EXHIBIT 2.1
RON BENDER (SBN 143364)
MONICA Y. KIM (SBN 180139)
JACQUELINE L. RODRIGUEZ (SBN 198838)
LEVENE, NEALE, BENDER, RANKIN & BRILL L.L.P.
1801 Avenue of the Stars, Suite 1120
Los Angeles, California 90067
Telephone: (310) 229-1234
Facsimile: (310) 229-1244
Attorneys for Chapter 11 Debtors
and Plan Proponents
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
SAN FERNANDO VALLEY DIVISION
In re ) CASE NO.SV 03-15880-GM
THE WALKING COMPANY, a) Jointly Administered With Case
California corporation, ) No. SV 03-15932-GM
and
)
ALAN'S SHOES, INC., an Arizona ) Chapter 11
corporation,
)
) DEBTORS' SECOND AMENDED PLAN
OF REORGANIZATION
Debtors.
_ Affects The Walking Company Only Plan Confirmation Hearing:
__________________________
_ Affects Alan's Shoes, Inc. Only Date: March 1, 2004
Time: 9:00 a.m.
X_ Affects Both Debtors Place: Courtroom "303"
21041 Burbank Blvd.
Woodland Hills, CA
- ----------------------------------------)
I. INTRODUCTION
The Walking Company ("TWC"), a California corporation, and Alan's
Shoes, Inc. ("Alan's"), an Arizona corporation (Alan's," and, with TWC, the
"Debtors") are the Debtors in pending Chapter 11 bankruptcy cases.
On July 14, 2003, TWC commenced its bankruptcy case by filing a Voluntary
Petition under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C.
SS
101 et seq. (the "Bankruptcy Code"). On July 15, 2003, Alan's commenced
its bankruptcy case by filing a Voluntary Petition under Chapter 11 of the
Bankruptcy Code. Alan's is a wholly-owned subsidiary of TWC.
The Debtors' Chapter 11 bankruptcy cases are pending before the
United States Bankruptcy Court, Central District of California,
San Fernando Valley Division (the "Bankruptcy Court"). This document
is the Second Amended Plan of Reorganization ("Plan") that is being proposed
by the Debtors.
The Disclosure Statement ("Disclosure Statement") describing this
Plan was approved by the Bankruptcy Court at a hearing on December 18, 2003.
All terms which are not otherwise defined in this Plan shall have the same
meaning as such terms are provided in the Disclosure Statement.
Chapter 11 allows the Debtors, and, under some circumstances,
creditors and other parties in interest, to propose a plan of reorganization.
This Plan is a plan of reorganization which has been proposed by the Debtors.
The effective date of this Plan (the "Effective Date") will be the first
business day following the date of entry of the Bankruptcy Court order
confirming this Plan (the "Plan Confirmation Order").
II. PLAN SUMMARY
The following is a summary description of the modifications to
the First Amended Plan of Reorganization (the "Original Plan") which are
contained in this Plan. For a more detailed description of this Plan and the
modifications to the Original Plan, you should read this Plan in its entirety.
All terms which are not defined herein shall have the meanings assigned to
those terms in the Original Plan and the Disclosure Statement.
1. On the Effective Date, TWC Acquisition Corp. (the
"Reorganized Debtor"), a subsidiary Delaware corporation formed by
Big Dogs Holdings, Inc. ("BDH"), will acquire all of the assets of the
Debtors (excluding the Lease Sale Proceeds, the Class Action Recovery Funds,
the Class Action Suit, and the $610,000 SCI Stock Proceeds) free and clear of
all rights, claims, liens, encumbrances and interests of the Debtors, their
bankruptcy estates, all creditors and interest holders, except as otherwise
provided for in this Plan. The common stock of the Reorganized Debtor will
be owned 90% by BDH and 10% by the Junior Secured Creditors. The 10% stock of
the Reorganized Debtor which will be owned by the Junior Secured Creditors
shall be referred to as the "Junior Secured Creditors Stock". The Junior
Secured Creditors Stock shall be issued to the Junior Secured Creditors on
a pro rata basis based on the allowed amount of their respective secured claims
against the Debtors.
2. On the Effective Date, BDH will contribute $8.95 million (the
"New Money Contribution") to the Reorganized Debtor. $6.45 million of the
New Money Contribution will be in the form of equity and $2.5 million of the
New Money Contribution will be in the form of subordinated debt which will
bear interest at the rate of ten percent (10%) per annum, with all principal
and interest subordinated to all debts of the Reorganized Debtor except to
the extent otherwise agreed upon in writing by the affected debt holders.
The amount of the New Money Contribution to be funded on the Effective Date
will be reduced by all sums that BDH advances to the Debtors prior to the
Effective Date for or on account of rent and other occupancy costs owed
by the Debtors for the month of February, 2004.
3. BDH has requested Wells to provide the Reorganized Debtor
with post-confirmation financing. If Wells agrees to do so upon terms
which are mutually acceptable to Wells and to the Reorganized Debtor,
Wells will be the Reorganized Debtor's post-confirmation lender. If Wells
does not agree to do so upon terms which are mutually acceptable to Wells and
to the Reorganized Debtor, the Reorganized Debtor will obtain a replacement
lender and Wells will be paid in cash in full on the Effective Date.
4. On the Effective Date, the Reorganized Debtor will pay
$1,265,000 of the New Money Contribution (the "Junior Secured Creditors New
Money Contribution") to all of the Junior Secured Creditors (which is an
increase of $465,000 over the $800,000 which was set forth in the Original
Plan) on a pro rata basis based upon the allowed amount of their respective
allowed secured claims remaining after distribution of the SCI Stock
Proceeds. The balance of the allowed secured claims owing to the Junior
Secured Creditors will be satisfied with promissory notes issued by the
Reorganized Debtor to each of the Junior Secured Creditors in the form
attached as Exhibit "10" to this Plan on a pro rata basis based upon the
amount of their respective allowed secured claims against the Debtors
(all such promissory notes shall collectively be referred to as the
"Junior Secured Creditors Promissory Notes"). The aggregate principal
amount of the Junior Secured Creditors Promissory Notes will be $3,279,000.
The Junior Secured Creditors Promissory Notes will bear interest at the rate
of 7% per annum. The Junior Secured Creditors Promissory Notes will have
the following additional features: (i) interest will paid on the Junior
Secured Creditors Promissory Notes on a quarterly basis, (ii)the Junior
Secured Creditors Promissory Notes will have a term of six years and
prepayments may be made without any penalty, and (iii) the following
mandatory principal payments will be made: $550,000 at the end of each of
years 2, 3, 4 and 5, and the remaining principal balance of $1,079,000 and
any unpaid interest will be due and payable at the end of the six-year term.
The Junior Secured Creditors Promissory Notes will be secured by a lien (the
"Junior Secured Creditors Lien") against substantially all assets of the
Reorganized Debtor (excluding real property leases). The obligations to and
the lien securing the Junior Secured Creditor Promissory Notes will at all
times be junior and subordinate to the obligations to and lien of Wells (if
Wells provides the Reorganized Debtor with post-confirmation financing) or
any other current replacement or future senior lender on terms acceptable to
Wells or such other replacement lender, but will not be junior to any other
liens.
5. On the Effective Date, the Reorganized Debtor will pay
$435,000 of the New Money Contribution (the "Unsecured Creditors New Money
Contribution") into the Professional Fee Account for the benefit of
professionals to the extent their allowed fees and expenses exceed
$600,000 and the balance for all holders of class 20 allowed claims (which is
an increase by $35,000 from the $400,000 which was set forth in the Original
Plan). In the event that the allowed professional fees and expenses beyond
any pre-petition retainers paid and the $750,000 paid out of the Professional
Fee Account as described in more detail in Section IV(B)(1)of the Disclosure
Statement exceed $600,000 (excluding any fees and expenses owing to FocalPoint),
such allowed professional fees and expenses will be paid first from this
$435,000, and the remainder of this $435,000 will be paid pro-rata to all
holders of class 20 allowed claims. Additionally, the Reorganized Debtor
will issue two unsecured promissory notes for the benefit of all holders of
class 20 allowed claims. The first such promissory note (the "First
Unsecured Creditors Promissory Note") will have a principal
amount of $700,000, will accrue interest at the rate of 7% per annum,
and will have a term of five years. The First Unsecured Creditors
Promissory Note will have the following additional features: (i)
interest will be paid on a quarterly basis, (ii) prepayments may be made
without penalty, and (iii) the following mandatory principal payments will
be made: $100,000 at the end of both years 2 and 3 and $150,000 at the end of
year 4, and the remaining principal balance of $350,000 and any unpaid
interest will be due and payable at the end of the five-year term. The second
such promissory note (the "Second Unsecured Creditors Promissory Note")
will have a principal amount of $21,000, will bear interest at the rate of
7% per annum, and will have the following additional features: (i) interest
will paid on the Second Unsecured Creditors Promissory Note on a quarterly
basis, (ii) the Second Unsecured Creditors Promissory Note will have a term
of six years and prepayments may be made without any penalty, and
(iii) the entire principal balance of $21,000 and any unpaid interest will
be due and payable at the end of the six-year term. All payments made on
account of the First Unsecured Creditors Promissory Note and the Second
Unsecured Creditors Promissory Note will be distributed by the Reorganized
Debtor to all holders of class 20 allowed claims on a pro-rata basis. The
obligations of the Reorganized Debtor under the First Unsecured Creditors
Promissory Note and the Second Unsecured Creditors Promissory Note will at
all times be junior and subordinate to the obligations to and lien of Wells
(if Wells provides the Reorganized Debtor with post-confirmation financing)
or any other current replacement or future senior lender and the obligations
to and lien of the Junior Secured Creditors.
6. On the Effective Date, the Reorganized Debtor will pay
$600,000 of the New Money Contribution into the Professional Fee Account
maintained by LNBRB to be used to pay the allowed professional fees and
expenses beyond those which have already been paid out of the Professional
Fee Account and exclusive of any allowed fees and expenses owing to
FocalPoint as ordered by the Bankruptcy Court. On the later of the Effective
Date and the date such claims are allowed by the Bankruptcy Court, the
Reorganized Debtor will also pay any allowed fees and expenses owing to
FocalPoint, all allowed amounts needed to cure any delinquencies in
connection with the assumption and assignment of any unexpired leases or
executory contracts, and any allowed expense reimbursement of up to
$60,000 to Jim Argyropoulos to reimburse him for his actual out-of-pocket
expenses incurred in connection with the Original Plan as provided by
the Bankruptcy Court.
7. The balance of the New Money Contribution remaining after
the Effective Date cash payments which are required to be paid under this Plan
will be deposited into the Reorganized Debtor's bank account and will
constitute the Reorganized Debtor's initial working capital.
8. On or before June 30, 2004, each of the Junior Secured
Creditors shall have a one time right to (i) exchange all or a portion of the
then unpaid principal balance of their Junior Secured Creditors Promissory
Note for BDH common stock at an exchange price of $4.35 per share, and/or
(ii) put up to 50% of the then outstanding principal balance of the Junior
Secured Creditors Promissory Note to BDH for cash equal to 80% of that portion
of the principal balance of the Junior Secured Creditors Promissory Note
which is to be put to BDH.
9. On or before June 30, 2004, the unsecured creditors acting
through the Post-Confirmation Committee shall have a one time right to (i)
exchange all or any portion of the then unpaid principal balance of the First
Unsecured Creditors Promissory Note for BDH common stock at an exchange price
of $4.35 per share, and/or (ii) put up to 100% of the then outstanding
principal balance of the First Unsecured Creditors Promissory Note to the
Reorganized Debtor for cash equal to 80% of that portion of the principal
balance of the First Unsecured Creditors Promissory Note which is to be put to
the Reorganized Debtor.
10. On or before June 30, 2004, the unsecured creditors acting
through the Post-Confirmation Committee shall have a one time right to (i)
exchange all or a portion of then unpaid principal balance of the Second
Unsecured Creditors Promissory Note for BDH common stock at an exchange price
of $4.35 per share, and/or (ii) put up to 100% of the then outstanding
principal balance of the Second Unsecured Creditors Promissory Note to BDH
for cash equal to 80% of that portion of the principal balance of the
Second Unsecured Creditors Promissory Note which has been put to BDH.
11. On or before June 30, 2004, the then holders of Junior
Secured Creditors Stock (based upon their individual pro rata share) shall
each have a one time right to (i) exchange all such Junior Secured Creditors
Stock for BDH common stock at an exchange price of $4.35 per share using the
agreed upon value of $645,000 for all of the Junior Secured Creditors Stock,
or (ii) put all such Junior Secured Creditors Stock to the Reorganized
Debtor for cash using the agreed upon value of $645,000 for all of the
Junior Secured Creditors Stock.
12. In addition to the foregoing, the Debtors' estate (or
successor thereto) shall retain free and clear of any interests of BDH or
the Reorganized Debtor (i) all proceeds received by the Debtors from the
sale of the Debtors' leases which have already closed or close by the time of
confirmation of this Plan (collectively, the "Lease Sale Proceeds"), and
(ii) the right to pursue and retain any funds (the "Class Action Recovery
Funds") recovered or to be recovered from Callahan, McCune & Willis or others
in connection with the class action suit (the "Class Action Suit") that was
previously filed against the Debtors and for which the Debtors made partial
settlement payments prior to the Debtors' bankruptcy filings. The
Reorganized Debtor will retain all other causes of action, including all
avoidance causes of action (other than the Class Action Suit), and the
Reorganized Debtor agrees that it will not pursue any such avoidance causes
of action.
13. In connection with the rights granted to holders of the Junior
Secured Creditors Promissory Notes, the Junior Secured Creditors Stock, the
First Unsecured Creditors Promissory Note and the Second Unsecured Creditors
Promissory Note to exchange their respective claims or interests for common
stock of BDH, BDH will obtain on or before the Effective Date a reasoned legal
opinion that such exchange rights and the BDH common stock issuable
pursuant thereto may be offered and sold to such creditors without
registration under the Securities Act of 1933 and such stock may be offered
and sold by such creditors without registration under the Securities Act of
1933, assuming that none of such creditors is an "underwriter" as defined
in Section 1145(b) of the Bankruptcy Code.
14. In complete settlement, satisfaction and resolution of any
and all claims or causes of action regarding insiders, subordination of
claims, recharacterization of debt, or otherwise arising between the
Creditors Committee and the Junior Secured Creditors, the Creditors
Committee and the Junior Secured Creditors have agreed to allocate the
additional consideration realized over the original stalking horse bid
contained in the Original Plan as follows: seven percent (7%) to the general
unsecured creditors and ninety-three percent (93%) to the Junior Secured
Creditors. This allocation is binding upon all classes of creditors under this
Plan and such allocation has already been taken into account with respect to
the various treatment of creditors as described above.
III. CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS
A. What Creditors and Interest Holders Will Receive Under this Plan
As required by the Bankruptcy Code, this Plan classifies claims and
interests in various classes according to their right to
priority. This Plan states whether each class of claims or interests is
impaired or unimpaired. This Plan provides the treatment each class will
receive.
B. Unclassified Claims
Certain types of claims are not placed into voting classes; instead
they are unclassified. They are not considered impaired and they do not vote
on this Plan because they are automatically entitled to specific treatment
provided for them in the Bankruptcy Code. As such, the Debtors have not
placed the following claims in a class.
1. Administrative Expenses
Administrative expenses are claims for costs or expenses of
administering the Debtors' Chapter 11 cases which are allowed under
Bankruptcy Code Section 507(a)(1). The Bankruptcy Code requires that
all administrative claims be paid on the Effective Date unless a particular
claimant agrees to a different treatment.
In accordance with the debtor-in-possession financing which was
approved by the Bankruptcy Court, the Debtors made a weekly deposit into a
professional fee account (the "Professional Fee Account"). The
Professional Fee Account was maintained by LNBRB. Pursuant to an order of the
Bankruptcy Court, the funds in the Professional Fee Account were disbursed by
LNBRB monthly to all of the professionals employed in these cases
(excluding FocalPoint and the Debtors' accountant) on a pro rata basis.
Pursuant to the debtor-in-possession financing which was approved by the
Bankruptcy Court, a total of $750,000 was funded into the Professional Fee
Account and disbursed to the professionals.
LNBRB made the first monthly disbursement on or about
September 30, 2003, at which time LNBRB disbursed a total of $350,000
out of the Professional Fee Account for fees and expenses incurred through
August 31, 2003 as follows:
1. LNBRB - $182,637.02
2. Renaissance Partners, L.C. - $13,129.18
3. Deloitte & Touche, LLP - $32,092.47
4. Kronish Lieb Weiner & Hellman LLP - $81,979.10
5. Klee, Tuchin, Bogdanoff & Stern LLP - $40,162.23
The foregoing five professionals had requested payment of a total
of $420,867.94 for fees and expenses incurred through August 31, 2003
(after taking into account a 20% holdback for fees).
LNBRB made the second monthly disbursement on or about October 31,
2003, at which time LNBRB disbursed a total of $150,000 out of the
Professional Fee Account for fees and expenses incurred through September
30, 2003 as follows:
1. LNBRB - $81,688.56
2. Renaissance Partners, L.C. - $4,064.91
3. Deloitte & Touche, LLP - $9,578.62
4. Kronish Lieb Weiner & Hellman LLP - $37,622.78
5. Klee, Tuchin, Bogdanoff & Stern LLP - $17,045.13
The foregoing five professionals had requested payment of a total
of $217,435.14 for fees and expenses incurred through
September 30, 2003 (after taking into account a 20% holdback for fees).
LNBRB made the third monthly disbursement on or about November 30,
2003, at which time LNBRB disbursed a total of $125,000 out of the Professional
Fee Account for fees and expenses incurred through October 31, 2003 as follows:
1. LNBRB - $77,321.74
2. Renaissance Partners, L.C. - $6,834.12
3. Deloitte & Touche, LLP - $8,343.12
4. Kronish Lieb Weiner & Hellman LLP - $23,474.43
5. Klee, Tuchin, Bogdanoff & Stern LLP - $9,026.59
The foregoing five professionals had requested payment of a total
of $213,672.44 for fees and expenses incurred through
October 31, 2003 (after taking into account a 20% holdback for fees).
LNBRB made the fourth monthly disbursement on or about December 30,
2003, at which time LNBRB disbursed a total of $125,000 out of the
Professional Fee Account for fees and expenses incurred through November 30,
2003 as follows:
1. LNBRB - $90,558.11
2. Renaissance Partners, L.C. - $0
3. Deloitte & Touche, LLP - $14,697.99
4. Kronish Lieb Weiner & Hellman LLP - $14,809.47
5. Klee, Tuchin, Bogdanoff & Stern LLP - $4,934.43
The five professionals employed in these cases requested payment of
a total of $136,672.88 for fees and expenses incurred through November 30,
2003 (after taking into account a 20% holdback for fees).
The following chart lists all of the Debtors' projected outstanding
and unpaid SS 507(a)(1) administrative claims and their treatment under this
Plan. All of the figures set forth in the following chart represent the
Debtors' estimate of the additional fees and expenses which will be owed by
the Reorganized Debtor to such professionals after taking into account
pre-petition retainers paid and the $750,000 which has been disbursed to such
professionals from the Professional Fee Account.
==================================== ================================= =================================
Name Amount Owed Treatment
------------------------------------ --------------------------------- ---------------------------------
------------------------------------ --------------------------------- ---------------------------------
Clerk's Office Fees $0 Paid in full on the Effective
Date by the Reorganized Debtor
------------------------------------ --------------------------------- ---------------------------------
Office of the U.S. Trustee $0 Paid in full on the Effective
Fees Date by the Reorganized Debtor
------------------------------------ --------------------------------- ---------------------------------
Kronish Lieb Weiner & Hellman LLP, $250,000 (est.) in excess of Paid in full out of the
general counsel to the Committee fees and expenses paid during Professional Fee Account on the
the Chapter 11 cases out of the later of the Effective Date and
Professional Fee Account the date the Bankruptcy Court
enters an order allowing such
fees and expenses
------------------------------------ --------------------------------- ---------------------------------
Klee, Tuchin, Bogdanoff & Stern $108,000 (est.) in excess of Paid in full out of the
LLP, local counsel to the fees and expenses paid during Professional Fee Account on the
Committee the Chapter 11 cases out of the later of the Effective Date and
Professional Fee Account the date the Bankruptcy Court
enters an order allowing such
fees and expenses
------------------------------------ --------------------------------- ---------------------------------
Deloitte & Touche, LLP, financial $85,000 (est.) in excess of Paid in full out of the
advisor to the Committee fees and expenses paid during Professional Fee Account on the
the Chapter 11 cases out of the later of the Effective Date and
Professional Fee Account the date the Bankruptcy Court
enters an order allowing such
fees and expenses
------------------------------------ --------------------------------- ---------------------------------
------------------------------------ --------------------------------- ---------------------------------
Levene, Neale, Bender, Rankin & $400,000 (est.) in excess of Paid in full out of the
Brill L.L.P., bankruptcy counsel LNBRB's pre-petition retainer Professional Fee Account on the
to the Debtors balance existing at the time of later of the Effective Date and
the Debtors' bankruptcy filings the date the Bankruptcy Court
and the fees and expenses paid enters an order allowing such
during the Chapter 11 cases out fees and expenses
of the Professional Fee
Account
------------------------------------ --------------------------------- ---------------------------------
------------------------------------ --------------------------------- ---------------------------------
Renaissance Partners, L.C., $80,000 (est.) in excess of Paid in full out of the
financial advisors to the Debtor Renpar's pre-petition retainer Professional Fee Account on the
balance existing at the time of later of the Effective Date and
the Debtors' bankruptcy filings the date the Bankruptcy Court
and the fees and expenses paid enters an order allowing such
during the Chapter 11 cases out fees and expenses
of the Professional Fee Account
==================================== ================================= =================================
------------------------------------ --------------------------------- ---------------------------------
David A. Stevens, accountant to $3,000 as the Debtors intend to Paid in full out of the
the Debtors pay such fees and expenses as Professional Fee Account on the
they are incurred in the later of the Effective Date and
ordinary course of the Debtors' the date the Bankruptcy Court
business enters an order allowing such
fees and expenses
==================================== ================================= =================================
------------------------------------ --------------------------------- ---------------------------------
FocalPoint Partners, LLC - Unknown because it is based Paid in full by the Reorganized
investment banker to the Debtors. upon the outcome of the final Debtor on the later of the
transaction which consummates. Effective Date and the date the
Bankruptcy Court enters an
order allowing such fees and
expenses.
==================================== ================================= =================================
------------------------------------ --------------------------------- ---------------------------------
Post-Petition Non-Professional Fee Accounts payable and other Assumed and paid in full by the
Administrative Claims accrued expenses incurred in Reorganized Debtor in the
the ordinary course of the ordinary course of the
Debtors' business. Reorganized Debtor's business
or following order of the
Bankruptcy Court if a dispute
exists between the Reorganized
Debtor and the administrative
claim holder
==================================== ================================= =================================
------------------------------------ --------------------------------- ---------------------------------
TOTAL $926,000 est. excluding any fee Paid in full in the manner
owing to FocalPoint or to described above
accounts payable assumed by the
Reorganized Debtor
------------------------------------ --------------------------------- ---------------------------------
Bankruptcy Court Approval of Fees Required:
-------------------------------------------
The Bankruptcy Court must approve all professional fees and
expenses listed in this chart before they may be paid. For all professional
fees and expenses except fees owing to the Clerk of the Bankruptcy Court
and fees owing to the Office of the United States Trustee, the professional
in question must file and serve a properly noticed fee application and the
Bankruptcy Court must rule on the application. Only the amount of fees and
expenses allowed by the Bankruptcy Court will be required to be paid under this
Plan. The administrative claim amounts set forth above simply represent the
Debtors' best estimate as to what the amount of allowed administrative claims
will be in these cases. The actual administrative claims may be higher or
lower. By voting to accept this Plan, creditors are not acknowledging the
validity of, or consenting to the amount of, any of these administrative
claims, and creditors are not waiving any of their rights to object to the
allowance of any of these administrative claims. As described above,
the Reorganized Debtor will not be required to pay more than $600,000
on account of the allowed fees and expenses of the professionals which
have been employed in these cases, exclusive of any fees and expenses
which the Bankruptcy Court awards to FocalPoint. To the extent the allowed
fees and expenses of the professionals which have been employed in these
cases exclusive of FocalPoint exceed $600,000 (after taking into account
pre-petition retainers paid and the $750,000 which has been disbursed to such
professionals from the Professional Fee Account), the difference will be paid
out of the Unsecured Creditors New Money Contribution. LNBRB will cause all
allowed professional fees and expenses to be paid out of the $1,035,000 to
be paid into the Professional Fee Account by the Reorganized Debtor on the
Effective Date (comprised of the $600,000 designated for allowed
professional fees and expenses plus the $435,000 Unsecured Creditors New
Money Contribution). After LNBRB has caused all allowed professional fees
and expenses to be paid out of the $1,035,000 to be paid into the
Professional Fee Account by the Reorganized Debtor on the Effective
Date, LNBRB will turn over the remaining balance to the Reorganized
Debtor who will hold such funds in a segregated interest bearing
account for the benefit of class 20 claim holders.
All administrative claims (i.e., post-bankruptcy claims including
outstanding professional fees and expenses and any fees and expenses owing to
the Bankruptcy Court and the Office of the United States Trustee) which are
either consented to by the Debtors or allowed by Bankruptcy Court order
will either be assumed by the Reorganized Debtor and paid in the ordinary
course of the Reorganized Debtor's business or paid by the Reorganized
Debtor when allowed by Bankruptcy Court order, except allowed fees and
expenses of professionals which have been employed in the Debtors'
Chapter 11 cases, exclusive of any fees and expenses of FocalPoint, which
the Reorganized Debtor will pay in the amount allowed by the Bankruptcy Court
with the Reorganized Debtor reserving all of its rights to object to any fees
and expenses requested by FocalPoint and to object to any other administrative
claim asserted against the Debtors.
2. Priority Tax Claims
Priority tax claims include certain unsecured income, employment
and other taxes described by Section 507(a)(8) of the Bankruptcy Code. The
Bankruptcy Code requires that each holder of such a Section 507(a)(8)
priority tax claim receive the present value of such claim in deferred cash
payments, over a period not exceeding six years from the date of the
assessment of such tax. The Debtors estimate that there are a total of
approximately $571,973.16 of pre-petition sales taxes which the Debtors
believe are entitled to priority under Section 507 of the Bankruptcy Code.
The Debtors are not aware of any other priority tax claims. All allowed
Section 507(a)(8) priority tax claims will be paid in full with interest
at the rate of six (6) percent (6%) per annum (or such other rate of interest
as determined by the Bankruptcy Court) over a period of six years from the
date of assessment of such tax claims, with such payments to be made on an
annual basis.
C. Classified Claims and Interests
1. Classes of Secured Claims
Secured claims are claims secured by liens on property of
the estate. Wells is not impaired under this Plan and is therefore deemed to
have voted to accept this Plan. Junior Secured Creditors (Classes 2
through 18, inclusive) had the right to accept the treatment offered them
under the Original Plan or to elect cramdown treatment if they timely voted
to reject the Original Plan. The Original Plan provided that Junior Secured
Creditors who did not timely vote on the Original Plan would be deemed to have
voted to accept the Original Plan. All of the Junior Secured Creditors
either voted to accept the Original Plan or did not timely vote on the
Original Plan and therefore are deemed to have voted to accept the Original
Plan. The following charts set forth the description and treatment of each
of the Debtors' known secured claims.
=============== ============================= ================== =======================================
CLASS # DESCRIPTION IMPAIRED TREATMENT
(Y/N)
--------------- ----------------------------- ------------------ ---------------------------------------
1 The allowed secured claim NotImpaired; Pursuant to the Bankruptcy Court
of Wells allowed claim order approving the post-petition
in financing provided to the Debtors by
Because the Debtors pay all this Wells, the Debtors are required to
of their sales proceeds to class pay Wells in cash in full on the
Wells and borrow money from is not entitled to Effective Date unless Wells agrees to
Wells on a daily basis, the vote the contrary. As described above,
Debtors' outstanding on BDH has requested Wells to provide
indebtedness owing to Wells this Plan. the Reorganized Debtor with
changes on a daily basis. post-confirmation financing. If
On October 31, 2003, the Wells is unwilling to provide the
outstanding indebtedness Reorganized Debtor with
owing to Wells was post-confirmation financing, the
$9,363,883.60. As set Reorganized Debtor will obtain an
forth in Exhibit "F" to the alternative lender to provide the
Disclosure Statement, the Reorganized Debtor with
Debtors estimate that the post-confirmation financing, and the
outstanding indebtedness Reorganized Debtor will pay the
owing to Wells on January outstanding indebtedness owing to
31, 2004 will be Wells on the Effective Date in cash
approximately $5,598,685 in full out of the refinancing
(which is a substantially proceeds.
reduced sum from the
average loan balance during
the year resulting from
payment of the Debtors'
holiday sales proceeds to
Wells).
--------------- ----------------------------- ------------------ ---------------------------------------
=============== ============================= ================== =======================================
CLASS # DESCRIPTION IMPAIRED TREATMENT
(Y/N)
--------------- ----------------------------- ------------------ ---------------------------------------
2 The allowed secured claim Impaired;allowed On the Effective Date, RR Growth will
of RR Growth claim receive its pro rata share of the
in Junior Secured Creditors New Money
The total secured claim of this Contribution (the "RR Growth Cash
RR Growth is approximately class Distribution"). This pro rata share
$3,192,551, including was entitled will be computed by dividing the
accrued interest up until to vote total secured claim of RR Growth by
the date of the Debtors' on the total amount of secured claims
bankruptcy filings. this Plan. held by all of the Junior Secured
However, under Section Creditors after subtracting the
506(c) of the Bankruptcy payment of the SCI Stock Proceeds
Code, the claim of RR from the amount of secured claims
Growth is treated as held by the $2.5 Million Junior
secured only up to the Secured Creditors (the "RR Growth
value of the collateral Percentage") and multiplying the RR
which secures that claim Growth Percentage by $1,265,000. The
and is treated as a general Debtors estimate that the RR Growth
unsecured claim (i.e., Cash Distribution will be in the
class 20) for the balance. amount of $470,780.
All of the Junior Secured In addition to the RR Growth Cash
Creditors are on a pari Distribution, RR Growth will receive
passu basis with respect to (i) a promissory note from the
the collateral which Reorganized Debtor (the "RR Growth
secures their claims (the Promissory Note") with a principal
"Junior Secured Creditors amount equal to the figure obtained
Collateral"), except with by multiplying the RR Growth Share
respect to the SCI Stock Percentage by $3,279,000, which
Proceeds as described amount is estimated to be $1,220,358
above, and subject to the and (ii) a pro-rata number of shares
senior lien of Wells. of the Junior Secured Creditors Stock
determined by multiplying the RR
Growth Percentage by the total number
of all shares of Junior Secured
Creditors Stock to be issued to all
Junior Secured Creditors.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
The RR Growth Promissory Note will
have the following additional
features: (i) the RR Growth
Promissory Note will bear interest at
the rate of 7% per annum, (ii)
interest will be paid on the RR
Growth Promissory Note on a quarterly
basis, (iii) the RR Growth Promissory
Note will have a term of six years,
(iv) prepayments may be made without
any penalty, and (v) RR Growth would
receive its pro rata share of the
following mandatory principal
payments which will be made in the
aggregate to all Junior Secured
Creditors: $550,000 at the end of
each of years 2, 3, 4 and 5 and the
remaining principal balance of
$1,079,000 and any unpaid interest
will be due and payable at the end of
the six-year term.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
The Reorganized Debtor's obligations
to RR Growth under the RR Growth
Promissory Note will be secured by
the Junior Secured Creditors Lien.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
On or before June 30, 2004, the RR
Growth shall have a one time right to
(i) exchange all or a portion of the
then unpaid principal balance of the
RR Growth Promissory Note for BDH
common stock at an exchange price of
$4.35 per share, and/or (ii) put up
to 50% of the then outstanding
principal balance of the RR Growth
Promissory Note to BDH for cash equal
to 80% of that portion of the
principal balance of the RR Growth
Promissory Note which has been put to
BDH.
On or before June 30, 2004, RR Growth
shall have the right to (i) exchange
all then owned shares of Junior
Secured Creditors Stock into BDH
common stock at a conversion price of
$4.35 per share using a valuation of
$645,000 for all of the Junior
Secured Creditors Stock, or (ii) put
all then owned shares of Junior
Secured Creditors Stock to the
Reorganized Debtor for cash in the
aggregate amount of $645,000 for all
of the Junior Secured Creditors Stock.
The foregoing treatment of RR
Growth's class 2 claim shall be in
full settlement and satisfaction of
such class 2 claim.
--------------- ----------------------------- ------------------ ---------------------------------------
=============== ============================= ================== =======================================
CLASS # DESCRIPTION IMPAIRED TREATMENT
(Y/N)
--------------- ----------------------------- ------------------ ---------------------------------------
3 The allowed secured claim Impaired; allowed On the Effective Date, Stratford will
of Stratford claim receive its pro rata share of the
in Junior Secured Creditors New Money
The total secured claim of this Contribution (the "Stratford Cash
Stratford is approximately class Distribution"). This pro rata share
$3,192,551, including was entitled will be computed by dividing the
accrued interest up until to vote total secured claim of Stratford by
the date of the Debtors' on the total amount of secured claims
bankruptcy filings. this Plan. held by all of the Junior Secured
However, under Section Creditors after subtracting the
506(c) of the Bankruptcy payment of the SCI Stock Proceeds
Code, the claim of from the amount of secured claims
Stratford is treated as held by the $2.5 Million Junior
secured only up to the Secured Creditors (the "Stratford
value of the collateral Percentage") and multiplying the
which secures that claim Stratford Percentage by $1,265,000.
and is treated as a general The Debtors estimate that the
unsecured claim (i.e., Stratford Cash Distribution will be
class 20) for the balance. in the amount of $470,780.
All of the Junior Secured In addition to the Stratford Cash
Creditors are on a pari Distribution, Stratford will receive
passu basis with respect to (i) a promissory note from the
the Junior Secured Reorganized Debtor (the "Stratford
Creditors Collateral, Promissory Note") with a principal
except with respect to the amount equal to the figure obtained
SCI Stock Proceeds as by multiplying the Stratford
described above, and Percentage by $3,279,000, which
subject to the senior lien amount is estimated to be $1,220,358
of Wells. and (ii) a pro-rata number of shares
of the Junior Secured Creditors Stock
determined by multiplying
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
the Stratford Percentage by the total
number of all shares of Junior
Secured Creditors Stock to be issued
to all Junior Secured Creditors.
The Stratford Promissory Note will
have the following additional
features: (i) the Stratford
Promissory Note will bear interest at
the rate of 7% per annum, (ii)
interest will be paid on the
Stratford Promissory Note on a
quarterly basis, (iii) the Stratford
Promissory Note will have a term of
six years, (iv) prepayments may be
made without any penalty, and (v)
Stratford would receive its pro rata
share of the following mandatory
principal payments which would be
made in the aggregate to all Junior
Secured Creditors: $550,000 at the
end of each of years 2, 3, 4 and 5
and the remaining principal balance
of $1,079,000 and any unpaid interest
will be due and payable at the end of
the six-year term.
The Reorganized Debtor's obligations
to Stratford under the Stratford
Promissory Note will be secured by
the Junior Secured Creditors Lien.
On or before June 30, 2004, Stratford
shall have a one time right to (i)
exchange all or a portion of the then
unpaid principal balance of the
Stratford Promissory Note for BDH
common stock at an exchange price of
$4.35 per share, and/or (ii) put up
to 50% of the then outstanding
principal balance of the Stratford
Promissory Note to BDH for cash equal
to 80% of that portion of the
principal balance of the Stratford
Promissory Note which has been put to
BDH.
On or before June 30, 2004, Stratford
shall have the right to (i) exchange
all then owned shares of Junior
Secured Creditors Stock into BDH
common stock at a conversion price of
$4.35 per share using a valuation of
$645,000 for all of the Junior
Secured Creditors Stock, or (ii) put
all then owned shares of Junior
Secured Creditors Stock to the
Reorganized Debtor for cash in the
aggregate amount of $645,000 for all
of the Junior Secured Creditors Stock.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
The foregoing treatment of
Stratford's class 3 claim shall be in
full settlement and satisfaction of
such class 3 claim.
--------------- ----------------------------- ------------------ ---------------------------------------
=============== ============================= ================== =======================================
CLASS # DESCRIPTION IMPAIRED TREATMENT
(Y/N)
--------------- ----------------------------- ------------------ ---------------------------------------
4 The allowed secured claim Impaired;allowed On the Effective Date, Cornerstone
of Cornerstone claim will receive its pro rata share of
in the $610,000 SCI Stock Proceeds (the
The total secured claim of this "Cornerstone SCI Stock Proceeds
Cornerstone is class Distribution"). This pro rata share
approximately $827,580, was entitled will be computed by dividing the
including accrued interest to vote total secured claim of Cornerstone by
up until the date of the on the total amount of the secured
Debtors' bankruptcy this Plan. claims held by the $2.5 Million
filings. However, under Junior Secured Creditors (the
Section 506(c) of the "Cornerstone Percentage") and
Bankruptcy Code, the claim multiplying the Cornerstone
of Cornerstone is treated Percentage by $610,000. The Debtors
as secured only up to the estimate that the Cornerstone SCI
value of the collateral Stock Proceeds Distribution will be
which secures that claim in the amount of $180,100.
and is treated as a general
unsecured claim (i.e., On the Effective Date, Cornerstone
class 20) for the balance. will also receive its pro rata share
of the Junior Secured Creditors New
All of the Junior Secured Money Contribution (the "Cornerstone
Creditors are on a pari Cash Distribution"). This pro rata
passu basis with respect to share would be computed by
the Junior Secured multiplying the Cornerstone
Creditors Collateral, Percentage by $1,265,000. The
except with respect to the Debtors estimate that the Cornerstone
SCI Stock Proceeds as Cash Distribution will be in the
described above, and amount of $95,482.
subject to the senior lien
of Wells. In addition to the Cornerstone SCI
Stock Proceeds Distribution and the
Cornerstone Cash
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
Distribution, Cornerstone will
receive (i) a promissory note from
the Reorganized Debtor (the
"Cornerstone Promissory Note") with a
principal amount equal to the figure
obtained by multiplying the
Cornerstone Percentage by $3,279,000,
which amount is estimated to be
$247,500 and (ii) a pro-rata number
of shares of the Junior Secured
Creditors Stock determined by
multiplying the Cornerstone Share
Percentage by the total number of all
shares of Junior Secured Creditors
Stock to be issued to all Junior
Secured Creditors.
The Cornerstone Promissory Note will
have the following additional
features: (i) the Cornerstone
Promissory Note will bear interest at
the rate of 7% per annum, (ii)
interest will be paid on the
Cornerstone Promissory Note on a
quarterly basis, (iii) the
Cornerstone Promissory Note will have
a term of six years, (iv) prepayments
may be made without any penalty, and
(v) Cornerstone would receive its pro
rata share of the following mandatory
principal payments which would be
made in the aggregate to all Junior
Secured Creditors: $550,000 at the
end of each of years 2, 3, 4 and 5
and the remaining principal balance
of $1,079,000 and any unpaid interest
will be due and payable at the end of
the six-year term.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
The Reorganized Debtor's obligations
to Cornerstone under the Cornerstone
Promissory Note will be secured by
the Junior Secured Creditors Lien.
On or before June 30, 2004,
Cornerstone shall have a one time
right to (i) exchange all or a
portion of the then unpaid principal
balance of the Cornerstone Promissory
Note for BDH common stock at an
exchange price of $4.35 per share,
and/or (ii) put up to 50% of the then
outstanding principal balance of the
Cornerstone Promissory Note to BDH
for cash equal to 80% of that portion
of the principal balance of the
Cornerstone Promissory Note which has
been put to BDH.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
On or before June 30, 2004,
Cornerstone shall have the right to
(i) exchange all then owned shares of
Junior Secured Creditors Stock into
BDH common stock at a conversion
price of $4.35 per share using a
valuation of $645,000 for all of the
Junior Secured Creditors Stock, or
(ii) put all then owned shares of
Junior Secured Creditors Stock to the
Reorganized Debtor for cash in the
aggregate amount of $645,000 for all
of the Junior Secured Creditors Stock.
The foregoing treatment of
Cornerstone's class 4 claim shall be
in full settlement and satisfaction
of such class 4 claim.
--------------- ----------------------------- ------------------ ---------------------------------------
=============== ============================= ================== =======================================
CLASS # DESCRIPTION IMPAIRED TREATMENT
(Y/N)
--------------- ----------------------------- ------------------ ---------------------------------------
5 The allowed secured claim Impaired;allowed On the Effective Date, Provender will
of Provender claim receive its pro rata share of the
in $610,000 SCI Stock Proceeds (the
The total secured claim of this "Provender SCI Stock Proceeds
Provender is approximately class Distribution"). This pro rata share
$241,825, including accrued is entitled will be computed by dividing the
interest up until the date to vote total secured claim of Provender by
of the Debtors' bankruptcy on the total amount of the secured
filings. However, under this Plan. claims held by the $2.5 Million
Section 506(c) of the Junior Secured Creditors (the
Bankruptcy Code, the claim "Provender Percentage") and
of Provender is treated as multiplying the Provender Percentage
secured only up to the by $610,000. The Debtors estimate
value of the collateral that the Provender SCI Stock Proceeds
which secures that claim Distribution will be in the amount of
and is treated as a general $52,627.
unsecured claim (i.e.,
class 20) for the balance. On the Effective Date, Provender will
also receive its pro rata share of
All of the Junior Secured the Junior Secured Creditors New
Creditors are on a pari Money Contribution (the "Provender
passu basis with respect to Cash Distribution"). This pro rata
the Junior Secured share would be computed by
Creditors Collateral, multiplying the Provender Percentage
except with respect to the by $1,265,000. The Debtors estimate
SCI Stock Proceeds as that the Provender Cash Distribution
described above, and will be in the amount of $27,901.
subject to the senior lien
of Wells.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
In addition to the Provender SCI
Stock Proceeds Distribution and the
Provender Cash Distribution,
Provender will receive (i) a
promissory note from the Reorganized
Debtor (the "Provender Promissory
Note") with a principal amount equal
to the figure obtained by multiplying
the Provender Percentage by
$3,279,000, which amount is estimated
to be $72,322 and (ii) a pro-rata
number of shares of the Junior
Secured Creditors Stock determined by
multiplying the Provender Percentage
by the total number of all shares of
Junior Secured Creditors Stock to be
issued to all Junior Secured
Creditors.
The Provender Promissory Note will
have the following additional
features: (i) the Provender
Promissory Note will bear interest at
the rate of 7% per annum, (ii)
interest will be paid on the
Provender Promissory Note on a
quarterly basis, (iii) the Provender
Promissory Note will have a term of
six years, (iv) prepayments may be
made without any penalty, and (v)
Provender would receive its pro rata
share of the following mandatory
principal payments which would be
made in the aggregate to all Junior
Secured Creditors: $550,000 at the
end of each of years 2, 3, 4 and 5
and the remaining principal balance
of $1,079,000 and any unpaid interest
will be due and payable at the end of
the six-year term.
The Reorganized Debtor's obligations
to Provender under the Provender
Promissory Note will be secured by
the Junior Secured Creditors Lien.
On or before June 30, 2004, Provender
shall have a one time right to (i)
exchange all or a portion of the then
unpaid principal balance of the
Provender Promissory Note for BDH
common stock at an exchange price of
$4.35 per share, and/or (ii) put up
to 50% of the then outstanding
principal balance of the Provender
Promissory Note to BDH for cash equal
to 80% of that portion of the
principal balance of the Provender
Promissory Note which has been put to
BDH.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
On or before June 30, 2004, Provender
shall have the right to (i) exchange
all then owned shares of Junior
Secured Creditors Stock into BDH
common stock at a conversion price of
$4.35 per share using a valuation of
$645,000 for all of the Junior
Secured Creditors Stock, or (ii) put
all then owned shares of Junior
Secured Creditors Stock to the
Reorganized Debtor for cash in the
aggregate amount of $645,000 for all
of the Junior Secured Creditors Stock.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
The foregoing treatment of
Provender's class 5 claim shall be in
full settlement and satisfaction of
such class 5 claim.
--------------- ----------------------------- ------------------ ---------------------------------------
=============== ============================= ================== =======================================
CLASS # DESCRIPTION IMPAIRED TREATMENT
(Y/N)
--------------- ----------------------------- ------------------ ---------------------------------------
6 The allowed secured claim Impaired;allowed On the Effective Date, Jim will
of Jim claim receive his pro rata share of the
in $610,000 SCI Stock Proceeds (the "Jim
The total secured claim of this SCI Stock Proceeds Distribution").
Jim is approximately class This pro rata share will be computed
$765,251, including accrued was entitled by dividing Jim's total secured claim
interest up until the date to vote by the total amount of the secured
of the Debtors' bankruptcy on claims held by the $2.5 Million
filings. However, under this Plan. Junior Secured Creditors (the "Jim
Section 506(c) of the Percentage") and multiplying the Jim
Bankruptcy Code, the claim Percentage by $610,000. The Debtors
of Jim is treated as estimate that the Jim SCI Stock
secured only up to the Proceeds Distribution will be in the
value of the collateral amount of $166,536.
which secures that claim
and is treated as a general On the Effective Date, Jim will also
unsecured claim (i.e., receive his pro rata share of the
class 20) for the balance. Junior Secured Creditors New Money
Contribution (the "Jim Cash
All of the Junior Secured Distribution"). This pro rata share
Creditors are on a pari would be computed by multiplying the
passu basis with respect to Jim Percentage by $1,265,000. The
the Junior Secured Debtors estimate that the Jim Cash
Creditors Collateral, Distribution will be in the amount of
except with respect to the $88,290.
SCI Stock Proceeds as
described above, and
subject to the senior lien
of Wells.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
In addition to the Jim SCI Stock
Proceeds Distribution and the Jim
Cash Distribution, Jim will receive
(i) a promissory note from the
Reorganized Debtor (the "Jim
Promissory Note") with a principal
amount equal to the figure obtained
by multiplying the Jim Percentage by
$3,279,000, which amount is estimated
to be $228,860 and (ii) a pro-rata
number of shares of the Junior
Secured Creditors Stock determined by
multiplying the Jim Percentage by the
total number of all shares of Junior
Secured Creditors Stock to be issued
to all Junior Secured Creditors.
The Jim Promissory Note will have the
following additional features: (i)
the Jim Promissory Note will bear
interest at the rate of 7% per annum,
(ii) interest will be paid on the Jim
Promissory Note on a quarterly basis,
(iii) the Jim Promissory Note will
have a term of six years, (iv)
prepayments may be made without any
penalty, and (v) Jim would receive
his pro rata share of the following
mandatory early principal payments
which would be made in the aggregate
to all Junior Secured Creditors if
they all voted to accept this Plan:
$550,000 at the end of each of years
2, 3, 4 and 5 and the remaining
principal balance of $1,079,000 and
any unpaid interest will be due and
payable at the end of the six-year
term.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
The Reorganized Debtor's obligations
to Jim under the Jim Promissory Note
will be secured by the Junior Secured
Creditors Lien.
On or before June 30, 2004, Jim shall
have a one time right to (i) exchange
all or a portion of the then unpaid
principal balance of the Jim
Promissory Note for BDH common stock
at an exchange price of $4.35 per
share, and/or (ii) put up to 50% of
the then outstanding principal
balance of the Jim Promissory Note to
BDH for cash equal to 80% of that
portion of the principal balance of
the Jim Promissory Note which has
been put to BDH.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
On or before June 30, 2004, Jim shall
have the right to (i) exchange all
then owned shares of Junior Secured
Creditors Stock into BDH common stock
at a conversion price of $4.35 per
share using a valuation of $645,000
for all of the Junior Secured
Creditors Stock, or (ii) put all then
owned shares of Junior Secured
Creditors Stock to the Reorganized
Debtor for cash in the aggregate
amount of $645,000 for all of the
Junior Secured Creditors Stock.
The foregoing treatment of Jim's
class 6 claim shall be in full
settlement and satisfaction of such
class 6 claim.
--------------- ----------------------------- ------------------ ---------------------------------------
=============== ============================= ================== =======================================
CLASS # DESCRIPTION IMPAIRED TREATMENT
(Y/N)
--------------- ----------------------------- ------------------ ---------------------------------------
7 The allowed secured claim Impaired;allowed On the Effective Date, Harry will
of Harry Adler ("Harry") claim receive his pro rata share of the
in $610,000 SCI Stock Proceeds (the
The total secured claim of this "Harry SCI Stock Proceeds
Harry is approximately class Distribution"). This pro rata share
$111,138, including accrued wasentitled will be computed by dividing Harry's
interest up until the date to vote total secured claim by the total
of the Debtors' bankruptcy on amount of the secured claims held by
filings. However, under this Plan. the $2.5 Million Junior Secured
Section 506(c) of the Creditors (the "Harry Percentage")
Bankruptcy Code, the claim and multiplying the Harry Percentage
of Harry is treated as by $610,000. The Debtors estimate
secured only up to the that the Harry SCI Stock Proceeds
value of the collateral Distribution will be in the amount of
which secures that claim $24,186.
and is treated as a general
unsecured claim (i.e., On the Effective Date, Harry will
class 20) for the balance. also receive his pro rata share of
the Junior Secured Creditors New
All of the Junior Secured Money Contribution (the "Harry Cash
Creditors are on a pari Distribution"). This pro rata share
passu basis with respect to would be computed by multiplying the
the Junior Secured Harry Percentage by $1,265,000. The
Creditors Collateral, Debtors estimate that the Harry Cash
except with respect to the Distribution will be in the amount of
SCI Stock Proceeds as $12,822.
described above, and
subject to the senior lien In addition to the Harry SCI Stock
of Wells. Proceeds Distribution and the Harry
Cash Distribution, Harry will receive
(i) a promissory
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
note from the Reorganized Debtor (the
"Harry Promissory Note") with a
principal amount equal to the figure
obtained by multiplying the Harry
Percentage by $3,279,000, which
amount is estimated to be $33,237 and
(ii) a pro-rata number of shares of
the Junior Secured Creditors Stock
determined by multiplying the Harry
Percentage by the total number of all
shares of Junior Secured Creditors
Stock to be issued to all Junior
Secured Creditors.
The Harry Promissory Note will have
the following additional features:
(i) the Harry Promissory Note will
bear interest at the rate of 7% per
annum, (ii) interest will be paid on
the Harry Promissory Note on a
quarterly basis, (iii) the Harry
Promissory Note will have a term of
six years, (iv) prepayments may be
made without any penalty, and (v)
Harry would receive his pro rata
share of the following mandatory
principal payments which would be
made in the aggregate to all Junior
Secured Creditors: $550,000 at the
end of each of years 2, 3, 4 and 5
and the remaining principal balance
of $1,079,000 and any unpaid interest
will be due and payable at the end of
the six-year term.
The Reorganized Debtor's obligations
to Harry under the Harry Promissory
Note will be secured by the Junior
Secured Creditors Lien.
On or before June 30, 2004, Harry
shall have a one time right to (i)
exchange all or a portion of the then
unpaid principal balance of the Harry
Promissory Note for BDH common stock
at an exchange price of $4.35 per
share, and/or (ii) put up to 50% of
the then outstanding principal
balance of the Harry Promissory Note
to BDH for cash equal to 80% of that
portion of the principal balance of
the Harry Promissory Note which has
been put to BDH.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
On or before June 30, 2004, Harry
shall have the right to (i) exchange
all then owned shares of Junior
Secured Creditors Stock into BDH
common stock at a conversion price of
$4.35 per share using a valuation of
$645,000 for all of the Junior
Secured Creditors Stock, or (ii) put
all then owned shares of Junior
Secured Creditors Stock to the
Reorganized Debtor for cash in the
aggregate amount of $645,000 for all
of the Junior Secured Creditors Stock.
The foregoing treatment of Harry's
class 7 claim shall be in full
settlement and satisfaction of such
class 7 claim.
--------------- ----------------------------- ------------------ ---------------------------------------
=============== ============================= ================== =======================================
CLASS # DESCRIPTION IMPAIRED TREATMENT
(Y/N)
--------------- ----------------------------- ------------------ ---------------------------------------
8 The allowed secured claim Impaired;allowed On the Effective Date, Milne will
of Greg Milne ("Milne") claim receive his pro rata share of the
in $610,000 SCI Stock Proceeds (the
The total secured claim of this "Milne SCI Stock Proceeds
Milne is approximately class Distribution"). This pro rata share
$11,114, including accrued was entitled will be computed by dividing Milne's
interest up until the date to vote total secured claim by the total
of the Debtors' bankruptcy on amount of the secured claims held by
filings. However, under this Plan. the $2.5 Million Junior Secured
Section 506(c) of the Creditors (the "Milne Percentage")
Bankruptcy Code, Milne's and multiplying the Milne Percentage
claim is treated as secured by $610,000. The Debtors estimate
only up to the value of the that the Milne SCI Stock Proceeds
collateral which secures Distribution will be in the amount of
that claim and is treated $2,419.
as a general unsecured
claim (i.e., class 20) for On the Effective Date, Milne will
the balance. also receive his pro rata share of
the Junior Secured Creditors New
All of the Junior Secured Money Contribution (the "Milne Cash
Creditors are on a pari Distribution"). This pro rata share
passu basis with respect to would be computed by multiplying the
the Junior Secured Milne Percentage by $1,265,000. The
Creditors Collateral, Debtors estimate that the Milne Cash
except with respect to the Distribution will be in the amount of
SCI Stock Proceeds as $1,282.
described above, and
subject to the senior lien In addition to the Milne SCI Stock
of Wells. Proceeds Distribution and the Milne
Cash Distribution,
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
Milne will receive (i) a promissory
note from the Reorganized Debtor (the
"Milne Promissory Note") with a
principal amount equal to the figure
obtained by multiplying the Milne
Percentage by $3,279,000, which
amount is estimated to be $3,324 and
(ii) a pro-rata number of shares of
the Junior Secured Creditors Stock
determined by multiplying the Milne
Percentage by the total number of all
shares of Junior Secured Creditors
Stock to be issued to all Junior
Secured Creditors.
The Milne Promissory Note will have
the following additional features:
(i) the Milne Promissory Note will
bear interest at the rate of 7% per
annum, (ii) interest will be paid on
the Milne Promissory Note on a
quarterly basis, (iii) the Milne
Promissory Note will have a term of
six years, (iv) prepayments may be
made without any penalty, and (v)
Milne would receive its pro rata
share of the following mandatory
principal payments which would be
made in the aggregate to all Junior
Secured Creditors: $550,000 at the
end of each of years 2, 3, 4 and 5
and the remaining principal balance
of $1,079,000 and any unpaid interest
will be due and payable at the end of
the six-year term.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
The Reorganized Debtor's obligations
to Milne under the Milne Promissory
Note will be secured by the Junior
Secured Creditors Lien.
On or before June 30, 2004, Milne
shall have a one time right to (i)
exchange all or a portion of the then
unpaid principal balance of the Milne
Promissory Note for BDH common stock
at an exchange price of $4.35 per
share, and/or (ii) put up to 50% of
the then outstanding principal
balance of the Milne Promissory Note
to BDH for cash equal to 80% of that
portion of the principal balance of
the Milne Promissory Note which has
been put to BDH.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
On or before June 30, 2004, Milne
shall have the right to (i) exchange
all then owned shares of Junior
Secured Creditors Stock into BDH
common stock at a conversion price of
$4.35 per share using a valuation of
$645,000 for all of the Junior
Secured Creditors Stock, or (ii) put
all then owned shares of Junior
Secured Creditors Stock to the
Reorganized Debtor for cash in the
aggregate amount of $645,000 for all
of the Junior Secured Creditors Stock.
The foregoing treatment of Milne's
class 8 claim shall be in full
settlement and satisfaction of such
class 8 claim.
--------------- ----------------------------- ------------------ ---------------------------------------
=============== ============================= ================== =======================================
CLASS # DESCRIPTION IMPAIRED TREATMENT
(Y/N)
--------------- ----------------------------- ------------------ ---------------------------------------
9 The allowed secured claim Impaired;allowed On the Effective Date, Zuckerman will
of Dan Zuckerman claim receive his pro rata share of the
("Zuckerman") in $610,000 SCI Stock Proceeds (the
this "Zuckerman SCI Stock Proceeds
The total secured claim of class Distribution"). This pro rata share
Zuckerman is approximately was entitled will be computed by dividing
$11,114, including accrued to vote Zuckerman's total secured claim by
interest up until the date on the total amount of the secured
of the Debtors' bankruptcy this Plan. claims held by the $2.5 Million
filings. However, under Junior Secured Creditors (the
Section 506(c) of the "Zuckerman Percentage") and
Bankruptcy Code, multiplying the Zuckerman Percentage
Zuckerman's claim is by $610,000. The Debtors estimate
treated as secured only up that the Zuckerman SCI Stock Proceeds
to the value of the Distribution will be in the amount of
collateral which secures $2,419.
that claim and is treated
as a general unsecured On the Effective Date, Zuckerman will
claim (i.e., class 20) for also receive his pro rata share of
the balance. the Junior Secured Creditors New
Money Contribution (the "Zuckerman
All of the Junior Secured Cash Distribution"). This pro rata
Creditors are on a pari share would be computed by
passu basis with respect to multiplying the Zuckerman Percentage
the Junior Secured by $1,265,000. The Debtors estimate
Creditors Collateral, that the Zuckerman Cash Distribution
except with respect to the will be in the amount of $1,282.
SCI Stock Proceeds as
described above, and
subject to the senior lien
of Wells.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
In addition to the Zuckerman SCI
Stock Proceeds Distribution and the
Zuckerman Cash Distribution Zuckerman
will receive (i) a promissory note
from the Reorganized Debtor (the
"Zuckerman Promissory Note") with a
principal amount equal to the figure
obtained by multiplying the Zuckerman
Percentage by $3,279,000, which
amount is estimated to be $3,324 and
(ii) a pro-rata number of shares of
the Junior Secured Creditors Stock
determined by multiplying the
Zuckerman by the total number of all
shares of Junior Secured Creditors
Stock to be issued to all Junior
Secured Creditors.
The Zuckerman Promissory Note will
have the following additional
features: (i) the Zuckerman
Promissory Note will bear interest at
the rate of 7% per annum, (ii)
interest will be paid on the
Zuckerman Promissory Note on a
quarterly basis, (iii) the Zuckerman
Promissory Note will have a term of
six years, (iv) prepayments may be
made without any penalty, and (v)
Zuckerman would receive his pro rata
share of the following mandatory
principal payments which would be
made in the aggregate to all Junior
Secured Creditors: $550,000 at the
end of each of years 2, 3, 4 and 5
and the remaining principal balance
of $1,079,000 and any unpaid interest
will be due and payable at the end of
the six-year term.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
The Reorganized Debtor's obligations
to Zuckerman under the Zuckerman
Promissory Note will be secured by
the Junior Secured Creditors Lien.
On or before June 30, 2004, Zuckerman
shall have a one time right to (i)
exchange all or a portion of the then
unpaid principal balance of the
Zuckerman Promissory Note for BDH
common stock at an exchange price of
$4.35 per share, and/or (ii) put up
to 50% of the then outstanding
principal balance of the Zuckerman
Promissory Note to BDH for cash equal
to 80% of that portion of the
principal balance of the Zuckerman
Promissory Note which has been put to
BDH.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
On or before June 30, 2004, Zuckerman
shall have the right to (i) exchange
all then owned shares of Junior
Secured Creditors Stock into BDH
common stock at a conversion price of
$4.35 per share using a valuation of
$645,000 for all of the Junior
Secured Creditors Stock, or (ii) put
all then owned shares of Junior
Secured Creditors Stock to the
Reorganized Debtor for cash in the
aggregate amount of $645,000 for all
of the Junior Secured Creditors Stock.
The foregoing treatment of
Zuckerman's class 9 claim shall be in
full settlement and satisfaction of
such class 9 claim.
--------------- ----------------------------- ------------------ ---------------------------------------
=============== ============================= ================== =======================================
CLASS # DESCRIPTION IMPAIRED TREATMENT
(Y/N)
--------------- ----------------------------- ------------------ ---------------------------------------
10 The allowed secured claim Impaired;allowed On the Effective Date, Nessim will
of Steve Nessim ("Nessim") claim receive his pro rata share of the
in $610,000 SCI Stock Proceeds (the
The total secured claim of this "Nessim SCI Stock Proceeds
Nessim is approximately class Distribution"). This pro rata share
$11,133, including accrued was entitled will be computed by dividing Nessim's
interest up until the date to vote total secured claim by the total
of the Debtors' bankruptcy on amount of the secured claims held by
filings. However, under this Plan. the $2.5 Million Junior Secured
Section 506(c) of the Creditors (the "Nessim Percentage")
Bankruptcy Code, Nessim's and multiplying the Nessim Percentage
claim is treated as secured by $610,000. The Debtors estimate
only up to the value of the that the Nessim SCI Stock Proceeds
collateral which secures Distribution will be in the amount of
that claim and is treated $2,423.
as a general unsecured
claim (i.e., class 20) for On the Effective Date, Nessim will
the balance. also receive his pro rata share of
the Junior Secured Creditors New
All of the Junior Secured Money Contribution (the "Nessim Cash
Creditors are on a pari Distribution"). This pro rata share
passu basis with respect to would be computed by multiplying the
the Junior Secured Nessim Percentage by $1,265,000. The
Creditors Collateral, Debtors estimate that the Nessim Cash
except with respect to the Distribution will be in the amount of
SCI Stock Proceeds as $1,284.
described above, and
subject to the senior lien In addition to the Nessim SCI Stock
of Wells. Proceeds Distribution and the Nessim
Cash Distribution, Nessim will
receive (i) a promissory note from
the Reorganized Debtor (the "Nessim
Promissory Note") with a
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
principal amount equal to the figure
obtained by multiplying the Nessim
Percentage by $3,279,000, which
amount is estimated to be $3,329 and
(ii) a pro-rata number of shares of
the Junior Secured Creditors Stock
determined by multiplying the Nessim
Percentage by the total number of all
shares of Junior Secured Creditors
Stock to be issued to all Junior
Secured Creditors.
The Nessim Promissory Note will have
the following additional features:
(i) the Nessim Promissory Note will
bear interest at the rate of 7% per
annum, (ii) interest will be paid on
the Nessim Promissory Note on a
quarterly basis, (iii) the Nessim
Promissory Note will have a term of
six years, (iv) prepayments may be
made without any penalty, and (v)
Nessim would receive its pro rata
share of the following mandatory
principal payments which would be
made in the aggregate to all Junior
Secured Creditors: $550,000 at the
end of each of years 2, 3, 4 and 5
and the remaining principal balance
of $1,079,000 and any unpaid interest
will be due and payable at the end of
the six-year term.
The Reorganized Debtor's obligations
to Nessim under the Nessim Promissory
Note will be secured by the Junior
Secured Creditors Lien.
On or before June 30, 2004, Nessim
shall have a one time right to (i)
exchange all or a portion of the then
unpaid principal balance of the
Nessim Promissory Note for BDH common
stock at an exchange price of $4.35
per share, and/or (ii) put up to 50%
of the then outstanding principal
balance of the Nessim Promissory Note
to BDH for cash equal to 80% of that
portion of the principal balance of
the Nessim Promissory Note which has
been put to BDH.
--------------- ----------------------------- ------------------ ---------------------------------------
On or before June 30, 2004, Nessim
shall have the right to (i) exchange
all then owned shares of Junior
Secured Creditors Stock into BDH
common stock at a conversion price of
$4.35 per share using a valuation of
$645,000 for all of the Junior
Secured Creditors Stock, or (ii) put
all then owned shares of Junior
Secured Creditors Stock to the
Reorganized Debtor for cash in the
aggregate amount of $645,000 for all
of the Junior Secured Creditors Stock.
The foregoing treatment of Nessim's
class 10 claim shall be in full
settlement and satisfaction of such
class 10 claim.
--------------- ----------------------------- ------------------ ---------------------------------------
=============== ============================= ================== =======================================
CLASS # DESCRIPTION IMPAIRED TREATMENT
(Y/N)
--------------- ----------------------------- ------------------ ---------------------------------------
11 The allowed secured claim Impaired; allowed On the Effective Date, Pinney will
of Pinney Family 1999 Trust claim in this receive its pro rata share of the
UAD 5/29/99 ("Pinney") class was entitled $610,000 SCI Stock Proceeds (the
to vote on this "Pinney SCI Stock Proceeds
The total secured claim of Plan. Distribution"). This pro rata share
Pinney is approximately will be computed by dividing Pinney's
$22,694, including accrued total secured claim by the total
interest up until the date amount of the secured claims held by
of the Debtors' bankruptcy the $2.5 Million Junior Secured
filings. However, under Creditors (the "Pinney Percentage")
Section 506(c) of the and multiplying the Pinney Percentage
Bankruptcy Code, Pinney's by $610,000. The Debtors estimate
claim is treated as secured that the Pinney SCI Stock Proceeds
only up to the value of the Distribution will be in the amount of
collateral which secures $4,939.
that claim and is treated
as a general unsecured On the Effective Date, Pinney will
claim (i.e., class 20) for also receive its pro rata share of
the balance. the Junior Secured Creditors New
Money Contribution (the "Pinney Cash
All of the Junior Secured Distribution"). This pro rata share
Creditors are on a pari would be computed by multiplying the
passu basis with respect to Pinney Percentage by $1,265,000. The
the Junior Secured Debtors estimate that the Pinney Cash
Creditors Collateral, Distribution will be in the amount of
except with respect to the $2,618.
SCI Stock Proceeds as
described above, and In addition to the Pinney SCI Stock
subject to the senior lien Proceeds Distribution and the Pinney
of Wells. Cash Distribution, Pinney will
receive (i) a promissory note from
the Reorganized
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
Debtor (the "Pinney Promissory Note")
with a principal amount equal to the
figure obtained by multiplying the
Pinney Percentage by $3,279,000,
which amount is estimated to be
$6,786 and (ii) a pro-rata number of
shares of the Junior Secured
Creditors Stock determined by
multiplying the Pinney Percentage by
the total number of all shares of
Junior Secured Creditors Stock to be
issued to all Junior Secured
Creditors.
The Pinney Promissory Note will have
the following additional features:
(i) the Pinney Promissory Note will
bear interest at the rate of 7% per
annum, (ii) interest will be paid on
the Pinney Promissory Note on a
quarterly basis, (iii) the Pinney
Promissory Note will have a term of
six years, (iv) prepayments may be
made without any penalty, and (v)
Pinney would receive its pro rata
share of the following mandatory
principal payments which would be
made in the aggregate to all Junior
Secured Creditors: $550,000 at the
end of each of years 2, 3, 4 and 5
and the remaining principal balance
of $1,079,000 and any unpaid interest
will be due and payable at the end of
the six-year term.
The Reorganized Debtor's obligations
to Pinney under the Pinney Promissory
Note will be secured by the Junior
Secured Creditors Lien.
On or before June 30, 2004, Pinney
shall have a one time right to (i)
exchange all or a portion of the then
unpaid principal balance of the
Pinney Promissory Note for BDH common
stock at an exchange price of $4.35
per share, and/or (ii) put up to 50%
of the then outstanding principal
balance of the Pinney Promissory Note
to BDH for cash equal to 80% of that
portion of the principal balance of
the Pinney Promissory Note which has
been put to BDH.
--------------- ----------------------------- ------------------ ---------------------------------------
On or before June 30, 2004, Pinney
shall have the right to (i) exchange
all then owned shares of Junior
Secured Creditors Stock into BDH
common stock at a conversion price of
$4.35 per share using a valuation of
$645,000 for all of the Junior
Secured Creditors Stock, or (ii) put
all then owned shares of Junior
Secured Creditors Stock to the
Reorganized Debtor for cash in the
aggregate amount of $645,000 for all
of the Junior Secured Creditors
Stock.
The foregoing treatment of Pinney's
class 11 claim shall be in full
settlement and satisfaction of such
class 11 claim.
--------------- ----------------------------- ------------------ ---------------------------------------
=============== ============================= ================== =======================================
CLASS # DESCRIPTION IMPAIRED TREATMENT
(Y/N)
--------------- ----------------------------- ------------------ ---------------------------------------
12 The allowed secured claim Impaired; allowed On the Effective Date, Appleton will
of Candice E. Appleton claim in this receive its pro rata share of the
Family Trust dated October class was entitled $610,000 SCI Stock Proceeds (the
15, 2002 ("Appleton") to vote on this "Appleton SCI Stock Proceeds
Plan. Distribution"). This pro rata share
The total secured claim of will be computed by dividing
Appleton is approximately Appleton's total secured claim by the
$18,648, including accrued total amount of the secured claims
interest up until the date held by the $2.5 Million Junior
of the Debtors' bankruptcy Secured Creditors (the "Appleton
filings. However, under Percentage") and multiplying the
Section 506(c) of the Appleton Percentage by $610,000. The
Bankruptcy Code, Appleton's Debtors estimate that the Appleton
claim is treated as secured SCI Stock Proceeds Distribution will
only up to the value of the be in the amount of $4,058.
collateral which secures
that claim and is treated On the Effective Date, Appleton will
as a general unsecured also receive its pro rata share of
claim (i.e., class 20) for the Junior Secured Creditors New
the balance. Money Contribution (the "Appleton
Cash Distribution"). This pro rata
All of the Junior Secured share would be computed by
Creditors are on a pari multiplying the Appleton Percentage
passu basis with respect to by $1,265,000. The Debtors estimate
the Junior Secured that the Appleton Cash Distribution
Creditors Collateral, will be in the amount of $2,152.
except with respect to the
SCI Stock Proceeds as In addition to the Appleton SCI Stock
described above, and Proceeds Distribution and the
subject to the senior lien Appleton Cash Distribution, Appleton
of Wells. will receive (i) a promissory note
from the Reorganized Debtor (the
"Appleton Promissory Note") with a
principal amount equal to the figure
obtained by multiplying the Appleton
Percentage by $3,279,000,
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
which amount is estimated to be
$5,576 and (ii) a pro-rata number of
shares of the Junior Secured
Creditors Stock determined by
multiplying the Appleton Percentage
by the total number of all shares of
Junior Secured Creditors Stock to be
issued to all Junior Secured
Creditors.
The Appleton Promissory Note will
have the following additional
features: (i) the Appleton Promissory
Note will bear interest at the rate
of 7% per annum, (ii) interest will
be paid on the Appleton Promissory
Note on a quarterly basis, (iii) the
Appleton Promissory Note will have a
term of six years, (iv) prepayments
may be made without any penalty, and
(v) Appleton would receive its pro
rata share of the following mandatory
principal payments which would be
made in the aggregate to all Junior
Secured Creditors: $550,000 at the
end of each of years 2, 3, 4 and 5
and the remaining principal balance
of $1,079,000 and any unpaid interest
will be due and payable at the end of
the six-year term.
The Reorganized Debtor's obligations
to Appleton under the Appleton
Promissory Note will be secured by
the Junior Secured Creditors Lien.
On or before June 30, 2004, Appleton
shall have a one time right to (i)
exchange all or a portion of the then
unpaid principal balance of the
Appleton Promissory Note for BDH
common stock at an exchange price of
$4.35 per share, and/or (ii) put up
to 50% of the then outstanding
principal balance of the Appleton
Promissory Note to BDH for cash equal
to 80% of that portion of the
principal balance of the Appleton
Promissory Note which has been put to
BDH.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
On or before June 30, 2004, Appleton
shall have the right to (i) exchange
all then owned shares of Junior
Secured Creditors Stock into BDH
common stock at a conversion price of
$4.35 per share using a valuation of
$645,000 for all of the Junior
Secured Creditors Stock, or (ii) put
all then owned shares of Junior
Secured Creditors Stock to the
Reorganized Debtor for cash in the
aggregate amount of $645,000 for all
of the Junior Secured Creditors Stock.
The foregoing treatment of Appleton's
class 12 claim shall be in full
settlement and satisfaction of such
class 12 claim.
--------------- ----------------------------- ------------------ ---------------------------------------
=============== ============================= ================== =======================================
CLASS # DESCRIPTION IMPAIRED TREATMENT
(Y/N)
--------------- ----------------------------- ------------------ ---------------------------------------
13 The allowed secured claim Impaired; allowed On the Effective Date, Taicher will
of Robert Taicher claim in this receive his pro rata share of the
("Taicher") class was entitled $610,000 SCI Stock Proceeds (the
to vote on this "Taicher SCI Stock Proceeds
The total secured claim of Plan. Distribution"). This pro rata share
Taicher is approximately will be computed by dividing
$50,100, including accrued Taicher's total secured claim by the
interest up until the date total amount of the secured claims
of the Debtors' bankruptcy held by the $2.5 Million Junior
filings. However, under Secured Creditors (the "Taicher
Section 506(c) of the Percentage") and multiplying the
Bankruptcy Code, Taicher's Taicher Percentage by $610,000. The
claim is treated as secured Debtors estimate that the Taicher SCI
only up to the value of the Stock Proceeds Distribution will be
collateral which secures in the amount of $10,903.
that claim and is treated
as a general unsecured On the Effective Date, Taicher will
claim (i.e., class 20) for also receive his pro rata share of
the balance. the Junior Secured Creditors New
Money Contribution (the "Taicher Cash
All of the Junior Secured Distribution"). This pro rata share
Creditors are on a pari would be computed by multiplying the
passu basis with respect to Taicher Percentage by $1,265,000.
the Junior Secured The Debtors estimate that the Taicher
Creditors Collateral, Cash Distribution will be in the
except with respect to the amount of $5,781.
SCI Stock Proceeds as
described above, and In addition to the Taicher SCI Stock
subject to the senior lien Proceeds Distribution and the Taicher
of Wells. Cash Distribution,
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
Taicher will receive (i) a promissory
note from the Reorganized Debtor (the
"Taicher Promissory Note") with a
principal amount equal to the figure
obtained by multiplying the Taicher
Percentage by $3,279,000, which
amount is estimated to be $14,983 and
(ii) a pro-rata number of shares of
the Junior Secured Creditors Stock
determined by multiplying the Taicher
Percentage by the total number of all
shares of Junior Secured Creditors
Stock to be issued to all Junior
Secured Creditors.
The Taicher Promissory Note will have
the following additional features:
(i) the Taicher Promissory Note will
bear interest at the rate of 7% per
annum, (ii) interest will be paid on
the Taicher Promissory Note on a
quarterly basis, (iii) the Taicher
Promissory Note will have a term of
six years, (iv) prepayments may be
made without any penalty, and (v)
Taicher would receive his pro rata
share of the following mandatory
principal payments which would be
made in the aggregate to all Junior
Secured Creditors: $550,000 at the
end of each of years 2, 3, 4 and 5
and the remaining principal balance
of $1,079,000 and any unpaid interest
will be due and payable at the end of
the six-year term.
The Reorganized Debtor's obligations
to Taicher under the Taicher
Promissory Note will be secured by
the Junior Secured Creditors Lien.
On or before June 30, 2004, Taicher
shall have a one time right to (i)
exchange all or a portion of the then
unpaid principal balance of the
Taicher Promissory Note for BDH
common stock at an exchange price of
$4.35 per share, and/or (ii) put up
to 50% of the then outstanding
principal balance of the Taicher
Promissory Note to BDH for cash equal
to 80% of that portion of the
principal balance of the Taicher
Promissory Note which has been put to
BDH.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
On or before June 30, 2004, Taicher
shall have the right to (i) exchange
all then owned shares of Junior
Secured Creditors Stock into BDH
common stock at a conversion price of
$4.35 per share using a valuation of
$645,000 for all of the Junior
Secured Creditors Stock, or (ii) put
all then owned shares of Junior
Secured Creditors Stock to the
Reorganized Debtor for cash in the
aggregate amount of $645,000 for all
of the Junior Secured Creditors Stock.
The foregoing treatment of Taicher's
class 13 claim shall be in full
settlement and satisfaction of such
class 13 claim.
--------------- ----------------------------- ------------------ ---------------------------------------
=============== ============================= ================== =======================================
CLASS # DESCRIPTION IMPAIRED TREATMENT
(Y/N)
--------------- ----------------------------- ------------------ ---------------------------------------
14 The allowed secured claim Impaired; allowed On the Effective Date, Bateman will
of Giles Bateman ("Bateman") claim in this receive his pro rata share of the
class was entitled $610,000 SCI Stock Proceeds (the
The total secured claim of to vote on this "Bateman SCI Stock Proceeds
Bateman is approximately Plan. Distribution"). This pro rata share
$9,113, including accrued will be computed by dividing
interest up until the date Bateman's total secured claim by the
of the Debtors' bankruptcy total amount of the secured claims
filings. However, under held by the $2.5 Million Junior
Section 506(c) of the Secured Creditors (the "Bateman
Bankruptcy Code, Bateman's Percentage") and multiplying the
claim is treated as secured Bateman Percentage by $610,000. The
only up to the value of the Debtors estimate that the Bateman SCI
collateral which secures Stock Proceeds Distribution will be
that claim and is treated in the amount of $1,983.
as a general unsecured
claim (i.e., class 20) for On the Effective Date, Bateman will
the balance. also receive his pro rata share of
the Junior Secured Creditors New
All of the Junior Secured Money Contribution (the "Bateman Cash
Creditors are on a pari Distribution"). This pro rata share
passu basis with respect to would be computed by multiplying the
the Junior Secured Bateman Percentage by $1,265,000.
Creditors Collateral, The Debtors estimate that the Bateman
except with respect to the Cash Distribution will be in the
SCI Stock Proceeds as amount of $1,051.
described above, and
subject to the senior lien
of Wells.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
In addition to the Bateman SCI Stock
Proceeds Distribution and the Bateman
Cash Distribution, Bateman will
receive (i) a promissory note from
the Reorganized Debtor (the "Bateman
Promissory Note") with a principal
amount equal to the figure obtained
by multiplying the Bateman Percentage
by $3,279,000, which amount is
estimated to be $2,725 and (ii) a
pro-rata of shares of the Junior
Secured Creditors Stock determined by
multiplying the Bateman Percentage by
the total number of all shares of
Junior Secured Creditors Stock to be
issued to all Junior Secured
Creditors.
The Bateman Promissory Note will have
the following additional features:
(i) the Bateman Promissory Note will
bear interest at the rate of 7% per
annum, (ii) interest will be paid on
the Bateman Promissory Note on a
quarterly basis, (iii) the Bateman
Promissory Note will have a term of
six years, (iv) prepayments may be
made without any penalty, and (v)
Bateman would receive its pro rata
share of the following mandatory
principal payments which would be
made in the aggregate to all Junior
Secured Creditors: $550,000 at the
end of each of years 2, 3, 4 and 5
and the remaining principal balance
of $1,079,000 and any unpaid interest
will be due and payable at the end of
the six-year term.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
The Reorganized Debtor's obligations
to Bateman under the Bateman
Promissory Note will be secured by
the Junior Secured Creditors Lien.
On or before June 30, 2004, Bateman
shall have a one time right to (i)
exchange all or a portion of the then
unpaid principal balance of the
Bateman Promissory Note for BDH
common stock at an exchange price of
$4.35 per share, and/or (ii) put up
to 50% of the then outstanding
principal balance of the Bateman
Promissory Note to BDH for cash equal
to 80% of that portion of the
principal balance of the Bateman
Promissory Note which has been put to
BDH.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
On or before June 30, 2004, Bateman
shall have the right to (i) exchange
all then owned shares of Junior
Secured Creditors Stock into BDH
common stock at a conversion price of
$4.35 per share using a valuation of
$645,000 for all of the Junior
Secured Creditors Stock, or (ii) put
all then owned shares of Junior
Secured Creditors Stock to the
Reorganized Debtor for cash in the
aggregate amount of $645,000 for all
of the Junior Secured Creditors Stock.
The foregoing treatment of Bateman's
class 14 claim shall be in full
settlement and satisfaction of such
class 14 claim.
--------------- ----------------------------- ------------------ ---------------------------------------
=============== ============================= ================== =======================================
CLASS # DESCRIPTION IMPAIRED TREATMENT
(Y/N)
--------------- ----------------------------- ------------------ ---------------------------------------
15 The allowed secured claim Impaired; allowed On the Effective Date, Simon will
of Herbert Simon ("Simon") claim in this receive his pro rata share of the
class was entitled $610,000 SCI Stock Proceeds (the
The total secured claim of to vote on this "Simon SCI Stock Proceeds
Simon is approximately Plan. Distribution"). This pro rata share
$289,324, including accrued will be computed by dividing Simon's
interest up until the date total secured claim by the total
of the Debtors' bankruptcy amount of the secured claims held by
filings. However, under the $2.5 Million Junior Secured
Section 506(c) of the Creditors (the "Simon Percentage")
Bankruptcy Code, Simon's and multiplying the Simon Percentage
claim is treated as secured by $610,000. The Debtors estimate
only up to the value of the that the Simon SCI Stock Proceeds
collateral which secures Distribution will be in the amount of
that claim and is treated $62,963.
as a general unsecured
claim (i.e., class 20) for On the Effective Date, Simon will
the balance. also receive his pro rata share of
the Junior Secured Creditors New
All of the Junior Secured Money Contribution (the "Simon Cash
Creditors are on a pari Distribution"). This pro rata share
passu basis with respect to would be computed by multiplying the
the Junior Secured Simon Percentage by $1,265,000. The
Creditors Collateral, Debtors estimate that the Simon Cash
except with respect to the Distribution will be in the amount of
SCI Stock Proceeds as $33,382.
described above, and
subject to the senior lien In addition to the Simon SCI Stock
of Wells. Proceeds Distribution and the Simon
Cash Distribution,
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
Simon will receive (i) a promissory
note from the Reorganized Debtor (the
"Simon Promissory Note") with a
principal amount equal to the figure
obtained by multiplying the Simon
Percentage by $3,279,000, which
amount is estimated to be $86,526 and
(ii) a pro-rata number of shares of
the Junior Secured Creditors Stock
determined by multiplying the Simon
Percentage by the total number of all
shares of Junior Secured Creditors
Stock to be issued to all Junior
Secured Creditors.
The Simon Promissory Note will have
the following additional features:
(i) the Simon Promissory Note will
bear interest at the rate of 7% per
annum, (ii) interest will be paid on
the Simon Promissory Note on a
quarterly basis, (iii) the Simon
Promissory Note will have a term of
six years, (iv) prepayments may be
made without any penalty, and (v)
Simon would receive its pro rata
share of the following mandatory
principal payments which would be
made in the aggregate to all Junior
Secured Creditors: $550,000 at the
end of each of years 2, 3, 4 and 5
and the remaining principal balance
of $1,079,000 and any unpaid interest
will be due and payable at the end of
the six-year term.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
The Reorganized Debtor's obligations
to Simon under the Simon Promissory
Note will be secured by the Junior
Secured Creditors Lien.
On or before June 30, 2004, Simon
shall have a one time right to (i)
exchange all or a portion of the then
unpaid principal balance of the Simon
Promissory Note for BDH common stock
at an exchange price of $4.35 per
share, and/or (ii) put up to 50% of
the then outstanding principal
balance of the Simon Promissory Note
to BDH for cash equal to 80% of that
portion of the principal balance of
the Simon Promissory Note which has
been put to BDH.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
On or before June 30, 2004, Simon
shall have the right to (i) exchange
all then owned shares of Junior
Secured Creditors Stock into BDH
common stock at a conversion price of
$4.35 per share using a valuation of
$645,000 for all of the Junior
Secured Creditors Stock, or (ii) put
all then owned shares of Junior
Secured Creditors Stock to the
Reorganized Debtor for cash in the
aggregate amount of $645,000 for all
of the Junior Secured Creditors
Stock.
The foregoing treatment of Simon's
class 15 claim shall be in full
settlement and satisfaction of such
class 15 claim.
--------------- ----------------------------- ------------------ ---------------------------------------
=============== ============================= ================== =======================================
CLASS # DESCRIPTION IMPAIRED TREATMENT
(Y/N)
--------------- ----------------------------- ------------------ ---------------------------------------
16 The allowed secured claim Impaired; allowed On the Effective Date, Montesano will
of Montesano Family Trust claim in this receive its pro rata share of the
Dated March 17, 1998 class was entitled $610,000 SCI Stock Proceeds (the
("Montesano") to vote on this "Montesano SCI Stock Proceeds
Plan. Distribution"). This pro rata share
The total secured claim of will be computed by dividing
Montesano is approximately Montesano's total secured claim by
$289,324, including accrued the total amount of the secured
interest up until the date claims held by the $2.5 Million
of the Debtors' bankruptcy Junior Secured Creditors (the
filings. However, under "Montesano Percentage") and
Section 506(c) of the multiplying the Montesano Percentage
Bankruptcy Code, by $610,000. The Debtors estimate
Montesano's claim is that the Montesano SCI Stock Proceeds
treated as secured only up Distribution will be in the amount of
to the value of the $62,963.
collateral which secures
that claim and is treated On the Effective Date, Montesano will
as a general unsecured also receive its pro rata share of
claim (i.e., class 20) for the Junior Secured Creditors New
the balance. Money Contribution (the "Montesano
Cash Distribution"). This pro rata
All of the Junior Secured share would be computed by
Creditors are on a pari multiplying the Montesano Percentage
passu basis with respect to by $1,265,000. The Debtors estimate
the Junior Secured that the Jim Cash Distribution will
Creditors Collateral, be in the amount of $33,382.
except with respect to the
SCI Stock Proceeds as In addition to the Montesano SCI
described above, and Stock Proceeds Distribution and the
subject to the senior lien Montesano Cash Distribution,
of Wells.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
Montesano will receive (i) a
promissory note from the Reorganized
Debtor (the "Montesano Promissory
Note") with a principal amount equal
to the figure obtained by multiplying
the Montesano Percentage by
$3,279,000, which amount is estimated
to be $86,526 and (ii) a pro-rata
number of shares of the Junior
Secured Creditors Stock determined by
multiplying the Montesano Percentage
by the total number of all shares of
Junior Secured Creditors Stock to be
issued to all Junior Secured
Creditors.
The Montesano Promissory Note will
have the following additional
features: (i) the Montesano
Promissory Note will bear interest at
the rate of 7% per annum, (ii)
interest will be paid on the
Montesano Promissory Note on a
quarterly basis, (iii) the Montesano
Promissory Note will have a term of
six years, (iv) prepayments may be
made without any penalty, and (v)
Montesano would receive its pro rata
share of the following mandatory
principal payments which would be
made in the aggregate to all Junior
Secured Creditors: $550,000 at the
end of each of years 2, 3, 4 and 5
and the remaining principal balance
of $1,079,000 and any unpaid interest
will be due and payable at the end of
the six-year term.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
The Reorganized Debtor's obligation's
to Montesano under the Montesano
Promissory Note will be secured by
the Junior Secured Creditors Lien.
On or before June 30, 2004, Montesano
shall have a one time right to (i)
exchange all or a portion of the then
unpaid principal balance of the
Montesano Promissory Note for BDH
common stock at an exchange price of
$4.35 per share, and/or (ii) put up
to 50% of the then outstanding
principal balance of the Montesano
Promissory Note to BDH for cash equal
to 80% of that portion of the
principal balance of the Montesano
Promissory Note which has been put to
BDH.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
On or before June 30, 2004, Montesano
shall have the right to (i) exchange
all then owned shares of Junior
Secured Creditors Stock into BDH
common stock at a conversion price of
$4.35 per share using a valuation of
$645,000 for all of the Junior
Secured Creditors Stock, or (ii) put
all then owned shares of Junior
Secured Creditors Stock to the
Reorganized Debtor for cash in the
aggregate amount of $645,000 for all
of the Junior Secured Creditors Stock.
The foregoing treatment of
Montesano's class 16 claim shall be
in full settlement and satisfaction
of such class 16 claim.
--------------- ----------------------------- ------------------ ---------------------------------------
=============== ============================= ================== =======================================
CLASS # DESCRIPTION IMPAIRED TREATMENT
(Y/N)
--------------- ----------------------------- ------------------ ---------------------------------------
17 The allowed secured claim Impaired; allowed On the Effective Date, Perlman will
of The Perlman Family Trust claim in this receive its pro rata share of the
Dated 2/17/95 ("Perlman") class was entitled $610,000 SCI Stock Proceeds (the
to vote on "Perlman SCI Stock Proceeds
The total secured claim of this Plan. Distribution"). This pro rata share
Perlman is approximately will be computed by dividing
$96,441, including accrued Perlman's total secured claim by the
interest up until the date total amount of the secured claims
of the Debtors' bankruptcy held by the $2.5 Million Junior
filings. However, under Secured Creditors (the "Perlman
Section 506(c) of the Percentage") and multiplying the
Bankruptcy Code, Perlman's Perlman Percentage by $610,000. The
claim is treated as secured Debtors estimate that the Perlman SCI
only up to the value of the Stock Proceeds Distribution will be
collateral which secures in the amount of $20,988.
that claim and is treated
as a general unsecured On the Effective Date, Perlman will
claim (i.e., class 20) for also receive its pro rata share of
the balance. the Junior Secured Creditors New
Money Contribution (the "Perlman Cash
All of the Junior Secured Distribution"). This pro rata share
Creditors are on a pari would be computed by multiplying the
passu basis with respect to Perlman Percentage by $1,265,000.
the Junior Secured The Debtors estimate that the Jim
Creditors Collateral, Cash Distribution will be in the
except with respect to the amount of $11,127.
SCI Stock Proceeds as
described above, and In addition to the Perlman SCI Stock
subject to the senior lien Proceeds Distribution and the Perlman
of Wells. Cash Distribution, Perlman will
receive (i)
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
a promissory note from the
Reorganized Debtor (the "Perlman
Promissory Note") with a principal
amount equal to the figure obtained
by multiplying the Perlman Percentage
by $3,279,000, which amount is
estimated to be $28,842 and (ii) a
pro-rata number of shares of the
Junior Secured Creditors Stock
determined by multiplying the Perlman
Percentage by the total number of all
shares of Junior Secured Creditors
Stock to be issued to all Junior
Secured Creditors.
The Perlman Promissory Note will have
the following additional features:
(i) the Perlman Promissory Note will
bear interest at the rate of 7% per
annum, (ii) interest will be paid on
the Perlman Promissory Note on a
quarterly basis, (iii) the Perlman
Promissory Note will have a term of
six years, (iv) prepayments may be
made without any penalty, and (v)
Perlman would receive its pro rata
share of the following mandatory
principal payments which would be
made in the aggregate to all Junior
Secured Creditors: $550,000 at the
end of each of years 2, 3, 4 and 5
and the remaining principal balance
of $1,079,000 and any unpaid interest
will be due and payable at the end of
the six-year term.
The Reorganized Debtor's obligations
to Perlman under the Perlman
Promissory Note will be secured by
the Junior Secured Creditors Lien.
On or before June 30, 2004, Perlman
shall have a one time right to (i)
exchange all or a portion of the then
unpaid principal balance of the
Perlman Promissory Note for BDH
common stock at an exchange price of
$4.35 per share, and/or (ii) put up
to 50% of the then outstanding
principal balance of the Perlman
Promissory Note to BDH for cash equal
to 80% of that portion of the
principal balance of the Perlman
Promissory Note which has been put to
BDH.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
On or before June 30, 2004, Perlman
shall have the right to (i) exchange
all then owned shares of Junior
Secured Creditors Stock into BDH
common stock at a conversion price of
$4.35 per share using a valuation of
$645,000 for all of the Junior
Secured Creditors Stock, or (ii) put
all then owned shares of Junior
Secured Creditors Stock to the
Reorganized Debtor for cash in the
aggregate amount of $645,000 for all
of the Junior Secured Creditors
Stock.
The foregoing treatment of Perlman's
class 17 claim shall be in full
settlement and satisfaction of such
class 17 claim.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
=============== ============================= ================== =======================================
CLASS # DESCRIPTION IMPAIRED TREATMENT
(Y/N)
--------------- ----------------------------- ------------------ ---------------------------------------
18 The allowed secured claim Impaired; allowed On the Effective Date, Merrill will
of Trent and Marilyn claim in this receive its pro rata share of the
Merrill Trust dated 1/29/90 class was entitled $610,000 SCI Stock Proceeds (the
("Merrill") to vote on "Merrill SCI Stock Proceeds
this Plan. Distribution"). This pro rata share
The total secured claim of will be computed by dividing
Merrill is approximately Merrill's total secured claim by the
$48,222, including accrued total amount of the secured claims
interest up until the date held by the $2.5 Million Junior
of the Debtors' bankruptcy Secured Creditors (the "Merrill
filings. However, under Percentage") and multiplying the
Section 506(c) of the Merrill Percentage by $610,000. The
Bankruptcy Code, Merrill's Debtors estimate that the Merrill SCI
claim is treated as secured Stock Proceeds Distribution will be
only up to the value of the in the amount of $10,494.
collateral which secures
that claim and is treated On the Effective Date, Merrill will
as a general unsecured also receive its pro rata share of
claim (i.e., class 20) for the Junior Secured Creditors New
the balance. Money Contribution (the "Merrill Cash
Distribution"). This pro rata share
All of the Junior Secured would be computed by multiplying the
Creditors are on a pari Merrill Percentage by $1,265,000.
passu basis with respect to The Debtors estimate that the Merrill
the Junior Secured Cash Distribution will be in the
Creditors Collateral, amount of $5,564.
except with respect to the
SCI Stock Proceeds as In addition to the Merrill SCI Stock
described above, and Proceeds Distribution and the Merrill
subject to the senior lien Cash Distribution, Merrill will
of Wells. receive (i)
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
a promissory note from the
Reorganized Debtor (the "Merrill
Promissory Note") with a principal
amount equal to the figure obtained
by multiplying the Merrill Percentage
by $3,279,000, which amount is
estimated to be $14,421 and (ii) a
pro-rata number of shares of the
Junior Secured Creditors Stock
determined by multiplying the Merrill
Percentage by the total number of all
shares of Junior Secured Creditors
Stock to be issued to all Junior
Secured Creditors.
The Merrill Promissory Note will have
the following additional features:
(i) the Merrill Promissory Note will
bear interest at the rate of 7% per
annum, (ii) interest will be paid on
the Merrill Promissory Note on a
quarterly basis, (iii) the Merrill
Promissory Note will have a term of
six years, (iv) prepayments may be
made without any penalty, and (v)
Merrill would receive its pro rata
share of the following mandatory
principal payments which would be
made in the aggregate to all Junior
Secured Creditors: $550,000 at the
end of each of years 2, 3, 4 and 5
and the remaining principal balance
of $1,079,000 and any unpaid interest
will be due and payable at the end of
the six-year term.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
The Reorganized Debtor's obligations
to Merrill under the Merrill
Promissory Note will be secured by
the Junior Secured Creditors Lien.
On or before June 30, 2004, Merrill
shall have a one time right to (i)
exchange all or a portion of the then
unpaid principal balance of the
Merrill Promissory Note for BDH
common stock at an exchange price of
$4.35 per share, and/or (ii) put up
to 50% of the then outstanding
principal balance of the Merrill
Promissory Note to BDH for cash equal
to 80% of that portion of the
principal balance of the Merrill
Promissory Note which has been put to
BDH.
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
On or before June 30, 2004, Merrill
shall have the right to (i) exchange
all then owned shares of Junior
Secured Creditors Stock into BDH
common stock at a conversion price of
$4.35 per share using a valuation of
$645,000 for all of the Junior
Secured Creditors Stock, or (ii) put
all then owned shares of Junior
Secured Creditors Stock to the
Reorganized Debtor for cash in the
aggregate amount of $645,000 for all
of the Junior Secured Creditors
Stock.
The foregoing treatment of Merrill's
class 17 claim shall be in full
settlement and satisfaction of such
class 17 claim.
--------------- ----------------------------- ------------------ ---------------------------------------
Attached to this Plan as Exhibit "1" is a schedule setting forth (i)
the computation of the amount of the secured claims of all of the Junior
Secured Creditors (including interest accrued up until the date of the
Debtors' bankruptcy filings), (ii) the pro rated distribution of the
$610,000 of SCI Stock Proceeds, (iii) the pro rated distribution of the
Junior Secured Creditors New Money Contribution, (iv) the pro rated
distribution of the Junior Secured Creditors Promissory Notes to be provided
to all of the Junior Secured Creditors, and (v) the pro rated distribution of
the shares of the Junior Secured Creditors Stock.
2. Classes of Priority Unsecured Claims
Certain priority claims that are referred to in Bankruptcy Code
Sections 507(a)(3), (4), (5), (6), and (7) are required to be placed in
classes. These types of claims are entitled to priority treatment as follows:
the Bankruptcy Code requires that each holder of such a claim receive
cash on the Effective Date equal to the allowed amount of such claim.
However, a class of unsecured priority claim holders may vote to accept
deferred cash payments of a value, as of the Effective Date, equal to the
allowed amount of such claim. The Debtors believe that there are no Section
507(a)(3), (4), (5), (6), or (7) priority unsecured claims. To the extent
the Debtors do have any such allowed priority unsecured claims, such claims
will be considered class 19 allowed claims and will be paid in full by the
Reorganized Debtor on the later of the Effective Date and the date the
Bankruptcy Court enters an order allowing such priority claims.
3. Class of General Unsecured Claims
General unsecured claims are unsecured claims not entitled to
priority under Bankruptcy Code Section 507(a). The following chart
identifies this Plan's treatment of the class containing all of the Debtors'
non-priority general unsecured claims (see Exhibit
"I" to the Disclosure Statement for detailed information about each general
unsecured claim):
=============== ============================= ================== =======================================
CLASS # DESCRIPTION IMPAIRED TREATMENT
(Y/N)
--------------- ----------------------------- ------------------ ---------------------------------------
20 All general unsecured Impaired; allowed On the Effective Date, the
claims claims in this Reorganized Debtor will pay into the
class were Professional Fee Account the $435,000
Excluding any deficiency entitled to vote Unsecured Creditors New Money
claim of the Junior Secured on this Plan. Contribution, which cash will be used
Creditors, the Debtors first to pay any outstanding allowed
estimate that there are fees and expenses of the
approximately $17,291,000 professionals employed in these cases
of unsecured claims (other than FocalPoint) if such fees
consisting of (i) and expenses exceed the $600,000 that
$1,500,000 which was lent will be paid by the Reorganized
to the Debtors on December Debtor (after taking into account
20, 2001 by Provender, pre-petition retainers paid and the
Cornerstone, Jim and NH $750,000 which have been disbursed to
Walking, Ltd., (ii) such professionals from the
$700,000 of unsecured debt Professional Fee Account), and second
which was provided to to be distributed to holders of class
Provender, Cornerston and 20 allowed claims on a pro rata
Jim in connection with a basis. After the Bankruptcy Court
secured loan that they enters orders allowing the fees and
extended to the Debtors on expenses of the professionals
September 18, 2002, (iii) employed in these cases (other than
$300,000 of unsecured debt FocalPoint), LNBRB will pay any such
which was provided to a allowed fees and expenses in excess
number of people/entities of $600,000 out of the $435,000
in connection with a Unsecured Creditors New Money
secured loan that they Contribution which will be in the
extended to Professional Fee Account, and LNBRB
will turn over the remaining balance
of such $435,000 Unsecured Creditors
New Money Contribution to the
Reorganized Debtor who will hold such
funds in a segregated account for the
benefit of holders of class 20
allowed claims.
In addition, on the Effective Date,
the Reorganized Debtor will execute
and deliver to the Post-Confirmation
Committee for the benefit of class 20
claim holders a promissory note with
a principal amount of $700,000 (the
"First Unsecured Creditors Promissory
Note"). The First Unsecured
Creditors Promissory Note will bear
interest at the rate of 7% per annum
and have a term of five years. The
First Unsecured Creditors
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
the Debtors on October 15, Promissory Note will have the
2002, and (iv) an estimated following additional features: (i)
$14,791,000 of general interest will be paid on a quarterly
unsecured debt, inclusive basis, (ii) prepayments may be made
of an estimated $5,027,000 without penalty, and (iii) the
of lease rejection claims following mandatory principal
held by the landlords of payments will be made: $100,000 at
the 29 stores at which the the end of both years 2 and 3 and
Debtors are conducting or $150,000 at the end of year 4, and
have conducted store the remaining principal balance of
closing sales and $350,000 and any unpaid interest will
approximately $400,000 be due and payable at the end of the
owing on account of a prior five-year term. All payments made on
class action damage claim. account of the First Unsecured
Creditors Promissory Note will be
RR Growth and Stratford distributed to all holders of class
contend that Provender, 20 allowed claims on a pro rata basis.
Cornerstone, Jim and NH
Walking, Ltd. assigned In addition, on the Effective Date,
their claims relating to the Reorganized Debtor will execute
the $1,500,000 which they and deliver to the Post-Confirmation
lent to the Debtors on Committee for the benefit of class 20
December 20, 2001 to RR claim holders a second promissory
Growth and Stratford as note with a principal amount of
security and that any $21,000 (the "Second Unsecured
payment to be made to Creditors Promissory Note").
Provender, Cornerstone, Jim The Second Unsecured Creditors
and NH Walking, Ltd. on Promissory Note will bear interest at
account of such class 20 the rate of 7% per annum, and will
allowed claims must instead have the following additional
be made to RR Growth and features: (i) interest will paid on
Stratford (on a 50%/50% the Second Unsecured Creditors
basis). Promissory Note on a quarterly basis,
(ii) the Second Unsecured Creditors
Promissory Note will have a term of
six years and prepayments may be made
without any penalty, and (iii) the
remaining principal balance of
$21,000 and any unpaid interest will
be due and payable at the end of the
six-year term.
On or before June 30, 2004, the class
20 claim holders acting through the
Post-Confirmation Committee shall
have a one time right to (i) exchange
all or any portion of the then unpaid
principal balance of the First
Unsecured Creditors Promissory Note
for BDH common stock at an exchange
price of $4.35 per share, and/or (ii)
put up to 100% of the then
outstanding principal balance of the
First Unsecured Creditors Promissory
Note to the Reorganized Debtor for
cash equal to 80% of that portion of
the principal balance of the First
Unsecured Creditors Promissory Note
which is to be put to the Reorganized
Debtor.
On or before June 30, 2004, the class
20 claim holders acting through the
Post-Confirmation Committee shall
have a one time right to (i) exchange
all or a portion of then unpaid
principal balance of the Second
Unsecured Creditors Promissory Note
for BDH common stock at an exchange
price of $4.35 per share, and/or (ii)
put up to 100% of the then
outstanding principal balance of the
Second Unsecured Creditors Promissory
Note to BDH for cash equal to 80% of
that portion of the principal balance
of the Second Unsecured Creditors
Promissory Note which has been put to
BDH.
In addition to the foregoing, on the
Effective Date all of the Lease Sale
Proceeds (currently at $41,985 and
expected to remain at this amount)
and all Class Action Recovery Funds,
if any, will be turned over to the
Reorganized Debtor who will hold such
funds in a segregated account for the
benefit of holders of class 20
allowed claims and all rights and
title to the Class Action Suit, to
the extent it remains unresolved on
the Effective Date, shall be deemed
transferred to the Post-Confirmation
Committee who shall have the right to
continue pursuit of the Class Action
Suit for the benefit of class 20
claim holders.
If the allowed professional fees and
expenses (excluding FocalPoint) do
not exceed $600,000 (after taking
into account pre-petition retainers
paid and the $750,000 which has been
disbursed to such professionals from
the Professional Fee Account), which
would mean that the entire $435,000
Unsecured Creditors New Money
Contribution
--------------- ----------------------------- ------------------ ---------------------------------------
--------------- ----------------------------- ------------------ ---------------------------------------
would be paid to class 20 claim
holders, and no money is recovered
from the Class Action Suit, the
Debtors estimate that a total of
$1,197,985 (comprised of $435,000
from the Unsecured Creditors New
Money Contribution + $700,000 from
the First Unsecured Creditors
Promissory Note + $21,000 from the
Second Unsecured Creditors Promissory
Note + $41,985 of Lease Sale
Proceeds) would be available to be
distributed to class 20 claim
holders.
If a total of $1,197,985 is
distributed to class 20 claim holders
and the total class 20 allowed claims
of the Junior Secured Creditors is
$3,434,123 (which is the estimated
total), the Debtors estimate that
each holder of a class 20 allowed
claim would receive a distribution
equal to approximately 5.78% of the
amount of their class 20 allowed
claim because a total of $1,197,985
would be distributed to a total of
$20,725,123 of class 20 allowed
claims.
If the allowed professional fees and
expenses (excluding FocalPoint) do
exceed $600,000 (after taking into
account pre-petition retainers paid
and the $750,000 which has been
disbursed to such professionals from
the Professional Fee Account), the
estimated recovery to holders of
class 20 allowed claims would be
reduced accordingly.
The foregoing treatment shall be in
full settlement and satisfaction of
all class 20 claims.
4. Class of Interest Holders
Interest holders are the parties who hold an ownership interest
(i.e., equity interest) in the Debtors, whether such
ownership interest consists of common stock, preferred stock,
options, warrants or any other stock vehicle. The following chart
identifies this Plan's treatment of the class of interest holders:
=============== ============================== ======================= ====================================
CLASS # DESCRIPTION IMPAIRED TREATMENT
(Y/N)
--------------- ------------------------------ ----------------------- ------------------------------------
21 All stock holders, including Impaired; holders of On the Effective Date, all class
holders of common stock, class 21 interests 21 interests will be deemed
preferred stock, stock are not entitled to cancelled, terminated, rejected
options, warrants, etc. vote on this Plan and of no further force and
because they are effect and will no longer
deemed to have constitute an equity interest in
rejected this Plan the Debtors or the Reorganized
pursuant to Section Debtor without the need for
1126(g) of the either the Debtors or the class
Bankruptcy Code. 21 interest holders to take any
further action. Interest holders
will not receive any distribution
or retain any property under this
Plan on account of their equity
interests in the Debtors.
=============== ============================== ======================= ====================================
D. Means of Effectuating this Plan and Implementation of this Plan
1. The Reorganized Debtor.
On or immediately before the Effective Date, TWC Acquisition Corp.
("Reorganized Debtor") shall be incorporated as a Delaware corporation.
On or immediately after the Effective Date, the Reorganized Debtor will
change its name to "The Walking Company" (or any other name selected by the
Reorganized Debtor). On the Effective Date title to all assets, properties
and business operations of the Debtors, including, without limitation,
all cash on hand, deposits, accounts receivable, inventory, fixtures,
furnishings and equipment (but excluding the Lease Sale Proceeds, the
Class Action Recovery Funds and the Class Action Suit), shall vest in the
Reorganized Debtor, and thereafter the Reorganized Debtor shall own and
retain such assets free and clear of all rights,claims, liens, encumbrances,
and interests, except as expressly provided in this Plan. From and after
the Effective Date, the Reorganized Debtor shall own and operate such
assets without further supervision by or jurisdiction of the Bankruptcy
Court. From and after the Effective Date, the Reorganized Debtor will satisfy
the obligations owing to the holders of allowed claims in Classes 2 through 20
under this Plan, and will perform all obligations under executory contracts
and unexpired leases assumed by the Debtors and assigned to the Reorganized
Debtor in accordance with the terms and provisions of this Plan.
2. Plan Funding
On the Effective Date, BDH will contribute the New Money Contribution
to the Reorganized Debtor. $6.45 million of the New Money Contribution
will be in the form of equity and $2.5 million of the New Money Contribution
will be in the form of subordinated debt which will bear interest at the rate
of ten percent (10%) per annum, with all principal and interest subordinated
to all debts of the Reorganized Debtor except to the extent otherwise
agreed upon in writing by the affected debt holders. BDH will receive a
promissory note payable by the Reorganized Debtor to BDH in the amount of
the subordinated debt (the "Intercompany Note"). The Intercompany Note
shall be payable to BDH only if and to the extent the Reorganized Debtor
accumulates stockholders equity after the Effective Date in an amount
equal to the amount to be paid on the Intercompany Note. The form of the
BDH Intercompany Note is attached hereto as Exhibit "2". The amount of the
New Money Contribution to be funded on the Effective Date will be reduced
by all sums that BDH advanced to the Debtors prior to the Effective Date
for or on account of rent and other occupancy costs owed by the Debtors for
the month of February, 2004.
The $610,000 of SCI Stock Proceeds will be distributed to the
$2.5 Million Junior Secured Creditors on a pro rata basis on the Effective
Date unless the Bankruptcy Court orders to the contrary. The $41,985 of
Lease Sale Proceeds and all Class Action Recovery Funds will be distributed
on a pro rata basis to the holders of class 20 allowed claims. All other
payments required to be made on the Effective Date will be paid out of the
New Money Contribution, including the $600,000 for payment of allowed
professional fees and expenses (exclusive of any fees or expenses of
FocalPoint), any fees and expenses of FocalPoint as allowed by the Bankruptcy
Court, all other allowed administrative claims, the $1,265,000 Junior
Secured Creditors New Money Contribution, the $435,000 Unsecured Creditors
New Money Contribution, and all cure amounts owing with respect to all
unexpired leases and executory contracts assumed by the Debtors and assigned
to the Reorganized Debtor. All other payments required to be made under this
Plan (other than as set forth above with respect to exchange rights
granted to the holders of the Junior Secured Creditors Stock, the Junior
Secured Creditors Promissory Notes, the First Unsecured Creditors Promissory
Note, and the Second Unsecured Creditors Promissory Note) will be funded
through the business operations and working capital of the Reorganized Debtor.
BDH has requested Wells to provide the Reorganized Debtor with
post-confirmation financing. If Wells and BDH have reached an agreement on
mutually acceptable terms for the post-confirmation financing of the
Reorganized Debtor, the obligation of the Reorganized Debtor to make any
payments to the Junior Secured Creditors and unsecured creditors would be
expressly subordinated in right of payment to the prior payment in full of
all obligations of the Reorganized Debtor to Wells under the
post-confirmation financing agreement (the "Wells Post-Confirmation
Financing"), any refinancings thereof and any obligations to any other
current or future senior lender on the terms acceptable to Wells or such other
replacement lender (recognizing that absent an event of default existing
under such financing agreements which prohibits the Reorganized Debtor
from making its required Plan payments to the Junior Secured Creditors and
the unsecured creditors, the Reorganized Debtor shall continue to be
obligated to make all such Plan payments to the Junior Secured Creditors
and the unsecured creditors). The security interest of the Junior
Secured Creditors and the unsecured creditors in the Reorganized Debtor's
assets and in any proceeds thereof shall be junior and subordinate in all
respects to the security interests in the assets and in any proceeds thereof
granted to Wells.
If an event of default should occur with respect to the Wells
Post-Confirmation Financing, or with respect to any instrument in connection
with the Wells Post-Confirmation Financing under which payment is
outstanding, or if any payment of amounts to or for the benefit of the Junior
Secured Creditors or the unsecured creditors would cause an event of default
to occur thereunder, then, unless and until such event of default has been
cured or waived, no payment shall be made to or for the benefit of the Junior
Secured Creditors or the unsecured creditors on account of any right to
payment arising under this Plan.
If an event of default should occur with respect to the Wells
Post-Confirmation Financing, or with respect to any instrument in connection
with the Wells Post-Confirmation Financing under which payment is
outstanding, or if any payment of amounts to or for the benefit of the Junior
Secured Creditors or the unsecured creditors pursuant to or on account of a
right to payment arising under this Plan would cause an event of default to
occur thereunder, then, BDH may delay such payment until such event of
default shall have been cured or waived, or the payment of such amounts due
to or for the benefit of the Junior Secured Creditors or the unsecured
creditors would no longer cause such an event of default or the Wells
Post-Confirmation Financing indebtedness is paid in full. BDH will provide
written notice to the applicable Junior Secured Creditors or the
Post-Confirmation Committee of any such delay in payment. BDH will further
provide written notice to the applicable Junior Secured Creditors or the
Post-Confirmation Committee that the event of default has been cured or waived
or shall have ceased to exist and will thereafter pay the applicable
Junior Secured Creditors or the unsecured creditors as soon as practicable
both to bring them current and on a go forward basis.
Furthermore, if there shall occur any receivership, insolvency,
assignment for the benefit of creditors, bankruptcy, reorganization or
arrangements with creditors (whether or not pursuant to bankruptcy or other
insolvency laws), sale of all or substantially all of the assets,
dissolution, liquidation or any other marshaling of assets and liabilities
of the Reorganized Debtor, (i) no amount shall be paid by the Reorganized
Debtor to the Junior Secured Creditors and unsecured creditors unless and
until the principal of, interest on and all other amounts due with respect to
the Wells Post-Confirmation Financing then outstanding is paid in full, and
(ii) no claim or proof of claim shall be filed with the Reorganized Debtor
by or on behalf of the Junior Secured Creditors or the unsecured creditors
which shall assert any right to receive any payments except subject to the
payment in full of the principal of, interest on and all other amounts due with
respect to the Wells Post-Confirmation Financing then outstanding.
On or as soon as practicable after the Effective Date, the
Reorganized Debtor will issue the Junior Secured Creditors Stock to the
Junior Secured Creditors on a pro-rata basis as set forth in Exhibit "1" to
this Plan. In conjunction with the issuance of the Junior Secured
Creditors Stock, the Reorganized Debtor will issue to each of the Junior
Secured Creditors (i) a Warrant in the form of Exhibit "3" to this Plan to
exchange all of such Junior Secured Creditor's shares of stock in the
Reorganized Debtor for BDH common shares at an exchange price of $4.35 per
share using a valuation of $645,000 for all of the shares of the Junior
Secured Creditors Stock, and (ii) a Put Option in the form of Exhibit "4" to
this Plan to exchange all of such Junior Secured Creditor's shares of stock
in the Reorganized Debtor for a cash payment from the Reorganized Debtor
using a valuation of $645,000 for all shares of the Junior Secured Creditors
tock. The Warrants and Put Options issued in conjunction with the Junior
Secured Creditors Stock must be exercised, if at all, on or before June 30,
2004.
On or as soon as practicable after the Effective Date, the
Reorganized Debtor will issue the Junior Secured Creditors Promissory Notes
to the Junior Secured Creditors on a pro-rata basis as set forth in Exhibit
"1" to this Plan. In conjunction with the issuance of the Junior Secured
Creditors Promissory Notes, the Reorganized Debtor will issue to each of
the Junior Secured Creditors (i) a Warrant in the form of Exhibit "3" to
this Plan to exchange all or a portion of such Junior Secured Creditor"s
Promissory Note for BDH common shares at an exchange price of $4.35 per
share, and (ii) a Put Option in the form of Exhibit "5" to this Plan to
exchange up to fifty percent (50%) of the then outstanding principal
balance of such Junior Secured Creditor's Promissory Note for a cash
payment from BDH equal to eighty percent (80%) of the principal balance
of the such Junior Secured Creditor's Promissory Note being put to BDH.
The Warrants and Put Options issued in conjunction with the Junior
Secured Creditors Promissory Notes must be exercised, if at all, on or
before June 30, 2004.
On or as soon as practicable after the Effective Date, the
Reorganized Debtor will issue the First Unsecured Creditors Promissory Note
in the form of Exhibit "6" to this Plan to the Post-Confirmation
Committee for the benefit of class 20 claim holders. In conjunction with
the issuance of the First Unsecured Creditors Promissory Note, the
Reorganized Debtor will issue to the Post-Confirmation Committee for the
benefit of class 20 claim holders (i) a Warrant in the form of Exhibit
"3" to this Plan to exchange all or a portion of the unpaid principal
balance of the First Unsecured Creditors Promissory Note for BDH common
shares at an exchange price of $4.35 per share, and (ii) a Put Option in the
form of Exhibit "7" to this Plan to exchange up to One Hundred percent
(100%) of the then outstanding principal balance of the First Unsecured
Creditors Promissory Note for a cash payment from the Reorganized Debtor
equal to eighty percent (80%) of the principal balance of the First Unsecured
Creditors Promissory Note being put to the Reorganized Debtor. The Warrant
and Put Option issued in conjunction with the First Unsecured Creditors
Promissory Note must be exercised, if at all, on or before June 30, 2004.
On or as soon as practicable after the Effective Date, the
Reorganized Debtor will issue the Second Unsecured Creditors Promissory
Note in the form of Exhibit "8" to this Plan to the Post-Confirmation
Committee for the benefit of class 20 claim holders. In conjunction with
the issuance of the Second Unsecured Creditors Promissory Note, the
Reorganized Debtor will issue to the Post-Confirmation Committee for the
benefit of class 20 claim holders (i) a Warrant in the form of Exhibit "3" to
this Plan to exchange all or a portion of the unpaid principal balance of
Second Unsecured Creditors Promissory Note for BDH common shares at an
exchange price of $4.35 per share, and (b) a Put Option in the form of Exhibit
"9" to this Plan to exchange up to one hundred percent (100%) of the then
outstanding principal balance of the Second Unsecured Creditors Promissory
Note for a cash payment from BDH equal to eighty percent (80%) of the principal
balance of the Second Unsecured Creditors Promissory Note being put to BDH.
The Warrant and Put Option issued in conjunction with the Second Unsecured
Creditors Promissory Note must be exercised, if at all, on or before June
30, 2004.
In connection with the rights granted to holders of the Junior
Secured Creditors Stock, Junior Secured Creditors Promissory Note, the First
Unsecured Creditors Promissory Note and the Second Unsecured Creditors
Promissory Note to exchange their respective claims or interests for common
stock of BDH, BDH will obtain on or before the Effective Date a reasoned
legal opinion that such exchange rights and the BDH common stock issuable
pursuant thereto may be offered and sold to such creditors without
registration under the Securities Act of 1933 and such stock may be offered
and sold by such creditors without registration under the Securities
Act of 1933, assuming that none of such creditors is an "underwriter" as
defined in Section 1145(b) of the Bankruptcy Code.
Each instrument which constitutes or may constitute a security
issued to the Junior Secured Creditors and unsecured creditors under this
Plan shall be issued with a legend in substantially the following form unless,
as soon as practicable after the Effective Date, the recipient of such
instrument represents to the issuer that it is not an "underwriter" as
defined by Section 1145(b) of the Bankruptcy Code and indemnifies such issuer
for any breach of such representation:
"THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN
REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933 OR ANY
STATE SECURITIES LAWS AND THUS MAY NOT BE TRANSFERRED UNLESS
REGISTERED OR QUALIFIED UNDER THAT ACT OR SUCH LAWS OR UNLESS AN
EXEMPTION FROM REGISTRATION OR QUALIFICATION IS AVAILABLE."
If a party entitled to receive securities to be issued under
this Plan has any questions regarding its status as an "underwriter" under
Section 1145(b) of Bankruptcy Code, it should consult with its counsel prior to
making this representation to the issuer.
3. Substantive Consolidation
On the Effective Date, TWC and Alan's will be substantively
consolidated. There will be no distinction between the treatment of TWC's
creditors and Alan's creditors under this Plan. From and after the Effective
Date, TWC and Alan's will cease to exist as a separate legal entities.
4. Post-Confirmation Management and Board of Directors
The management of the Reorganized Debtor and the members of the
Reorganized Debtor's Board of Directors will be determined by BDH, as the owner
of 90% of the Reorganized Debtor. Prior to the Plan confirmation hearing,
BDH will file a pleading with the Bankruptcy Court identifying the makeup
of the initial management of the Reorganized Debtor and the initial
members of the Reorganized Debtor's Board of Directors.
5. Purchase and Waiver of Avoidance Causes of Action.
Other than the Class Action Suit, the Reorganized Debtor will be
acquiring all causes of action of these estates, including avoidance
causes of action, and the Reorganized Debtor has agreed not to pursue
any such causes of action.
6. Objections to Claims
The Post-Confirmation Committee shall file and prosecute or continue
with the prosecution of objections to claims which were commenced by
the Debtors prior to the Effective Date. The Bankruptcy Court shall
retain jurisdiction to consider and adjudicate all such objections
to claims, regardless of whether the objections to claims were
filed prior to or after the Effective Date. Any objection to any
claim must be filed within one hundred twenty (120) days following the
Effective Date.
7. Disbursing Agent
The Reorganized Debtor shall serve as the disbursing agent for the
purpose of making all distributions to the class 20 claim holders.
LNBRB shall cause all allowed fees and expenses of the professionals
employed in these cases (excluding FocalPoint) to be paid out of the
Professional Fee Account.
8. Executory Contracts and Unexpired Leases
On the Effective Date, all of the Debtors' executory contracts and
unexpired leases attached as Exhibit "11" to this Plan (the "Assumed
Contracts and Leases") shall be deemed assumed by the Reorganized
Debtor effective as of the Effective Date. BDH shall have the right to
amend the list of the Assumed Contracts and Leases up until the
business day prior to the hearing on confirmation of this Plan.
With respect to all of the Assumed Contracts and Leases, the
Reorganized Debtor will be required to (a) cure or provide adequate
assurance that the Reorganized Debtor will promptly cure any default
existing under all such Assumed Contracts and Leases, (b) compensate
or provide adequate assurance that the Reorganized Debtor will
promptly compensate any other party to such Assumed Contracts and
Leases for any actual pecuniary loss to such parties resulting from
any default existing under any such Assumed Contracts and Leases,
and (c) provide adequate assurance of future performance under such
Assumed Contracts and Leases. If the Reorganized Debtor elects not
to take an assignment of one or more of the Debtors' existing retail
store leases and those landlords obtain allowed unsecured claims
against the Debtors as a result of the rejection, the principal
amount of the First Unsecured Creditors' Promissory Note will be
increased so as not to dilute the distribution that class 20 claim
holders would have received if not for such rejection.
All of the Debtors' remaining executory contracts and
unexpired leases which are not included among the list of Assumed Contracts
and Leases attached as Exhibit "11" to this Plan shall be deemed rejected
effective as of 11:59 PST on the Effective Date. THE BAR DATE FOR FILING A
PROOF OF CLAIM BASED ON A CLAIM ARISING FROM THE REJECTION OF AN UNEXPIRED
LEASE OR EXECUTORY CONTRACT WHICH IS REJECTED ON THE EFFECTIVE DATE WILL
BE THIRTY (30) DAYS AFTER THE EFFECTIVE DATE. Any claim based on the
rejection of an unexpired lease or executory contract will be barred if the
proof of claim is not timely filed, unless the Bankruptcy Court orders
otherwise.
With respect to any real property leases of the Debtors that the
Reorganized Debtor elects not to take an assignment of (a "Rejected Property"),
the Reorganized Debtor shall be entitled to continue in possession of the
subject property and operate therefrom for up to 30 days after the Effective
Date (the "Exit Period") in order to close and exit the Rejected Property
in an orderly fashion, to give advance notice to the store employees, and to
remove store inventory, equipment and trade fixtures. The Reorganized
Debtor shall have the right to remove all inventory, equipment and trade
fixtures from a Rejected Property during the Exit Period free of any claim or
lien of the landlord or other party. During the Exit
Period, the Reorganized Debtor shall comply with all
provisions of the applicable lease, including, without limitation, the
payment of rent and expenses, the maintenance of insurance
coverage, and provisions regarding use. At the end of such occupancy the
Reorganized Debtor shall turn over possession of the Rejected Property
to the landlord in broom-clean condition and repair any damage caused by the
removal of equipment and trade fixtures all in accordance with the terms of
the respective lease. The Bankruptcy Court shall retain jurisdiction to order
the return of possession at the end of the Exit Period.
With respect to any executory contract or unexpired capital lease of
the Debtors that the Reorganized Debtor elects not to take an assignment of
(a "Rejected Contract"), the Reorganized Debtor shall have the same 30-day
Exit Period to redeliver such equipment to the lessor, and during such Exit
Period, the Reorganized Debtor shall pay all of the contractual rent due the
respective lessor under the Rejected Contract until the redelivery of such
equipment to the lessor, all in accordance with the terms of the
respective Rejected Contract.
9. Changes in Rates Subject to Regulatory Commission Approval
The Debtors are not subject to governmental regulatory commission
approval of their rates.
10. Name Change, Termination of Qualifications and Dissolution
of Debtors.
On the Effective Date, the Debtors shall deliver to the Reorganized
Debtor (a) an executed Certificate of Amendment to its Articles of
Incorporation changing its name to "Shoes Liquidation Co." in a form
acceptable to the California Secretary of State and (b) an executed
Certificate of Withdrawal from the State of Delaware surrendering its
authority to transact business in Delaware in a form acceptable to the
Delaware Secretary of State. Each of such documents shall be prepared
by BDH, at BDH's expense, and delivered to the Debtors for signature
at least one business day prior to the Effective Date. As soon as
practicable after the Effective Date, each of the Debtors shall
deliver to the Reorganized Debtor the documents necessary to surrender
its authority to transact business in each state in which it is
currently qualified to do business. Each of such documents shall be
prepared by BDH, at BDH's expenses, and delivered to the Debtors for
signature prior to the Effective Date.
Pursuant to this Plan, the Plan Confirmation Order, and Section
1400 of the California Corporations Code, as applicable, the Debtors
shall cease to exist as corporate entities and shall be deemed, as a
matter of law, dissolved, as of the entry of the Final Decree.
Notwithstanding the dissolution of the Debtors and consistent with
Section 2010 of the California Corporations Code, the Debtors shall
continue to exist for the purpose of winding up their affairs, and
the officers of the Debtors in office on the Effective Date shall
execute and deliver to the Reorganized Debtor such reasonable
instruments and other documents which are prepared by BDH, at BDH's
expense, and delivered to the Debtors prior to the Effective Date
for the purpose of carrying out or evidencing any of the transactions
contemplated by this Plan.
11. Tax-Free Reorganization
Confirmation of this Plan shall effect a tax-free reorganization under
Internal Revenue Code SS 368(a)(1)(G).
12. Exemption From Certain Transfer Taxes
Pursuant to section 1146(c) of the Bankruptcy Code, the transfer of
property shall not be subject to any stamp tax, transfer tax or
similar tax.
13. Present Certificated Securities and Promissory Notes Deemed
Null and Void
The various promissory notes, stock certificates, and other documents
to be provided to holders of allowed claims under this Plan shall be in
the place and stead of any certificated security or promissory note
presently held by such creditors as evidence of such allowed claims and
all such documents presently held by such creditors shall be deemed null
and void as of the Effective Date.
14. Retention of Jurisdiction
After confirmation of this Plan and occurrence of the Effective Date,
in addition to any jurisdiction which is provided to the Bankruptcy
Court by the Bankruptcy Code, the Bankruptcy Court will retain such
jurisdiction as is legally permissible including for the following
purposes:
i. to resolve any and all disputes regarding
the operation and interpretation of this Plan and the
Plan Confirmation Order;
ii. to resolve any and all disputes regarding any
exhibits to this Plan and any other documents that the Reorganized
Debtor issues under this Plan or requests the Debtors to execute to
effectuate the terms of this Plan;
iii. to determine the allowability,
classification, or priority of claims and interests, regardless of
whether such objection is filed before or after the Effective Date;
iv. to determine the extent, validity and
priority of any lien asserted against property of the Debtors or
their estates;
v. to construe and take any action to enforce
this Plan, the Plan Confirmation Order, and any other order of the
Bankruptcy Court, issue such orders as may be necessary for the
implementation, execution, performance, and consummation of this Plan,
the Plan Confirmation Order, and all matters referred to in this Plan
and the Plan Confirmation Order, and to determine all matters that
may be pending before the Bankruptcy Court in these cases on or
before the Effective Date with respect to any person or entity related
thereto;
vi. to determine (to the extent necessary) any
and all applications for allowance of compensation and reimbursement
of expenses of professionals for the period on or before the Effective
Date;
vii. to determine any request for payment of
administrative expenses;
viii. to determine motions for the rejection,
assumption, or assignment of executory contracts or unexpired leases
filed before the Effective Date and the allowance of any claims
resulting therefrom;
ix. to determine all applications, motions,
adversary proceedings, contested matters, and any other litigated
matters instituted during the pendency of these cases whether before,
on, or after the Effective Date including avoidance causes of action;
x. to determine such other matters and for
such other purposes as may be provided in the Plan Confirmation
Order;
xi. to modify this Plan under Section 1127 of
the Bankruptcy Code in order to remedy any apparent defect or
omission in this Plan or to reconcile any inconsistency in this Plan
so as to carry out its intent and purpose;
xii. except as otherwise provided in this Plan and
the Plan Confirmation Order, to issue injunctions, to take such
other actions or make such other orders as may be necessary or
appropriate to restrain interference with this Plan or the Plan
Confirmation Order, or the execution or implementation by any person or
entity of this Plan or the Plan Confirmation Order;
xiii. to issue such orders in aid of consummation
of this Plan and the Plan Confirmation Order, notwithstanding any
otherwise applicable nonbankruptcy law, with respect to any person or
entity, to the fullest extent authorized by the Bankruptcy Code or
Bankruptcy Rules; and
xiv. to enter a final decree closing these Chapter 11
cases.
15. Post-Confirmation Committee
The Post-Confirmation Committee shall be comprised of those
members of the Creditors Committee who wish to serve on the
Post-Confirmation Committee. The Post-Confirmation Committee
shall have the right to retain such professionals that they deem
necessary to effectuate the foregoing and to pay the fees and expenses
of such professionals out of the funds designated to be paid
to the class 20 claim holders without any further order of the
Bankruptcy Court.
The Post-Confirmation Committee shall remain in existence
until such time as the final distribution is made to holders of class
20 allowed claims. The Post-Confirmation Committee shall have
the powers and responsibilities, and the duties of the
Post-Confirmation Committee shall be restricted to the matters,
described immediately below.
1. The Post-Confirmation Committee shall monitor th
performance of the Reorganized Debtor regarding its obligations to make
all of the payments required to be made to class 20 allowed claims.
2. The Post-Confirmation Committee shall monitor the
performance of the Reorganized Debtor.
3. The Post-Confirmation Committee shall have the
authority to agree on behalf of all class 20 claim holders to:
i. proposals made by the Reorganized Debtor to
modify this Plan;
ii. elect to exchange all or a portion of the
then unpaid principal balance of the First
Unsecured Creditors Promissory Note for BDH common
stock at an exchange price of $4.35 per share and/or
put up to 100% of the then outstanding principal
balance of the First Unsecured Creditors Promissory
Note to the Reorganized Debtor for cash equal to 80%
of that portion of the principal balance of the First
Unsecured Creditors Promissory Note which is to be put
to the Reorganized Debtor, as provided for herein;
iii. elect to exchange all or a portion of the then
unpaid principal balance of the Second Unsecured
Creditors Promissory Note for BDH common stock at an
exchange price of $4.35 per share and/or put up to 100%
of the then outstanding principal balance of the
Second Unsecured Creditors Promissory Note to the
Reorganized Debtor for cash equal to 80% of that
portion of the principal balance of the Second
Unsecured Creditors Promissory Note which is to be
put to the Reorganized Debtor, as provided for
herein; and
iv. proposals made by the Reorganized Debtor to
postpone the scheduled date of a distribution to
holders of class 20 allowed claims.
4. The Post-Confirmation Committee may initiate and
prosecute objections to claims, including objections to claims
which were filed prior to the Effective Date.
5. The Post-Confirmation Committee shall have
authority to agree on behalf of class 20 claim holders to proposals by
the Reorganized Debtor with respect to disposition and settlement of
any class 20 claim.
6. The Post-Confirmation Committee shall have such
other powers and responsibilities as expressly set forth in this
Plan.
7. The members of the Post-Confirmation Committee shall
serve without compensation for their performance of services as members
of the Post-Confirmation Committee, except that they shall be
entitled to reimbursement of reasonable expenses by the
Reorganized Debtor.
8. The Post-Confirmation Committee shall take such
steps as are necessary to obtain the entry of a final decree closing
the Debtors' Chapter 11 cases
9. The Post-Confirmation Committee shall have the
right to retain the services of attorneys, accountants and other
agents which, in the discretion of the Post-Confirmation Committee,
are necessary to assist the Post-Confirmation Committee in the
performance of its duties, including any professional which were
employed in the Debtors' Chapter 11 cases whether by the Debtors or
the Creditors Committee. The fees and expenses of such
professionals shall be paid by the Reorganized Debtor upon the
monthly submission of bills to the Reorganized Debtor and the
Post-Confirmation Committee. The payment of the fees and expenses
of the Post-Confirmation Committee's retained professionals shall be
made in the ordinary course of business and shall not be subject to the
approval of the Bankruptcy Court.
10. Neither the Post-Confirmation Committee, nor any of
its members, designees or professionals, nor any duly designated
agent or representative of the Post-Confirmation Committee, or their
respective employees, shall be liable for the act or omission of
any other member, designee, agent or representative of the
Post-Confirmation Committee. Nor shall any member be liable for any
act or omission taken or omitted to be taken in its capacity as a
member of the Post-Confirmation Committee, other than acts or
omissions resulting from such member's willful misconduct or gross
negligence. The Post-Confirmation Committee may, in connection
with the performance of its functions, and in its sole and absolute
discretion, consult with its counsel, accountants and agents, and
shall not be liable for any act taken, omitted to be taken, or
suffered to be done in accordance with advice or opinions rendered by
such professionals. Notwithstanding such authority, the
Post-Confirmation Committee shall be under no obligation to consult
with its counsel, accountants or agents, and its determination
not to do so shall not result in the imposition of liability
on the Post-Confirmation Committee, or its members and/or designees,
unless such determination is based on willful negligence or gross
negligence.
11. The Post-Confirmation Committee will terminate upon
the Reorganized Debtor's satisfying in full all obligations
owing by the Reorganized Debtor under both the First Unsecured
Creditors Promissory Note and the Second Unsecured Creditors
Promissory Note.
IV. EFFECT OF CONFIRMATION OF THIS PLAN
A. Discharge.
The Debtors will not receive a discharge under this Plan pursuant
to and in accordance with the provisions of Section 1141 of the
Bankruptcy Code because there has been a liquidation of all or
substantially all of the property of the Debtors' estates and
because the Debtors will not engage in business after the consummation
of this Plan.
B. Modification of this Plan.
The Debtors may modify this Plan at any time before
confirmation. However, the Bankruptcy Court may require a new
disclosure statement and/or re-voting on this Plan if the Debtors
modify this Plan before confirmation. The Debtors may also seek to
modify this Plan at any time after confirmation of this Plan so long
as (1) this Plan has not been substantially consummated and (2)
the Bankruptcy Court authorizes the proposed modifications after notice
and a hearing.
C. Post-Confirmation Status Reports.
Until a final decree closing the Debtors' Chapter 11 cases is
entered, the Post-Confirmation Committee shall file a quarterly
status report with the Bankruptcy Court explaining what progress
has been made toward consummation of the confirmed Plan and shall
serve such status reports upon the Office of the United States Trustee,
the Post-Confirmation Committee, and those parties who have
requested special notice.
D. Post-Confirmation Conversion/Dismissal.
A creditor or any other party in interest may bring a motion to convert
r dismiss these cases under Section 1112(b) of the Bankruptcy Code
after this Plan is confirmed if there is a default in performing
this Plan. If the Bankruptcy Court orders these cases converted to
Chapter 7 after this Plan is confirmed, then all property that had
been property of the Chapter 11 estates, and that has not been
disbursed pursuant to this Plan, will revest in the Chapter 7 estates,
and the automatic stay will be reimposed upon the revested property,
but only to the extent that relief from stay was not previously
authorized by the Bankruptcy Court during these cases. The Plan
Confirmation Order may also be revoked under very limited
circumstances. The Bankruptcy Court may revoke the Plan Confirmation
Order if it was procured by fraud and if a party in interest brings an
adversary proceeding to revoke confirmation within 180 days after the
entry of the Plan Confirmation Order.
E. Final Decree.
Once these estates have been fully administered as referred to in
Bankruptcy Rule 3022, the Post-Confirmation Committee shall file a
motion with the Bankruptcy Court to obtain a final decree to close
these cases. The Reorganized Debtor shall be responsible for the
timely payment of all fees incurred pursuant to 28 U.S.C. Section
1930(a)(6) until the entry of a final decree closing these cases.
Presented By:
------------
LEVENE, NEALE, BENDER, RANKIN & BRILL L.L.P.
By: /s/ Monica Kim
---------------
RON BENDER
MONICA Y. KIM
Attorneys for Chapter 11
Debtors and Plan Proponents
Approved By:
------------
WOLF, RIFKIN, SHAPIRO & SCHULMAN, LLP
By: /s/ Simon Aron
---------------
SIMON ARON
Attorneys for Big Dog Holdings, Inc.
TABLE OF CONTENTS
-----------------
I. INTRODUCTION.............................................................................................2
II. PLAN SUMMARY.............................................................................................3
III. CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS....................................................12
A. What Creditors and Interest Holders Will Receive Under this Plan...............................12
B. Unclassified Claims............................................................................12
1. Administrative Expenses...............................................................13
2. Priority Tax Claims...................................................................20
C. Classified Claims and Interests................................................................21
1. Classes of Secured Claims.............................................................21
2. Classes of Priority Unsecured Claims..................................................77
3. Class of General Unsecured Claims.....................................................78
4. Class of Interest Holders.............................................................85
D. Means of Effectuating this Plan and Implementation of this Plan................................86
1. The Reorganized Debtor................................................................86
2. Plan Funding..........................................................................87
3. Substantive Consolidation.............................................................96
4. Post-Confirmation Management and Board of Directors...................................96
5. Purchase and Waiver of Avoidance Causes of Action.....................................96
6. Objections to Claims..................................................................96
7. Disbursing Agent......................................................................97
8. Executory Contracts and Unexpired Leases..............................................97
9. Changes in Rates Subject to Regulatory Commission Approval...........................100
10. Name Change, Termination of Qualifications and Dissolution of Debtors................100
11. Tax-Free Reorganization..............................................................101
12. Exemption From Certain Transfer Taxes................................................101
13. Present Certificated Securities and Promissory Notes Deemed Null and Void............102
14. Retention of Jurisdiction............................................................102
15. Post-Confirmation Committee..........................................................105
IV. EFFECT OF CONFIRMATION OF THIS PLAN....................................................................109
A. Discharge.....................................................................................109
B. Modification of this Plan.....................................................................109
C. Post-Confirmation Status Reports..............................................................110
D. Post-Confirmation Conversion/Dismissal........................................................110
E. Final Decree..................................................................................111