Account of Claims that Become Allowed after the Effective Date
    	
26
    
	
 
    	
7.3.
    	
Distributions by   Reorganized Debtor
    	
26
    
	
 
    	
7.4.
    	
Means of Cash Payment
    	
26
    
	
 
    	
7.5.
    	
Withholding and   Reporting Requirements
    	
26
    
	
 
    	
7.6.
    	
Compliance Matters
    	
26
    
	
 
    	
7.7.
    	
Setoff and Recoupment
    	
26
    
	
 
    	
7.8.
    	
Reinstated Claims
    	
27
    
	
 
    	
7.9.
    	
Undeliverable or   Non-Negotiated Distributions
    	
27
    
	
 
    	
7.10.
    	
Claims Paid by Third   Parties
    	
27
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII: CONFIRMATION   AND CONSUMMATION OF THE PLAN
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.1.
    	
Conditions to Effective   Date of Plan Implementing the Alternative Transaction
    	
27
    
	
 
    	
8.2.
    	
Conditions to Effective   Date of Plan Implementing the Original Transaction
    	
28
    
	
 
    	
8.3.
    	
Waiver of Conditions
    	
28
    
	
 
    	
8.4.
    	
Vacatur of Confirmation   Order
    	
29
    
	
 
    	
8.5.
    	
Notice of Effective   Date
    	
29
    
	
 
    	
 
    	
 
    
	
ARTICLE IX: EFFECT OF   PLAN CONFIRMATION
    	
29
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.1.
    	
Binding Effect
    	
29
    
	
 
    	
9.2.
    	
Discharge
    	
29
    
	
 
    	
9.3.
    	
Releases by the Debtor
    	
30
    
	
 
    	
9.4.
    	
Releases by Certain   Holders of Claims
    	
31
    
	
 
    	
9.5.
    	
Exculpation
    	
31
    
	
 
    	
9.6.
    	
Injunctions Related to   Exculpation and Releases
    	
32
    
	
 
    	
9.7.
    	
Survival of   Indemnification and Exculpation Obligations
    	
33
    
	
 
    	
9.8.
    	
Term of Bankruptcy   Injunction or Stays
    	
33
    

 

ii

 

	
 
    	
9.9.
    	
Liability to   Governmental Units
    	
33
    
	
 
    	
9.10.
    	
Receivership Complaint
    	
34
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE X: RETENTION OF   JURISDICTION
    	
34
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
10.1.
    	
Retention of   Jurisdiction
    	
34
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE XI: MISCELLANEOUS   PROVISIONS
    	
36
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
11.1.
    	
Post-Effective Date   Retention of Professionals
    	
36
    
	
 
    	
11.2.
    	
Effectuating Documents   and Further Transactions
    	
36
    
	
 
    	
11.3.
    	
Exemption from Transfer   Taxes
    	
36
    
	
 
    	
11.4.
    	
Payment of Statutory   Fees
    	
37
    
	
 
    	
11.5.
    	
Amendment or   Modification of this Plan
    	
37
    
	
 
    	
11.6.
    	
Severability of Plan   Provisions
    	
37
    
	
 
    	
11.7.
    	
Successors and Assigns
    	
37
    
	
 
    	
11.8.
    	
Non-Consummation
    	
38
    
	
 
    	
11.9.
    	
Notice
    	
38
    
	
 
    	
11.10.
    	
Governing Law
    	
38
    
	
 
    	
11.11.
    	
Tax Reporting and   Compliance
    	
39
    
	
 
    	
11.12.
    	
Exhibits
    	
39
    
	
 
    	
11.13.
    	
Filing of Additional   Documents
    	
39
    
	
 
    	
11.14.
    	
Plan Documents
    	
39
    
	
 
    	
11.15.
    	
Reservation of Rights
    	
39
    

 

iii

 

TABLE OF EXHIBITS

 

	
Exhibit A
    	
 
    	
Alternative Master   Lease Term Sheet
    
	
 
    	
 
    	
 
    
	
Exhibit B
    	
 
    	
Alternative Plan   Sponsor Agreement
    
	
 
    	
 
    	
 
    
	
Exhibit C
    	
 
    	
Original Master Lease   Amendment
    
	
 
    	
 
    	
 
    
	
Exhibit D
    	
 
    	
Original Plan Sponsor   Agreement
    
	
 
    	
 
    	
 
    
	
Exhibit E
    	
 
    	
Directors and Officers   of Reorganized Debtor — Alternative Transaction
    
	
 
    	
 
    	
 
    
	
Exhibit F
    	
 
    	
Directors and Officers   of Reorganized Debtor — Original Transaction
    
	
 
    	
 
    	
 
    
	
Exhibit G
    	
 
    	
Certificate of   Incorporation of Reorganized Debtor — Original Transaction
    
	
 
    	
 
    	
 
    
	
Exhibit H
    	
 
    	
By-Laws of Reorganized   Debtor — Original Transaction
    

 

iv

 

INTRODUCTION

 

HCR ManorCare, Inc. (the “Debtor”) hereby proposes the following first amended plan of reorganization for the Debtor’s reorganization case under Chapter 11 of the Bankruptcy Code for the resolution of the outstanding Claims against and Interests in the Debtor. Capitalized terms used but not defined in this paragraph have the meanings assigned to them in Article I. The classification and treatment of Claims against and Interests in the Debtor are set forth in Article II and Article III. The Debtor is the proponent of this Plan within the meaning of section 1129 of the Bankruptcy Code. Reference is made to the Disclosure Statement, distributed contemporaneously herewith, for a discussion of the Debtor’s history, business, properties and operations, projections for those operations, risk factors, a summary and analysis of this Plan, and related matters.

 

ARTICLE I:

DEFINED TERMS AND RULES OF INTERPRETATION

 

A.                                    Defined Terms. As used in this Plan, capitalized terms shall have the meanings set forth in this Article I. Any term that is not otherwise defined herein, but that is used in the Bankruptcy Code or the Bankruptcy Rules, shall have the meaning given to that term in the Bankruptcy Code or the Bankruptcy Rules, as applicable.

 

1.1                               Administrative Expense Claim means a Claim for costs and expenses of administration of the Chapter 11 Case arising after the Petition Date and prior to the Effective Date under sections 328, 330, 363, 364(c)(1), 365, 503(b), 507(a)(2), or 507(b) of the Bankruptcy Code, including, without limitation, (a) any actual and necessary costs and expenses of preserving the Estate and operating the businesses of the Debtor after the Petition Date and Claims of governmental units for taxes (including tax audit Claims) related to tax years commencing after the Petition Date, but excluding Claims related to tax periods, or portions thereof, ending on or before the Petition Date; (b) any Professional Fee Claim, to the extent Allowed by Final Order under sections 328, 330, 331 or 503 of the Bankruptcy Code; (c) with the exception of section 507(b) Claims, any indebtedness or obligations incurred or assumed by the Debtor during the Chapter 11 Case; (d) any cash payment required to be made under this Plan and payments to cure a default under an Executory Contract that has been or will be assumed by the Debtor; or (e) any Quarterly Fees; provided, however, in connection with the Alternative Transaction, no QCP Claim (including the Agreed Deferred Rent Obligation if the Closing of the Alternative Transaction occurs) shall be treated as an Administrative Expense Claim and all QCP Claims shall be treated only as provided in Section 3.2.4(c)(i).

 

1.2                               Affiliate has the meaning assigned to such term in section 101(2) of the Bankruptcy Code.

 

1.3                               Agreed Deferred Rent Obligation means, for purposes of the Alternative Transaction only, an obligation of the Debtor for deferred rent in the amount of $440,190,183.

 

1.4                               Allowed means, with respect to a Claim or Interest, such Claim or Equity Interest or any portion thereof that the Debtor has assented to the validity of, and to which the Plan Sponsor has not objected, or that has been (a) allowed by an order of the Bankruptcy Court, (b) allowed pursuant to the terms of the Plan, (c) following the Effective Date, allowed by agreement between the Holder of such Claim, on one hand, and the Reorganized Debtor, as applicable, on the other hand, or (d)

 

1

 

allowed by an order of a court in which such Claim could have been determined, resolved or adjudicated if the Chapter 11 Case had not been commenced; provided, however, that an Administrative Expense Claim, other than Professional Fee Claim, incurred by the Debtor in the ordinary course of its business during the Chapter 11 Case, or assumed by the Debtor during the Chapter 11 Case, may be Allowed if the Debtor assents to the validity of such Claim; provided, further that, notwithstanding the foregoing, the Reorganized Debtor shall retain all Causes of Action and defenses with respect to Allowed Claims that are Reinstated or otherwise Unimpaired pursuant to the Plan (including, for the avoidance of doubt, Administrative Expense Claims not paid prior to the Effective Date).

 

1.5                               Allowed Claim or Interest means a Claim or Interest in a particular Class or of a particular type that is also an Allowed Claim or Interest. For example, an Allowed Administrative Expense Claim is an Administrative Expense Claim that is also an Allowed Claim.

 

1.6                               Alternative Master Lease has the meaning given to such term in the Alternative Plan Sponsor Agreement. The form of Alternative Master Lease shall be filed with the Plan Supplement. A term sheet describing the terms of the Alternative Master Lease is attached hereto as Exhibit A.

 

1.7                               Alternative Plan Sponsor Agreement means the Plan Sponsor Agreement among the Debtor, QCP, ProMedica Health System, Inc., ProMedica, and Meerkat I LLC, dated as of April 25, 2018, as amended, modified or supplemented from time to time in accordance with its terms, and including all schedules and exhibits thereto. A copy of the Alternative Plan Sponsor Agreement is attached hereto as Exhibit B.

 

1.8                               Alternative Restructuring Support Agreement means the Restructuring Support Agreement among the Debtor, Carlyle, MC Operations Investments, LLC, and ProMedica Health System, Inc., dated as of April 25, 2018, as amended, modified or supplemented from time to time in accordance with its terms.

 

1.9                               Alternative Transaction shall have the meaning ascribed to it in Article V hereof.

 

1.10                        Avoidance Actions means any and all actual or potential claims or causes of action to avoid a transfer of property or an obligation incurred by the Debtor arising under sections 502(d), 542, 544, 545, 547, 548, 549, 550, 551, 552 or 553(b) of the Bankruptcy Code, or under similar or related state or federal statutes or common law, including fraudulent transfer and conveyance laws, in each case whether or not litigation to prosecute such claim(s) or cause(s) of action was commenced prior to the Effective Date.

 

1.11                        Ballot means the ballot form for accepting or rejecting this Plan, distributed with the Disclosure Statement to the Holders of Claims that are Impaired under this Plan and entitled to vote to accept or reject this Plan pursuant to Article III and Article IV.

 

1.12                        Bankruptcy Code means Title 11 of the United States Code, 11 U.S.C. §§ 101 through 1532, as in effect on the Petition Date, together with any amendments and modifications thereto that may subsequently be made applicable to the Chapter 11 Case.

 

1.13                        Bankruptcy Court means the United States Bankruptcy Court for the District of Delaware or any other court with jurisdiction over the Chapter 11 Case.

 

2

 

1.14                        Bankruptcy Rules means, collectively: (a) the Federal Rules of Bankruptcy Procedure promulgated by the United States Supreme Court under section 2075 of Title 28 of the United States Code; (b) the Federal Rules of Civil Procedure, as applicable to the Chapter 11 Case or any proceedings therein; and (c) the local rules of the Bankruptcy Court, all as in effect on the Petition Date, together with any amendments and modifications thereto that may subsequently be made applicable to the Chapter 11 Case.

 

1.15                        Business Day means any day other than a Saturday, a Sunday or “legal holiday” (as defined in Bankruptcy Rule 9006(a)).

 

1.16                        By-Laws means the amended and restated by-laws of Reorganized Debtor which (i) if the Closing of the Alternative Transaction occurs, shall be substantially in the form to be filed with the Plan Supplement and (ii) otherwise shall be substantially in the form of Exhibit H.

 

1.17                        Carlyle means Carlyle MC Partners, L.P., a Delaware limited partnership, Carlyle Partners V-A MC, L.P., a Delaware limited partnership, Carlyle Partners V MC, L.P., a Delaware limited partnership, CP V Coinvestment A, L.P., a Delaware limited partnership, and CP V Coinvestment B, L.P., a Delaware limited partnership, collectively.

 

1.18                        Cash means legal tender of the United States of America.

 

1.19                        Cash Collateral Order means, collectively, the Final Order Under 11 U.S.C. §§ 105(a), 361, 362, 363, 507 and 552 and Bankruptcy Rules 2002, 4001, 6004 and 9014 (I) Authorizing Debtor to Use Cash Collateral, (II) Granting Adequate Protection to Prepetition Secured Parties, (III) Modifying the Automatic Stay and (IV) Granting Related Relief [D.I. 94] and the interim Bankruptcy Court order entered in connection therewith [D.I. 45].

 

1.20                        Cause of Action means any action, including any Avoidance Action, cause of action, liability, obligation, account, controversy, right to legal remedy, right to equitable remedy, right to payment, suit, debt, sum of money, damage, judgment, or Claim whatsoever, whether known or unknown, now or in the future, reduced to judgment, not reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured, whether alleged, asserted or assertable directly or derivatively, in law, equity, admiralty, or otherwise, arising under any applicable law, regulation, or similar governmental pronouncement.

 

1.21                        Certificate of Incorporation means the certificate of incorporation of Reorganized Debtor which (i) if the Closing of the Alternative Transaction occurs, shall be substantially in the form to be filed with the Plan Supplement and (ii) otherwise shall be substantially in the form of Exhibit G.

 

1.22                        Chapter 11 Case means the voluntary case under Chapter 11 of the Bankruptcy Code commenced by the Debtor in the Bankruptcy Court on the Petition Date.

 

1.23                        Claim means a “claim,” as defined in section 101(5) of the Bankruptcy Code.

 

1.24                        Class means each category of Holders of Claims or Interests established under Article III pursuant to sections 1122 and 1123(a)(1) of the Bankruptcy Code.

 

3

 

1.25                        Closing has the meaning given to such term in the Alternative Plan Sponsor Agreement or the Original Plan Sponsor Agreement, as applicable.

 

1.26                        Common Equity Distribution means the difference between the Total Equity Distribution and the Preferred Equity Distribution.

 

1.27                        [Common Interest means any Interest in the Debtor issued by the Debtor prior to the Effective Date (including prior to the Petition Date) other than the Preferred Interests.](2)

 

1.28                        Confirmation means the entry of the Confirmation Order by the Bankruptcy Court.

 

1.29                        Confirmation Date means the date on which the Clerk of the Bankruptcy Court enters the Confirmation Order on the Bankruptcy Court’s docket.

 

1.30                        Confirmation Hearing means the hearing held by the Bankruptcy Court on confirmation of this Plan, as such hearing may be continued from time to time.

 

1.31                        Confirmation Order means the order of the Bankruptcy Court confirming this Plan pursuant to section 1129 of the Bankruptcy Code.

 

1.32                        Credit Facility means that certain Credit Agreement, dated as of July 17, 2017, as subsequently amended, modified or supplemented among HCR Home Health Care and Hospice, LLC, as borrower, HCR Manorcare Operations II, LLC, HCR Manorcare Heartland, LLC, Manor Care, Inc., HCR II Healthcare, LLC and HCR Healthcare, LLC as Holdcos, the Credit Facility Lenders and the Credit Facility Agent.

 

1.33                        Credit Facility Agent means RD Credit, LLC, in its capacity as the administrative agent and collateral agent under the Credit Facility.

 

1.34                        Credit Facility Claim means all Claims against the Debtor of the Credit Facility Agent and Credit Facility Lenders under the Credit Facility.

 

1.35                        Credit Facility Lenders means the lenders under the Credit Facility.

 

1.36                        Debtor means HCR ManorCare, Inc., as debtor and debtor in possession.

 

1.37                        Disclosure Statement means the written disclosure statement that relates to this Plan including, without limitation, all exhibits and schedules thereto, as the same may be amended, supplemented or otherwise modified from time to time, in a manner acceptable to the Debtor and the Plan Sponsor, as approved by the Bankruptcy Court pursuant to section 1125 of the Bankruptcy Code.

 

1.38                        Effective Date means, and shall occur on, the Business Day on which each of the conditions precedent to the occurrence of the Effective Date set forth in Article VIII has been satisfied or waived in accordance with the terms thereof.

 

(2) To be revised to exclude out-of-the-money options and/or other similar interests.

 

4

 

1.39                        Eligible Employee means each of the current Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and General Counsel of the Debtor as of the Petition Date.

 

1.40                        Entity means an entity as defined in section 101(15) of the Bankruptcy Code.

 

1.41                        Estate means the estate of the Debtor created in the Chapter 11 Case under section 541 of the Bankruptcy Code.

 

1.42                        Exculpated Fiduciaries means each of the following solely in their capacity as such: (a) the Debtor; (b) the Reorganized Debtor; and (c) with respect to each of the foregoing parties, such Entities’ directors, officers, and professionals.

 

1.43                        Exculpated Parties means, collectively, the Exculpated Fiduciaries and the Section 1125(e) Parties.

 

1.44                        Executory Contracts means all executory contracts to which the Debtor is a party.

 

1.45                        Exhibit(s) means, individually or collectively, the exhibits to this Plan.

 

1.46                        Final Order means an order or judgment of the Bankruptcy Court (or other court of competent jurisdiction) entered by the clerk of the Bankruptcy Court on the docket in the Chapter 11 Case (or on the docket of any other court of competent jurisdiction), which has not been reversed, vacated or stayed and as to which (a) the time to appeal, petition for certiorari or move for a new trial, reargument or rehearing has expired and as to which no appeal, petition for certiorari or other proceedings for a new trial, reargument or rehearing shall then be pending, or (b) if an appeal, writ of certiorari, new trial, reargument or rehearing thereof has been sought, such order or judgment of the Bankruptcy Court shall have been affirmed by the highest court to which such order was appealed, or certiorari shall have been denied or a new trial, reargument or rehearing shall have been denied or resulted in no modification of such order, and the time to take any further appeal, petition for certiorari or move for a new trial, reargument or rehearing shall have expired; provided, however, that the possibility that a motion pursuant to section 502(j) or 1144 of the Bankruptcy Code or under Rule 59 or Rule 60 of the Federal Rules of Civil Procedure, or any analogous rule under the Bankruptcy Rules, may be filed relating to such order shall not solely cause such order not to be a Final Order.

 

1.47                        Former CEO Settlement Agreement has the meaning given to such term in the Plan Sponsor Agreement.

 

1.48                        General Unsecured Claim means a Claim against the Debtor that is not an Administrative Expense Claim, a Priority Tax Claims, a Secured Claim, a Credit Facility Claim, a QCP Claim, a Severance Claim, an Intercompany Claim, or a Section 510(b) Claim.

 

1.49                        Governmental Unit has the meaning provided in section 101(27) of the Bankruptcy Code.

 

1.50                        Guaranty means that certain Guaranty of Obligations made by the Debtor, effective as of February 11, 2013, as amended, supplemented or modified from time to time in accordance with its terms.

 

5

 

1.51                        HCR III means HCR III Healthcare, LLC.

 

1.52                        Holder means an Entity holding a Claim against, or Interest in, the Debtor.

 

1.53                        Impaired means “impaired” within the meaning of section 1124 of the Bankruptcy Code.

 

1.54                        Implementation Memorandum means that certain document describing the procedures and transactions required for implementation of the Alternative Transaction on the date of the Closing, which Implementation Memorandum shall be filed no later than thirty (30) days after execution of the Alternative Plan Sponsor Agreement and shall be subject to the consent of the Debtor (which consent shall not be unreasonably withheld or delayed); provided that no such procedures or transactions shall have any force or effect prior to the occurrence of the Closing of the Alternative Transaction; provided further that nothing in the Implementation Memorandum shall delay or impede ProMedica’s obligation to obtain required regulatory approval or adversely impact the distributions to be made to any Holder of a Claim or Interest under the Plan.

 

1.55                        Intercompany Claim means any Claim against the Debtor that is held by a non-Debtor subsidiary of the Debtor.

 

1.56                        Intercompany Note means that certain $25 million Subordinated Secured Demand Note, dated March 1, 2018, made by Debtor to HCR Home Health Care and Hospice, LLC.

 

1.57                        Intercompany Note Claims means the secured claims of HCR Home Health Care and Hospice, LLC against the Debtor in respect of the Intercompany Note.

 

1.58                        Interest means any equity security within the meaning of section 101(16) of the Bankruptcy Code, including any issued and outstanding common stock, preferred stock, limited liability company interest, partnership interest, or any other instrument evidencing an ownership interest in the Debtor prior to the Effective Date (including prior to the Petition Date), whether or not transferable, and any restricted stock units, calls, rights, puts, awards, commitments, repurchase rights, unvested or unexercised options, rights of conversion, warrants, unvested common interests, unvested preferred interests or any other agreements of any character related to the common or preferred interests of the Debtor, obligating the Debtor to issue, transfer, purchase, redeem, or sell any equity interests or other equity securities, and any rights under any equity incentive plans, voting agreements and registration rights agreements regarding equity securities of the Debtor.

 

1.59                        Lessors has the meaning given to such term in the Alternative Plan Sponsor Agreement or the Original Plan Sponsor Agreement, as applicable.

 

1.60                        Lien means, with respect to any interest in property, any mortgage, “lien” as defined in section 101(37) of the Bankruptcy Code, pledge, charge, security interest, easement or encumbrance of any kind whatsoever affecting such interest in property.

 

1.61                        Merger Agreement means the Agreement and Plan of Merger by and among Welltower Inc., Potomac Acquisition LLC, Quality Care Properties, Inc., QCP AL REIT, LLC, QCP SNF West REIT, LLC, QCP SNF Central REIT, LLC, QCP SNF East, LLC, QCP HoldCo REIT,

 

6

 

LLC, and QCP TRS, LLC, dated as of April 25, 2018, as amended, modified, or supplemented from time to time in accordance with its terms, and including all schedules and exhibits thereto.

 

1.62                        MLSA means that certain Master Lease and Security Agreement, among certain Affiliates of QCP who are the parties thereto, as “Lessor”, and HCR III, as “Lessee”, dated as of April 7, 2011, as amended, modified or supplemented from time to time.

 

1.63                        New Common Stock means the new common stock to be issued by Reorganized Debtor on the Effective Date authorized by this Plan, which shall have the powers, preferences and rights and be subject to the limitations, qualifications and restrictions, in each case, as set forth in the Certificate of Incorporation.

 

1.64                        Ordinary Litigation Claims means the claims, rights of action, suits or proceedings, whether in law or in equity, whether known or unknown, that the Debtor or its Estate may hold against any Person as of the Petition Date; provided, however, Ordinary Litigation Claims shall not include (a) any claim, right of action, suit or proceeding that has been settled on or prior to the Effective Date, in accordance with the Plan Sponsor Agreement, (b) any claim, right of action, suit or proceeding that the Debtor or its Estate may hold under chapter 5 of the Bankruptcy Code, including any Avoidance Action, and (c) claims, rights of action, suits or proceedings waived or released pursuant to Article IX.

 

1.65                        Original Master Lease means the MLSA, as amended by the Original Master Lease Amendment.

 

1.66                        Original Master Lease Amendment has the meaning given to such term in the Plan Sponsor Agreement. The form of Original Master Lease Amendment is attached hereto as Exhibit C.

 

1.67                        Original Plan Sponsor Agreement means the Plan Sponsor Agreement among the Debtor, QCP, HCP Mezzanine Lender, LP, a Delaware limited partnership and a wholly-owned subsidiary of QCP, and the Lessors identified therein, dated as of March 2, 2018, as amended, modified or supplemented from time to time in accordance with its terms, and including all schedules and exhibits thereto. A copy of the Original Plan Sponsor Agreement is attached hereto as Exhibit D.

 

1.68                        Original Restructuring Support Agreement means the Restructuring Support Agreement among the Debtor, Carlyle, and MC Operations Investments, LLC, dated as of March 2, 2018, as amended, modified or supplemented from time to time in accordance with its terms.

 

1.69                        Original Transaction shall have the meaning ascribed to it in Article V hereof.

 

1.70                        Other Priority Claim means an Allowed Claim under section 507(a) of the Bankruptcy Code other than an Administrative Expense Claim or Priority Tax Claim.

 

1.71                        Person or person means a person as defined in section 101(41) of the Bankruptcy Code.

 

7

 

1.72                        Petition Date means March 4, 2018, the date on which the Debtor commenced the Chapter 11 Case.

 

1.73                        Plan means this First Amended Chapter 11 Plan of Reorganization for HCR ManorCare, Inc., including all Exhibits, supplements, appendices and schedules hereto, either in its present form or as the same may be altered, amended or modified from time to time in accordance with the provisions of the Bankruptcy Code and the terms hereof.

 

1.74                        Plan Sponsor means (i) ProMedica Health System, Inc., the sponsor under the Alternative Plan Sponsor Agreement or (ii) QCP, the sponsor under the Original Plan Sponsor Agreement, as applicable. For the avoidance of doubt, (a) absent the consent of the Debtor and the Plan Sponsor under the Original Plan Sponsor Agreement, the Plan Sponsor under the Alternative Plan Sponsor Agreement shall not enter into any agreements or transactions on behalf of the Debtor, or take any actions that obligate or purport to obligate the Debtor, prior to the occurrence of the Closing of the Alternative Transaction, and no such agreements, transactions or actions shall become effective until the occurrence of the Closing of the Alternative Transaction, and (b) absent the consent of the Debtor and the Plan Sponsor under the Alternative Plan Sponsor Agreement, the Plan Sponsor under the Original Plan Sponsor Agreement shall not enter into any agreements or transactions on behalf of the Debtor, or take any actions that obligate or purport to obligate the Debtor, prior to the occurrence of the Closing of the Original Transaction, and no such agreements, transactions or actions shall become effective until the occurrence of the Closing of the Original Transaction.

 

1.75                        Plan Sponsor Agreement means the Alternative Plan Sponsor Agreement or the Original Plan Sponsor Agreement, as applicable.

 

1.76                        Plan Supplement means the supplement to this Plan to be filed with the Bankruptcy Court fifteen (15) days prior to the Confirmation Hearing on this Plan, together with any amendments, modifications, and/or supplements thereto, which shall be subject to the consent of the Debtor and the applicable Plan Sponsor.

 

1.77                        Preferred Equity Distribution means Cash in the amount of $2 million.

 

1.78                        Preferred Interest means the preferred stock in the Debtor issued by the Debtor prior to the Effective Date (including prior to the Petition Date).

 

1.79                        Priority Tax Claim means any Claim of a governmental unit of the kind against the Debtor entitled to priority in payment as specified in sections 502(i) and 507(a)(8) of the Bankruptcy Code.

 

1.80                        Professional means any Person retained by the Debtor or a statutory committee, if any, pursuant to a Final Order of the Bankruptcy Court entered pursuant to sections 327, 328 or 1103 of the Bankruptcy Code.

 

1.81                        Professional Fee Claim means any Claim of a Professional for allowance of compensation and/or reimbursement of costs and expenses incurred in the Chapter 11 Case on or before the Effective Date.

 

8

 

1.82                        ProMedica means Suburban HealthCo, Inc., an Ohio non-profit corporation and an indirect, wholly-owned subsidiary of ProMedica Health System, Inc., an Ohio non-profit corporation.

 

1.83                        ProMedica Plan Contribution means Cash in the amount required to (i) pay the Allowed Credit Facility Claims in full, (ii) pay the Agreed Deferred Rent Obligation, and (iii) make the Total Equity Distribution, which shall take the form, at ProMedica’s election, either of (x) a capital contribution to the Reorganized Debtor or (y) a combination of (A) the capital contribution referred to in clause (x) and (B) an unsecured, subordinated loan to the Reorganized Debtor in principal amount not to exceed $550,000,000, which unsecured loan shall mature no earlier than the third anniversary of the date of the Closing and the other terms and conditions of which shall be reasonably acceptable to the Debtor.

 

1.84                        QCP means Quality Care Properties, Inc.

 

1.85                        QCP Claims means all Claims of QCP and its subsidiaries against the Debtor, including, but not limited to, all Claims arising under the Guaranty and due and unpaid as of the Effective Date.

 

1.86                        Quarterly Fees has the meaning given to such term in Section 11.4 of the Plan.

 

1.87                        Receivership Complaint means that certain complaint filed by QCP against the Debtor, HCR III and “John Does 1–50” in Los Angeles County Superior Court, dated on or about August 17, 2017, seeking, among other things, the appointment of a receiver for HCR III.

 

1.88                        Reinstate, Reinstated or Reinstatement means (a) leaving unaltered the legal, equitable and contractual rights to which a Claim or Interest entitles the Holder of such Claim or Interest, or (b) notwithstanding any contractual provision or applicable law that entitles the Holder of such Claim or Interest to demand or receive accelerated payment of such Claim or Interest after the occurrence of a default, (i) curing any such default that occurred before or after the Petition Date, other than a default of a kind specified in section 365(b)(2) of the Bankruptcy Code; (ii) reinstating the maturity of such Claim or Interest as such maturity existed before such default; (iii) compensating the Holder of such Claim or Interest for any damages incurred as a result of any reasonable reliance by such Holder on such contractual provision or such applicable law; (iv) if such Claim or Interest arises from any failure to perform a nonmonetary obligation other than a default arising from failure to operate under a nonresidential real property lease subject to section 365(b)(1)(A) of the Bankruptcy Code, compensating the Holder of such Claim or Interest (other than the Debtor or an insider of the Debtor) for any actual pecuniary loss incurred by such Holder as the result of such failure; and (v) not otherwise altering the legal, equitable or contractual rights to which such Claim or Interest entitles the Holder thereof.

 

1.89                        Related Persons means, with respect to any Person, such Person’s predecessors, successors and assigns (whether by operation of law or otherwise) and their respective present and former Affiliates and each of their respective current and former members, partners, equity holders, controlling persons, officers, directors, employees, managers, shareholders, partners, financial advisors, attorneys, accountants, investment bankers, consultants, agents and professionals each acting in such capacity, and any Person claiming by or through any of them (including their respective

 

9

 

officers, directors, managers, shareholders, partners, employees, equity holders, members, and professionals); provided, however, that when used in reference to the Debtor or Reorganized Debtor, the term Related Persons shall not include the Debtor’s and Reorganized Debtor’s direct or indirect subsidiaries; provided, further, that (x) no Eligible Employee shall be a Related Person unless he executes and delivers a Separation Agreement and (y) Paul Ormond shall not be a Related Person unless he executes and delivers the Former CEO Settlement Agreement, in each case, prior to the Effective Date.

 

1.90                        Released Parties means each of the following solely in its capacity as such: (a) the Debtor; (b) the Reorganized Debtor; (c) Carlyle; (d) the Credit Facility Agent; (e) the Credit Facility Lenders; (f) the Plan Sponsor under the Alternative Plan Sponsor Agreement, (g) the Plan Sponsor under the Original Plan Sponsor Agreement, (h) Welltower; and (i) with respect to each of the foregoing parties under (a) through (h), such Entities’ Related Persons; provided, if the Closing of the Alternative Transaction does not occur, neither the Plan Sponsor under the Alternative Plan Sponsor Agreement, nor Welltower, or any Related Person to such Entities, shall constitute Released Parties.

 

1.91                        Reorganized Debtor means the Debtor and any successors thereto by merger, consolidation, conversion or otherwise, on or after the Effective Date, after giving effect to the transactions implementing this Plan.

 

1.92                        Restructuring Support Agreement means the Alternative Restructuring Support Agreement or the Original Restructuring Support Agreement, as applicable.

 

1.93                        Section 510(b) Claim means a Claim against the Debtor that is subordinated, or subject to subordination, pursuant to section 510(b) of the Bankruptcy Code, including, without limitation, a claim arising from the rescission or purchase of a sale or security of the Debtor or an affiliate of the Debtor, for damages arising from the purchase or sale of such security or for reimbursement or contribution on account of such Claim pursuant to section 502 of the Bankruptcy Code.

 

1.94                        Section 1125(e) Parties means each of the following, solely in their capacity as such: (a) Carlyle; (b) the Credit Facility Agent; (c) the Credit Facility Lenders; (d) the Plan Sponsor under the Alternative Plan Sponsor Agreement; (e) the Plan Sponsor under the Original Plan Sponsor Agreement; (f) Welltower; and (g) with respect to each of the foregoing parties under (a) through (f), such Entities’ directors, officers, and professionals; provided, if the Closing of the Alternative Transaction does not occur, the Plan Sponsor under the Alternative Plan Sponsor Agreement, Welltower, and/or any of their directors, officers or professionals, shall constitute Section 1125(e) Parties only to the extent permitted by applicable law.

 

1.95                        Secured Claim means any Claim, other than the Credit Facility Claim and the Intercompany Note Claim, secured by a Lien on collateral in which the Estate has an interest, to the extent of the value of such collateral (i) as agreed to by the Holder of such Claim and the Debtor or (ii) as determined pursuant to a Final Order of the Bankruptcy Court in accordance with section 506(a) of the Bankruptcy Code or, in the event that such Claim is subject to setoff under section 553 of the Bankruptcy Code, to the extent of such setoff.

 

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1.96                        Securities Act means the Securities Act of 1933, as now in effect or hereafter amended, and the rules and regulations of the U.S. Securities and Exchange Commission promulgated thereunder.

 

1.97                        Separation Agreement has the meaning given to such term in the Plan Sponsor Agreement.

 

1.98                        Severance Claim means a claim against the Debtor for damages resulting from the termination of an employment contract to which the Debtor is a party.

 

1.99                        Total Equity Distribution means Cash in the amount of $50 million.

 

1.100                 Unimpaired means with respect to a Claim, a Claim that is not Impaired, including any Claim that is Reinstated.

 

1.101                 United States Trustee means the Office of the United States Trustee for the District of Delaware.

 

1.102                 Welltower means Welltower Inc. and Meerkat I LLC.

 

B.                                    Rules of Interpretation. For purposes of this Plan, unless otherwise provided herein: (a) whenever from the context it is appropriate, each term, whether stated in the singular or the plural, will include both the singular and the plural; (b) unless otherwise provided in this Plan, any reference in this Plan to a contract, instrument, release, or other agreement or document being in a particular form or on particular terms and conditions means that such document will be substantially in such form or substantially on such terms and conditions, subject to the Plan Sponsor Agreement; (c) any reference in this Plan to an existing document, schedule or Exhibit filed or to be filed means such document, schedule or Exhibit, as it may have been or may be amended, modified, or supplemented pursuant to this Plan and, as applicable, the Plan Sponsor Agreement; (d) any reference to an entity as a Holder of a Claim or Interest includes that entity’s successors and assigns; (e) all references in this Plan to Sections or Articles are references to Sections or Articles of this Plan or the Plan Supplement, as the same may be amended, waived or modified from time to time; (f) the words “herein,” “hereof,” “hereto,” “hereunder” and other words of similar import refer to this Plan as a whole and not to any particular Section, subsection or clause contained in this Plan; (g) captions and headings to Articles and Sections are inserted for convenience of reference only and are not intended to be a part of or to affect the interpretation of this Plan; (h) the rules of construction set forth in section 102 of the Bankruptcy Code (other than section 102(5) of the Bankruptcy Code) will apply; and (i) any reference to an Entity’s “subsidiaries” means its direct and indirect subsidiaries.

 

C.                                    Computation of Time. In computing any period of time prescribed or allowed by this Plan, unless otherwise expressly provided, the provisions of Bankruptcy Rule 9006(a) shall apply. In the event that any payment, distribution, act or deadline under this Plan is required to be made or performed or occurs on a day that is not a Business Day, then the making of such payment or distribution, the performance of such act or the occurrence of such deadline shall be deemed to be on the next succeeding Business Day, but if so made, performed or completed by such next succeeding Business Day shall be deemed to have been completed or to have occurred as of the required date.

 

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D.                                    Exhibits and Plan Supplement. All Exhibits to this Plan, as well as the Plan Supplement, are incorporated into and are a part of this Plan as if set forth in full herein. Holders of Claims and Interests may obtain a copy of the Plan Supplement and the filed Exhibits upon written request to the Debtor. Upon their filing, the Plan Supplement and the Exhibits may be inspected (i) in the office of the Clerk of the Bankruptcy Court during normal business hours, (ii) at the Bankruptcy Court’s website at http://www.deb.uscourts.gov, or (iii) free of charge on the Debtor’s restructuring website at http://dm.epiq11.com/HCR.

 

E.                                     Deemed Acts. Whenever an act or event is expressed under this Plan to have been deemed done or to have occurred, it shall be deemed to have been done or to have occurred by virtue of this Plan and/or Confirmation Order without any further act by any party.

 

ARTICLE II:

TREATMENT OF ADMINISTRATIVE EXPENSE CLAIMS AND PRIORITY TAX CLAIMS

 

In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Expense Claims and Priority Tax Claims have not been classified and thus are excluded from the Classes of Claims and Interests set forth in Article III.

 

2.1.                            Administrative Expense Claims.

 

(a)                                General.

 

Subject to the terms of the Confirmation Order and Section 2.1(b) of this Plan, each Holder of an Allowed Administrative Expense Claim shall receive, on account of and in full and complete settlement, release and discharge of, and in exchange for, such Allowed Administrative Expense Claim, payment of Cash equal to the full unpaid amount of such Allowed Administrative Expense Claim (i) on the Effective Date or as soon as reasonably practicable thereafter, (ii) such other date as the Reorganized Debtor and such Holder shall have agreed, or (iii) as otherwise ordered by the Bankruptcy Court, provided, however, that Allowed Administrative Expense Claims not yet due or that represent obligations incurred by the Debtor in the ordinary course of its business during the Chapter 11 Case, or assumed by the Debtor during the Chapter 11 Case, shall be paid or performed when due in the ordinary course of business and in accordance with the terms and conditions of the particular agreements governing such obligations.

 

(b)                                Professionals Fee Claims.

 

All Professionals or other entities requesting compensation or reimbursement of expenses pursuant to sections 327, 328, 330, 331, 503(b) and/or section 1103 of the Bankruptcy Code for services rendered before the Effective Date (including, without limitation, any compensation requested by any Professional or any other entity for making a substantial contribution in the Chapter 11 Case) shall file and serve final requests for payment of Professional Fee Claims no later than the first Business Day that is forty-five (45) days after the Effective Date. Objections to any Professional Fee Claim must be filed and served on the Reorganized Debtor and the applicable Professional within thirty (30) days after the filing of the final fee application with respect to the Professional Fee Claim. Any such objections that are not consensually resolved may be set for hearing on twenty-one (21) days’ notice by the Professional asserting such Professional Fee Claim.

 

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2.2.                            Priority Tax Claims. Each Holder of an Allowed Priority Tax Claim against the Debtor shall receive, on account of and in full and complete settlement, release and discharge of, and in exchange for, such Allowed Priority Tax Claim, payment in full in Cash, on the latest of: (a) the Effective Date; (b) the date such Priority Tax Claim becomes an Allowed Claim; and (c) the date such Allowed Priority Tax Claim becomes due and payable under applicable non-bankruptcy law.

 

2.3.                            Post-Effective Date Fees and Expenses. Except as otherwise specifically provided in the Plan, from and after the Effective Date, the Reorganized Debtor shall, in the ordinary course of business and without any further notice to or action, order or approval of the Bankruptcy Court, pay in Cash the legal, professional or other fees and expenses related to the implementation and consummation of the Plan incurred by the Reorganized Debtor following the Effective Date. Upon the Effective Date, any requirement that Professionals comply with sections 327 through 331 and 1103 of the Bankruptcy Code in seeking retention or compensation for services rendered after such date shall terminate, and each Reorganized Debtor may employ and pay any professional for services rendered or expenses incurred after the Effective Date in the ordinary course of business without any further notice to or action, order or approval of the Bankruptcy Court.

 

ARTICLE III:

CLASSIFICATION AND TREATMENT OF

CLASSIFIED CLAIMS AND INTERESTS

 

3.1.                            Summary of Classification and Treatment of Classified Claims and Interests.

 

3.1.1                                             General.

 

(a)                                 Pursuant to sections 1122 and 1123 of the Bankruptcy Code, Claims and Interests are classified for all purposes, including, without limitation, voting, Confirmation and distributions pursuant to this Plan, as set forth herein. A Claim or Interest shall be deemed classified in a particular Class only to the extent that the Claim or 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 Interest qualifies within the description of such different Class. A Claim or Interest is in a particular Class only to the extent that such Claim or Interest is Allowed in that Class and has not been paid or otherwise settled prior to the Effective Date.

 

(b)                                 Any Class of Claims or Interests that, as of the commencement of the Confirmation Hearing, does not have at least one Holder of a Claim or Interest that is Allowed in an amount greater than zero for voting purposes shall be considered vacant, deemed eliminated from the Plan for purposes of voting to accept or reject the Plan, and disregarded for purposes of determining whether the Plan satisfies section 1129(a)(8) of the Bankruptcy Code with respect to that Class.

 

(c)                                  Pursuant to Bankruptcy Rule 9019 and section 1123(b)(3) of the Bankruptcy Code, and in consideration for the classification, distribution and other benefits provided under the Plan, the provisions of the Plan shall constitute a good faith compromise and settlement of all Claims and controversies resolved pursuant to the Plan, including all Claims, causes of action and controversies arising prior to the Effective Date, whether known or unknown, foreseen or unforeseen, asserted or unasserted, by or against any Released Party, or Holders of Claims, arising out of, relating to or in connection with the business or affairs of or transactions with the Debtor. The entry of the

 

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Confirmation Order shall constitute the Bankruptcy Court’s approval of each of the foregoing compromises or settlements, and all other compromises and settlements provided for in the Plan, and the Bankruptcy Court’s findings shall constitute its determination that such compromises and settlements are in the best interests of the Debtor, the Estate, creditors and other parties in interest, and are fair, equitable and within the range of reasonableness. The provisions of the Plan, including its release, injunction, exculpation and compromise provisions, are mutually dependent and non-severable.

 

3.1.2                                             Identification of Classes Against the Debtor. The following chart assigns a number to each Class for purposes of identifying each separate Class:

 

	
CLASS
    	
 
    	
CLAIM OR INTEREST
    
	
 
    	
 
    	
 
    
	
1
    	
 
    	
 
    	
Other Priority Claims
    
	
 
    	
 
    	
 
    	
 
    
	
2
    	
 
    	
 
    	
Secured Claims
    
	
 
    	
 
    	
 
    	
 
    
	
3
    	
 
    	
 
    	
Credit Facility Claims
    
	
 
    	
 
    	
 
    	
 
    
	
4
    	
 
    	
 
    	
QCP Claims
    
	
 
    	
 
    	
 
    	
 
    
	
5
    	
 
    	
 
    	
General Unsecured Claims
    
	
 
    	
 
    	
 
    	
 
    
	
6
    	
 
    	
 
    	
Severance Claims
    
	
 
    	
 
    	
 
    	
 
    
	
7
    	
 
    	
 
    	
Section 510(b) Claims
    
	
 
    	
 
    	
 
    	
 
    
	
8A
    	
 
    	
 
    	
Preferred Interests
    
	
 
    	
 
    	
 
    	
 
    
	
8B
    	
 
    	
 
    	
Common Interests
    

 

3.2.                            Classification and Treatment of Claims Against and Interests in the Debtor

 

3.2.1                                             Class 1: Other Priority Claims.

 

(a)                                 Classification: Class 1 consists of all Other Priority Claims against the Debtor.

 

(b)                                 Treatment: Each Holder of an Allowed Other Priority Claim will receive, in the sole discretion of the Reorganized Debtor, (i) payment in full in Cash as promptly as reasonably practicable on the later of (a) the Effective Date and (b) the date on which such Other Priority Claim becomes an Allowed Claim payable under applicable law or any agreement relating thereto, or (ii) treatment of such Allowed Other Priority Claim in any other manner that renders the claim Unimpaired, including Reinstatement. All Allowed Other Priority Claims not due and payable on or before the Effective Date shall be paid in the ordinary course of business in accordance with the terms thereof.

 

(c)                                  Voting: Allowed Claims in Class 1 are Unimpaired. Each Holder of an Allowed Claim in Class 1 shall be conclusively deemed to have accepted this Plan pursuant to

 

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section 1126(f) of the Bankruptcy Code, and, therefore, shall not be entitled to vote to accept or reject this Plan.

 

3.2.2                                             Class 2: Secured Claims.

 

(a)                                 Classification: Class 2 consists of Secured Claims against the Debtor.

 

(b)                                 Treatment: Except to the extent a Holder of a Secured Claim agrees to different treatment of that Secured Claim, each Holder of an Allowed Secured Claim shall, in the sole discretion of the Reorganized Debtor, receive on the Effective Date (or as promptly thereafter as reasonably practicable) or in the ordinary course of the Reorganized Debtor’s business (a) payment in full by Reorganized Debtor in Cash, including the payment of any interest Allowed and payable under section 506(b) of the Bankruptcy Code, (b) delivery of the collateral securing such Allowed Secured Claim, or (c) treatment of such Allowed Secured Claim in any other manner that renders the Claim Unimpaired, including Reinstatement.

 

(c)                                  Voting: Allowed Claims in Class 2 are Unimpaired. Each Holder of an Allowed Claim in Class 2 shall be conclusively deemed to have accepted this Plan pursuant to section 1126(f) of the Bankruptcy Code, and, therefore, shall not be entitled to vote to accept or reject this Plan.

 

3.2.3                                             Class 3: Credit Facility Claims.

 

(a)                                 Classification: Class 3 consists of the Credit Facility Claims against the Debtor.

 

(b)                                 Treatment:

 

(i)                                                             If the Closing of the Alternative Transaction occurs, the Credit Facility Agent shall receive, on the Effective Date, in full and final satisfaction, release, and discharge of (including any Liens related thereto), and in exchange for, the Allowed Credit Facility Claims, payment in full, in Cash, of all such Allowed Credit Facility Claims.

 

(ii)                                                          If the Closing of the Alternative Transaction does not occur, on the Effective Date, the Credit Facility Claims shall be Reinstated and any liens held by the Credit Facility Agent, on behalf of itself and the Credit Facility Lenders, against the assets of the Debtor securing the Credit Facility Claims shall survive the Effective Date in the same priority as they existed as of the Petition Date.

 

(c)                                  Voting: Claims in Class 3 are Unimpaired. Each Holder of an Allowed Claim in Class 3 shall be conclusively deemed to have accepted this Plan pursuant to section 1126(f) of the Bankruptcy Code, and, therefore, shall not be entitled to vote to accept or reject this Plan.

 

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3.2.4                                             Class 4: QCP Claims.

 

(a)                                 Classification: Class 4 consists of all QCP Claims.

 

(b)                                 Allowance: The QCP Claims shall be deemed Allowed on the Effective Date in the aggregate amount of $445,796,590.

 

(c)                                  Treatment:

 

(i)                                                             If the Closing of the Alternative Transaction occurs, on the Effective Date, (x) the Agreed Deferred Rent Obligation shall be paid, in full, in Cash, and (y) the balance of the QCP Claims, including any such QCP Claims that are Administrative Expense Claims, shall be waived and released.

 

(ii)                                                          If the Closing of the Alternative Transaction does not occur, the Holders of the QCP Claims (or the designee(s) of QCP) shall receive, on the Effective Date, in full and final satisfaction, release, and discharge of, and in exchange for, their QCP Claims, 100% of the New Common Stock of Reorganized Debtor.

 

(d)                                 Voting: Allowed Claims in Class 4 are Impaired. The Holder of an Allowed QCP Claim in Class 4 shall be entitled to vote to accept or reject this Plan.

 

3.2.5                                             Class 5: General Unsecured Claims.

 

(a)                                 Classification: Class 5 consists of all General Unsecured Claims.

 

(b)                                 Treatment: Except to the extent a Holder of an Allowed General Unsecured Claim agrees to different treatment of that General Unsecured Claim, each Holder of an Allowed General Unsecured Claim shall receive, in the sole discretion of the Reorganized Debtor, (i) payment in full in Cash of such Claim (a) on the Effective Date or as promptly thereafter as reasonably practicable, (b) in the ordinary course of the Reorganized Debtor’s business, or (c) on the date such Allowed General Unsecured Claim becomes due and payable according to its terms; or (ii) satisfaction of such Allowed General Unsecured Claim in any other manner that renders the Allowed General Unsecured Claim Unimpaired, including Reinstatement.

 

(c)                                  Voting: Allowed Claims in Class 5 are Unimpaired. Each Holder of an Allowed Claim in Class 5 shall be conclusively deemed to have accepted this Plan pursuant to section 1126(f) of the Bankruptcy Code, and, therefore, shall not be entitled to vote to accept or reject this Plan.

 

3.2.6                                             Class 6: Severance Claims

 

(a)                                 Classification: Class 6 consists of all Severance Claims.

 

(b)                                 Allowance: On the Effective Date, the Severance Claims shall be Allowed in the maximum amount permitted under the applicable provisions of the Bankruptcy Code.

 

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(c)                                  Treatment: Each Holder of an Allowed Severance Claim shall receive, in the sole discretion of the Plan Sponsor, payment in full in Cash on account of such Allowed Severance Claim (a) on the Effective Date or as soon as thereafter as reasonably practicable or (b) as otherwise agreed by the Reorganized Debtor and such Holder of a Severance Claim.

 

(d)                                 Voting: Allowed Claims in Class 6 are Unimpaired, and the Holders of such Claims are conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.

 

3.2.7                                             Class 7: Section 510(b) Claims.

 

(a)                                 Classification: Class 7 consists of all Section 510(b) Claims against the Debtor.

 

(b)                                 Treatment:

 

(i)                                                             If the Closing of the Alternative Transaction occurs, except to the extent a Holder of an Allowed Section 510(b) Claim, if any, agrees to different treatment of that Allowed Section 510(b) Claim, each such Holder of an Allowed Section 510(b) Claim shall receive satisfaction of such Allowed Section 510(b) Claim in any manner determined by the Debtor, with the consent of the Plan Sponsor, that renders such Allowed Section 510(b) Claim Unimpaired, including Reinstatement.

 

(ii)                                                          If the Closing of the Alternative Transaction does not occur, on the Effective Date, all Section 510(b) Claims shall be discharged and extinguished and the Holders thereof shall not receive or retain any property under this Plan on account of such Section 510(b) Claims.

 

(c)                                  Voting: Claims in Class 7 are Impaired because each Holder of an Allowed Section 510(b) Claim, if any, will not be entitled to receive or retain any property under this Plan if the Closing of the Alternative Transaction does not occur. Accordingly, each Holder of an Allowed Claim in Class 7 shall be conclusively deemed to have rejected this Plan pursuant to section 1126(g) of the Bankruptcy Code, and, therefore, shall not be entitled to vote to accept or reject this Plan

 

3.2.8                                             Class 8A: Preferred Interests.

 

(a)                                 Classification: Class 8A consists of all Preferred Interests.

 

(b)                                 Treatment:

 

(i)                                     If the Closing of the Alternative Transaction occurs, on the Effective Date or as soon thereafter as reasonably practicable, each Holder of an Allowed Preferred Interest shall receive its pro rata share of the Preferred Equity Distribution.

 

(ii)                                  If the Closing of the Alternative Transaction does not occur, on the Effective Date, all Preferred Interests in the Debtor shall be cancelled, annulled, and extinguished and the Holders of such Preferred Interests shall not receive or retain any property under

 

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this Plan on account of such Preferred Interests nor receive any distributions or property under this Plan on account of such Preferred Interests.

 

(c)                                  Voting: Preferred Interests in Class 8A are Impaired. Each Holder of a Preferred Interest in Class 8A shall be entitled to vote to accept or reject this Plan.

 

3.2.9                                             Class 8B: Common Interests.

 

(a)                                 Classification: Class 8B consists of all Common Interests.

 

(b)                                 Treatment:

 

(i)                                     If the Closing of the Alternative Transaction occurs, on the Effective Date or as soon thereafter as reasonably practicable, each Holder of an Allowed Common Interest shall receive its pro rata share of the Common Equity Distribution.

 

(ii)                                  If the Closing of the Alternative Transaction does not occur, on the Effective Date, all Common Interests in the Debtor shall be cancelled, annulled, and extinguished and the Holders of such Common Interests shall not receive or retain any property under this Plan on account of such Common Interests nor receive any distributions or property under this Plan on account of such Common Interests.

 

(c)                                  Voting: Common Interests in Class 8B are Impaired. Each Holder of a Common Interest in Class 8B shall be entitled to vote to accept or reject this Plan.

 

3.3.                            Intercompany Claims.

 

3.3.1                                             On the Effective Date, in the sole discretion of the Reorganized Debtor, all Intercompany Claims shall either be (i) Reinstated, in whole or in part, (ii) deemed satisfied, or (iii) discharged and extinguished, in full or in part, and shall be eliminated as of the Effective Date, in whole or in part, in which case the Holders thereof shall not be entitled to and shall not receive or retain any property or interest on account of such discharged and extinguished portion under this Plan; provided, however, that prior to such discharge and extinguishment such Intercompany Claims may be contributed to capital, transferred, setoff or subject to any other arrangement in the sole discretion of the Reorganized Debtor; provided further, that any Intercompany Claim held by an obligor under the Credit Facility shall not be discharged or extinguished without the express written consent of the Credit Facility Agent.

 

3.3.2                                             For the avoidance of doubt, the Intercompany Note Claim evidenced by the Intercompany Note shall: (i) if the Closing of the Alternative Transaction occurs, be Allowed in the amount of $25,000,000 plus accrued and unpaid interest thereon and, in the sole discretion of the Plan Sponsor under the Alternative Plan Sponsor Agreement, either (A) HCR Home Health Care and Hospice, LLC shall receive, on the Effective Date, in full and final satisfaction, release, and discharge of (including any liens related thereto), and in exchange for, the Intercompany Note Claim, payment in full, in Cash, of the Intercompany Note Claim or (B) such Intercompany Note Claim shall be Reinstated under the Plan, and any liens held by HCR Home Health Care and Hospice, LLC against the assets of the Debtor securing the Intercompany Note shall survive the Effective Date with the

 

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same priority that such liens held as of the Petition Date; and (ii) if the Closing of the Alternative Transaction does not occur, such Intercompany Note Claims shall be Allowed in the amount of $25,000,000 plus accrued and unpaid interest thereon and be Reinstated under the Plan, and any liens held by HCR Home Health Care and Hospice, LLC against the assets of the Debtor securing the Intercompany Note shall survive the Effective Date with the same priority that such liens held as of the Petition Date.

 

3.4.                            Unimpaired Claims.

 

3.4.1                                             Notwithstanding anything to the contrary in this Plan or the Plan Documents, and subject to Section 3.4.2, each Holder of a Claim arising prior to the Effective Date (i) in Classes 1, 2, 5 or 7 (if the Closing of the Alternative Transaction occurs) of this Plan or (ii) in Classes 1, 2, 3, or 5 (if the Closing of the Alternative Transaction does not occur) of the Plan (each of (i) and (ii), as applicable, a “Covered Unimpaired Claim”) shall be entitled to enforce its rights in respect of its Covered Unimpaired Claim against the Reorganized Debtor, in each case, until such Claim has been (a) paid in full in accordance with applicable law, or on terms agreed to between the Holder of such Claim and the Debtor or Reorganized Debtor, or in accordance with the terms and conditions of the particular transaction giving rise to such Claim or (b) otherwise satisfied or disposed of as determined by a court of competent jurisdiction. The Debtor, Reorganized Debtor and any other Entity shall retain all rights and defenses, both legal and equitable, under the Bankruptcy Code or other applicable bankruptcy and non-bankruptcy law with respect to any Covered Unimpaired Claim (other than the power to impair such Claim within the meaning of section 1124 of the Bankruptcy Code), including, but not limited to, legal and equitable rights of setoff and/or recoupment as to Covered Unimpaired Claims; provided, however, that (x) the foregoing shall not apply with respect to the Intercompany Note Claim, which is Allowed in full under this Plan without defenses, counterclaims, setoff or recoupment, and (y) for the avoidance of doubt, the Debtor, the Reorganized Debtor and any other Entity shall not retain such rights and defenses with respect to (i) any Claims or Causes of Action held by the Debtor or its Estate or the Reorganized Debtor that are released pursuant to Section 9.3 of this Plan (the “Debtor Released Claims”) or (ii) any Claims of Causes of Action released by certain Holders of Claims pursuant to Section 9.4 of this Plan (the “Third Party Released Claims”). Such Debtor Released Claims and Third Party Released Claims shall be deemed settled, satisfied, resolved, released, discharged, barred and/or enjoined by the applicable provisions under, and pursuant to the express terms of, this Plan and Plan Documents on the Effective Date. Holders of Covered Unimpaired Claims shall not be required to file a Proof of Claim with the Court and shall retain all their rights under applicable non-bankruptcy law to pursue their Covered Unimpaired Claims in any forum with jurisdiction over the parties. If the Debtor or the Reorganized Debtor disputes any Covered Unimpaired Claim, such dispute shall be determined, resolved or adjudicated pursuant to applicable non-bankruptcy law.

 

3.4.2                                             Notwithstanding the foregoing or anything else to the contrary in this Plan or the Plan Documents, with respect to all Claims (a) in Class 5 arising from the rejection of an Executory Contract and (b) in Class 6: (i) the Allowed amount of such Claims may be determined by the Bankruptcy Court after notice and a hearing; (ii) such Claims may be paid in full in Cash by the Debtor on the Effective Date or as soon thereafter as reasonably practicable; and (iii) such Claims shall be discharged pursuant to Section 9.2.1 of this Plan and Holders of such Claims shall be subject to the injunction set forth in Section 9.2.2 of this Plan.

 

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ARTICLE IV: ACCEPTANCE OR REJECTION OF THE PLAN

 

4.1.                            Impaired Classes of Claims or Interests Entitled to Vote on this Plan. Claims in Class 4 (QCP Claims) and Interests in Class 8A (Preferred Interests) and Class 8B (Common Interests) are Impaired, and the Holders of such Claims and Interests are entitled to vote to accept or reject this Plan.

 

4.2.                            Acceptance by an Impaired Class of Claims or Interests. Pursuant to section 1126(c) of the Bankruptcy Code, an Impaired Class of Claims shall have accepted the Plan if, after excluding any Claims held by any Holder whose Claims have been designated pursuant to section 1126(e) of the Bankruptcy Code, (a) the Holders of at least two-thirds in dollar amount of the Allowed Claims actually voting in such Class have voted to accept such Plan, and (b) more than one-half in number of such Allowed Claims actually voting in such Class have voted to accept the Plan. Pursuant to section 1126(d) of the Bankruptcy Code, an Impaired Class of Interests shall have accepted the Plan if, after excluding any Interests held by any Holder who has been designated pursuant to section 1126(e) of the Bankruptcy Code, the Holders of more than two-thirds in amount of such Allowed Interests actually voting in such Class have voted to accept the Plan.

 

4.3.                            Presumed Acceptance by Unimpaired Classes. Classes 1 (Other Priority Claims), 2 (Secured Claims), 3 (Credit Facility Claims), 5 (General Unsecured Claims), and 6 (Severance Claims) are Unimpaired by this Plan. Pursuant to section 1126(f) of the Bankruptcy Code, the Holders of Claims in such Classes are conclusively presumed to have accepted this Plan and therefore shall not be entitled to vote to accept or reject this Plan.

 

4.4.                            Presumed Rejection by Certain Impaired Classes. Class 7 (Section 510(b) Claims) (if the Closing of the Alternative Transaction does not occur) is Impaired by this Plan. Holders of Claims in Class 7 (Section 510(b) Claims) (if the Closing of the Alternative Transaction does not occur) will not receive or retain any property under this Plan on account of such Claims. Pursuant to section 1126(g) of the Bankruptcy Code, the Holders of Claims in Class 7 (Section 510(b) Claims) are conclusively presumed to have rejected this Plan and therefore shall not be entitled to vote to accept or reject this Plan.

 

4.5.                            Confirmability of this Plan and Reservation of Rights.

 

4.5.1                                             Confirmation. The confirmation requirements of section 1129 of the Bankruptcy Code must be satisfied with respect to the Debtor.

 

4.5.2                                             Reservation of Rights. The Debtor reserves the right to amend, modify, or supplement this Plan for any reason.

 

ARTICLE V:

MEANS FOR IMPLEMENTATION OF THE PLAN

 

Alternative Transaction. The Alternative Transaction means the transaction described in the Alternative Plan Sponsor Agreement, pursuant to which ProMedica (or its designee(s)), on the Effective Date, shall provide the ProMedica Plan Contribution in exchange for 100% of the New

 

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Common Stock of Reorganized Debtor. In addition, on the Effective Date, the Alternative Master Lease shall be executed and delivered.

 

5.2.                            Original Transaction. The Original Transaction means the transaction described in the Original Plan Sponsor Agreement, pursuant to which the Holders of the QCP Claims (or the designee(s) of QCP) shall receive on the Effective Date, in full and final satisfaction, release, and discharge of, and in exchange for, their QCP Claims, 100% of the New Common Stock of Reorganized Debtor. The Debtor shall consummate the Original Transaction in accordance with its terms if the Alternative Plan Sponsor Agreement is terminated in accordance with its terms.

 

5.3.                            Operations Between the Confirmation Date and Effective Date. During the period from the Confirmation Date through and until the Effective Date, the Debtor may continue to operate its business as debtor in possession in the ordinary course in a manner consistent with its obligations under the applicable Plan Sponsor Agreement and the transactions contemplated by the Plan and the Plan Sponsor Agreement, subject to all applicable orders of the Bankruptcy Court and the provisions of the Bankruptcy Code.

 

5.4.                            Sources of Cash Consideration for Plan Distributions. The Reorganized Debtor shall fund distributions and satisfy applicable Allowed Claims under the Plan with Cash on hand and/or, if the Closing of the Alternative Transaction occurs, from such Cash on hand together with the ProMedica Plan Contribution.

 

5.5.                            New Common Stock.

 

(a) If the Closing of the Alternative Transaction occurs, on the Effective Date, ProMedica (or its designee(s)) shall receive, and the Debtor shall, in accordance with the Implementation Memorandum, issue, transfer, and deliver to ProMedica (or its designee(s)), 1,000,000 newly issued shares of New Common Stock of the Debtor, par value $0.01 per share, which shall constitute all of the issued and outstanding capital stock and rights to purchase or otherwise acquire capital stock of the Debtor, free and clear of any lien, charge, pledge, security interest, claim, or other encumbrance in consideration for the ProMedica Plan Contribution.

 

(b) If the Closing of the Alternative Transaction does not occur, on the Effective Date, QCP or its designee(s) shall receive, and the Debtor shall issue, transfer, and deliver to QCP or its designee(s), 1,000,000 newly issued shares of New Common Stock of the Reorganized Debtor, par value $0.01 per share, which shall constitute all of the issued and outstanding capital stock and rights to purchase or otherwise acquire capital stock of the Debtor, free and clear of any lien, charge, pledge, security interest, claim, or other encumbrance, in full satisfaction of all of the QCP Claims.

 

5.6.                            Section 1145 Exemption. To the maximum extent provided by section 1145 of the Bankruptcy Code and applicable non-bankruptcy law, the offering, issuance and distribution of the New Common Stock of the Debtor shall be exempt from, among other things, the registration and prospectus delivery requirements of section 5 of the Securities Act, and any other applicable state and federal law requiring registration and/or delivery of a prospectus prior to the offering, issuance, distribution or sale of securities, subject to the provisions of section 1145(b)(1) of the Bankruptcy Code relating to the definition of an underwriter in section 2(a)(11) of the Securities Act. In addition, any securities issued under the Plan shall be freely transferable under the Securities Act by the

 

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recipients thereof, subject to compliance with any rules and regulations of the U.S. Securities and Exchange Commission, if any, applicable at the time of any future transfer of such Interests and applicable regulatory approval, if any.

 

5.7.                            Master Lease Amendment.

 

(a)                 If the Closing of the Alternative Transaction occurs, on the Effective Date, the Reorganized Debtor shall cause HCR III to, and Meerkat I LLC (or its designees) and the Lessors shall, enter into the Alternative Master Lease.

 

(b)                 If the Closing of the Alternative Transaction does not occur, on the Effective Date, Reorganized Debtor shall cause HCR III to, and QCP and the Lessors shall, enter into the Original Master Lease Amendment.

 

5.8.                            Release of Guaranty. On or prior to the third day after the Effective Date, HCR III and the Lessors under the MLSA shall terminate, release and discharge the Guaranty pursuant either to the Original Plan Sponsor Agreement or the Alternative Plan Sponsor Agreement, as applicable.

 

5.9.                            Corporate Governance, Directors, Officers and Corporate Action.

 

5.9.1                                             Certificate of Incorporation; By-Laws. On the Effective Date, the Certificate of Incorporation and the By-Laws shall go into effect. Consistent with, but only to the extent required by, section 1123(a)(6) of the Bankruptcy Code, on the Effective Date, the Certificate of Incorporation shall be amended to prohibit the issuance of non-voting equity securities. After the Effective Date, the Reorganized Debtor may amend and restate its certificates or articles of incorporation, by-laws, or similar governing documents, as applicable, as permitted by applicable law.

 

5.9.2                                             Directors and Officers of the Reorganized Debtor. Subject to any requirement of Bankruptcy Court approval pursuant to section 1129(a)(5) of the Bankruptcy Code, the initial directors and officers of Reorganized Debtor on the Effective Date, shall be as set forth on (i) Exhibit E, if the Closing of the Alternative Transaction occurs or (ii) Exhibit F, if the Closing of the Alternative Transaction does not occur. After the Effective Date, the Certificate of Incorporation and the By-Laws, as each may be amended thereafter from time to time, shall govern the designation and election of directors.

 

5.9.3                                             Corporate Action. On the Effective Date, (i) the selection of directors and officers for Reorganized Debtor, (ii) the issuance and distribution of the New Common Stock, and (iii) all other actions and transactions contemplated by this Plan and the Plan Sponsor Agreement shall be deemed authorized and approved in all respects (subject to the provisions of this Plan and the Plan Sponsor Agreement). All matters provided for in this Plan and the Plan Sponsor Agreement 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 this Plan and the Plan Sponsor Agreement, shall be deemed to have timely occurred in accordance with applicable law and shall be in effect, without any requirement of further action by the security holders or directors of the Debtor or the Reorganized Debtor in accordance with section 303 of the Delaware General Corporation Law and the provisions of the Bankruptcy Code. On and after the Effective Date, the appropriate officers of the Reorganized Debtor and members of the boards of directors or managers of the Reorganized

 

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Debtor shall be authorized and directed to issue, execute and deliver the agreements, documents, securities and instruments contemplated by this Plan and the Plan Sponsor Agreement in the name of and on behalf of the Reorganized Debtor.

 

5.10.                     Continued Corporate Existence and Vesting of Assets in the Reorganized Debtor. On and after the Effective Date, after giving effect to each of the actions contemplated under this Plan, the Reorganized Debtor shall continue to exist in accordance with the applicable law in the jurisdiction in which it is formed. Pursuant to section 1141(b) of the Bankruptcy Code, except as otherwise provided under this Plan, all property of the Debtor’s Estate, including all claims, rights and causes of action and any property acquired by the Debtor or the Reorganized Debtor under or in connection with this Plan, together with any property of the Debtor that is not property of its Estate and that is not specifically disposed of pursuant to this Plan, shall revest in the Reorganized Debtor on the Effective Date free and clear of all Claims, Liens, charges, other encumbrances and Interests, except as specifically provided in this Plan (including Sections 3.2.3(b), 3.2.4(c) and 3.3.2 herein) or the Confirmation Order. Thereafter, the Reorganized Debtor may operate its business and may use, acquire and dispose of property free of any restrictions of the Bankruptcy Code and the Bankruptcy Rules. As of the Effective Date, all property of the Reorganized Debtor shall be free and clear of all Liens and non-Reinstated Claims, except as specifically provided in this Plan (including Sections 3.2.3(b), 3.2.4(c) and 3.3.2 herein) or the Confirmation Order.

 

5.11.                     Cancellation of Liens. Except as otherwise provided in this Plan, on the Effective Date, in consideration for the distributions to be made on the Effective Date pursuant to this Plan, all Liens, charges, and encumbrances related to any Claim or Interest, other than any Lien securing a Secured Claim, an Intercompany Note Claim or a Credit Facility Claim that is, in each case, Reinstated pursuant to this Plan, shall be terminated, null and void and of no effect. The Holders of Secured Claims (other than a Secured Claim, Intercompany Note Claim or a Credit Facility Claim that is, in each case, Reinstated pursuant to this Plan) shall be authorized and directed to release any collateral or other property of the Debtor (including any Cash collateral) held by such Holder and to take such actions as may be requested by the Debtor (or the Reorganized Debtor, as the case may be) to evidence the release of any Liens, including the execution, delivery, and filing or recording of such release documents as may be requested by the Debtor (or the Reorganized Debtor, as the case may be).

 

5.12.                     Preservation of Rights of Action and Settlement of Ordinary Litigation Claims . Except as otherwise provided in this Plan, the Confirmation Order, or in any document, instrument, release or other agreement entered into in connection with this Plan, in accordance with section 1123(b)(3)(B) of the Bankruptcy Code, the Debtor and its Estate shall retain the Ordinary Litigation Claims. The Reorganized Debtor, as the successor in interest to the Debtor and the Estate, may enforce, sue on, settle or compromise (or decline to do any of the foregoing) any or all of the Ordinary Litigation Claims or any other claims, rights of action, suits or proceedings that the Debtor or its Estate may hold against any Person, and the failure to specifically identify any Ordinary Litigation Claim as being retained herein shall not effectuate a waiver or release of such Ordinary Litigation Claim.

 

5.13.                     Registration of New Common Stock. On the Effective Date, the New Common Stock shall not be listed for public trading on any securities exchange, the Reorganized Debtor will not be a reporting company under the Securities Exchange Act of 1934, and the Reorganized Debtor shall

 

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not be required to file reports with the U.S. Securities and Exchange Commission or any other governmental entity.

 

5.14.                     Additional Transactions Authorized Under this Plan. On or after the Effective Date, the Reorganized Debtor shall be authorized to take any such actions as may be necessary or appropriate to Reinstate Claims or render Claims not Impaired, as provided for under this Plan.

 

5.15.                     Comprehensive Settlement of Claims and Controversies. Pursuant to Bankruptcy Rule 9019 and in consideration for the distributions and other benefits provided under the Plan, the provisions of the Plan will constitute a good faith compromise and settlement of all Claims or controversies relating to the rights that a Holder of a Claim or Interest may have with respect to any Allowed Claim or Allowed Interest or any distribution to be made pursuant to the Plan on account of any Allowed Claim or Allowed Interest. The entry of the Confirmation Order will constitute the Bankruptcy Court’s approval, as of the Effective Date, of the compromise or settlement of all such claims or controversies and the Bankruptcy Court’s finding that all such compromises or settlements are in the best interests (i) of the Debtor, the Reorganized Debtor, the Estate and their respective property, and (ii) Claim and Interest holders, and are fair, equitable and reasonable.

 

5.16.                     Tax Election. On or after the Effective Date, and subject to the Closing of the Alternative Transaction, the Reorganized Debtor shall be authorized to elect to opt out of the application of Section 382(l)(5) of the Internal Revenue Code of 1986, as amended, by filing such election as is required under Section 382(l)(5)(G) of the Internal Revenue Code of 1986, as amended.

 

ARTICLE VI:

TREATMENT OF EXECUTORY CONTRACTS AND INSURANCE POLICIES

 

6.1.                            Assumption or Rejection of Executory Contracts. On the Effective Date, all Executory Contracts of the Debtor will be deemed assumed in accordance with, and subject to, the provisions and requirements of sections 365 and 1123 of the Bankruptcy Code, unless such Executory Contract (i) was previously assumed or rejected by the Debtor, (ii) previously expired or terminated pursuant to its own terms, or (iii) upon the Plan Sponsor’s prior written consent or request, is subject to a motion to reject such Executory Contract filed prior to the Effective Date. Entry of the Confirmation Order by the Bankruptcy Court shall constitute approval of such assumptions and the rejection of any Executory Contract for which a motion to reject has been filed, pursuant to sections 365(a) and 1123 of the Bankruptcy Code. Each Executory Contract assumed pursuant to this Article VI shall revest in and be fully enforceable by the Reorganized Debtor in accordance with its terms, except as modified by the provisions of this Plan, or any order of the Bankruptcy Court authorizing and providing for its assumption. Any motions to assume or reject Executory Contracts pending on the Effective Date shall be subject to approval by the Bankruptcy Court on or after the Effective Date. To the maximum extent permitted by law, to the extent any provision in any Executory Contract assumed pursuant to the Plan restricts or prevents, or purports to restrict or prevent, or is breached or deemed breached by, the assumption of such Executory Contract, including any “change of control” provision, then such provision shall be deemed modified such that the transactions contemplated by the Plan shall not entitle the non-Debtor party thereto to terminate such Executory Contract or to exercise any other default-related rights with respect thereto.

 

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6.2.                            No Cure Obligations. There are no anticipated cure obligations with respect to any Executory Contract to which the Debtor is a party. Unless otherwise determined by the Bankruptcy Court pursuant to a Final Order or agreed to by the parties thereto prior to the Effective Date, no payments shall be required to cure any defaults of the Debtor existing as of the Confirmation Date with respect to any Executory Contract assumed pursuant to this Plan. Subject to the occurrence of the Effective Date, the entry of the Confirmation Order shall constitute a finding by the Bankruptcy Court that (i) each such assumption is in the best interest of the Debtor and its Estate, and (ii) the requirements of section 365(b)(l) of the Bankruptcy Code are deemed satisfied.

 

6.3.                            Insurance Policies and Agreements. Insurance policies issued to, or insurance agreements entered into by, the Debtor prior to the Petition Date (including, without limitation, any policies covering directors’ or officers’ conduct) shall continue in effect after the Effective Date. To the extent that such insurance policies or agreements are considered to be Executory Contracts, this Plan shall constitute a motion to assume or ratify such insurance policies and agreements, and, subject to the occurrence of the Effective Date, the entry of the Confirmation Order shall constitute approval of such assumption pursuant to section 365(a) of the Bankruptcy Code and a finding by the Bankruptcy Court that each such assumption is in the best interest of the Debtor and its Estate. Unless otherwise determined by the Bankruptcy Court pursuant to a Final Order or agreed to by the parties thereto prior to the Effective Date, no payments shall be required to cure any defaults of the Debtor existing as of the Confirmation Date with respect to each such insurance policy.

 

6.4.                            Postpetition Contracts and Leases. All contracts, agreements and leases that were entered into by the Debtor or assumed by the Debtor after the Petition Date shall be deemed assigned by the Debtor to the Reorganized Debtor on the Effective Date.

 

6.5.                            Modifications, Amendments, Supplements, Restatements or Other Agreements. Unless otherwise provided in the Plan, each Executory Contract that is assumed shall include all modifications, amendments, supplements, restatements or other agreements that in any manner affect such Executory Contract including easements, licenses, permits, rights, privileges, immunities, options, rights of first refusal and any other interests, unless any of the foregoing agreements has been previously rejected or repudiated or is rejected or repudiated under the Plan. Modifications, amendments, supplements and restatements to prepetition Executory Contracts that have been executed by the Debtor during the Chapter 11 Case shall not be deemed to alter the prepetition nature of the Executory Contract, or the validity, priority or amount of any Claims that may arise in connection therewith.

 

ARTICLE VII:

PROVISIONS GOVERNING DISTRIBUTIONS

 

7.1.                            Distributions on Account of Claims Allowed as of the Effective Date. Unless the Holder of an Allowed Claim and the Debtor or the Reorganized Debtor agree to a different date, and except as otherwise provided herein or as ordered by the Bankruptcy Court, distributions to be made on account of each Claim that is Allowed as of the Effective Date shall be made as set forth in the provisions of the Plan governing the treatment of such Claim or as soon thereafter as practicable.

 

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7.2.                            Distributions on Account of Claims that Become Allowed after the Effective Date. Unless the Holder of a Claim that becomes an Allowed Claim after the Effective Date and the Reorganized Debtor agrees to a different date, and except as otherwise provided herein or as ordered by the Bankruptcy Court, distributions on account of Claims that become Allowed Claims after the Effective Date shall be made on the later of (a) the date such Claim becomes Allowed and (b) as set forth in the provisions of the Plan governing the treatment of such Claim or as soon thereafter as is practicable.

 

7.3.                            Distributions by Reorganized Debtor. Other than as specifically set forth in this Plan, the Reorganized Debtor shall make, or cause to be made, all distributions required to be made under this Plan.

 

7.4.                            Means of Cash Payment. Payments of Cash made pursuant to this Plan shall be in U.S. dollars and shall be made, at the option and in the sole discretion of the Reorganized Debtor, by (a) checks drawn on or (b) wire transfers from a bank selected by the Reorganized Debtor. Cash payments to foreign creditors may be made, at the option of the Reorganized Debtor, in such funds and by such means as are necessary or customary in a particular foreign jurisdiction.

 

7.5.                            Withholding and Reporting Requirements. In connection with this Plan and all distributions thereunder, the Reorganized Debtor shall comply with all withholding and reporting requirements imposed by any federal, state, local or foreign taxing authority, and all distributions hereunder shall be subject to any such withholding and reporting requirements. The Reorganized Debtor shall be authorized to take any and all actions that may be necessary or appropriate to comply with such withholding and reporting requirements, including liquidating a portion of the distribution to be made under the Plan to generate sufficient funds to pay applicable withholding taxes or establishing such other mechanisms that the Reorganized Debtor believes are reasonable and appropriate. All persons holding Claims or Interests shall be required to provide any information necessary to effect information reporting and the withholding of such taxes. Each Holder of an Allowed Claim that is to receive a distribution pursuant to this Plan shall have sole and exclusive responsibility for the satisfaction and payment of any tax obligations imposed by any governmental unit, including income, withholding and other tax obligations, on account of such distribution. No distribution shall be made to or on behalf of such Holder pursuant to this Plan unless and until such Holder has made arrangements satisfactory to the Reorganized Debtor for the payment and satisfaction of such tax obligations.

 

7.6.                            Compliance Matters. The Debtor or the Reorganized Debtor, as applicable, reserves the right to allocate and distribute all distributions made under the Plan in compliance with all applicable wage garnishments, alimony, child support and other spousal awards, Liens and similar encumbrances.

 

7.7.                            Setoff and Recoupment. The Reorganized Debtor may, pursuant to sections 553 and/or 558 of the Bankruptcy Code or applicable non-bankruptcy laws, but shall not be required to, set off and/or recoup against any Claim the payments or other distributions to be made pursuant to this Plan in respect of such Claim, or claims of any nature whatsoever that the Debtor or the Reorganized Debtor may have against the Holder of such Claim; provided, however, that neither the failure to assert such rights of setoff and/or recoupment nor the allowance of any Claim hereunder

 

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shall constitute a waiver or release by the Reorganized Debtor of any claim that the Debtor or the Reorganized Debtor may assert against any Holder of an Allowed Claim.

 

7.8.                            Reinstated Claims. Notwithstanding anything contained herein to the contrary, nothing shall affect, diminish or impair the Debtor’s or the Reorganized Debtor’s rights and defenses, both legal and equitable, with respect to any Reinstated Claim, including, but not limited to, legal and equitable rights of setoff and/or recoupment against the Holders of any Reinstated Claims; provided, however, that the foregoing shall not apply with respect to any Credit Facility Claims or Intercompany Note Claims, each of which is Allowed in full under this Plan without defenses, counterclaims, setoff or recoupment. Additionally, and notwithstanding anything contained herein to the contrary, any Unimpaired Claim in Classes 1, 2, 5 (other than a Claim in Class 5 arising from the rejection of an Executory Contract) and, solely in the event the Closing of the Alternative Transaction occurs, Class 7, not paid in full in Cash by the Debtor on the Effective Date or as soon thereafter as reasonably practicable shall constitute a Reinstated Claim.

 

7.9.                            Undeliverable or Non-Negotiated Distributions. If any distribution is returned as undeliverable, no further distributions to the applicable Holder shall be made unless and until the Reorganized Debtor is notified in writing of such Holder’s then-current address, at which time the undelivered distribution shall be made to such Holder without interest or dividends. All undeliverable distributions under the Plan that remain unclaimed for one year after attempted distribution shall indefeasibly revert to the Reorganized Debtor. Upon such reversion, the relevant Allowed Claim (and any Claim on account of missed distributions) shall be automatically discharged and forever barred, notwithstanding any federal or state escheat laws to the contrary. Checks issued on account of Allowed Claims shall be null and void if not negotiated within 180 calendar days from and after the date of issuance thereof. Requests for reissuance of any check must be made directly and in writing to the Reorganized Debtor by the Holder of the relevant Allowed Claim within the 180-calendar-day period. After such date, the relevant Allowed Claim (and any Claim for reissuance of the original check) shall be deemed undeliverable as of the date of the original issuance of the check and shall indefeasibly revert to the Reorganized Debtor in accordance with the terms hereof, notwithstanding any federal or state escheat laws to the contrary.

 

7.10.                     Claims Paid by Third Parties. To the extent a Holder receives a distribution on account of a Claim and also receives payment from a party that is not the Debtor or the Reorganized Debtor on account of such Claim, such Holder shall, within thirty calendar days of receipt thereof, repay or return the distribution to the Reorganized Debtor, to the extent the Holder’s total recovery on account of such Claim from the third party and under the Plan exceeds the amount of the Claim as of the date of any such distribution under the Plan.

 

ARTICLE VIII:

CONFIRMATION AND CONSUMMATION OF THE PLAN

 

8.1.                            Conditions to Effective Date of Plan Implementing the Alternative Transaction. This Plan shall not become effective, the Effective Date shall not occur, and the Alternative Transaction

 

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shall not be consummated unless and until the following conditions shall have been satisfied or waived in accordance with Section 8.2 of this Plan:

 

8.1.1                     The Confirmation Order confirming this Plan shall have been entered by the Bankruptcy Court and shall not have been stayed or vacated, and there have been no amendments to the Plan or the Confirmation Order except as permitted by the Plan and the Alternative Plan Sponsor Agreement.

 

8.1.2                     All conditions precedent to the consummation of the transactions set forth in Article VI of the Alternative Plan Sponsor Agreement (other than the occurrence of the Effective Date) shall have been satisfied.

 

8.1.3                     The Alternative Plan Sponsor Agreement shall not have terminated in accordance with its terms.

 

8.1.4                     All authorizations, consents, certifications, approvals, rulings, no-action letters, opinions or other documents or actions required by any law, regulation or order to be received or to occur in order to implement this Plan on the Effective Date shall have been obtained or shall have occurred.

 

8.2.                            Conditions to Effective Date of Plan Implementing the Original Transaction. If the Alternative Plan Sponsor Agreement shall have terminated in accordance with its terms, this Plan shall not become effective, the Effective Date shall not occur, and the Original Transaction shall not be consummated unless and until the following conditions shall have been satisfied or waived in accordance with Section 8.2 of this Plan:

 

8.2.1                     The Confirmation Order confirming this Plan shall have been entered by the Bankruptcy Court and shall have become a Final Order, and there have been no amendments to the Plan or the Confirmation Order except as permitted by the Plan and the Original Plan Sponsor Agreement.

 

8.2.2                     All conditions precedent to the consummation of the transactions set forth in Article VI of the Original Plan Sponsor Agreement (other than the occurrence of the Effective Date) shall have been satisfied.

 

8.2.3                     The Original Plan Sponsor Agreement shall not have terminated in accordance with its terms.

 

8.2.4                     All authorizations, consents, certifications, approvals, rulings, no-action letters, opinions or other documents or actions required by any law, regulation or order to be received or to occur in order to implement this Plan on the Effective Date shall have been obtained or shall have occurred.

 

8.3.                            Waiver of Conditions. Each of the conditions set forth in Section 8.1 of this Plan may be waived in whole or in part with the consent of both the Debtor and the Plan Sponsor under the Alternative Plan Sponsor Agreement, in their respective sole discretion; provided, however, that any such waiver which adversely affects the Plan Sponsor under the Original Plan Sponsor Agreement shall require the consent of the Plan Sponsor under the Original Plan Sponsor Agreement. Each of

 

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the conditions set forth in Section 8.2 of this Plan may be waived in whole or in part with the consent of both the Debtor and the Plan Sponsor under the Original Plan Sponsor Agreement, in their respective sole discretion.

 

8.4.                            Vacatur of Confirmation Order. If the Confirmation Order is vacated, (a) this Plan shall be null and void in all respects; (b) any settlement of Claims or Interests provided for hereby shall be null and void without further order of the Bankruptcy Court; and (c) the Debtor shall be entitled, at any time before or after entry of the order vacating the Confirmation Order, to request appropriate relief from the Bankruptcy Court with respect to the treatment of Executory Contracts.

 

8.5.                            Notice of Effective Date. The Debtor shall file with the Bankruptcy Court a notice of the occurrence of the Effective Date on the Effective Date or as soon as practicable thereafter.

 

ARTICLE IX:

EFFECT OF PLAN CONFIRMATION

 

9.1.                            Binding Effect. On the Effective Date, except as otherwise provided in section 1141(d)(3) of the Bankruptcy Code, all provisions of this Plan or the Plan Supplement, including all agreements, instruments and other documents filed in connection with this Plan and executed by the Debtor or the Reorganized Debtor in connection with this Plan or the Plan Supplement, shall be binding upon the Debtor, the Reorganized Debtor, all Holders of Claims against and Interests in the Debtor and such Holder’s respective successors and assigns, whether or not the Claim or Interest of such Holder is Impaired under this Plan and whether or not such Holder has accepted this Plan, and all other parties that are affected in any manner by this Plan. Except as expressly provided otherwise in the Plan, all agreements, instruments and other documents filed in connection with this Plan shall be given full force and effect, and shall bind all parties referred to therein as of the Effective Date, whether or not such agreements are actually issued, delivered or recorded on the Effective Date or thereafter and whether or not a party has actually executed such agreement. For the avoidance of doubt, no provision of the Plan Supplement or any agreement, instrument or other document filed in connection with this Plan and executed by the Debtor or the Reorganized Debtor in connection with this Plan or the Plan Supplement shall render Impaired any Claim that is otherwise Unimpaired under this Plan; provided, however, that the Reorganized Debtor may take any action that it determines may be necessary, advisable or appropriate in connection with the operation of the Reorganized Debtor after the consummation of this Plan (without prejudice to the rights of creditors or other parties under contract or applicable nonbankruptcy law).

 

9.2.                            Discharge.

 

9.2.1                     Discharge of Claims and Termination of Interests. Except as otherwise provided herein or in the Confirmation Order including with respect to any Claims that are Reinstated under this Plan, all consideration distributed under this Plan shall be in exchange for all Claims and Interests of any nature whatsoever, whether known or unknown, against the Debtor or its Estate, assets, properties or interest in property, and shall constitute a complete satisfaction and settlement of all Claims and Interests other than Reinstated Claims, in each case regardless of whether any property shall have been distributed or retained pursuant to this Plan on account of such Claims and Interests. On the Effective Date, except for Reinstated Claims, the Debtor shall be deemed discharged and released under section

 

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1141(d)(l)(A) of the Bankruptcy Code from any and all Claims and Interests, including, but not limited to, demands and liabilities that arose before the Effective Date, and all debts of the kind specified in sections 502(g), 502(h) or 502(i) of the Bankruptcy Code, Section 510(b) Claims, General Unsecured Claims, and Interests in the Debtor.

 

9.2.2                     Discharge Injunction. As of the Effective Date, except as otherwise expressly provided in this Plan or the Confirmation Order, all Entities (other than holders of Reinstated Claims solely in their capacities as such) shall be precluded from asserting against the Debtor or the Reorganized Debtor and their respective assets and property or the Estate, any other or further Claims (other than those Reinstated under this Plan) or Interests, or any other obligations, suits, judgments, damages, debts, rights, remedies, causes of action or liabilities of any nature whatsoever, relating to the Debtor or Reorganized Debtor or any of their respective assets and property or the Estate, based upon any act, omission, transaction or other activity of any nature that occurred prior to the Effective Date. In accordance with the foregoing, except as expressly provided in this Plan or the Confirmation Order, the Confirmation Order shall constitute a judicial determination, as of the Effective Date, of the discharge of all non-Reinstated Claims or other obligations, suits, judgments, damages, debts, rights, remedies, causes of action or liabilities, pursuant to sections 524 and 1141 of the Bankruptcy Code, and such discharge shall void and extinguish any judgment obtained against the Debtor, the Reorganized Debtor, or its respective assets, property and Estate at any time, to the extent such judgment is related to a discharged Claim, debt, liability or Interest. Except as otherwise specifically provided in this Plan or the Confirmation Order, all Persons or Entities who have held, hold or may hold Claims or Interests that arose prior to the Effective Date and all other parties-in-interest, along with their respective present or former employees, agents, officers, directors, principals, representatives and Affiliates, are permanently enjoined, from and after the Effective Date, from (i) commencing or continuing in any manner any action or other proceeding of any kind with respect to any such Claim (including a Section 510(b) Claim) against or Interest in the Reorganized Debtor or property of the Reorganized Debtor, other than to enforce any right to a distribution pursuant to the Plan, (ii) the enforcement, attachment, collection or recovery by any manner or means of any judgment, award, decree or order against the Reorganized Debtor or property of the Reorganized Debtor, other than to enforce any right to a distribution pursuant to this Plan, (iii) creating, perfecting or enforcing any Lien or encumbrance of any kind against the Reorganized Debtor or against the property or interests in property of the Reorganized Debtor, other than to enforce any right to a distribution pursuant to this Plan or (iv) asserting any right of setoff or subrogation of any kind against any obligation due from the Reorganized Debtor or against the property or interests in property of the Reorganized Debtor, with respect to any such Claim or Interest. Such injunction shall extend to any successors or assignees of the Reorganized Debtor and their respective properties and interest in properties. For the avoidance of doubt, the provisions of this Section 9.2.2 shall not apply with respect to Claims that are Reinstated under this Plan, including, without limitation, the Credit Facility Claims (if the Closing of the Alternative transaction does not occur) and the Intercompany Note Claim, as applicable.

 

9.3.                            Releases by the Debtor. Except as otherwise expressly provided in this Plan or the Confirmation Order, on the Effective Date, for good and valuable consideration, to the fullest extent permissible under applicable law, each of the Debtor and Reorganized Debtor on its own behalf and as a representative of its respective Estate, shall, and shall be deemed to,

 

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completely and forever release, waive, void, extinguish and discharge unconditionally, each and all of the Released Parties of and from any and all Claims and Causes of Action (including, without limitation, Avoidance Actions), any and all other obligations, suits, judgments, damages, debts, rights, remedies, causes of action and liabilities of any nature whatsoever, whether liquidated or unliquidated, fixed or contingent, direct or derivative, matured or unmatured, known or unknown, foreseen or unforeseen, then existing or thereafter arising, in law, equity or otherwise that are or may be based in whole or part on any act, omission, transaction, event or other circumstance taking place or existing on or prior to the Effective Date (including prior to the Petition Date) in connection with or related to the Debtor, the Reorganized Debtor, their respective assets and property, and the Estate, the Chapter 11 Case, this Plan, the Plan Supplement or the Disclosure Statement that may be asserted by or on behalf of the Debtor, the Reorganized Debtor or the Estate against any of the Released Parties; provided, however, that nothing in this Section 9.3 shall be construed to release any party from fraud, willful misconduct or gross negligence as determined by a Final Order.

 

9.4.                            Releases by Certain Holders of Claims. Except as otherwise expressly provided in this Plan or the Confirmation Order, on the Effective Date, for good and valuable consideration, to the fullest extent permissible under applicable law, each Holder of a Claim or an Interest that votes to accept this Plan shall be deemed to have completely and forever released, waived, and discharged unconditionally each of the Released Parties of and from any and all Claims, any and all other obligations, suits, judgments, damages, debts, rights, remedies, causes of action and liabilities of any nature whatsoever (including, without limitation, those arising under the Bankruptcy Code), whether liquidated or unliquidated, fixed or contingent, direct or derivative, matured or unmatured, known or unknown, foreseen or unforeseen, then existing or thereafter arising, in law, equity or otherwise that are or may be based in whole or part on any act, omission, transaction, event or other circumstance taking place or existing on or prior to the Effective Date (including prior to the Petition Date) in connection with or related to the Debtor, the Reorganized Debtor or their respective assets and property, and the Estate, the Chapter 11 Case, this Plan, the Plan Supplement, and/or the Disclosure Statement; provided, however, that nothing in this Section 9.4 shall be construed to release (x) any party from fraud, willful misconduct or gross negligence as determined by a Final Order, (y) any Reinstated Claim including, without limitation, the Credit Facility Claims (if the Closing of the alternative Transaction does not occur) and the Intercompany Note Claims, as applicable or (z) any obligations under the Plan Sponsor Agreement or the Merger Agreement.

 

9.5.                            Exculpation. From and after the Effective Date, the Exculpated Fiduciaries and, solely to the extent provided by section 1125(e) of the Bankruptcy Code, the Section 1125(e) Parties, shall neither have nor incur any liability to, or be subject to any right of action by, any Holder of a Claim or an Interest, or any other party in interest, or any of their respective employees, representatives, financial advisors, attorneys, or agents acting in such capacity, or Affiliates, or any of their successors or assigns, for any act or omission in connection with, relating to, or arising out of, the Chapter 11 Case, formulating, negotiating or implementing this Plan and/or previous iterations hereof, the Plan Supplement, the Disclosure Statement and/or previous iterations thereof, the Alternative Plan Sponsor Agreement, the Original Plan Sponsor Agreement, the Restructuring Support Agreement, the Alternative Master Lease or the Original Master Lease (as applicable), the solicitation of acceptances of this Plan and/or previous iterations hereof, the pursuit of Confirmation of this Plan, the Confirmation of this

 

31

 

Plan, the consummation of this Plan, the administration of this Plan, the property to be distributed under this Plan, the consummation of the transactions contemplated by the Alternative Plan Sponsor Agreement, the Original Plan Sponsor Agreement, or any other act taken or omitted to be taken in connection with or in contemplation of the Chapter 11 Case or implementation of this Plan; provided, however, that this Section 9.5 shall not apply to release (x) obligations under this Plan, and obligations under the Alternative Plan Sponsor Agreement, the Original Plan Sponsor Agreement, the Restructuring Support Agreement, the Alternative Master Lease or the Original Master Lease (as applicable), the Merger Agreement and the contracts, instruments, releases, agreements, and documents delivered, Reinstated or assumed under this Plan (including, without limitation, the Credit Facility (if the Closing of the Alternative Transaction does not occur) and the Intercompany Note, as applicable), and (y) any Claims or Causes of Action arising out of fraud, willful misconduct or gross negligence as determined by a Final Order.

 

Any of the Exculpated Parties shall be entitled to rely, in all respects, upon the reasonable and informed advice of counsel with respect to their duties and responsibilities under this Plan.

 

9.6.                            Injunctions Related to Exculpation and Releases. (a) Except as expressly provided in this Plan or the Confirmation Order, as of the Effective Date, all Persons and Entities that hold, have held, or may hold a Claim or any other obligation, suit, judgment, damages, debt, right, remedy, Cause of Action or liability of any nature whatsoever, of the types described in Section 9.5 of this Plan and relating to the Debtor, the Reorganized Debtor or any of their respective assets and property and/or the Estate, are, and shall be, permanently, forever and completely stayed, restrained, prohibited, barred and enjoined from taking any of the following actions against any Exculpated Party or its property on account of such released liabilities, whether directly or indirectly, derivatively or otherwise, on account of or based on the subject matter of such discharged Claims or other obligations, suits, judgments, damages, debts, rights, remedies, causes of action or liabilities: (i) commencing, conducting or continuing in any manner, directly or indirectly, any suit, action or other proceeding (including, without limitation, any judicial, arbitral, administrative or other proceeding) in any forum; (ii) enforcing, attaching (including, without limitation, any prejudgment attachment), collecting, or in any way seeking to recover any judgment, award, decree, or other order; (iii) creating, perfecting or in any way enforcing in any matter, directly or indirectly, any Lien; (iv) setting off, seeking reimbursement or contributions from, or subrogation against, or otherwise recouping in any manner, directly or indirectly, any amount against any liability or obligation that is discharged under Section 9.2 of this Plan; and/or (v) commencing or continuing in any manner any judicial, arbitration or administrative proceeding in any forum, that does not comply with or is inconsistent with the provisions of this Plan or the Confirmation Order.

 

(b)                                 Except as expressly provided in this Plan or the Confirmation Order, as of the Effective Date, all Persons and Entities that hold, have held, or may hold a Claim or any other obligation, suit, judgment, damages, debt, right, remedy, Cause of Action or liability of any nature whatsoever, of the types described in Section 9.4 of this Plan and relating to the Debtor, the Reorganized Debtor or any of their respective assets and property and/or the Estate, the Chapter 11 Case, this Plan, the Plan Supplement and/or the Disclosure Statement are, and shall

 

32

 

be, permanently, forever and completely stayed, restrained, prohibited, barred and enjoined from taking any of the following actions against any Released Party or its property on account of such released liabilities, whether directly or indirectly, derivatively or otherwise, on account of or based on the subject matter of such discharged Claims or other obligations, suits, judgments, damages, debts, rights, remedies, causes of action or liabilities: (i) commencing, conducting or continuing in any manner, directly or indirectly, any suit, action or other proceeding (including, without limitation, any judicial, arbitral, administrative or other proceeding) in any forum; (ii) enforcing, attaching (including, without limitation, any prejudgment attachment), collecting, or in any way seeking to recover any judgment, award, decree, or other order; (iii) creating, perfecting or in any way enforcing in any matter, directly or indirectly, any Lien; (iv) setting off, seeking reimbursement or contributions from, or subrogation against, or otherwise recouping in any manner, directly or indirectly, any amount against any liability or obligation that is discharged under Section 9.2 of this Plan; and/or (v) commencing or continuing in any manner any judicial, arbitration or administrative proceeding in any forum, that does not comply with or is inconsistent with the provisions of this Plan or the Confirmation Order.

 

9.7.                            Survival of Indemnification and Exculpation Obligations. The obligations of the Debtor to indemnify and exculpate any past and present directors, officers, agents, employees and representatives who provided services to the Debtor prior to or after the Petition Date, pursuant to certificates or articles of incorporation, by-laws, contracts and/or applicable statutes, in respect of all actions, suits and proceedings against any of such officers, directors, agents, employees and representatives, based upon any act or omission related to service with, for or on behalf of the Debtor, shall not be discharged or Impaired by Confirmation or consummation of this Plan and shall be assumed by the Reorganized Debtor. For the avoidance of doubt, this Section 9.7 affects only the obligations of the Debtor and Reorganized Debtor with respect to any indemnity or exculpation owed to or for the benefit of past and present directors, officers, agents, employees and representatives of the Debtor, and shall have no effect on nor in any way discharge or reduce, in whole or in part, any obligation of any other Person, including any provider of director and officer insurance, owed to or for the benefit of such past and present directors, officers, agents, employees and representatives of the Debtor. For further avoidance of doubt, the provisions regarding indemnification, exculpation and directors’ and officers’ insurance contained in section 4.7 of the Plan Sponsor Agreement shall be deemed incorporated into this Plan as if set forth fully herein.

 

9.8.                            Term of Bankruptcy Injunction or Stays. All injunctions or stays provided for in the Chapter 11 Case under section 105 or section 362 of the Bankruptcy Code, or otherwise, and in existence on the Confirmation Date, shall remain in full force and effect until the Effective Date.

 

9.9.                            Liability to Governmental Units. Nothing in the Confirmation Order or the Plan discharges, releases, resolves, precludes, exculpates, or enjoins: (i) any liability to any Governmental Unit that is not a Claim ; (ii) any Claim of a Governmental Unit arising on or after the Confirmation Date ; (iii) any police or regulatory liability to a Governmental Unit to the extent of such entity’s liability under non-bankruptcy law on account of its status as the owner or operator of property after the Confirmation Date; or (iv) any liability to a Governmental Unit on the part of any Person other than the Debtor or Reorganized Debtor. For the avoidance of doubt, the foregoing shall not limit the scope of discharge of all Claims and Interests arising prior to the Effective Date under sections 524 and 1141 of the Bankruptcy Code, or limit the Debtor’s or Reorganized Debtor’s rights under section

 

33

 

525 of the Bankruptcy Code. Nothing in the Confirmation Order or this Plan shall affect any setoff or recoupment rights of any Governmental Unit.

 

9.10.                     Receivership Complaint. The Receivership Complaint shall be deemed dismissed with prejudice as of the Effective Date. QCP, with the reasonable cooperation of Debtor, shall cause the Receivership Complaint to be withdrawn from the relevant court docket as soon as practicable after the Effective Date.

 

ARTICLE X:

RETENTION OF JURISDICTION

 

10.1.                     Retention of Jurisdiction Pursuant to sections 105(c) and 1142 of the Bankruptcy Code and notwithstanding entry of the Confirmation Order and the occurrence of the Effective Date, the Bankruptcy Court shall retain jurisdiction over all matters arising out of, and related to, the Chapter 11 Case and this Plan to the fullest extent permitted by law, including, among other things, jurisdiction to:allow, disallow, determine, liquidate, classify, estimate or establish the priority, secured or unsecured status, or amount of any Claim or Interest, including the resolution of any request for payment of any Administrative Expense Claim or Priority Tax Claim, and the resolution of any objections to the secured or unsecured status, allowance, priority or amount of Claims or Interests;

 

(b)                                 resolve any matters related to the assumption or rejection of any Executory Contract to which the Debtor is a party or with respect to which the Debtor or Reorganized Debtor may be liable and to hear, determine, and, if necessary, liquidate any Claims arising therefrom;

 

(c)                                  ensure that distributions to Holders of Allowed Claims are accomplished pursuant to the provisions of this Plan and adjudicate any and all disputes from, or relating to distributions under, the Plan;

 

(d)                                 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;

 

(e)                                  enter such orders as may be necessary or appropriate to implement or consummate the provisions of this Plan, the Plan Sponsor Agreement, the Restructuring Support Agreement, and all contracts, instruments, releases and other agreements or documents created in connection with this Plan, the Disclosure Statement, the Plan Supplement or the Confirmation Order, and issue injunctions, enter and implement other orders, or take such other actions as may be necessary or appropriate to restrain interference by any entity with consummation, implementation or enforcement of this Plan or the Confirmation Order;

 

(f)                                   resolve any cases, controversies, suits or disputes that may arise in connection with the consummation, interpretation, or enforcement of this Plan, the Plan Sponsor Agreement, the Restructuring Support Agreement, or any contract, instrument, release or other agreement or document that is executed or created pursuant to this Plan, or any Entity’s rights arising from or obligations incurred in connection with this Plan or such documents, including hearing and determining disputes, cases, or controversies arising in connection with the interpretation,

 

34

 

implementation or enforcement of the Plan, Plan Sponsor Agreement, Restructuring Support Agreement or the Confirmation Order;

 

(g)                                  enter and enforce any order for the sale of property pursuant to sections 363, 1123, or 1146(a) of the Bankruptcy Code;

 

(h)                                 adjudicate, decide or resolve any and all disputes as to the ownership of any Claim or Interest;

 

(i)                                     approve any modification of this Plan before or after the Effective Date pursuant to section 1127 of the Bankruptcy Code or approve any modification of the Disclosure Statement, the Confirmation Order or any contract, instrument, release or other agreement or document created in connection with this Plan, the Disclosure Statement, the Plan Supplement or the Confirmation Order, or remedy any defect or omission or reconcile any inconsistency in any Bankruptcy Court order, this Plan, the Disclosure Statement, the Plan Supplement, the Confirmation Order or any contract, instrument, release or other agreement or document created in connection with this Plan, the Disclosure Statement, the Plan Supplement or the Confirmation Order, in such manner as may be necessary or appropriate to consummate this Plan;

 

(j)                                    hear and determine all disputes involving the existence, nature or scope of the Debtor’s discharge;

 

(k)                                 subject to Section 11.1, hear and determine all applications for compensation and reimbursement of expenses of Professionals under this Plan or under sections 330, 331, 363, 503(b), 1103 and 1129(a)(9) of the Bankruptcy Code, which shall be payable by the Debtor only upon allowance thereof pursuant to an order of the Bankruptcy Court;

 

(l)                                     hear and determine Causes of Action by or on behalf of the Debtor or the Reorganized Debtor;

 

(m)                             hear and determine matters concerning state, local and federal taxes in accordance with sections 346, 505 and 1146 of the Bankruptcy Code;

 

(n)                                 hear and determine any issues arising under, or violations of, section 525 of the Bankruptcy Code;

 

(o)                                 enter and implement such orders as are necessary or appropriate if the Confirmation Order is for any reason or in any respect modified, stayed, reversed, revoked or vacated, or if distributions pursuant to this Plan are enjoined or stayed;

 

(p)                                 determine any other matters that may arise in connection with or relate to this Plan, the Disclosure Statement, the Plan Supplement, the Confirmation Order, the Plan Sponsor Agreement, the Restructuring Support Agreement, or any contract, instrument, release, or other agreement, or document created in connection with this Plan, the Disclosure Statement, the Plan Supplement or the Confirmation Order;

 

(q)                                 enforce all orders, judgments, injunctions, releases, exculpations, indemnifications and rulings entered in connection with the Chapter 11 Case;

 

35

 

(r)                                    hear and determine all matters related to the property of the Estate from and after the Confirmation Date;

 

(s)                                   hear and determine such other matters as may be provided in the Confirmation Order or as may be authorized under the Bankruptcy Code;

 

(t)                                    enter a final order or decree concluding or closing the Chapter 11 Case; and

 

(u)                                 hear any other matter not inconsistent with the Bankruptcy Code;

 

provided, however, that the Bankruptcy Court shall not retain jurisdiction after the Effective Date over disputes concerning documents contained in the Plan Supplement or in respect of the Credit Facility or Intercompany Note that have a jurisdictional, forum selection or dispute resolution clause that refers disputes to a different court, including, for the avoidance of doubt, the Alternative Master Lease or the Original Master Lease (as applicable), and any disputes concerning documents contained in the Plan Supplement that contain such clauses shall be governed in accordance with the provisions of such documents.

 

ARTICLE XI:

MISCELLANEOUS PROVISIONS

 

11.1.                     Post-Effective Date Retention of Professionals. On the Effective Date, any requirement that Professionals employed by the Reorganized Debtor comply with sections 327 through 331 of the Bankruptcy Code in seeking retention or compensation for services rendered after such date will terminate, and the Reorganized Debtor will be authorized to employ and compensate professionals in the ordinary course of business and without the need for application to or approval by the Bankruptcy Court, including professionals previously employed by the Debtor.

 

11.2.                     Effectuating Documents and Further Transactions. Each of the Debtor and the Reorganized Debtor is authorized to execute, deliver, file or record such contracts, instruments, certificates, notes, releases and other agreements or documents and take such actions as may be necessary or appropriate to effectuate, implement and further evidence the terms and conditions of this Plan, the Plan Sponsor Agreement, and the New Common Stock issued under or in connection with this Plan.

 

11.3.                     Exemption from Transfer Taxes. Pursuant to section 1146(a) of the Bankruptcy Code, (a) the issuance, transfer or exchange of equity securities under this Plan; (b) the creation of any mortgage, deed of trust, lien, pledge or other security interest; or (c) the making or delivery of any deed or other instrument of transfer under this Plan, including, without limitation, merger agreements, agreements of consolidation, restructuring, disposition, liquidation or dissolution, deeds, bills of sale, and transfers of tangible property, will not be subject to any document recording tax, stamp tax, conveyance fee, intangibles or similar tax, mortgage tax, stamp act, real estate transfer tax, mortgage recording tax, Uniform Commercial Code filing or recording fee or other similar tax or governmental assessment in the United States. The Confirmation Order shall direct the appropriate federal, state or local governmental officials or agents to forgo the collection of any such tax or governmental

 

36

 

assessment and to accept for filing and recordation any of the foregoing instruments or other documents without the payment of any such tax or governmental assessment.

 

11.4.                     Payment of Statutory Fees. All fees due and payable pursuant to section 1930(a)(6) of Title 28 of the United States Code (“Quarterly Fees”) prior to the Effective Date shall be paid by the Debtor on the Effective Date. After the Effective Date, the Reorganized Debtor shall be liable for any and all Quarterly Fees when they are due and payable after the Effective Date. The Debtor shall file all Quarterly Reports due prior to the Effective Date when they become due, in a form reasonably acceptable to the United States Trustee. After the Effective Date, the Reorganized Debtor shall file with the Bankruptcy Court Quarterly Reports in a form reasonably acceptable to the United States Trustee, which reports shall include a separate schedule of disbursements made by the Reorganized Debtor during the applicable period, attested to by an authorized representative of the Reorganized Debtor. The Reorganized Debtor shall remain obligated to pay Quarterly Fees to the Office of the U.S. Trustee until the earliest of the Debtor’s case being closed, dismissed or converted to a case under Chapter 7 of the Bankruptcy Code.

 

11.5.                     Amendment or Modification of this Plan. Subject to section 1127 of the Bankruptcy Code, the Debtor may alter, amend or modify this Plan or the Exhibits at any time prior to or after the Confirmation Date but prior to the substantial consummation of this Plan, solely in accordance with the Plan Sponsor Agreement; provided, that sections of this Plan pertaining to the the Credit Facility Claims, the Intercompany Note or Intercompany Claims held by obligors under the Credit Facility shall not be altered, amended or modified other than in accordance with the Credit Facility. Any Holder of a Claim that has accepted this Plan shall be deemed to have accepted this Plan, as altered, amended or modified, if the proposed alteration, amendment or modification is made in accordance with the Plan Sponsor Agreement and does not materially and adversely change the treatment of the Claim of such Holder.

 

11.6.                     Severability of Plan Provisions. If, prior to the Confirmation Date, any term or provision of this Plan is determined by the Bankruptcy Court to be invalid, void or unenforceable, the Bankruptcy Court will have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void or unenforceable, and such term or provision will then be applicable as altered or interpreted, provided that any such holding, alteration or interpretation complies and is consistent with the Plan Sponsor Agreement and does not adversely impact the holders of the Credit Facility Claims. Notwithstanding any such holding, alteration or interpretation, the remainder of the terms and provisions of this Plan will remain in full force and effect and will in no way be affected, impaired or invalidated by such holding, alteration, or interpretation. The Confirmation Order will constitute a judicial determination and will provide that each term and provision of this Plan, as it may have been altered or interpreted in accordance with the foregoing, is valid and enforceable pursuant to its terms.

 

11.7.                     Successors and Assigns. This Plan shall be binding upon and inure to the benefit of the Debtor, and its successors and assigns, including, without limitation, the Reorganized Debtor. The rights, benefits and obligations of any entity named or referred to in this Plan shall be binding on, and shall inure to the benefit of, any heir, executor, administrator, successor or assign of such entity.

 

37

 

11.8.                     Non-Consummation. If consummation of this Plan does not occur, then (a) this Plan shall be null and void in all respects, (b) any settlement or compromise embodied in this Plan (including the fixing or limiting to an amount certain any Claim or Interest or Class of Claims or Interests), assumption or rejection of Executory Contracts or leases affected by this Plan, and any document or agreement executed pursuant to this Plan shall be deemed null and void and (c) nothing contained in this Plan shall (i) constitute a waiver or release of any Claims by or against, or any Interests in, the Debtor or any other Person, (ii) prejudice in any manner the rights of the Debtor, the Plan Sponsor under the Alternative Plan Sponsor Agreement, the Plan Sponsor under the Original Plan Sponsor Agreement, or any other Person or (iii) constitute an admission of any sort by the Debtor, the Plan Sponsor under the Alternative Plan Sponsor Agreement, the Plan Sponsor under the Original Plan Sponsor Agreement, or any other Person.

 

11.9.                     Notice. All notices, requests and demands to or upon the Debtor or the Reorganized Debtor to be effective shall be in writing and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when actually delivered or, in the case of notice by facsimile transmission, when received and telephonically confirmed, addressed as follows:

 

HCR ManorCare, Inc.

333 N. Summit St.

Toledo, Ohio 43604

Attn: John R. Castellano, Chief Restructuring Officer

 

with a copy to:

 

SIDLEY AUSTIN LLP

One South Dearborn Street

Chicago, Illinois 60603

Telephone: (312) 853-7000

Facsimile: (312) 853-7036

Attn: Larry J. Nyhan

Dennis M. Twomey

 

-and-

 

YOUNG CONAWAY STARGATT & TAYLOR, LLP

Rodney Square

1000 North King Street

Wilmington, Delaware 19801

Telephone: (302) 571-6600

Facsimile: (302) 571-1253

Attn: Edmon L. Morton

 

Attorneys for the Debtor and Debtor in Possession

 

11.10.              Governing Law. Subject to the provisions of any contract, certificates or articles of incorporation, by-laws, instruments, releases, or other agreements or documents entered into in connection with this Plan, and subject further to Section 10.1 of this Plan, the rights and obligations

 

38

 

arising under this Plan shall be governed by, and construed and enforced in accordance with (i) the Bankruptcy Code, the Bankruptcy Rules or other federal law to the extent applicable and (ii) if none of such law is applicable, the laws of the State of Delaware, without giving effect to the principles of conflicts of law of such jurisdiction.

 

11.11.              Tax Reporting and Compliance. The Reorganized Debtor is hereby authorized, on behalf of the Debtor, to request an expedited determination under section 505 of the Bankruptcy Code of the tax liability of the Debtor for all taxable periods ending after the Petition Date through, and including, the Effective Date.

 

11.12.              Exhibits. All Exhibits to this Plan are incorporated into and are a part of this Plan as if set forth in full herein.

 

11.13.              Filing of Additional Documents. On or before substantial consummation of this Plan, the Reorganized Debtor and the Debtor shall, as applicable, file such agreements and other documents as may be necessary or appropriate to effectuate and evidence further the terms and conditions of this Plan.

 

11.14.              Plan Documents. The Plan and the Plan Supplement, including all Exhibits, supplements, appendices and schedules thereto, and any modifications to any of the foregoing, shall be in form and substance acceptable to the Debtor, subject to the Plan Sponsor Agreement.

 

11.15.              Reservation of Rights. Except as expressly set forth herein, this Plan shall have no force and effect unless the Bankruptcy Court has entered the Confirmation Order. The filing of this Plan, any statement or provision contained in this Plan, or the taking of any action by the Debtor with respect to this Plan shall not be and shall not be deemed to be an admission or waiver of any rights of the Debtor, the Plan Sponsor under the Alternative Plan Sponsor Agreement, the Plan Sponsor under the Original Plan Sponsor Agreement, the Credit Facility Agent, the Credit Facility Lenders or any other Person with respect to Claims against and Interests in the Debtor.

 

39

 

	
Dated:   April 25, 2018
    	
Respectfully   submitted,
    
	
Wilmington,   Delaware
    	
 
    
	
 
    	
HCR   ManorCare, Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   John R. Castellano
    
	
 
    	
John R.   Castellano
    
	
 
    	
Chief   Restructuring Officer
    
	
 
    	
 
    
	
 
    	
SIDLEY AUSTIN   LLP
    
	
 
    	
Larry J. Nyhan
    
	
 
    	
Dennis M. Twomey
    
	
 
    	
William A.   Evanoff
    
	
 
    	
Allison Ross   Stromberg
    
	
 
    	
Matthew E.   Linder
    
	
 
    	
One South   Dearborn Street
    
	
 
    	
Chicago, Illinois   60603
    
	
 
    	
Telephone: (312)   853-7000
    
	
 
    	
Facsimile: (312)   853-7036
    
	
 
    	
 
    
	
 
    	
-and-
    
	
 
    	
 
    
	
 
    	
YOUNG CONAWAY   STARGATT & TAYLOR, LLP
    
	
 
    	
Robert S. Brady   (No. 2847)
    
	
 
    	
Edmon L. Morton   (No. 3856)
    
	
 
    	
Justin H. Rucki   (No. 5304)
    
	
 
    	
Tara C. Pakrouh   (No. 6192)
    
	
 
    	
Rodney Square
    
	
 
    	
1000 North King   Street
    
	
 
    	
Wilmington,   Delaware 19801
    
	
 
    	
Telephone: (302)   571-6600
    
	
 
    	
Facsimile: (302)   571-1253
    
	
 
    	
 
    
	
 
    	
Attorneys   for the Debtor and Debtor in Possession
    

 

 

Exhibit A

 

Alternative Master Lease Term Sheet

 

 

Exhibit B

 

Alternative Plan Sponsor Agreement

 

 

Exhibit C

 

Original Master Lease Amendment

 

 

Exhibit D

 

Original Plan Sponsor Agreement

 

 

Exhibit E

 

Directors and Officers of Reorganized Debtor — Alternative Transaction

 

 

Exhibit F

 

Directors and Officers of Reorganized Debtor — Original Transaction

 

 

Exhibit G

 

Certificate of Incorporation of Reorganized Debtor — Original Transaction

 

 

Exhibit H

 

By-Laws of Reorganized Debtor — Original Transaction

 

 

EXHIBIT B

 

Joinder Agreement

 

This Joinder Agreement to the Restructuring Support Agreement, dated as of [·], 2018, by and among (a) HCR Manorcare, Inc. (the “Debtor”), (b) MC Operations Investments, LLC (the “QCP Holder”) and (c) Carlyle MC Partners, L.P., a Delaware limited partnership, Carlyle Partners V-A MC, L.P., a Delaware limited partnership, Carlyle Partners V MC, L.P., a Delaware limited partnership, CP V Coinvestment A, L.P., a Delaware limited partnership, and CP V Coinvestment B, L.P., a Delaware limited partnership (collectively, the “Majority Holders”) (as set forth in Annex I hereto, the “Restructuring Support Agreement”), is executed and delivered by [                                      ] (the “Joining Supporting Party”) as of [                                   ], 2018. Each capitalized term used herein but not otherwise defined shall have the meanings set forth in the Restructuring Support Agreement.

 

1.              Agreement to be Bound. The Joining Supporting Party hereby agrees to be bound by all of the terms of the Restructuring Support Agreement (as the same may be hereafter amended, restated or otherwise modified from time to time), including, without limitation, the covenants set forth in Section 2 of the Restructuring Support Agreement. The Joining Supporting Party shall hereafter be deemed to be a “Supporting Party” and a Party for all purposes under the Restructuring Support Agreement.

 

2.              Representations and Warranties. With respect to the aggregate principal amount of shares held by the Joining Supporting Party upon consummation of the Transfer of such shares, the Joining Supporting Party hereby makes the representations and warranties of the Supporting Parties set forth in Section 1 of the Restructuring Support Agreement to each of the other Parties.

 

3.              Governing Law. This Joinder Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware, without regard to any conflicts of law provisions which would require the application of the law of any other jurisdiction.

 

* * * * *

 

[SIGNATURE PAGE FOLLOWS]

 

 

IN WITNESS WHEREOF, the Joining Supporting Party has caused this Joinder Agreement to be executed as of the date first written above.

 

	
SUPPORTING   PARTY
    
	
 
    
	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    
	
 
    
	
Notice   Address and E-mail:
    
	
 
    
	
 
    
	
 
    
	
                                                @
    

 

 

Annex 1 to Joinder Agreement

 

Restructuring Support Agreementofix-ex101_22.htm

Exhibit 10.1

 

ORTHOFIX INTERNATIONAL N.V.

INDUCEMENT PLAN FOR SPINAL KINETICS EMPLOYEES

 

	
1.
	
PURPOSE

The purpose of the Plan is to enable the Company to award Options and shares of Restricted Stock to persons employed by Spinal Kinetics, Inc. and its Subsidiaries (collectively, “Spinal Kinetics”) in connection with the proposed indirect purchase by the Company of all of the outstanding shares of Spinal Kinetics (the “Transaction”), in each case as an inducement material to the individual’s entering into and continuing employment with the Company or its current or future Subsidiaries upon consummation of the Transaction and to promote the success of the business of the Company and its current or future Subsidiaries.  The Plan is intended to comply with Section 5635(c)(4) and IM-5635-1 of the NASDAQ Stock Market listing requirements, which provide an exception to the shareholder approval requirement for the issuance of securities with regard to grants to prospective employees of the Company, including without limitation grants to new employees in connection with a merger or other acquisition.

	
2.
	
DEFINITIONS

For purposes of interpreting the Plan and related documents (including Award Agreements), the following definitions shall apply, unless the context clearly indicates otherwise:

2.1“Affiliate” means any company or other trade or business that controls, is controlled by or is under common control with the Company within the meaning of Rule 405 of Regulation C under the Securities Act, including any Subsidiary. For purposes of grants of Options, an entity may not be considered an Affiliate unless the Company holds a “controlling interest” in such entity within the meaning of Treasury Regulation Section 1.414(c)-2(b)(2)(i), provided, that (a) except as specified in clause (b) below, an interest of “at least 50 percent” shall be used instead of an interest of “at least 80 percent” in each case where “at least 80 percent” appears in Treasury Regulation Section 1.414(c)-2(b)(2)(i) and (b) where the grant of Options is based upon a legitimate business criterion, an interest of “at least 20 percent” shall be used instead of an interest of “at least 80 percent” in each case where “at least 80 percent” appears in Treasury Regulation Section 1.414(c)-2(b)(2)(i).

2.2“Applicable Laws” means the legal requirements relating to the Plan and the Awards under (a) applicable provisions of the Code, the Securities Act, the Exchange Act, any rules or regulations thereunder, and any other laws, rules, regulations, and government orders of any jurisdiction applicable to the Company or its Affiliates, (b) applicable provisions of the corporate, securities, tax, and other laws, rules, regulations, and government orders of any jurisdiction applicable to Awards granted to residents thereof, and (c) the rules of any Stock Exchange or Securities Market on which the Stock is listed.

2.3“Award” means, individually or collectively, a grant under the Plan of an Option or a share of Restricted Stock.

2.4“Award Agreement” means the agreement, in such paper, electronic or other form as determined by the Committee, between the Company and a Grantee that evidences and sets out the terms and conditions of an Award.

2.5“Benefit Arrangement” shall have the meaning set forth in Section 11.

2.6“Board” means the Board of Directors of the Company.

2.7“Cause” shall have the meaning set forth in the applicable agreement between the Grantee and the Company or an Affiliate, and in the absence of such agreement, means, as determined by the Committee, (i) gross negligence or willful misconduct in connection with the performance of duties; (ii) conviction of a criminal offense (other than minor traffic offenses); or (iii) material breach of any term of any employment, consulting or other services, confidentiality, intellectual property or non-competition agreements, if any, between the Service Provider and the Company or an Affiliate.  Any determination by the Committee regarding whether an event constituting Cause shall have occurred shall be finding, binding and conclusive.

2.8“Code” means the Internal Revenue Code of 1986, as amended, as now in effect or as hereafter amended, and any successor thereto.  References in the Plan to any Code Section shall be deemed to include, as applicable, regulations and guidance promulgated under such Code Section.

2.9“Committee” means a committee of, and designated from time to time by resolution of, the Board, which shall be constituted as provided in Section 3.1 (or, if no Committee has been so designated, the entire Board itself).

2.10“Company” means Orthofix International N.V. and any successor thereto.

2.11“Corporate Transaction” means, subject to Section 14.10, (a) a “Person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of more than fifty percent (50%) of the total voting power of all classes of stock of the Company; (b) individuals who on the Effective Date constitute the Board (together with any new Directors whose election by such Board or whose nomination by such Board for election by the shareholders of the Company was approved by a vote of at least a majority of the members of such Board then in office who either were members of such Board on the Effective Date or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the members of such Board then in office; (c) the Company consummates a transaction with, or merger with or into, any Person, or any Person consummates a transaction with, or merger with or into, the Company, other than any such transaction in which the holders of securities that represented one hundred percent (100%) of the voting stock of the Company immediately prior to such transaction (or other securities into which such securities are converted as part of such merger or consolidation transaction) own directly or indirectly at least a majority of the voting power of the surviving Person in such merger or consolidation transaction immediately after such transaction; (d) there is consummated any direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one transaction or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to any “Person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act); or (e) the shareholders of the Company adopt a plan or proposal for the liquidation, winding up or dissolution of the Company.  The Board shall have full and final authority, in its sole discretion, to determine conclusively whether a Corporate Transaction has occurred pursuant to the above definition, the date of the occurrence of such Corporate Transaction, and any incidental matters relating thereto.  For the avoidance of doubt, the Transaction shall not constitute a Corporate Transaction.

2.12“Disability” means the Grantee is unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.

2.13“Exchange Act” means the Securities Exchange Act of 1934, as amended, as now in effect or as hereafter amended.

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2.14“Fair Market Value” means the fair market value of a share of Stock for purposes of the Plan, which shall be determined as follows, subject to Section 14.3:

(a)If on the Grant Date or other determination date the shares of Stock are listed on an established national or regional stock exchange (a “Stock Exchange”), or are publicly traded on an established securities market (a “Securities Market”), the Fair Market Value of a share of Stock shall be the closing price of the Stock as reported on such Stock Exchange or Securities Market (provided that if there is more than one such Stock Exchange or Securities Market, the Committee shall designate the appropriate Stock Exchange or Securities Market for purposes of the Fair Market Value determination) on the Grant Date or other determination date. If there is no such reported closing price on such date, the Fair Market Value of a share of Stock shall be, as determined by the Committee, the mean between (i) the highest bid price and the lowest asked price of the Stock as reported on such Stock Exchange or such Securities Market on such date or (ii) the high and low sale prices of the Stock as reported on such Stock Exchange or such Securities Market on such date, or if no sale of Stock shall have been so reported for such date, on the immediately preceding day on which any sale of Stock shall have been reported on such Stock Exchange or Securities Market.

(b)If on such Grant Date or other determination date the shares of Stock are not listed on a Stock Exchange or publicly traded on a Securities Market, the Fair Market Value of a share of Stock shall be the value of the Stock as determined by the Committee by the reasonable application of a reasonable valuation method, in a manner consistent with Code Section 409A.

2.15“Family Member” means, with respect to any Grantee as of any date of determination, (a) a person who is a spouse, former spouse, child, stepchild, grandchild, parent, stepparent, grandparent, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law, including adoptive relationships, of such Grantee, (b) any person sharing such Grantee’s household (other than a tenant or employee), (c) a trust in which any one or more of the persons specified in clauses (a) and (b) above (and such Grantee) own more than fifty percent (50%) of the beneficial interest, (d) a foundation in which any one or more of the persons specified in clauses (a) and (b) above (and such Grantee) control the management of assets, and (e) any other entity in which one or more of the persons specified in clauses (a) and (b) above (and such Grantee) own more than fifty percent (50%) of the voting interests.

2.16“Grant Date” means, as determined by the Committee, the later to occur of (a) the date as of which the Company completes the corporate action constituting the Award, or (b) such date subsequent to the date specified in clause (a) as may be specified by the Committee.

2.17“Grantee” means a person who receives or holds an Award under the Plan.

2.18“Option” means an option to purchase one or more shares of Stock at a specified Option Price pursuant to Section 8.  No Options granted under the Plan are intended to be incentive stock options under Code Section 422.

2.19“Option Price” means the exercise price for each share of Stock subject to an Option.

2.20“Other Agreement” shall have the meaning set forth in Section 11.

2.21“Outside Director” means a member of the Board who is not an officer or employee of the Company or any Subsidiary.

2.22“Parachute Payment” shall have the meaning set forth in Section 11.

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2.23“Plan” means this Orthofix International N.V. Inducement Plan for Spinal Kinetics Employees, as it may be further amended from time to time.

2.24“Purchase Price” means the purchase price, if any, for each share of Stock subject to an Award of Restricted Stock.

2.25“Restricted Stock” means shares of Stock awarded to a Grantee pursuant to Section 9.

2.26“Securities Act” means the Securities Act of 1933, as amended, as now in effect or as hereafter amended.

2.27“Service” means service of a Grantee as a Service Provider to the Company or any Affiliate.  Unless otherwise provided in the applicable Award Agreement, a Grantee’s change in position or duties with the Company or any Affiliate shall not result in interrupted or terminated Service, so long as the Grantee continues to be a Service Provider to the Company or any Affiliate.  If a Service Provider’s employment or other Service relationship is with an Affiliate and the applicable entity ceases to be an Affiliate, a termination of Service shall be deemed to have occurred when such entity ceases to be an Affiliate unless the Service Provider transfers his or her employment or other Service relationship to the Company or any other Affiliate.  Any determination by the Committee whether a termination of Service shall have occurred for purposes of the Plan shall be final, binding and conclusive.

2.28“Service Provider” means, as of any date of determination, (a) an employee, officer, or director of the Company or an Affiliate, or (b) a consultant (who is a natural person) or adviser (who is a natural person) of the Company or any Affiliate who provides bona fide services to the Company or any Affiliate and whose services are not in connection with the Company’s sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s stock.

2.29“Share Limit” shall have the meaning set forth in Section 4.1. 

2.30“Stock” means the common stock, par value $0.01 per share, of the Company, or any security for which the shares of Stock may be exchanged or into which the shares of Stock may be converted.

2.31“Subsidiary” means any corporation (other than the Company) or non-corporate entity with respect to which the Company and Subsidiaries collectively own, directly or indirectly, fifty percent (50%) or more of the total combined voting power of all classes of stock, membership interests or other ownership interests of any class or kind ordinarily having the power to vote for the directors, managers or other voting members of the governing body of such corporation or non-corporate entity. In addition, any other entity may be designated by the Committee as a Subsidiary, provided that (a) such entity could be considered as a subsidiary according to generally accepted accounting principles in the United States of America and (b) in the case of an Award of Options, such Award would be considered to be granted in respect of “service recipient stock” under Code Section 409A.

Unless the context otherwise requires, all references in the Plan to “including” shall mean “including without limitation.”

	
3.
	
ADMINISTRATION OF THE PLAN

3.1Committee.

(a)The Committee shall administer the Plan and shall have such powers and authorities related to the administration of the Plan as are consistent with the Company’s articles of 

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incorporation and bylaws and Applicable Laws. Without limiting the generality of the foregoing, the Committee shall have full power and authority to take all actions and to make all determinations required or provided for under the Plan, any Award or any Award Agreement, and shall have full power and authority to take all such other actions and make all such other determinations not inconsistent with the specific terms and provisions of the Plan which the Committee deems to be necessary or appropriate to the administration of the Plan, any Award or any Award Agreement. All such actions and determinations shall be made by (i) the affirmative vote of a majority of the members of the Committee present at a meeting at which a quorum is present, or (ii) the unanimous consent of the members of the Committee executed in writing or evidenced by electronic transmission in accordance with the Company’s articles of incorporation and bylaws and Applicable Laws. Unless otherwise expressly determined by the Board, the interpretation and construction by the Committee of any provision of the Plan, any Award or any Award Agreement shall be final, binding and conclusive whether or not expressly provided for in any provision of the Plan, such Award or such Award Agreement.

(b)In the event that the Plan, any Award or any Award Agreement provides for any action to be taken by or any determination to be made by the Board, such action may be taken or such determination may be made by the Committee or another committee constituted in accordance with this Section 3.1 if the Board has delegated the power and authority to do so to the Committee or such other committee pursuant to this Section 3.1. Unless otherwise expressly determined by the Board, any such action or determination by the Committee or other committee shall be final, binding and conclusive whether or not expressly provided for in any provision of the Plan, such Award or such Award Agreement.

(c)Except as provided in Section 3.2 and except as the Board may otherwise determine, the Committee shall consist of two or more Outside Directors of the Company who: (a) meet such requirements as may be established from time to time by the Securities and Exchange Commission for plans intended to qualify for exemption under Rule 16b-3 (or its successor) under the Exchange Act, and (b) comply with the independence requirements of the Stock Exchange or Securities Market on which the Stock is listed or publicly traded; provided, that any action taken by the Committee shall be valid and effective whether or not members of the Committee at the time of such action are later determined not to have satisfied the requirements for membership set forth in this Section 3.1 or otherwise provided in any charter of the Committee.  Without limiting the generality of the foregoing, the Committee may be the Compensation Committee of the Board or a subcommittee thereof if the Compensation Committee of the Board or such subcommittee satisfies the foregoing requirements.  

(d)The Board may also appoint one or more committees of the Board, each composed of one or more directors of the Company who need not be Outside Directors, who may administer the Plan with respect to employees or other Service Providers who are not “executive officers” as defined in Rule 3b-7 under the Exchange Act or directors of the Company and may determine all terms of such Awards, subject to the requirements of Rule 16b-3 under the Exchange Act and any Stock Exchange or Securities Market on which the Stock is listed or publicly traded. Any reference to “Committee” in the Plan, any Award or any Award Agreement shall be deemed, as applicable, to refer to any committee appointed by the Board pursuant to this Section 3.1.

3.2Board.

The Board from time to time may exercise any or all of the powers and authorities related to the administration and implementation of the Plan, as set forth in Section 3.1 and other applicable provisions of the Plan, as the Board shall determine, consistent with the Company’s articles of incorporation and bylaws and Applicable Laws.

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3.3Terms of Awards.

Subject to the other terms and conditions of the Plan, the Committee shall have full and final authority to:

(a)designate Grantees;

(b)determine the type or types of Awards to be made to a Grantee;

(c)determine the value or number of shares of Stock to be subject to an Award;

(d)establish the terms and conditions of each Award (including the Option Price of any Option and the Purchase Price of shares of Restricted Stock, the nature and duration of any restriction or condition (or provision for lapse thereof) relating to the vesting, exercise, transfer, or forfeiture of an Award or the shares of Stock subject thereto, and the treatment of an Award in the event of a Corporate Transaction (subject to applicable agreements));

(e)prescribe the form of each Award Agreement evidencing an Award; and

(f)amend, modify, reprice (except as such practice is prohibited by Section 3.5 herein), or supplement the terms of any outstanding Award, which authority shall include the authority, in order to effectuate the purposes of the Plan but without amending the Plan, to make Awards or to modify outstanding Awards made to eligible natural persons who are foreign nationals or are natural persons who are employed outside the United States to reflect differences in local law, tax policy, or custom, provided that, notwithstanding the foregoing, no amendment, modification or supplement of the terms of any outstanding Award shall, without the consent of the Grantee thereof, materially impair the Grantee’s rights under such Award.

3.4Forfeiture; Recoupment

.

(a)The Committee may reserve the right in an Award Agreement to cause a forfeiture of the gain realized by a Grantee with respect to an Award thereunder on account of actions taken by, or failed to be taken by, such Grantee in violation or breach of, or in conflict with, any (i) employment agreement, (ii) non-competition agreement, (iii) agreement prohibiting solicitation of Employees or clients of the Company or an Affiliate, (iv) confidentiality obligation with respect to the Company or an Affiliate, (v) Company or Affiliate policy or procedure, (vi) other agreement, or (vii) other obligation of such Grantee to the Company or an Affiliate, as and to the extent specified in such Award Agreement.  If the Grantee of an outstanding Award is an employee of the Company or an Affiliate and such Grantee’s Service is terminated for Cause, the Committee may annul such Grantee’s outstanding Award as of the date of the Grantee’s termination of Service for Cause.

(b)Any Award granted pursuant to the Plan, to the extent provided in any Award Agreement relating thereto, shall be subject to mandatory repayment by the Grantee of such Award to the Company to the extent that such Grantee is or in the future becomes subject to (i) any Company or Affiliate “clawback” or recoupment policy or (ii) any Applicable Laws, in each case that require the repayment by such Grantee to the Company or Affiliate of compensation paid to such Grantee by the Company or an Affiliate in the event that such Grantee fails to comply with, or violates, the terms or requirements of such policy. 

(c)If the Company is required to prepare an accounting restatement due to the material noncompliance by the Company, as a result of misconduct, with any financial reporting requirement under 

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the federal securities laws, any Grantee of an Award under such Award Agreement who knowingly engaged in such misconduct, was grossly negligent in engaging in such misconduct, knowingly failed to prevent such misconduct or was grossly negligent in failing to prevent such misconduct, shall reimburse the Company the amount of any payment in settlement of such Award earned or accrued during the period of twelve (12) months following the first public issuance or filing with the United States Securities and Exchange Commission (whichever first occurred) of the financial document that contained information affected by such material noncompliance.

(d)Notwithstanding any other provision of the Plan or any provision of any Award Agreement, if the Company is required to prepare an accounting restatement, then Grantees shall forfeit any cash or Stock received in connection with an Award (or an amount equal to the Fair Market Value of such Stock on the date of delivery thereof to the Grantee if the Grantee no longer holds the shares of Stock) if pursuant to the terms of the Award Agreement for such Award, the amount of the Award earned or the vesting in the Award was expressly based on the achievement of pre-established performance goals set forth in the Award Agreement (including earnings, gains, or other performance goals) that are later determined, as a result of the accounting restatement, not to have been achieved.

3.5No Repricing.

Notwithstanding anything in the Plan to the contrary, except in connection with a Corporate Transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the Company may not (a) amend the terms of outstanding Options to reduce the Option Price of such outstanding Options; (b) cancel or assume outstanding Options in exchange for or substitution of Options with an Option Price that is less than the Option Price of the original Options; or (c) cancel or assume outstanding Options with an Option Price above the current Fair Market Value in exchange for cash, Awards, or other securities, in each case, unless such action (i) is subject to and approved by the Company’s shareholders, or (ii) is an appropriate adjustment pursuant Section 13.

3.6Deferral Arrangement.

The Committee may permit or require the deferral of any payment pursuant to any Award into a deferred compensation arrangement, subject to such rules and procedures as it may establish, which may include provisions for the payment or crediting of interest or dividend equivalent rights and, in connection therewith, provisions for converting such credits into deferred Stock equivalents and for restricting deferrals to comply with hardship distribution rules affecting tax-qualified retirement plans subject to Code Section 401(k)(2)(B)(IV), provided that no dividend equivalent rights may be granted in connection with, or related to, an Award of Options. Any such deferrals shall be made in a manner that complies with Code Section 409A.

3.7No Liability.

No member of the Board or the Committee shall be liable for any action or determination made in good faith with respect to the Plan, any Award, or any Award Agreement.  Notwithstanding any provision of the Plan to the contrary, neither the Company, an Affiliate, the Board, the Committee, nor any person acting on behalf of the Company, an Affiliate, the Board, or the Committee will be liable to any Grantee or to the estate or beneficiary of any Grantee or to any other holder of an Award under the Plan by reason of any acceleration of income, or any additional tax (including any interest and penalties), asserted by reason of the failure of an Award to satisfy the requirements of Code Section 422 or Code Section 409A or by reason of Code Section 4999, or otherwise asserted with respect to the Award; provided, that this Section 

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3.7 shall not affect any of the rights or obligations set forth in an applicable agreement between the Grantee and the Company or an Affiliate.

3.8Stock Issuance; Book-Entry.

Notwithstanding any provision of the Plan to the contrary, the ownership of the shares of Stock issued under the Plan may be evidenced in such a manner as the Committee, in its discretion, deems appropriate, including by book-entry or direct registration or by the issuance of one or more stock certificates.

	
4.
	
STOCK SUBJECT TO THE PLAN

4.1Number of Shares of Stock Available for Awards.

Subject to adjustment pursuant to Section 13, the maximum number of shares of Stock reserved for issuance under the Plan shall be equal to 51,705 shares (the “Share Limit”).  Any of the shares of Stock reserved and available for issuance under the Plan may be used for any type of Award under the Plan.  Shares of Stock to be issued under the Plan shall be authorized but unissued shares, or, to the extent permitted by Applicable Laws, shares of treasury stock and issued shares that have been reacquired by the Company.

4.2Share Usage.

(a)Shares of Stock subject to an Award shall be counted against the Share Limit as used as of the Grant Date.

(b)Any shares of Stock that are subject to Awards shall be counted against the Share Limit as one (1) share of Stock for every one (1) share of Stock subject to such Award.  

(c)The number of shares of Stock available for issuance under the Plan shall not be increased by the number of shares of Stock (i) tendered or withheld or subject to an Award surrendered in connection with the purchase of shares of Stock upon exercise of an Option, (ii) that were not issued upon the net settlement or net exercise of an Option granted under the Plan, (iii) deducted or delivered from payment of an Award in connection with the Company’s tax withholding obligations as provided in Section 14.3 or (iv) purchased by the Company with proceeds from Option exercises.

	
5.
	
EFFECTIVE DATE, DURATION AND AMENDMENTS

5.1Effective Date.

The Plan was adopted by the Board and became effective as of April 30, 2018 (the “Effective Date”), as of immediately prior to the consummation of the Transaction.

5.2Term.

The Plan shall terminate automatically on the first to occur of (a) the day before the tenth (10th) anniversary of the Effective Date, (b) the date determined in accordance with Section 5.3, and (c) the date determined in accordance with Section 13.3.  Upon such termination of the Plan, all outstanding Awards shall continue to have full force and effect in accordance with the provisions of the terminated Plan and the applicable Award Agreement (or other documents evidencing such Awards).

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5.3Amendment, Suspension and Termination.

The Board may, at any time and from time to time, amend, suspend or terminate the Plan or any Award Agreement, provided, that with respect to Awards theretofore granted under the Plan, no amendment, suspension, or termination of the Plan or any Award Agreement shall, without the consent of the Grantee, materially impair the Grantee’s rights under any such Award.  The effectiveness of any amendment to the Plan shall be contingent on approval of such amendment by the Company’s shareholders to the extent provided by the Board or required by Applicable Laws (including the rules of any Stock Exchange or Securities Market on which the Stock is then listed or publicly traded), provided that no amendment shall be made to the no-repricing provisions of Section 3.5 or the Option Price provisions of Section 8.1 without the approval of the Company’s shareholders. 

	
6.
	
AWARD ELIGIBILITY 

Only persons who are officers or employees (within the meaning of Section 5635(c) of the NASDAQ Stock Market listing requirements) of Spinal Kinetics immediately prior to consummation of the Transaction shall be eligible for selection by the Committee for the grant of Awards hereunder, which shall be granted as an inducement material to each such individual’s entering into employment with the Company or one of its Subsidiaries upon consummation of the Transaction.  Awards shall not become effective until consummation of the Transaction and the Grantee’s commencement of employment with the Company or one of its Subsidiaries.  No Award shall be granted hereunder to any person who is an officer or employee of, or who is rendering services to, the Company or any of its Subsidiaries immediately prior to the Transaction.

	
7.
	
AWARD AGREEMENT

Each Award granted pursuant to the Plan shall be evidenced by an Award Agreement, which shall be in such form or forms as the Committee shall from time to time determine. Award Agreements employed under the Plan from time to time or at the same time need not contain similar provisions but shall be consistent with the terms of the Plan. In the event of any inconsistency between the Plan and an Award Agreement, the provisions of the Plan shall control.

	
8.
	
TERMS AND CONDITIONS OF OPTIONS

8.1Option Price.

The Option Price of each Option shall be fixed by the Committee and stated in the Award Agreement evidencing such Option. The Option Price of each Option shall be at least the Fair Market Value of a share of Stock on the Grant Date. In no case shall the Option Price of any Option be less than the par value of a share of Stock.

8.2Vesting and Exercisability.

Subject to Sections 8.3 and 13.3, each Option granted under the Plan shall become exercisable at such times and under such conditions as shall be determined by the Committee and stated in the Award Agreement; provided, that no Option shall be granted to Grantees who are entitled to overtime under Applicable Laws that will vest or be exercisable within a six (6)-month period starting on the Grant Date. For purposes of this Section 8.2, fractional numbers of shares of Stock subject to an Option shall be rounded down to the next nearest whole number.

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8.3Term.

Each Option granted under the Plan shall terminate, and all rights to purchase shares of Stock thereunder shall cease, on the day before the tenth (10th) anniversary of the Grant Date of such Option, or under such circumstances and on such date prior thereto as is set forth in the Plan or as may be fixed by the Committee and stated in the Award Agreement relating to such Option; provided, that to the extent deemed necessary or appropriate by the Committee to reflect differences in local law, tax policy or custom with respect to any Option granted to a Grantee who is a foreign national or is a natural person who is employed outside the United States, such Option may terminate, and all rights to purchase shares of Stock thereunder may cease, upon the expiration of a period longer than ten (10) years from the Grant Date of such Option as the Committee shall determine. 

8.4Termination of Service.

Each Award Agreement with respect to the grant of an Option shall set forth the extent to which the Grantee thereof, if at all, shall have the right to exercise such Option following termination of such Grantee’s Service. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service.

8.5Limitations on Exercise of Option.

Notwithstanding any other provision of the Plan, in no event may any Option be exercised, in whole or in part, after the occurrence of an event referred to in Section 13 which results in the termination of such Option.

8.6Method of Exercise.

Subject to the terms of Sections 10 and 14.3, an Option that is exercisable may be exercised by the Grantee’s delivery to the Company or its designee or agent of notice of exercise on any business day, at the Company’s principal office or the office of such designee or agent, on the form specified by the Company and in accordance with any additional procedures specified by the Committee. Such notice shall specify the number of shares of Stock with respect to which such Option is being exercised and shall be accompanied by payment in full of the Option Price of the shares of Stock for which such Option is being exercised, plus the amount (if any) of federal and/or other taxes which the Company may, in its judgment, be required to withhold with respect to the exercise of such Option.

8.7Rights of Holders of Options.

A Grantee or other person holding or exercising an Option shall have none of the rights of a shareholder of the Company (for example, the right to receive cash or dividend payments or distributions attributable to the shares of Stock subject to such Option, to direct the voting of the shares of Stock subject to such Option, or to receive notice of any meeting of the Company’s shareholders) until the shares of Stock subject thereto are fully paid and issued to such Grantee or other person. Except as provided in Section 13, no adjustment shall be made for dividends, distributions or other rights with respect to any shares of Stock subject to an Option for which the record date is prior to the date of issuance of such shares of Stock.

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8.8Delivery of Stock.

Promptly after the exercise of an Option by a Grantee and the payment in full of the Option Price with respect thereto, such Grantee shall be entitled to receive such evidence of such Grantee’s ownership of the shares of Stock subject to such Option as shall be consistent with Section 3.8.

8.9Transferability of Options.

Except as provided in Section 8.10, during the lifetime of a Grantee of an Option, only such Grantee (or, in the event of such Grantee’s legal incapacity or incompetency, such Grantee’s guardian or legal representative) may exercise such Option.  Except as provided in Section 8.10, no Option shall be assignable or transferable by the Grantee to whom it is granted, other than by will or the laws of descent and distribution.

8.10Family Transfers.

If authorized in the applicable Award Agreement and by the Committee, in its sole discretion, a Grantee may transfer, not for value, all or part of an Option to any Family Member. For the purpose of this Section 8.10, a transfer “not for value” is a transfer which is (a) a gift, (b) a transfer under a domestic relations order in settlement of marital property rights, or (c) unless Applicable Laws do not permit such transfer, a transfer to an entity in which more than fifty percent (50%) of the voting interests are owned by Family Members (and/or the Grantee) in exchange for an interest in such entity. Following a transfer under this Section 8.10, any such Option shall continue to be subject to the same terms and conditions as were applicable immediately prior to such transfer, and the shares of Stock acquired pursuant to such Option shall be subject to the same restrictions with respect to transfers of shares as would have applied to the Grantee thereof. Subsequent transfers of transferred Options shall be prohibited except to Family Members of the original Grantee in accordance with this Section 8.10 or by will or the laws of descent and distribution. The provisions of Section 8.4 relating to termination of Service shall continue to be applied with respect to the original Grantee of the Option, following which such Option shall be exercisable by the transferee only to the extent, and for the periods specified, in Section 8.4.

	
9.
	
TERMS AND CONDITIONS OF RESTRICTED STOCK 

9.1Grant of Restricted Stock.

Awards of Restricted Stock may be made for consideration or for no consideration (other than the par value of the shares of Stock, which shall be deemed paid by past or future Services by the Grantee to the Company or an Affiliate).

9.2Restrictions.

Subject to Section 13.3, at the time a grant of Restricted Stock is made, the Committee may, in its sole discretion, (a) establish a period of time (a “restricted period”) applicable to such Restricted Stock and (b) prescribe restrictions in addition to or other than the expiration of the restricted period.  Awards of Restricted Stock may not be sold, transferred, assigned, pledged or otherwise encumbered or disposed of during the restricted period or prior to the satisfaction of any other restrictions prescribed by the Committee with respect to such Awards.

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9.3Restricted Stock Certificates; Book-Entry Registration.

Subject to Section 3.8 and the immediately following sentence, the Company may issue, in the name of each Grantee to whom Restricted Stock has been granted, stock certificates representing the total number of shares of Restricted Stock granted to the Grantee, as soon as reasonably practicable after the Grant Date of such Restricted Stock. The Committee may provide in an Award Agreement that either (a) the Secretary of the Company shall hold such certificates for such Grantee’s benefit until such time as such shares of Restricted Stock are forfeited to the Company or the restrictions applicable thereto lapse and such Grantee shall deliver a stock power to the Company with respect to each certificate, or (b) such certificates shall be delivered to such Grantee, provided, that such certificates shall bear legends that comply with applicable securities laws and regulations and make appropriate reference to the restrictions imposed on such Award of Restricted Stock under the Plan and such Award Agreement.  Pursuant to Section 3.8, to the extent Restricted Stock is represented by a book-entry, such book entry shall be notated to evidence the restrictions imposed on such Award of Restricted Stock under the Plan and the applicable Award Agreement.

9.4Rights of Holders of Restricted Stock.

Holders of Restricted Stock shall have the right to vote such shares of Restricted Stock and the right to receive any dividends declared or paid with respect to such shares of Restricted Stock.  Notwithstanding the foregoing, cash dividends declared or paid on shares of Restricted Stock (i) shall not be paid currently but instead shall be accrued, (ii) shall be subject to the same vesting conditions and restrictions applicable to such underlying shares of Restricted Stock, and (iii) shall not vest or become payable unless and until the shares of Restricted Stock to which the dividends apply become vested and nonforfeitable.  All stock distributions, if any, received by a Grantee with respect to Restricted Stock as a result of any stock split, stock dividend, combination of stock, or other similar transaction shall be subject to the same vesting conditions and restrictions applicable to such underlying shares of Restricted Stock.

9.5Termination of Service.

Unless the Committee provides otherwise in an Award Agreement or in writing after such Award Agreement is issued, but prior to termination of Grantee’s Service, upon the termination of such Grantee’s Service, any shares of Restricted Stock held by such Grantee that have not vested, or with respect to which all applicable restrictions and conditions have not lapsed, shall immediately be deemed forfeited. Upon forfeiture of such Restricted Stock, the Grantee thereof shall have no further rights with respect thereto, including any right to vote such Restricted Stock or any right to receive dividends with respect to such Restricted Stock. 

9.6Purchase of Restricted Stock.

The Grantee shall be required, to the extent required by Applicable Laws, to purchase the Restricted Stock from the Company at a Purchase Price equal to the greater of (a) the aggregate par value of the shares of Stock represented by such Restricted Stock or (b) the Purchase Price, if any, specified in the Award Agreement relating to such Restricted Stock.  The Purchase Price shall be payable in a form provided in Section 10 or, in the sole discretion of the Committee, in consideration for past or future Services rendered to the Company or an Affiliate.

9.7Delivery of Shares of Stock.

Upon the expiration or termination of any restricted period and the satisfaction of any other conditions prescribed by the Committee, the restrictions applicable to Restricted Stock shall lapse, and, 

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unless otherwise provided in the applicable Award Agreement, a book-entry or direct registration or a stock certificate evidencing ownership of such shares of Stock shall, consistent with Section 3.8, be issued, free of all such restrictions, to the Grantee thereof or such Grantee’s beneficiary or estate, as the case may be. 

	
10.
	
FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK

10.1General Rule.

Payment of the Option Price for the shares of Stock purchased pursuant to the exercise of an Option or the Purchase Price for Restricted Stock shall be made in cash or in cash equivalents acceptable to the Company.

10.2Surrender of Shares of Stock.

To the extent that the applicable Award Agreement so provides, payment of the Option Price for shares of Stock purchased pursuant to the exercise of an Option or the Purchase Price for Restricted Stock may be made all or in part through the tender or attestation to the Company of shares of Stock, which shall be valued, for purposes of determining the extent to which such Option Price or Purchase Price has been paid thereby, at their Fair Market Value on the date of such tender or attestation.

10.3Cashless Exercise.

With respect to an Option only (and not with respect to Restricted Stock), to the extent permitted by Applicable Laws and to the extent the Award Agreement so provides, payment of the Option Price for shares of Stock purchased pursuant to the exercise of an Option may be made all or in part by delivery (on a form acceptable to the Committee) of an irrevocable direction to a licensed securities broker acceptable to the Company to sell shares of Stock and to deliver all or part of the proceeds of such sale to the Company in payment of such Option Price and any withholding taxes described in Section 14.3.

10.4Other Forms of Payment.

To the extent the Award Agreement so provides and/or unless otherwise specified in an Award Agreement, payment of the Option Price for shares of Stock purchased pursuant to exercise of an Option or the Purchase Price for Restricted Stock may be made in any other form that is consistent with Applicable Laws, including (a) Service to the Company or an Affiliate and (b) net exercise, net settlement or share withholding.

	
11.
	
PARACHUTE LIMITATIONS

If any Grantee is a “disqualified individual,” as defined in Code Section 280G(c), then, notwithstanding any other provision of the Plan or of any other agreement, contract, or understanding heretofore or hereafter entered into by such Grantee with the Company or an Affiliate, except an agreement, contract, or understanding that expressly addresses Code Section 280G or Code Section 4999 (an “Other Agreement”), and notwithstanding any formal or informal plan or other arrangement for the direct or indirect provision of compensation to the Grantee (including groups or classes of Grantees or beneficiaries of which the Grantee is a member), whether or not such compensation is deferred, is in cash, or is in the form of a benefit to or for the Grantee (a “Benefit Arrangement”), any right of the Grantee to any exercise, vesting, payment or benefit under the Plan shall be reduced or eliminated:

(a)to the extent that such right to exercise, vesting, payment, or benefit, taking into account all other rights, payments, or benefits to or for the Grantee under the Plan, all Other Agreements, 

13

 

and all Benefit Arrangements, would cause any exercise, vesting, payment, or benefit to the Grantee under the Plan to be considered a “parachute payment” within the meaning of Code Section 280G(b)(2) as then in effect (a “Parachute Payment”); and

(b)if, as a result of receiving such Parachute Payment, the aggregate after-tax amounts received by the Grantee from the Company under the Plan, all Other Agreements, and all Benefit Arrangements would be less than the maximum after-tax amount that could be received by the Grantee without causing any such payment or benefit to be considered a Parachute Payment.

Except as required by Code Section 409A or to the extent that Code Section 409A permits discretion, the Committee shall have the right, in the Committee’s sole discretion, to designate those rights, payments, or benefits under the Plan, all Other Agreements, and all Benefit Arrangements that should be reduced or eliminated so as to avoid having such rights, payments, or benefits be considered a Parachute Payment; provided, however, to the extent any payment or benefit constitutes deferred compensation under Code Section 409A, in order to comply with Code Section 409A, the Company shall instead accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of Options, then by reducing or eliminating any accelerated vesting of Restricted Stock, then by reducing or eliminating any other remaining Parachute Payments.

	
12.
	
REQUIREMENTS OF LAW

12.1General.

The Company shall not be required to offer, sell or issue any shares of Stock under any Award, whether pursuant to the exercise of an Option or otherwise, if the offer, sale or issuance of such shares of Stock would constitute a violation by the Grantee, the Company or an Affiliate, or any other person of any provision of the Company’s articles of incorporation or bylaws or of Applicable Laws, including any federal or state securities laws or regulations. If at any time the Company shall determine, in its discretion, that the listing, registration or qualification of any shares of Stock subject to an Award upon any Stock Exchange or Securities Market or under any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the offering, issuance, sale or purchase of shares of Stock in connection with any Award, no shares of Stock may be offered, issued or sold to the Grantee or any other person under such Award, whether pursuant to the exercise of an Option or otherwise, unless such listing, registration or qualification shall have been effected or obtained free of any conditions not acceptable to the Company, and any delay caused thereby shall in no way affect the date of termination of such Award.  Without limiting the generality of the foregoing, upon the exercise of any Option or the delivery of any shares of Stock underlying an Award, unless a registration statement under the Securities Act is in effect with respect to the shares of Stock subject to such Award, the Company shall not be required to offer, sell or issue such shares of Stock unless the Committee shall have received evidence satisfactory to it that the Grantee or any other person exercising such Option or accepting delivery of such shares may acquire such shares of Stock pursuant to an exemption from registration under the Securities Act.  Any determination by the Committee in connection with the foregoing shall be final, binding, and conclusive.  The Company may register, but shall in no event be obligated to register, any shares of Stock or other securities issuable pursuant to the Plan pursuant to the Securities Act.  The Company shall not be obligated to take any affirmative action in order to cause the exercise of an Option or the issuance of shares of Stock or other securities issuable pursuant to the Plan or any Award to comply with any Applicable Laws. As to any jurisdiction that expressly imposes the requirement that an Option shall not be exercisable until the shares of Stock subject to such Option are registered under the securities laws thereof or are exempt from such registration, the exercise of such Option under circumstances in which the laws of such jurisdiction apply shall be deemed conditioned upon the effectiveness of such registration or the availability of such an exemption.

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12.2Rule 16b-3.

During any time when the Company has a class of equity security registered under Section 12 of the Exchange Act, it is the intention of the Company that Awards pursuant to the Plan and the exercise of Options granted hereunder that would otherwise be subject to Section 16(b) of the Exchange Act shall qualify for the exemption provided by Rule 16b-3 under the Exchange Act. To the extent that any provision of the Plan or action by the Committee does not comply with the requirements of such Rule 16b-3, such provision or action shall be deemed inoperative with respect to such Awards to the extent permitted by Applicable Laws and deemed advisable by the Committee, and shall not affect the validity of the Plan.  In the event that such Rule 16b-3 is revised or replaced, the Board may exercise its discretion to modify the Plan in any respect necessary or advisable in its judgment to satisfy the requirements of, or to permit the Company to avail itself of the benefits of, the revised exemption or its replacement.

	
13.
	
EFFECT OF CHANGES IN CAPITALIZATION

13.1Changes in Stock.

If the number of outstanding shares of Stock is increased or decreased or the shares of Stock are changed into or exchanged for a different number of shares or kind of capital stock or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse stock split, spin-off, combination of stock, exchange of stock, stock dividend or other distribution payable in capital stock, or other increase or decrease in such shares of Stock effected without receipt of consideration by the Company occurring after the Effective Date, the number and kinds of shares of stock for which grants of Options and other Awards may be made under the Plan, including the Share Limit, shall be adjusted proportionately and accordingly by the Committee. In addition, the number and kind of shares of stock for which Awards are outstanding shall be adjusted proportionately and accordingly by the Committee so that the proportionate interest of the Grantee therein immediately following such event shall, to the extent practicable, be the same as immediately before such event. Any such adjustment in outstanding Options shall not change the aggregate Option Price payable with respect to shares that are subject to the unexercised portion of such outstanding Options but shall include a corresponding proportionate adjustment in the per share Option Price.  The conversion of any convertible securities of the Company shall not be treated as an increase in shares effected without receipt of consideration. Notwithstanding the foregoing, in the event of any distribution to the Company’s shareholders of securities of any other entity or other assets (including an extraordinary dividend, but excluding a non-extraordinary dividend, declared and paid by the Company) without receipt of consideration by the Company, the Committee shall, in such manner as it deems appropriate, adjust (a) the number and kind of shares of stock subject to outstanding Awards and/or (b) the aggregate and per share Option Price of outstanding Options as required to reflect such distribution.

13.2Reorganization in Which the Company Is the Surviving Entity Which Does not Constitute a Corporate Transaction.

Subject to Section 13.3, if the Company shall be the surviving entity in any reorganization, merger, or consolidation of the Company with one or more other entities which does not constitute a Corporate Transaction, any Award theretofore granted pursuant to the Plan shall pertain to and apply to the securities to which a holder of the number of shares of Stock subject to such Award would have been entitled immediately following such reorganization, merger, or consolidation, with a corresponding proportionate adjustment of the per share Option Price, if applicable, so that the aggregate Option Price thereafter shall be the same as the aggregate Option Price of the shares of Stock remaining subject to the Option as in effect immediately prior to such reorganization, merger, or consolidation.  Subject to any contrary language in an Award Agreement, any restrictions applicable to such Award shall apply as well to any replacement shares received by the Grantee as a result of such reorganization, merger, or consolidation.  

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13.3Corporate Transaction in which Awards are not Assumed.

Except as otherwise provided in the applicable Award Agreement, in another agreement with the Grantee, or as otherwise set forth in writing, upon the occurrence of a Corporate Transaction in which outstanding Awards are not being assumed, continued, or substituted for, the following provisions shall apply to such Award, to the extent not assumed, continued, or substituted for:

(a)All Grantees of shares of Restricted Stock shall become vested in their Awards as of immediately prior to the occurrence of a Corporate Transaction and any shares of Stock or cash that become vested pursuant to the operation of this Section 13.3(a) shall be delivered, immediately prior to the occurrence of such Corporate Transaction;

(b)All Grantees of Options shall become immediately vested in their Awards as of immediately prior to the occurrence of a Corporate Transaction; and

(c)Either or both of the following two actions may be taken:

(i)At least fifteen (15) days prior to the scheduled consummation of such a Corporate Transaction, notice shall be given to all Grantees of vested Options outstanding hereunder (including Options that become vested pursuant to the operation of Section 13.3(b)) that such Options shall remain exercisable for a period of fifteen (15) days and shall thereafter be terminated.  With respect to the Company’s establishment of an exercise window, (A) any exercise of an Option during the fifteen (15)-day period referred to above shall be conditioned upon the consummation of the applicable Corporate Transaction and shall be effective only immediately before the consummation thereof, and (B) upon consummation of any Corporate Transaction, the Plan and all outstanding but unexercised Options shall terminate. The Committee shall send notice of an event that shall result in such a termination to all natural persons and entities who hold Options not later than the time at which the Company gives notice thereof to its shareholders.

and/or

(ii)The Committee may elect, in its sole discretion, to cancel any outstanding Awards of Options or Restricted Stock and pay or deliver, or cause to be paid or delivered, to the holder thereof an amount in cash or securities having a value (as determined by the Committee acting in good faith), in the case of Restricted Stock, equal to the formula or fixed price per share paid to holders of shares of Stock pursuant to such Corporate Transaction and, in the case of Options, equal to the product of the number of shares of Stock subject such Options multiplied by the amount, if any, by which (A) the formula or fixed price per share paid to holders of shares of Stock pursuant to such transaction exceeds (B) the Option Price applicable to such Options.

13.4Corporate Transaction in which Awards are Assumed.

Except as otherwise provided in the applicable Award Agreement, in another agreement with the Grantee, or as otherwise set forth in writing, upon the occurrence of a Corporate Transaction in which outstanding Awards are being assumed, continued, or substituted for, the following provisions shall apply to such Award, to the extent assumed, continued, or substituted for:

(a)The Plan and the Awards theretofore granted under the Plan shall continue in the manner and under the terms so provided in the event of any Corporate Transaction to the extent that provision is made in writing in connection with such Corporate Transaction for the assumption or continuation of such Awards, or for the substitution for such Awards of new common stock options, stock 

16

 

appreciation rights, restricted stock, common stock units, dividend equivalent rights and other equity-based awards relating to the stock of a successor entity, or a parent or subsidiary thereof, with appropriate adjustments as to the number of shares (disregarding any consideration that is not common stock) and option and stock appreciation rights exercise prices. 

(b)In the event an Award is assumed, continued or substituted upon the consummation of any Corporate Transaction and the employment of such Grantee with the Company or an Affiliate is terminated without Cause within one year following the consummation of such Corporate Transaction, such Award shall be fully vested and may be exercised in full, to the extent applicable, beginning on the date of such termination and for the one-year period immediately following such termination or for such longer period as the Committee shall determine. 

13.5Adjustments

Adjustments under this Section 13 related to shares of Stock or securities of the Company shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive. No fractional shares or other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case by rounding downward to the nearest whole share.  The Committee may provide in the applicable Award Agreements at the time of grant, or any time thereafter with the consent of the Grantee, for different provisions to apply to an Award in place of those provided in Sections 13.1, 13.2, 13.3 and 13.4.  This Section 13 shall not limit the Company’s ability to provide for alternative treatment of Awards outstanding under the Plan in the event of change in control events that are not Corporate Transactions.

13.6No Limitations on Company.

The making of Awards pursuant to the Plan shall not affect or limit in any way the right or power of the Company to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure or to merge, consolidate, dissolve, or liquidate, or to sell or transfer all or any part of its business or assets (including all or any part of the business or assets of any Subsidiary or other Affiliate) or to engage in any other transaction or activity.

	
14.
	
GENERAL PROVISIONS

14.1Disclaimer of Rights.

No provision in the Plan or in any Award or Award Agreement shall be construed to confer upon any individual the right to remain in the employ or Service of the Company or an Affiliate, or to interfere in any way with any contractual or other right or authority of the Company or an Affiliate either to increase or decrease the compensation or other payments to any natural person or entity at any time, or to terminate any employment or other relationship between any natural person or entity and the Company or an Affiliate.  In addition, notwithstanding anything contained in the Plan to the contrary, unless otherwise stated in the applicable Award Agreement, no Award granted under the Plan shall be affected by any change of duties or position of the Grantee thereof, so long as such Grantee continues to provide Service. The obligation of the Company to pay any benefits pursuant to the Plan shall be interpreted as a contractual obligation to pay only those amounts provided herein, in the manner and under the conditions prescribed herein.  The Plan and Awards shall in no way be interpreted to require the Company to transfer any amounts to a third party trustee or otherwise hold any amounts in trust or escrow for payment to any Grantee or beneficiary under the terms of the Plan.

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14.2Nonexclusivity of the Plan.

The adoption of the Plan shall not be construed as creating any limitations upon the right and authority of the Board or the Committee to adopt such other incentive compensation arrangements (which arrangements may be applicable either generally to a class or classes of individuals or specifically to a particular individual or particular individuals) as the Board or the Committee, in its discretion, determines desirable.

14.3Withholding Taxes.

(a)The Company or an Affiliate, as the case may be, shall have the right to deduct from payments of any kind otherwise due to a Grantee any federal, state, or local taxes of any kind required by Applicable Laws to be withheld with respect to the vesting of or other lapse of restrictions applicable to an Award or upon the issuance of any shares of Stock upon the exercise of an Option or pursuant to any other Award. At the time of such vesting, lapse, or exercise, the Grantee shall pay in cash to the Company or an Affiliate, as the case may be, any amount that the Company or such Affiliate may reasonably determine to be necessary to satisfy such withholding obligation; provided, however, that if there is a same day sale of shares of Stock subject to an Award, the Grantee shall pay such withholding obligation on the day on which the same-day sale is completed. Subject to the prior approval of the Company or an Affiliate, which may be withheld by the Company or such Affiliate, as the case may be, in its sole discretion, the Grantee may elect to satisfy such withholding obligation, in whole or in part, (a) by causing the Company or such Affiliate to withhold shares of Stock otherwise issuable to the Grantee or (b) by delivering to the Company or such Affiliate shares of Stock already owned by the Grantee.  The shares of Stock so withheld or delivered shall have an aggregate Fair Market Value equal to such withholding obligation. The Fair Market Value of the shares of Stock used to satisfy such withholding obligation shall be determined by the Company or such Affiliate as of the date on which the amount of tax to be withheld is to be determined.  A Grantee who has made an election pursuant to this Section 14.3 may satisfy such Grantee’s withholding obligation only with shares of Stock that are not subject to any repurchase, forfeiture, unfulfilled vesting, or other similar requirements. 

(b)The maximum number of shares of Stock that may be withheld from any Award to satisfy any federal, state, or local tax withholding requirements upon the exercise, vesting, or lapse of restrictions applicable to any Award or payment of shares of Stock pursuant to such Award, as applicable, may not exceed such number of shares of Stock having a Fair Market Value equal to the minimum statutory amount required by the Company or the applicable Affiliate to be withheld and paid to any such federal, state, or local taxing authority with respect to such exercise, vesting, lapse of restrictions, or payment of shares of Stock; provided, however, for so long as Accounting Standards Update 2016-09 or a similar rule remains in effect, the Board or the Committee has full discretion to choose, or to allow a Grantee to elect, to withhold a number of shares of Stock having an aggregate Fair Market Value that is greater than the applicable minimum required statutory withholding obligation (but such withholding may in no event be in excess of the maximum required statutory withholding amount(s) in such Grantee’s relevant tax jurisdiction).

(c)Notwithstanding Section 2.17 or this Section 14.3, for purposes of determining taxable income and the amount of the related tax withholding obligation pursuant to this Section 14.3, the Fair Market Value will be determined by the Committee in good faith using any reasonable method as it deems appropriate, to be applied consistently with respect to Grantees; provided, further, that the Committee shall determine the Fair Market Value of shares of Stock for tax withholding obligations due in connection with sales, by or on behalf of a Grantee, of such shares of Stock subject to an Award to pay the Option Price, and/or any tax withholding obligation on the same date on which such shares may first be sold pursuant to the terms of the applicable Award Agreement (including broker-assisted cashless exercises 

18

 

of Options and sell-to-cover transactions) in any manner consistent with applicable provisions of the Code, including but not limited to using the sale price of such shares on such date (or if sales of such shares are effectuated at more than one sale price, the weighted average sale price of such shares on such date) as the Fair Market Value of such shares, so long as such Grantee has provided the Company, or its designee or agent, with advance written notice of such sale.

14.4Captions.

The use of captions in the Plan or any Award Agreement is for the convenience of reference only and shall not affect the meaning of any provision of the Plan or such Award Agreement.

14.5Other Provisions.

Each Award granted under the Plan may contain such other terms and conditions not inconsistent with the Plan as may be determined by the Committee, in its sole discretion.

14.6Number and Gender.

With respect to words used in the Plan, the singular form shall include the plural form, and the masculine gender shall include the feminine gender, as the context requires.

14.7Severability.

If any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction.

14.8Governing Law

The validity and construction of the Plan and the instruments evidencing the Awards hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the State of Delaware, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of the Plan and the instruments evidencing the Awards granted hereunder to the substantive laws of any other jurisdiction.

14.9Foreign Jurisdictions

.

To the extent the Committee determines that the terms set by the Committee imposed by the Plan preclude the achievement of the purposes of the Plan in jurisdictions outside the United States, the Committee will have the authority and discretion to modify those terms and provide for such additional terms and conditions as the Committee determines to be necessary, appropriate, or desirable to accommodate differences in local law, policy, or custom or to facilitate administration of the Plan.  The Committee may adopt or approve sub-plans, appendices, or supplements to, or amendments, restatements, or alternative versions of the Plan as in effect for any other purposes.  The special terms and any sub-plans, appendices, supplements, amendments, restatements, or alternative versions, however, shall not include any provisions that are inconsistent with the terms of the Plan as in effect, unless the Plan could have been amended to eliminate such inconsistency without further approval by the Company’s shareholders.

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14.10Section 409A of the Code.

The Plan is intended to comply with Code Section 409A to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan will be interpreted and administered to be in compliance with Code Section 409A.  Any payments described in the Plan that are due within the “short-term deferral period” within the meaning of Code Section 409A will not be treated as deferred compensation unless Applicable Laws require otherwise. Notwithstanding any provision of the Plan to the contrary, to the extent required to avoid accelerated taxation and tax penalties under Code Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan during the six (6)-month period immediately following the Grantee’s “separation from service” within the meaning of Code Section 409A will instead be paid on the first payroll date after the six (6)-month anniversary of the Grantee’s Separation from Service (or the Grantee’s death, if earlier). 

Furthermore, notwithstanding anything in the Plan to the contrary, in the case of an Award that is characterized as deferred compensation under Code Section 409A, and pursuant to which settlement and delivery of the cash or shares of Stock subject to the Award is triggered based on a Corporate Transaction, in no event will a Corporate Transaction be deemed to have occurred for purposes of such settlement and delivery of cash or shares of Stock if the transaction is not also a “change in the ownership or effective control of” the Company or “a change in the ownership of a substantial portion of the assets of” the Company as determined under Treasury Regulation Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder).  If an Award characterized as deferred compensation under Code Section 409A is not settled and delivered on account of the provision of the preceding sentence, the settlement and delivery shall occur on the next succeeding settlement and delivery triggering event that is a permissible triggering event under Code Section 409A.  No provision of this paragraph shall in any way affect the determination of a Corporate Transaction for purposes of vesting in an Award that is characterized as deferred compensation under Code Section 409A.

Notwithstanding the foregoing, neither the Company nor the Committee will have any obligation to take any action to prevent the assessment of any excise tax or penalty on any Grantee under Code Section 409A, and neither the Company or an Affiliate nor the Board or the Committee will have any liability to any Grantee for such tax or penalty.

To the extent that the Company determines that a Grantee would be subject to the additional twenty percent (20%) tax imposed on certain nonqualified deferred compensation plans pursuant to Code Section 409A as a result of any provision of any Award granted under the Plan, such provision shall be deemed amended to the minimum extent necessary to avoid application of such additional tax.  The nature of any such amendment shall be determined by the Committee.

* * *

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To record adoption of the Plan by the Board as of the Effective Date, the Company has caused its authorized officer to execute the Plan.

 

 

			
	
  
	
ORTHOFIX INTERNATIONAL N.V.

	
 
	
 
	
 

	
 
	
 
	
 

	
  
	
By:
	
/s/ Kimberley A. Elting

	
 
	
Name:
	
Kimberley A. Elting

	
  
	
Title:
	
Chief Legal and Administrative Officer

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