First Amended Chapter 11 Plan of Reorganization for Premier Concepts, Inc. and Acquisition of USN Television Group, Inc.

Contract Categories: Mergers & Acquisitions › Plan of Reorganization Agreements
Summary

Premier Concepts, Inc., operating under several trade names, has filed a Chapter 11 bankruptcy reorganization plan. The plan restructures the company's debts, provides for payments to creditors, cancels existing stock, and issues new stock. It also includes the acquisition of USN Television Group, Inc., making USN a wholly owned subsidiary. Secured creditors will receive payments or notes, while unsecured creditors will receive partial payments in installments. The plan is subject to court approval and aims to allow Premier Concepts to continue business under new management while improving its financial position.

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EX-2.1 2 usn_8kex2-1.txt EXHIBIT 2.1 PLAN OF REORGANIZATION OF USN CORPORATION TABLE OF CONTENTS ----------------- PAGE ---- TABLE OF AUTHORITIES ....................................................... iii I. INTRODUCTION ...................................................... 1 II. DEFINITIONS ...................................................... 3 III. CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS ............ 10 A. General Overview .................................................... 10 B. Unclassified Claims ................................................. 10 1. Administrative Expenses ..................................... 10 a. Bar Date For Administrative Expenses .................. 12 i) Professionals ................................. 12 ii) Non-Professional Administrative Claims Which Are Not In Ordinary Course ........................................ 12 iii) Ordinary Course Of Business Administrative Expenses........................ 13 2. Priority Tax Claims ......................................... 13 C. Classified Claims and Interests ..................................... 18 1. Classes of Secured Claims ................................... 18 2. Classes of Priority Unsecured Claims ........................ 21 3. Class of Administrative Convenience Unsecured Claims ........ 22 4. Class of General Unsecured Claims ........................... 22 5. Class of Interest Holders ................................... 23 D. Means of Effectuating the Plan ...................................... 24 1. Acquisition of USN .......................................... 24 2. Funding for the Plan ........................................ 25 3. Post-Confirmation Management ................................ 25 4. Incentive Plan for Directors and Officers ................... 27 5. Disbursing Agent ............................................ 27 a. Delivery of Distributions in General .................. 28 b. Undeliverable Distributions ........................... 28 c. Compliance With Tax Requirements ...................... 29 6. Actions To Amend Organizational Documents ................... 29 7. Status Of Securities To Be Issued Pursuant To The Plan ...... 30 i IV. TREATMENT OF MISCELLANEOUS ITEMS ....................................... 30 A. Executory Contracts and Unexpired Leases ............................ 30 1. Assumptions ................................................. 30 2. Rejections .................................................. 31 B. Changes in Rates Subject to Regulatory Commission Approval .......... 32 C. Retention of Jurisdiction ........................................... 32 V. EFFECT OF CONFIRMATION OF PLAN........................................... 33 A. Discharge ........................................................... 33 B. Revesting of Property in the Debtor ................................. 33 C. Modification of Plan ................................................ 33 D. Releases ............................................................ 34 E. Claims Injunction ................................................... 35 F. Satisfaction and Termination ........................................ 35 G. Post-Confirmation Status Report ..................................... 36 H. Post-Confirmation Conversion/Dismissal .............................. 36 I. Final Decree ........................................................ 37 J. Business Operations and Post-Confirmation U.S. Trustee Fees ......... 38 EXHIBIT A - UNEXPIRED LEASES WHICH MAY BE ASSUMED .......................... 39 EXHIBIT B - EXECUTORY CONTRACTS TO BE ASSUMED .............................. 42 ii LAWRENCE A. DIAMANT (State Bar No. 39582) JEREMY W. FAITH (State Bar No. 190647) ROBINSON, DIAMANT & WOLKOWITZ A Professional Corporation 1888 Century Park East, Suite 1500 Los Angeles, California 90067 Telephone: (310) 277-7400 Telecopier: (310) 277-7584 Attorneys for Debtor and Debtor-in-Possession UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA LOS ANGELES DIVISION iii In re PREMIER CONCEPTS, INC., a Colorado corporation, d/b/a IMPOSTORS, IMPOSTORS COPY JEWELS, ELEGANT PRETENDERS, PREMIER JEWELRY and JOLI-JOLI, Debtor and Debtor-in-Possession. Tax I.D. No. 84-1186026 Case No. LA 03-36445-BR Chapter 11 DEBTOR'S FIRST AMENDED CHAPTER 11 PLAN AS MODIFIED DISCLOSURE STATEMENT HEARING Date: September 20, 2004 Time: 2:00 p.m. Place: Courtroom 1668 Roybal Federal Building 255 E. Temple Street Los Angeles, CA 90012 PLAN CONFIRMATION HEARING SEE FIRST AMENDED DISCLOSURE STATEMENT FOR VOTING AND OBJECTING PROCEDURES Date: November 8, 2004 Time: 2:00 p.m. Place: Courtroom 1668 Roybal Federal Building 255 E. Temple Street Los Angeles, CA 90012 I. INTRODUCTION Premier Concepts, Inc., d/b/a Impostors, Impostors Copy Jewels, Elegant Pretenders, Premier Jewelry and Joli Joli, is the debtor in a Chapter 11 bankruptcy case. On October 10, 2003, Premier Concepts, Inc. commenced a bankruptcy case by filing a voluntary Chapter 11 petition under the United States Bankruptcy Code ("Code"), 11 U.S.C. Section 101 ET SEQ. Chapter 11 allows the Debtor, and under some circumstances, creditors and others parties in interest, to propose a plan of reorganization ("Plan"). This document is the Chapter 11 Plan ("Plan") proposed by Premier Concepts, Inc. ("Proponent" or "Debtor"). Sent to you in the same envelope as this document is the Disclosure Statement which has been approved by the Court, and which is provided to help you understand the Plan. 1 The Plan is a reorganizing plan. The Proponent seeks to accomplish reorganization by restructuring its debt and making payments under the Plan; canceling existing stock in the Debtor, issuing new stock (the "New Securities"); acquiring the stock of another company in exchange for a portion of the New Securities, which acquired company will become a wholly owned subsidiary of the Reorganized Debtor; and continuing its business operations under new management. Distributions under the Plan will be from the Debtor's operations. The Debtor's secured creditors, Bank One, Stephlaur, Inc. and Yurman Designs, Inc., shall receive monthly cash payments of principal and interest until their claims are paid in full. Secured creditor G. David Gordon, Jr., shall receive an unsecured convertible promissory note in full satisfaction of Gordon's secured claim. Post-petition administrative secured claimant Clark Capital Corp. shall receive common stock in the Reorganized Debtor in full satisfaction of its post-petition DIP financing administrative expense obligation of $250,000. Unsecured creditors will receive ten percent of their allowed claims which will be paid in two installments, one-half (1/2) on January 15, 2005 and the balance on January 15, 2006. Subject only to Confirmation of the Plan, and pursuant to the Plan, Premier has entered into a binding agreement with the owners of all outstanding shares of USN Television Group, Inc. ("USN") for the acquisition by Premier of all outstanding USN stock. USN is a retail seller of consumer products through interactive electronic media including broadcast, cable and satellite television and the internet. The Debtor believes that the acquisition of USN will substantially enhance its consolidated balance sheet, cash flow and profitability. The current owners of USN, Messrs. M. Reinstein and Brian Kelly are also principals of The Archetype Group, Inc. ("Archetype") which is managing the Debtor's operations pursuant to a Management Consulting and Corporate Governance Agreement (the "Management Agreement"). These current owners of USN shall receive 4,850,000 shares of the Reorganized Debtor's New Securities in exchange for their shares in USN. USN has recently been advanced one million dollars by Philip Wasserman and the Philip Roy Fund (the "New USN Investors") in exchange for convertible promissory notes which the New USN Investors may convert into USN stock. Neither Mr. Wasserman nor the Philip Roy Fund, a hedge fund registered with the SEC, have any prior relationship or affiliation with the Debtor. Prior to Plan confirmation, the New USN Investors will convert their USN debt into USN stock and will receive approximately 700,000 shares of the New Securities in exchange for their USN stock. On confirmation of the Plan, the Reorganized Debtor will change its name from Premier Concepts, Inc. to USN Corporation, and continue the operations of the combined entities. 2 III. DEFINITIONS The following definitions will apply with respect to this Plan and the Disclosure Statement. 1. "ADMINISTRATIVE CLAIMS" OR "ADMINISTRATIVE EXPENSES." Claims for costs or expenses of administering the Debtor's Chapter 11 case which are allowed under Bankruptcy Code section 507(a)(1). 2. "ADMINISTRATIVE TAX CLAIMS." A Claim filed by a governmental unit for taxes (and for interest and penalties related to such taxes) for any tax year or period to the extent it occurs or falls within the period from and including the Petition Date through and including the Effective Date. 3. "ALLOWED." When used in respect of a Claim or Interest or group of Claims or Interests, means - a. if no proof of Claim or Interest has been timely filed, such amount of the Claim or Interest or group of Claims or Interests which has been scheduled by the Debtor as liquidated in amount and not disputed or contingent and as to which no party in interest has filed an objection within the time required under the Plan or otherwise fixed by the Bankruptcy Court and which Claim or Interest is not disallowed under Section 502(d) or (e) of the Bankruptcy Code; or b. if a proof of Claim or Interest has been filed by the Claims Bar Date or is deemed timely filed by the Bankruptcy Court, such amount of the Claim or Interest or group of Claims or Interests as to which any party in interest has not filed an objection within the time required under this Plan or otherwise fixed by the Bankruptcy Court and which Claim or Interest is not disallowed under Section. 502(d) or (e) of the Bankruptcy Code; or c. such amount of the Claim or Interest or group of Claims or Interests which is allowed by a Final Order of the Bankruptcy Court; or d. such amount of the Claim or Interest or group of Claims or Interests which is allowed under the Plan. 4. "ALLOWED CLAIM." A Claim which is Allowed. 5. "ALLOWED CLASS . . . CLAIM." An Allowed Claim in the particular Class described. 6. "APBO." Accounting Principles Board. 7. "ARCHETYPE." The Archetype Group, Inc. 3 8. "ASSETS." All assets of the Debtor's Estate including "property of the estate" as described in Section. 541 of the Bankruptcy Code. 9. "ASSESSMENT DATE." The date that taxes are assessed by a taxing agency. 10. "BALLOT." The Ballot for accepting or rejecting this Plan. 11. "BALLOT DATE." The date set by the Bankruptcy Court by which all Ballots with respect to the Plan must be received. 12. "BANKRUPTCY RULES." The Federal Rules of Bankruptcy Procedure as now in effect or hereafter amended and applicable to the Case. 13. "BAR DATE." The general bar date for the filing of proofs of Claim as set by the Bankruptcy Court. 14 "BUSINESS DAY." Any day other than a Saturday, Sunday or a legal holiday (as defined in Bankruptcy Rule 9006(a)). 15. "CASE." The case under Chapter 11 of the Bankruptcy Code commenced by the Debtor on December 10, 2001 and bearing Case No. LA 01-46753-KM. 16. "CASH." Cash or cash equivalents including, but not limited to, bank deposits, checks or other similar items. 17. "CLAIM." (a) Any right to payment from the Debtor, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured, or (b) any right to an equitable remedy for breach of performance if such breach gives rise to a right of payment from the Debtor, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured. 4 18 "CLASS." A class of Claims or Interests described in Article III of the Plan. 19. "CODE." The Bankruptcy Code, as codified in Title 11 of the United States Code, 11 U.S.C. Section. 101 ET SEQ., including all amendments thereto, to the extent such amendments are applicable to the Case. 20. "COLLATERAL." Debtor's personal property assets including all inventory, chattel paper, accounts, equipment and general intangibles both owned and after acquired and all proceeds thereof. 21. "COMMITTEE." The Official Committee of Creditors Holding General Unsecured Claims. 22 "CONFIRMATION." The entry of the Order by the Bankruptcy Court confirming the Plan pursuant to Section. 1129 of the Bankruptcy Code. 23. "CONFIRMATION DATE." The date upon which the Bankruptcy Court enters an order confirming the Plan pursuant to Section. 1129 of the Bankruptcy Code. 24. "CONFIRMATION ORDER." The order of the Bankruptcy Court confirming the Plan pursuant to Section. 1129 of the Bankruptcy Code. 25. "COURT." The United States Bankruptcy Court for the Central District of California. 5 26. "CREDITOR." The Holder of a Claim against the Debtor. 27. "DEBTOR." Premier Concepts, Inc., a Colorado corporation d/b/a Impostors, Impostors Copy Jewels, Elegant Pretenders, Premier Jewelry and Joli-Joli. 28. "DISBURSING AGENT." The person or entity responsible for making all distributions provided for under the Plan. 29. "DISCLOSURE STATEMENT." The "Debtor's Disclosure Statement Describing Debtor's Original Chapter 11 Plan" filed by the Plan Proponent in support of the Plan, and any and all amendments and exhibits to the Disclosure Statement. 30. "DISPUTED CLAIM." A Claim or Interest as to which a proof of Claim or Interest has been filed or is deemed to have been filed under applicable law or an Administrative Claim, as to which an objection has been or is filed by the Debtor or any other party in interest in accordance with the Plan, the Bankruptcy Code, the Bankruptcy Rules, or the Local Rules, which objection has not been withdrawn or determined by a Final Order. Prior to the time that an objection has been or is filed, for the purposes of the Plan, a Claim or Interest may be considered a Disputed Claim in its entirety if: (i) the amount of a Claim or Interest specified in a proof of claim exceeds the amount of any corresponding Claim scheduled by the Debtor in its Schedule of Assets and Liabilities; (ii) any corresponding Claim scheduled by the Debtor in its Schedule of Assets and Liabilities has been scheduled as disputed, contingent or unliquidated, irrespective of the amount scheduled; or (iii) no corresponding Claim has been scheduled by the Debtor in its Schedule of Assets and Liabilities. 6 31. "EFFECTIVE DATE." The first business day after the Confirmation Date so long as all conditions to the Effective Date have been satisfied or if waivable, waived. 32. "ESTATE." The estate in the Debtor's Case created pursuant to Section. 541(a) of the Bankruptcy Code. 33. "ESTATE REPRESENTATIVE." The person(s) or entity(ies) authorized to exercise and perform the rights, powers and duties held by the Estate, including without limitation the authority under Bankruptcy Code Section. 1123(b)(3) to provide for the settlement, adjustment, retention and enforcement of Claims and Interests of the Estate, including, but not limited to all Rights of Action and the authority to exercise all rights under Bankruptcy Code Sections. 1106, 1107 and 1108. Upon and after the Effective Date, the Reorganized Debtor shall be the Estate Representative. 34. "FINAL ORDER." An order, decree or judgment, the operation or effect of which has not been reversed, stayed, modified or amended, and as to which order, decree or judgment (or any revision, modification or amendment thereof), the time to appeal or seek review or rehearing has expired and as to which no appeal or petition for review or rehearing has been taken or is pending. 7 35. "HOLDER." The holder of a Claim against or Interest in the Debtor. 36. "INSIDERS." All Persons who are "insiders" as that term is defined in Section 101 of the Bankruptcy Code. 37. "INTEREST." Any equity security of the Debtor as defined in section 101(49) of the Bankruptcy Code. 38. "LOCAL RULES." The Local Bankruptcy Rules for the United States Bankruptcy Court for the Central District of California, as now in effect or hereafter amended and applicable to the Case. 39. "MANAGEMENT AGREEMENT." The Management Consulting and corporate Governance Agreement between the Debtor and Archetype. 40. "NEW SECURITIES." Equity securities issued in the Reorganized Debtor. 41. "NEW USN INVESTORS." Philip Wasserman and the Philip Roy Fund. 42. "PERSON." Any natural person or other entity. 43. "PETITION DATE." December 10, 2001. 44. "PLAN." The Debtor's First Amended Chapter 11 Plan as modified. 45. "PRIORITY TAX CLAIMS." Certain unsecured income, employment and other taxes described by Bankruptcy Code Section 507(a)(8). 46. "PRIORITY UNSECURED CLAIMS." Claims that are referred to in Bankruptcy Code Sections 507(a)(3), (4), (5), (6), and (7) which are required to be placed in Classes. 8 47. "PROPONENT." The Debtor. 48. "REORGANIZED DEBTOR." The Debtor after the Effective Date. 49. "RIGHTS OF ACTION." Any and all claims, demands, rights, actions, causes of action and suits of the Debtor's Estate, of any kind or character whatsoever, known or unknown, suspected or unsuspected, whether arising prior to, on or after the Petition Date, in contract or in tort, at law or in equity or under any other theory of law, including but not limited to (1) rights of setoff, counterclaim or recoupment, and claims on contracts or for breaches of duties imposed by law, (2) the right to object to Claims or Interests, (3) claims pursuant to Section 362 of the Bankruptcy Code, (4) such claims and defenses as fraud, mistake, duress, usury and (5) all avoiding powers, rights to seek subordination and all rights and remedies under Sections 502(d), 506, 510, 542, 543, 544, 545, 547, 548, 549, 550, 551, 552 or 553 or any fraudulent conveyance, fraudulent transfer, or preference laws. 50. "SEC." The Securities and Exchange Commission. 51. "SECURED CLAIM." A Claim secured by a lien on property of the Debtor's Estate. 52. "UNCLAIMED PROPERTY." Any funds or securities distributed to Creditors or Holders of Interests which are unclaimed for the period provided in the Plan. Unclaimed Property will include, without limitation, Cash, checks, securities, and any other property which is to be distributed pursuant to the Plan which has been returned as undeliverable without a proper forwarding address, or which was not mailed or delivered because of the absence of a proper address to which to mail or deliver such property. 53. "UNSECURED CLAIM." Any Claim against the Debtor, however arising, E.G., from providing goods or services or from the rejection of an executory contract or an unexpired lease, which is not an Administrative Claim, Priority Tax Claim, Priority Non-Tax Claim or Secured Claim. 54. "USN." USN Television Group, Inc. 9 III. CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS A. GENERAL OVERVIEW As required by the Bankruptcy Code, the Plan classifies claims and interests in various classes according to their right to priority. The Plan states whether each class of claims or interests is impaired or unimpaired. The Plan provides the treatment each class will receive under the Plan. 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 the Plan because they are automatically entitled to specific treatment provided for them in the Bankruptcy Code. As such, the Proponent has NOT placed the following claims in a class. The treatment of these claims is provided below. 1. ADMINISTRATIVE EXPENSES Administrative expenses are claims for costs or expenses of administering the Debtor's Chapter 11 case which are allowed under Code Section 507(a)(1). The Code requires that all administrative claims be paid on the Effective Date of the Plan, unless a particular claimant agrees to a different treatment. The following chart estimates the Debtor's Section. 507(a)(1) administrative claims (leasehold administrative rent claims asserted by lessors are listed in Exhibit "L") and their treatment under this Plan.
==================================================================================================================================== NAME AMOUNT OWED TREATMENT - ------------------------------------------------------------------------------------------------------------------------------------ Robinson, Diamant & Wolkowitz $250,000 ON OR BEFORE THE EFFECTIVE DATE UNLESS OTHERWISE ("RD&W") - Insolvency counsel for the Estimated fees from and costs AGREED TO BY RD&W, THE REORGANIZED DEBTOR SHALL Debtor. from October 10, 2003 through the PLACE IN A SEGREGATED ACCOUNT SUFFICIENT CASH TO Effective Date.(4) THE AMOUNTS ABOVE PAY THE ADMINISTRATIVE CLAIMS OF RD&W UPON COURT ARE ESTIMATED AND MAY BE HIGHER OR APPROVAL OF FINAL FEE APPLICATIONS. LOWER. - ------------------------------------------------------------------------------------------------------------------------------------ PEITZMAN, WEG & KEMPINSKY, LLP $35,000 ON OR BEFORE THE EFFECTIVE DATE UNLESS OTHERWISE ("PW&K") - COUNSEL FOR THE OFFICIAL ESTIMATED FEES AND COSTS FROM AGREED TO BY PW&K, THE REORGANIZED DEBTOR SHALL COMMITTEE OF UNSECURED CREDITORS. OCTOBER 10, 2003 THROUGH EFFECTIVE PLACE IN A SEGREGATED ACCOUNT SUFFICIENT CASH TO DATE.(5) THE AMOUNTS ABOVE ARE PAY THE ADMINISTRATIVE CLAIMS OF PW&K UPON COURT ESTIMATED AND MAY BE HIGHER OR LOWER. APPROVAL OF FINAL FEE APPLICATIONS. - ------------------------------------------------------------------------------------------------------------------------------------ CLARK CAPITAL CORP. - DIP LENDER $250,000 In full satisfaction of its priority administrative AMOUNT OF POST-PETITION FINANCING obligation, Clark Capital Corp. shall receive ADVANCED UNDER DIP FINANCING 500,000 fully paid and non-assessable shares of the AGREEMENT. New Securities. Clark Capital Corp. has agreed to this treatment. - ------------------------------------------------------------------------------------------------------------------------------------
___________________ (4) RD&W's First Interim Fee Application was heard on June 23, 2004. The Court approved fees and costs of $135,321.31. RD&W was authorized to apply its pre-petition retainer of $5,083.50 to its leaving an unpaid balance for the approved fees of $130,237.81. (5) PW&K's First Interim Fee Application was heard on June 22, 2004. The Court approved fees and costs of $16,468.06. 10
==================================================================================================================================== NAME AMOUNT OWED TREATMENT - ------------------------------------------------------------------------------------------------------------------------------------ The Archetype Group - Management $550,000 Archetype shall receive 550,000 shares of New Company Estimated fees from October Securities in full satisfaction of its allowed 10, 2003 through the Effective Date. administrative claim. The amounts above are estimated and may be higher or lower. Archetype has agreed to this treatment. - ------------------------------------------------------------------------------------------------------------------------------------ Clerk's Office Fees $ 0 Paid in full by Debtor on Effective Date. - ------------------------------------------------------------------------------------------------------------------------------------ Office of the U.S. Trustee Fees $ 0 Paid in full by Debtor on Effective Date. - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL $1,085,000 ====================================================================================================================================
COURT APPROVAL OF FEES REQUIRED: Other than fees for the Clerk's Office and UST, the Court must rule on all professional fees which may be sought before the fees will be owed. For all fees except Clerk's Office fees and U.S. Trustee's fees, the professional in question must file and serve a properly noticed fee application and the Court must rule on the application. Only the amount of fees allowed by the Court will be owed and required to be paid under the Plan. As indicated above, the Debtor will need to pay approximately $285,000 of administrative claims (or perhaps more or less) as soon after the Effective Date as the Court approves such fees and costs. As indicated elsewhere in this Plan, Debtor will have more than ample cash on hand on the Effective Date of the Plan. The source of this cash will be from the acquisition of USN and the Debtor's own operating capital. 11 a. BAR DATE FOR ADMINISTRATIVE EXPENSES i) PROFESSIONALS All professionals requesting compensation or reimbursement of expenses for services performed before the Effective Date of the Plan are required to file with the Bankruptcy Court and deliver to the attorneys for the Debtor an application for final allowance of compensation and reimbursement of expenses no later than forty-five (45) days after the Effective Date. The Debtor shall calendar a hearing on the applications and give notice of the hearing in accordance with the Local Bankruptcy Rules. Professional services rendered for the Debtor after the Effective Date shall not be the subjects of fee applications and shall be paid directly by the Reorganized Debtor pursuant to such arrangement as may be agreed to by the parties. ii) NON-PROFESSIONAL ADMINISTRATIVE CLAIMS WHICH ARE NOT IN ORDINARY COURSE All holders of Administrative Claims requesting compensation of administrative costs and expenses incurred on or before the Effective Date for administrative claims incurred outside the ordinary course of business pursuant to Bankruptcy Code section 507(a)(1) or 507(b) or the terms hereof (except for post-petition date claims for professional fees incurred during the Chapter 11 case, and claims under 28 U.S.C. Section. 1930) must file and serve an application for such costs and expenses no later than 30 days after the Effective Date. Any holder of an Administrative Claim not yet allowed or listed on Exhibit "L" to the Disclosure Statement that does not file an application for payment of such Claim or expense by the deadline set forth in the Plan SHALL BE FOREVER BARRED from asserting such Claim against the Debtor, the estate, the Reorganized Debtor, their successors, assigns, or their respective property and shall receive no distribution under the Plan or otherwise on account of such Claim. 12 iii) ORDINARY COURSE OF BUSINESS ADMINISTRATIVE EXPENSES v) Payment of all administrative expenses incurred in the ordinary course of the Debtor's business shall be paid in the ordinary course without further application. 2. PRIORITY TAX CLAIMS Priority tax claims are certain unsecured income, employment and other taxes described by Code Section 507(a)(8). The Code requires that each holder of such a 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 Reorganized Debtor shall deposit with the Plan Trust, sufficient funds for the Disbursing Agent to pay the quarterly priority tax payments pursuant to the Plan. The following chart lists ALL of the Debtor's Section 507(a)(8) priority tax claims and their treatment under this Plan. 13
==================================================================================================================================== AMOUNT ALLEGEDLY DESCRIPTION OWED TREATMENT ==================================================================================================================================== o Name = State of Arizona $2,380.50 - The State The Allowed Claim Priority Tax Claim of Arizona shall be ("Arizona") of Arizona has filed satisfied in full with equal quarterly payments commencing two proofs of claim 180 days after the Effective Date and ending six years o Type of tax = Sales Tax which total from the Assessment Date. $6,000.00. The Debtor o Date tax assessed = October, 2003 disputes this amount o Pymt interval = Quarterly as an estimate and not an accurate o Pymt amt/interval = $120/quarter assuming calculation of the Allowed Claim of Debtor's tax $2,380.50 liability. The Debtor o Begin date = 180 days after Effective will object to the Date amount of the State o End date = June, 2009 of Arizona's claim pursuant to 11 U.S.C. o Interest Rate % = 6% per annum Section. 502 or will seek a ruling pursuant o Total Payout Amount = $2,761 assuming an to 11 U.S.C. Allowed Claim of Section. 505(a). $2,380.50 and twenty quarterly payments = 100% plus interest In the event the claim of the State of Arizona is allowed in an amount in excess of $2,380.50, the Debtor will pay the allowed priority claim in equal quarterly installments over 6 years from the date of assessment with 6% interest per annum. - ------------------------------------------------------------------------------------------------------------------------------------ The Allowed Claim of the Los Angeles County shall be satisfied in full with equal quarterly payments commencing 180 days after the Effective Date and ending six years from the Assessment Date. o Pymt interval = Quarterly. o Pymt amt/interval = $67/quarter o Begin date = 180 days after Effective Date o End date = June, 2009 o Name = Los Angeles County Tax Collector o Interest Rate % = 6% per annum o Type of tax = Personal Property o Total Payout Amount = $1,340 o Date tax assessed = October, 2003 $1,155.89 = 100% plus interest - ------------------------------------------------------------------------------------------------------------------------------------ o Name = Clark County Department The Allowed Claim of Clark County Department of Revenue of Revenue shall be paid in full on the Effective Date. o Type of tax = Sales Tax o Date tax assessed = Unknown $784.77 - ------------------------------------------------------------------------------------------------------------------------------------ o Name = Clark County Department of Revenue o Type of tax = Sales Tax The Allowed Claim of Clark County Clerk shall be paid in o Date tax assessed = Unknown $528.34 full on the Effective Date. - ------------------------------------------------------------------------------------------------------------------------------------ The Allowed Claim of the Nevada Dept. of Taxation shall be o Name = Nevada Department of satisfied in full with equal quarterly payments commencing Taxation 180 days after the Effective Date and ending six years from the Assessment Date. o Type of tax = Sales Tax $3,481.00 o Pymt interval = Quarterly. - ------------------------------------------------------------------------------------------------------------------------------------
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==================================================================================================================================== AMOUNT ALLEGEDLY DESCRIPTION OWED TREATMENT ==================================================================================================================================== o Date tax assessed = October, 2003 o Pymt amt/interval = $202/quarter o Begin date = 180 days after Effective Date o End date = June, 2009 o Interest Rate % = 6% per annum o Total Payout Amount = $4,038 = 100% plus interest - ------------------------------------------------------------------------------------------------------------------------------------ o Name = DC Government The Allowed Priority Tax Claim of the DC Government shall be satisfied in full on the Effective Date. o Type of tax = Sales Tax o Date tax assessed = Unknown $559.00 - ------------------------------------------------------------------------------------------------------------------------------------ o Name = City of Naples Florida The Allowed Priority Tax Claim of the City of Naples Florida shall be satisfied in full on the Effective Date. o Type of tax = Sales Tax o Date tax assessed = October, 2003 $50.00 - ------------------------------------------------------------------------------------------------------------------------------------ o Name = Orange County Treasurer The Allowed Priority Tax Claim of the Orange County Treasurer shall be satisfied in full on the Effective o Type of tax = Property Tax Date. o Date tax assessed = October, 2003 $984.13 - ------------------------------------------------------------------------------------------------------------------------------------ o Name = City of Tempe The Allowed Priority Tax Claim of the City of Tempe shall be paid in full on the Effective Date. o Type of tax = Sales Tax o Date tax assessed = October, 2003 $108.00 - ------------------------------------------------------------------------------------------------------------------------------------ The Allowed Claim of the Louisiana Dept. Of Revenue shall be satisfied in full with equal quarterly payments commencing 180 days after the Effective Date and ending six years from the Assessment Date. o Pymt interval = Quarterly. o Pymt amt/interval = $82/quarter o Name = Louisiana Dept. of Revenue o Begin date = 180 days after Effective Date o End date = June, 2009 o Type of tax = Sales = $10.31 o Interest Rate % = 6% per annum Withholding = $ 1,195.65 Corp. Inc. = $ 211.10 o Total Payout Amount = $1,644 o Date tax assessed = October, 2003 $1,417.06 = 100% plus interest - ------------------------------------------------------------------------------------------------------------------------------------ The Allowed Claim of the Pennsylvania Department of Revenue shall be satisfied in full with equal quarterly payments commencing 180 days after the Effective Date and ending six years from the Assessment Date. o Pymt interval = Quarterly. o Pymt amt/interval = $177/quarter o Begin date = 180 days after Effective Date o End date = June, 2009 o Name = Pennsylvania Department of Revenue o Interest Rate % = 6% per annum o Type of tax = Sales & Use o Total Payout Amount = $3,540 o Date tax assessed = October, 2003 $3,052.50 = 100% plus interest - ------------------------------------------------------------------------------------------------------------------------------------
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==================================================================================================================================== AMOUNT ALLEGEDLY DESCRIPTION OWED TREATMENT ==================================================================================================================================== The Allowed Claim of the State of Florida Department of Revenue shall be satisfied in full with equal quarterly payments commencing 180 days after the Effective Date and ending six years from the Assessment Date. $2,463.33 - The State of Florida has filed o Pymt interval = Quarterly. a proof of claim for $4,347.55. o Pymt amt/interval = $143/quarter The Debtor disputes this o Begin date = 180 days after Effective amount. The Date Debtor will object to the o End date = June, 2009 amount of the o Name = State of Florida claim pursuant to o Interest Rate % = 6% per annum Department of Revenue 11 U.S.C. Section. 502 or will seek a o Total Payout Amount = $2,857 o Type of tax = Sales & Use ruling pursuant to 11 U.S.C. = 100% plus interest o Date tax assessed = October, 2003 Section. 505(a). - ------------------------------------------------------------------------------------------------------------------------------------ The Allowed Claim of the State of Maryland shall be satisfied in full with equal quarterly payments commencing 180 days after the Effective Date and ending six years from the Assessment Date. o Pymt interval = Quarterly. $4,954.49 - The o Pymt amt/interval = 287/quarter State of Maryland has filed a proof of o Begin date = 180 days after Effective claim for $10,048.59. Date The Debtor disputes this amount. The o End date = June, 2009 Debtor will object to the amount of the o Interest Rate % = 6% per annum o Name = State of Maryland claim pursuant to 11 U.S.C. Section. 502 o Total Payout Amount = $5,747 o Type of tax = Sales and Use or will seek a ruling pursuant to 11 U.S.C. = 100% plus interest o Date tax assessed = October, 2003 Section. 505(a). - ------------------------------------------------------------------------------------------------------------------------------------ The Allowed Claim of the Montgomery County Maryland shall be satisfied in full with equal quarterly payments commencing 180 days after the Effective Date and ending six years from the Assessment Date. o Pymt interval = Quarterly. o Pymt amt/interval = 172/quarter o Begin date = 180 days after Effective Date o End date = June, 2009 o Name = Montgomery County Maryland o Interest Rate % = 6% per annum o Type of tax = Unknown o Total Payout Amount = $3,438 o Date tax assessed = October, 2003 $2,963.58 = 100% plus interest - ------------------------------------------------------------------------------------------------------------------------------------
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==================================================================================================================================== AMOUNT ALLEGEDLY DESCRIPTION OWED TREATMENT ==================================================================================================================================== The Allowed Claim of the California State Board of Equalization shall be satisfied in full with equal quarterly payments commencing 180 days after the Effective Date and ending six years from the Assessment Date. o Pymt interval = Quarterly. o Pymt amt/interval = $1,687/quarter o Begin date = 180 days after Effective Date o End date = October 2006 o Name = California State Board of Equalization o Interest Rate % = 6% per annum o Type of tax = Sales & Use o Total Payout Amount = $33,745 o Date tax assessed = October, 2003 $29,092.26 = 100% plus interest - ------------------------------------------------------------------------------------------------------------------------------------ $773.88 - The State of New Jersey has filed a proof of claim for $89,003.77. The Debtor disputes this amount as an estimate and not an accurate calculation The Allowed Claim of the State of New Jersey shall be paid of the Debtor's tax in full on the Effective Date. liability. The Debtor will object to the In the event the claim of the State of New Jersey is o Name = State of New Jersey amount of the claim allowed in an amount in excess of $1,000, the Allowed pursuant to 11 U.S.C. Claim of the State of New Jersey shall be satisfied in o Type of tax = Sales Tax Section. 502 or will full with equal quarterly payments commencing 180 days seek a ruling after the Effective Date or as soon thereafter as possible o Date tax assessed = October, 2003 pursuant to 11 and ending six years from the Assessment Date. U.S.C. Section. 505(a). - ------------------------------------------------------------------------------------------------------------------------------------ The Allowed Claim of the Colorado Department of Revenue shall be satisfied in full with equal quarterly payments commencing 180 days after the Effective Date and ending six years from the Assessment Date. o Pymt interval = Quarterly. o Pymt amt/interval = $117/quarter o Begin date = 180 days after Effective Date o End date = June, 2009 o Name = Colorado Department of Revenue o Interest Rate % = 6% per annum o Total Payout Amount = $2,335 o Type of tax = Sales o Date tax assessed = October, 2003 $2,012.75 = 100% plus interest - ------------------------------------------------------------------------------------------------------------------------------------
17
==================================================================================================================================== AMOUNT ALLEGEDLY DESCRIPTION OWED TREATMENT ==================================================================================================================================== The Allowed Claim of the County of Santa Clara shall be satisfied in full with equal quarterly payments commencing 180 days after the Effective Date and ending six years from the Assessment Date. o Pymt interval = Quarterly. o Pymt amt/interval = $280/quarter o Begin date = 180 days after Effective Date o End date = June, 2009 o Name = County of Santa Clara o Interest Rate % = 6% per annum o Type of tax = Sales Tax Total Payout Amount = $5,595 $2,491.48 o Date tax assessed = October, 2003 and $2,332.17 = 100% plus interest - ------------------------------------------------------------------------------------------------------------------------------------ o Name = City of Scottsdale o Type of tax = Sales Tax The Allowed Priority Tax Claim of the City of Scottsdale o Date tax assessed = October, 2003 $254.00 shall be paid in full on the Effective Date. ====================================================================================================================================
C. CLASSIFIED CLAIMS AND INTERESTS 1. CLASSES OF SECURED CLAIMS Secured claims are claims secured by liens on property of the estate. The following chart lists all classes containing Debtor's secured pre-petition claims and their treatment under this Plan: 18
==================================================================================================================================== CLASS DESCRIPTION INSIDERS (Y/N) IMPAIRED TREATMENT # (Y/N) - ------------------------------------------------------------------------------------------------------------------------------------ Secured Claim of: No Impaired; Claims o New Secured Promissory Note in this Class are o Pymt Interval = Monthly o Name = Bank One entitled to vote o Est. Pymt Amt/Interval = $5,000 on the Plan. o Balloon pymt = $663 o Collateral description = 1st priority in o Begin Date = 11/2004 Debtor's personal property assets including o End Date = 5/2007 but not limited to all inventory, chattel o Interest Rate % = Prime + 3% paper, accounts, equipment and general o Total Payout = $141,569.28 plus intangibles both owned and after acquired and interest (estimated will be less all proceeds thereof ("Collateral"). or more depending on prime rate fluctuation) o Collateral value = Debtor believes that the o Treatment of Lien = Lien shall value of the Collateral is approximately remain in place until allowed $560,000 as of the Petition Date. claim is satisfied in full pursuant to the Plan o Principal owed = $116,569.28 o Pre-pet. arrearage amount = 0 o Post-pet. arrearage amount = 0 o Total claim amount = $116,569.28 1 (plus attorneys' fees and costs) - ------------------------------------------------------------------------------------------------------------------------------------
==================================================================================================================================== CLASS DESCRIPTION INSIDERS (Y/N) IMPAIRED TREATMENT # (Y/N) - ------------------------------------------------------------------------------------------------------------------------------------ Secured Claim of: No Impaired; Claims in this Class are o New Secured Promissory Note o Name = Stephlaur, Inc. entitled to vote containing attorneys' fee clause. on the Plan. Payments of $6,000 per month o Collateral description = 2nd priority in except $10,000 per month on Debtor's personal property assets including 12/15/04, 1/15/05 and 2/15/05 but not limited to all inventory, chattel o Pymt Interval = Monthly paper, accounts, equipment and general o Begin Date = 11/2004 intangibles both owned and after acquired and o End Date = 2/2006 all proceeds thereof ("Collateral"). o Interest Rate % = 7% o Total Payout = $107,000 o Collateral value = Debtor believes o Treatment of Lien = Lien that the value of the Collateral is in place until allowed claim is approximately $560,000 as of the Petition satisfied in full pursuant to the Date. Same collateral as above. Plan o Principal owed = $93,157.98 o Pre-pet. arrearage amount = 0 o Post-pet. arrearage amount = 0 o Total claim amount = $93,157.98 2 (plus attorneys' fees and costs) - ------------------------------------------------------------------------------------------------------------------------------------
19 - ------------------------------------------------------------------------------------------------------------------------------------ Secured Claim of No Impaired; Claims in this Class are entitled to vote o Name = Yurman Design, Inc. on the Plan. o Collateral description = 4th priority in Debtor's personal property assets including but not limited to all inventory, chattel paper, accounts, equipment and general intangibles both owned and after acquired and all proceeds thereof ("Collateral"). o Collateral value = Debtor believes that the value of the Collateral is approximately $560,000 as of the Petition Date. Same collateral as above. o New Secured Promissory Note o Pymt Interval = Monthly o Principal owed = $11,428.00 o Est. Pymt Amt/Interval = $1,000 o Begin Date = 11/2004 o Pre-pet. arrearage amount = 0 o End Date = 10/2005 o Interest Rate % = 7% o Post-pet. arrearage amount = 0 o Total Payout = $11,860 o Treatment of Lien = Lien shall o Total claim amount = remain in place until allowed $11,428.00 (plus attorneys' fees and claim is satisfied in full 3 costs) pursuant to the Plan - ------------------------------------------------------------------------------------------------------------------------------------ Secured Claim of: No Impaired; Claims An unsecured convertible promissory in this Class are note (the "Gordon Note") in full entitled to vote satisfaction of his pre-petition on the Plan. secured claim. The Gordon Note shall have the following terms: o Name = G. David Gordon, Jr., assignee of the Fleet Precious Metals' o Payment = $750/month debt. o Balloon Payment = $250,000 on o Collateral description = 3rd 9/30/2006 priority in Debtor's personal property assets including but not limited to all o Interest = Payable monthly inventory, chattel paper, accounts, commencing 11/30/l2004 and equipment and general intangibles both continuing through 10/30/2006 owned and after acquired and all proceeds o Principal = To be paid on thereof ("Collateral"). 10/30/2006. o Conversion = Gordon shall have the o Collateral value = Debtor election to require the believes that the value of the Collateral Reorganized Debtor to satisfy any is approximately $560,000 as of the part of outstanding principal and Petition Date. Same collateral as above. unpaid interest of the Gordon Note by issuing Gordon shares of the o Principal owed = $250,000 Reorganized Debtor's common stock with a comparison ratio of one (1) o Pre-pet. arrearage amount = 0 share of the New Securities for each $1.00 of principal and interest. o Post-pet. arrearage amount = 0 o Common Stock = The Reorganized Debtor shall set aside 250,000 of o Total claim amount = $250,000 the Reorganized Debtor's common 4 (plus attorneys' fees and costs) stock for the eventuality that Gordon exercises his conversion rights under the Gordon Note. - ------------------------------------------------------------------------------------------------------------------------------------
20 Secured Claim of: No Not Impaired; Claims in this Class are not o Name = Clark Capital Corp. - entitled to vote for Post-Petition Secured DIP Financing on the Plan. o Collateral description = 5th priority in Debtor's personal property, including but not limited to, accounts, inventory, equipment, and proceeds (but excluding avoidance actions) subordinate to the existing security interests of the Secured Creditors and to any other entity with a valid and perfected lien on the Debtor's assets existing as of the Petition Date. In addition, a perfected 1st priority lien in the proceeds of any sale or assignment of the Debtor's leasehold interest in certain real property leases ("Collateral"). o Collateral value = Debtor believes that the value of the Collateral is approximately $560,000 as of the Petition Date. Same collateral as above - plus leasehold values - unknown. See treatment of Clark Capital Corp. o Principal owed = $250,000 in Section III.D.1 herein above. Clark Capital shall receive nothing o Pre-pet. arrearage amount = n/a on account of its secured claim as it will receive 500,000 shares of New o Post-pet. arrearage amount = 0 Securities in full satisfaction of its administrative claim (which is 5 o Total claim amount = $250,000 the same obligation.) - ------------------------------------------------------------------------------------------------------------------------------------
2. CLASSES OF PRIORITY UNSECURED CLAIMS Certain priority claims that are referred to in 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 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 claims. 21 The Debtor does not believe it has any section 507(a)(3), (a)(4), (a)(5), (a)(6), and (a)(7) priority unsecured claims. 3. CLASS OF ADMINISTRATIVE CONVENIENCE UNSECURED CLAIMS Administrative Convenience Unsecured Claims are unsecured claims in the amounts of $200.00 or less including those claimants who elect to reduce their claims to $200.00. These are unsecured claims not entitled to priority under section 507(a) except that they have been placed in a convenience class and are therefore treated as provided in the chart below.
==================================================================================================================================== CLASS # DESCRIPTION IMPAIRED(Y/N) TREATMENT - ------------------------------------------------------------------------------------------------------------------------------------ Administrative Convenience Class -- Not impaired. General unsecured claims of $200.00 or Claims in this less, and those allowed unsecured Class are not claims that are reduced to $200.00 by entitled to a timely written election made on the vote on the ballot used to vote on the Plan. Plan. Debtor estimates that the total amount of allowed claims in this class will be approximately $18,578.00. Claimants in Class 6, including those Claimants that elect to reduce their claims to $200.00, o Total Payout % = 100% shall receive on the Effective Date, or as soon as practicable thereafter, the allowed amount of date. o Total Estimated Payout = their claims or $200.00 if the allowed claim is Approximately $18,578 plus 6% interest reduced thereto, plus interest at 6% per annum from the Petition Date thru the date from the Petition Date to the Plan 6 Confirmation of the payment. - ------------------------------------------------------------------------------------------------------------------------------------
4. CLASS OF GENERAL UNSECURED CLAIMS General unsecured claims are unsecured claims, other than convenience class, not entitled to priority under Code Section 507(a). The following chart identifies this Plan's treatment of the class containing ALL of Debtor's general unsecured claims: 22
==================================================================================================================================== CLASS # DESCRIPTION IMPAIRED(Y/N) TREATMENT - ------------------------------------------------------------------------------------------------------------------------------------ Impaired. General unsecured claims Claims in this In full and complete satisfaction of Allowed Class class are 7 Unsecured Claims, Allowed Unsecured Claimants o Total amt of claims = entitled to vote shall receive 10% of the allowed amounts of their $2,542,595 on the Plan. claims in two (2) installments, Debtor estimates that total allowed claims o Begin date = 1/15/05 one-half (1/2) on 1/15/05 and the balance on will be approximately $1,023,177. After o Interest Rate % = 0 1/15/06. subtracting claims for the administrative convenience class, the Debtor o Total Payout % = 10% of Allowed Claims. estimates o Pymt estimated $50,223 per installment paying distributions on o Estimated Amount = $100,445 $1,004,459. 7 ====================================================================================================================================
5. CLASS OF INTEREST HOLDERS Interest holders are the parties who hold ownership interest (i.e., equity interest) in the Debtor. If the Debtor is a corporation, entities holding preferred or common stock in the Debtor are interest holders. If the Debtor is a partnership, the interest holders include both general and limited partners. If the Debtor is an individual, the Debtor is the interest holder. The following chart identifies the Plan's treatment of the class of interest holders:
==================================================================================================================================== CLASS # DESCRIPTION IMPAIRED(Y/N) TREATMENT - --------------------------------------------------------------------------------------------------------------------------- The current holders of the Debtor's Impaired. All existing shares of the Debtor will common stock are as indicated in Claims in this be cancelled on Confirmation of the Exhibit I. class are Class 8 Interest Holders shall entitled to vote receive a pro rata distribution of on the Plan. 350,000 shares of New Securities in the Reorganized Debtor, or, approximately 6% of the total outstanding shares in the Reorganized Debtor. Fractional shares shall be rounded down to the lower whole 8 number. ====================================================================================================================================
23 The equity interest of existing shareholders in the Debtor is reduced to approximately 6%. Nevertheless their continued ownership of stock in the R3. eorganized Debtor is critical to the reorganization. The Debtor believes that as a public company it must retain a count of approximately 500 shareholders, and that without such a shareholder base, it will incur risk of manipulation of its stock price. Moreover, without such a base trading volume in its stock must suffer dramatically; its prospective ability to reach the stock values which it has estimated in this plan is threatened significantly, as is its agreement for the acquisition of USN, and therefore its ability to fund the Plan and properly fund its operations. D. MEANS OF EFFECTUATING THE PLAN 1. ACQUISITION OF USN Immediately prior to and subject to Plan Confirmation and the occurrence of the Effective Date, the Debtor shall acquire all outstanding stock of USN, including without limitation, the stock of Philip Wasserman and The Philip Roy Fund, each of whom shall have converted the entireties of the convertible note obligations owed to them by USN to stock in USN. To the extent that up to an additional $2 million is advanced to USN in exchange for convertible notes prior to Plan Confirmation, they shall be converted to equity in USN and then in the Debtor at a percentage equal to not less than $1.42 of debt per share of the Reorganized Debtor. The Debtor believes that the private placement is also exempt under Section. 1145 of the Bankruptcy Code. At the option of Messrs. Reinstein, Kelly, Wasserman and The Philip Roy Fund, the Reorganized Debtor shall seek to have their shares filed for registration with the Securities Exchange Commission at the earliest time at which the Reorganized Debtor is reasonably able to so do. 24 On the Effective Date, the Reorganized Debtor's subsidiary, USN, shall execute an irrevocable guaranty, guaranteeing in full the payments to holders of Class 7 Claims. 2. FUNDING FOR THE PLAN Allowed Claims in Class 6 will be paid from cash on hand on the Effective Date. Allowed Class 7 claims will be paid from cash on hand as a result of operations. 3. POST-CONFIRMATION MANAGEMENT Post confirmation, the Company will be managed by a combined management team that includes the Debtor's key executive as well as executives from USN. Dr. Terry Washburn will remain as the Chief Executive Officer at a salary of $78,000 per year and will step down as President. Mr. Brad Berdow is the President and Chief Operating Officer of USN Television Group and will serve in these positions at the Debtor post confirmation. Mr. Berdow is the former vice-president of Creative Marketing Concepts, one of the leading suppliers of sports memorabilia and collectibles to Home Shopping Network and ShopNBC (ValueVision International). He holds a Masters in Business Administration from the Wharton School of Business at the University of Pennsylvania and a Juris Doctorate degree from the University of Pennsylvania Law School. 25 Mr. Ping Shih is currently the Debtor's Vice President of Finance. Mr. Shih will continue to serve in this position post plan confirmation at a salary of $90,000 per year. Mr. Shih served as the Director of Accounting for Medialive International, a leading technology company and he holds a Bachelor of Arts degree in Accounting from the University of Massachusetts, Amherst. Raj Halaharvi is the Chief Technology Officer of USN and is one of the primary architects of the USN technology platform. He will serve in this capacity for the Reorganized Debtor. He previously worked as a Senior Database Administrator at 24/7 Media, a leading technology services company. Mr. Halaharvi holds a Bachelor of Science in Technology from MIT/Manipal, India. Ms. Candice Egnew serves as the Director of Merchandising and Distribution for the Debtor. Ms. Egnew is responsible for product procurement and store distribution. She will continue to serve in this capacity for the Reorganized Debtor. Ms. Stephanie Pasquarella serves as the Director of Stores for the Debtor. She is responsible for store operations, sales management and human resources. She will continue to serve in this capacity for the Reorganized Debtor. The current members of the Board of Directors, Dr. Terry Washburn, Mr. Gary Wolfe and Mr. Paul Johnson will remain on the Board of Directors of the Reorganized Debtor. 26 4. INCENTIVE PLAN FOR DIRECTORS AND OFFICERS The Reorganized Debtor shall set aside 300,000 shares of New Securities as part of an incentive package for current officers and directors to be distributed during the first year from the Confirmation Date. The New Securities for the directors and officers will be distributed at the discretion of the Reorganized Debtor and contingent upon the directors and officers remaining employed by the Reorganized Debtor and performing their job functions in a reasonable manner. These New Securities will be legended and not saleable for a period of one year from date of issuance. 5. DISBURSING AGENT The Reorganized Debtor shall act as the Disbursing Agent for the purpose of making all distributions provided for under the Plan. The Disbursing Agent shall serve without bond and shall receive no compensation for distribution services rendered and expenses incurred pursuant to the Plan. The Disbursing Agent shall make payments to Class 7 Allowed Claimants pro rata. If, on a distribution date, a Class 7 Claim has neither been allowed nor disallowed, the Disbursing Agent shall segregate the amount which might otherwise be paid on such claim if allowed and pay the same if and when the claim is allowed. 27 a. Delivery of Distributions in General Distributions to holders of allowed claims shall be made: (a) at the addresses set forth in the proofs of claim filed by such holders; (b) at the addresses set forth in any written notices of address change delivered to the Debtor or to the Disbursing Agent after the date on which any related proof of claim was filed; or (c) at the addresses reflected in the Schedules relating to the applicable claim if no proof of claim was filed and the Disbursing Agent received no written notice of a change of address. b. UNDELIVERABLE DISTRIBUTIONS If the distribution to any holder of an allowed claim is returned to the Disbursing Agent as undeliverable, no further distribution shall be made to such holder unless and until the Disbursing Agent is notified in writing of such holder's then current address. Any holder of an allowed claim who does not assert a claim pursuant to the Plan for an undeliverable distribution to be made by the Disbursing Agent within six months after the date on which the distribution is returned to the Disbursing Agent shall have its claim for such undeliverable distribution discharged and shall be forever barred from asserting any such claim for an undeliverable distribution against the Debtor, the Reorganized Debtor or either of their property or against the Disbursing Agent. In such a case, any cash held for distribution on account of such claim for undeliverable distributions shall become property of the Reorganized Debtor. 28 c. COMPLIANCE WITH TAX REQUIREMENTS In connection with the Plan, to the extent applicable, the Disbursing Agent shall comply with all tax withholding and reporting requirements imposed on him by any governmental unit and all distributions pursuant to the Plan shall be subject to such withholding and reporting requirements. The Disbursing Agent shall be authorized to take any and all actions that may be necessary or appropriate to comply with such withholding and reporting requirements. 6. ACTIONS TO AMEND ORGANIZATIONAL DOCUMENTS The Board of Directors of the Reorganized Debtor shall be authorized without further corporate action to take any and all action necessary or appropriate to effectuate any amendments to the Reorganized Debtor's Articles of Incorporation, Bylaws and other organizational documents consistent with the Plan, and the President of the Reorganized Debtor shall be authorized to execute, verify, acknowledge, file and publish any and all instruments or documents that may be required to accomplish same. Without limitation, the Reorganized Debtor's Articles of Incorporation and Bylaws shall be amended and deemed amended to cancel the current equity securities of the Debtor; to change the name of the Reorganized Debtor; to authorize the issuance of 7,500,000 shares of Reorganized Debtor's Common Stock as of the Effective Date; and to prohibit the issuance of non-voting equity securities to the extent required by Section 1123(a)(6) of the Code. Except as amended consistent with the Plan, the Reorganized Debtor's organizational documents shall remain in force subject to amendment in accord with their terms and with otherwise applicable law. 29 7. STATUS OF SECURITIES TO BE ISSUED PURSUANT TO THE PLAN Except as otherwise specified in the Plan, all securities of Reorganized Debtor to be issued in accordance with this Plan to administrative claimants, to existing shareholders of the Debtor, and the private placement to USN shareholders, will not be registered under the Securities Act of 1933, as amended, or under any state or local securities laws and will be issued under an exemption from registration provided by section 1145 of the Bankruptcy Code (11 U.S.C. Section. 1145). IV. TREATMENT OF MISCELLANEOUS ITEMS A. EXECUTORY CONTRACTS AND UNEXPIRED LEASES 1. ASSUMPTIONS The following are the unexpired leases and executory contracts which may be assumed as obligations of the Reorganized Debtor under the Plan: (1) Valley Fair - Westfield. (2) Harborplace - Rouse. (3) Palm Dessert Mall - Westfield. (4) Stoneridge - Taubman. (5) White Flint Mall - Leiner Corporation. (6) Park Meadows - Rouse. (7) Scottsdale Fashion Square - Westcor. (8) Coastland Center - General Growth. (9) Falls Shopping Center - Taubman. 30 The Debtor has assumed its Masquerade Village, Las Vegas lease and its Georgetown Park lease. The Debtor has already filed pleadings with the Court seeking to assume all of its remaining executory leases. A motion seeking assumption of three leases has been heard and approved. The Debtor will seek to enter into new leases or sub-leases for its locations at Union Station, D.C., Carmel Plaza, Carmel, California, Aladin Bazaar, Las Vegas, Nevada, Menlo Park, New Jersey (a rejected lease), Towson, Maryland and Fisherman's Wharf, San Francisco. The Debtor is currently operating under certain leases entered into post-petition and certain leases which terminated post-petition and are now month-to-month tenancies. The Reorganized Debtor will seek to continue to operate under these leases and tenancies post-confirmation. 2. REJECTIONS On the Effective Date, any executory contracts and unexpired leases not already rejected or assumed or the subject of motions seeking assumption or rejection will be deemed rejected. Specifically, the Debtor intends to reject the equipment leases with Marlin Leasing Corporation, lease numbers 001-0146187 and 001-0146187-002 and with GE Capital for the lease of a Power 6000 Workstation. 31 The order confirming the Plan shall constitute an order approving the rejection of a lease or contract that has not been assumed or the subject of a motion seeking assumption. If you are a party to a contract or lease to be rejected and you object to the rejection of your contract or lease, you must file and serve your objection to the proposed rejection within the deadline for objecting to the confirmation of the Plan. See Section I.B.3 of the Disclosure Statement for the specific date. A PROOF OF CLAIM BASED ON A CLAIM ARISING FROM THE REJECTION OF AN EXECUTORY CONTRACT OR AN UNEXPIRED LEASE MUST BE FILED WITHIN 30 DAYS AFTER SAID PARTY IS SERVED WITH WRITTEN NOTICE THAT SAID CONTRACT OR LEASE HAS BEEN REJECTED BY THE BANKRUPTCY ESTATE, OR BY DECEMBER 7, 2004, WHICHEVER DATE IS LATER. Any claim based on the rejection of an executory contract or unexpired lease will be barred if the proof of claim is not timely filed, unless the Court later orders otherwise. B. CHANGES IN RATES SUBJECT TO REGULATORY COMMISSION APPROVAL This Debtor is not subject to governmental regulatory commission approval of its rates. C. RETENTION OF JURISDICTION The Court will retain jurisdiction as required under the Plan and to the extent provided by law. 32 V. EFFECT OF CONFIRMATION OF PLAN A. DISCHARGE Upon confirmation of the Plan, subject to the occurrence of the Effective Date, Debtor shall be discharged of liability for payment of debts incurred before confirmation of the Plan, to the extent specified in 11 U.S.C. Section. 1141. However, the discharge will not discharge any liability imposed by the Plan. B. REVESTING OF PROPERTY IN THE DEBTOR Except as provided elsewhere in the Plan, the confirmation of the Plan, subject to the occurrence of the Effective Date, revests all of the property of the estate in the Reorganized Debtor. C. MODIFICATION OF PLAN The Proponent of the Plan may modify the Plan at any time before confirmation. However, the Court may require a new disclosure statement and/or revoting on the Plan if Proponent modifies the Plan before confirmation. The Proponent of the Plan may also seek to modify the Plan at any time after confirmation only if (1) the Plan has not been substantially consummated AND (2) if the Court authorizes the proposed modifications after notice and a hearing. 33 D. RELEASES i) On the Confirmation Date, subject to the occurrence of the Effective Date, the Debtor and the Estate shall be deemed to release any and all claims which they or either of them may have against the Creditors Committee and its members, the Professionals employed in the case by order of the Bankruptcy Court and their present and former management, consultants, shareholders, directors, officers, agents, employees, attorneys, advisors, successors and assigns. The Debtor is unaware of the existence of any claims whatsoever against any of the parties to be released. ii) On the Confirmation Date, subject to the occurrence of the Effective Date, to the fullest extent permitted by law, all parties in interest in this chapter 11 case shall be deemed to have released any and all claims which they may have against the Debtor's officers and directors, the Creditors Committee and its members and the Professionals and against each and every of their present and former management, consultants, shareholders, directors, officers, agents, employees, attorneys, advisors, successors and assigns employed in the case pursuant to orders of the Bankruptcy Court. Notwithstanding anything herein to the contrary, the foregoing releases shall be enforced only to the extent permitted by applicable law and, with respect to releases of attorneys by their clients, only to the extent permitted by applicable canons of ethics and rules of professional conduct. 34 E. CLAIMS INJUNCTION From and after the Effective Date, except as otherwise expressly provided in this Plan or the Confirmation Order, all Entities shall be precluded from asserting against the Estate or its successors, any claims, debts, rights, causes of action, liabilities or interest based upon any act, omission, transaction or other activity of any kind or nature satisfied, released or discharged under the Plan to the fullest extent available under the Bankruptcy Code. F. SATISFACTION AND TERMINATION Except as otherwise expressly provided in this Plan or the Confirmation Order, as of the Effective Date, all entities that have held, currently hold or may hold a claim that is satisfied or interest that is terminated pursuant to the terms of the Plan are permanently enjoined from taking any of the following actions against the Estate, the Reorganized Debtor or their successors or their property on account of any such satisfied claims or terminated interests: (a) commencing or continuing, in any manner or in any place, any action or other proceeding; (b) enforcing, attaching, collecting or recovering in any manner any judgment, award, decree or order; (c) creating, perfecting or enforcing any lien or encumbrance; (d) asserting a setoff, right of subrogation or recoupment of any kind against any debt, liability or obligation due to the Debtor; and (e) commencing or continuing any action, in any manner or in any place, that does not comply with or is inconsistent with the provisions of the Plan. 35 G. POST-CONFIRMATION STATUS REPORT Within 120 days of the entry of the order confirming the Plan, Plan Proponent shall file a status report with the Court explaining what progress has been made toward consummation of the confirmed Plan. The status report shall be served on the United States Trustee, the twenty largest unsecured creditors, and those parties who have requested special notice. Further status reports shall be filed every 120 days and served on the same entities. H. POST-CONFIRMATION CONVERSION/DISMISSAL A creditor or party in interest may bring a motion to convert or dismiss the case under Section. 1112(b), after the Plan is confirmed, if there is a default in performing the Plan. If the Court orders the case converted to Chapter 7 after the Plan is confirmed, then all property of the Reorganized Debtor that has not been disbursed pursuant to the Plan, will revest in the Chapter 7 estate. 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 Court during this case. 36 The order confirming the Plan may also be revoked under very limited circumstances. The Court may revoke the order if the order of confirmation was procured by fraud and if the party in interest brings an adversary proceeding to revoke confirmation within 180 days after the entry of the order of confirmation. Each holder of an Allowed Class 7 Claim shall have standing and the right to bring an action to enforce the rights afforded to all holders of Class 7 Claims, including, but not limited to, the rights to payment granted in this Plan, on behalf of all holders of claims in Class 7. If, at any time, the Reorganized Debtor is in default of its obligations under this Plan to holders of Allowed Class 7 Claims, or any of them, then the Reorganized Debtor shall bear and be liable for, including the reimbursement of any entity paying or providing, any and all legal or professional fees and expenses incurred by any creditor seeking to enforce the Reorganized Debtor's obligations under this Plan, including the obligations and guarantees of any of the Debtor's or Reorganized Debtor's subsidiaries or affiliates. To the extent allowed under the law, such obligations shall be an administrative expense of the Debtor's estate, or any chapter 7 estate arising from conversion of this Case. I. FINAL DECREE Once the estate has been fully administered as referred to in Bankruptcy Rule 3022, the Plan Proponent, or other party as the Court shall designate in the Plan Confirmation Order, shall file a motion with the Court to obtain a final decree to close the case. 37 J. BUSINESS OPERATIONS AND POST-CONFIRMATION U.S. TRUSTEE FEES The Reorganized Debtor shall continue to operate its business free of supervision by the United States Trustee and shall no longer be required to file interim statements or operating reports but shall be obligated to pay fees pursuant to 28 U.S.C. section 1930(a)(6) until the entry of a final decree closing this Chapter 11 case. DATED: December __, 2004 ROBINSON, DIAMANT & WOLKOWITZ A Professional Corporation By:___________________________ LAWRENCE A. DIAMANT JEREMY W. FAITH Attorneys for Debtor and Debtor in Possession Premier Concepts, Inc. 38 EXHIBIT A - UNEXPIRED LEASES WHICH MAY BE ASSUMED
==================================================================================================================================== LEASES ARREARS/DMGS METHODS OF CURE - ------------------------------------------------------------------------------------------------------------------------------------ Description = Lease for retail space Cure amt = $29,913.19** Method of curing default & loss = NA at Valley Fair mall, Santa Clara, CA Actual pecuniary loss = 0 Means of assuring future performance = Business Lessor's name = Westfield Operations Lessee's name = Debtor Expiration date = February 28, 2007 - ------------------------------------------------------------------------------------------------------------------------------------ Description = Lease for retail space Cure amt = $20,108.68** (plus Method of curing default & loss = Cash at Harbor Place, Baltimore, MD attorneys' fees and costs) Actual pecuniary loss = 0 Means of assuring future performance = Business Lessor's name = Rouse/Harborplace Ltd. Operations Partnership Lessee's name = Debtor Expiration date = July 31, 2007 - ------------------------------------------------------------------------------------------------------------------------------------
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==================================================================================================================================== LEASES ARREARS/DMGS METHODS OF CURE - ------------------------------------------------------------------------------------------------------------------------------------ Description = Lease for retail space Cure amt = $23,279.12** Method of curing default & loss = Cash at Palm Desert mall, Palm Desert, CA Actual pecuniary loss = 0 Means of assuring future performance = Business Lessor's name = Westfield - WEA Palm Operations Desert LLC Lessee's name = Debtor Expiration date = August 31, 2007 - ------------------------------------------------------------------------------------------------------------------------------------ Description = Lease for retail space Cure amt = $24,203.79** (plus Method of curing default & loss = Cash at Stoneridge Mall, Pleasanton, CA attorneys' fees and costs) Actual pecuniary loss = 0 Means of assuring future performance = Business Lessor's name = Taubman/Stoneridge Operations Properties Lessee's name = Debtor Expiration date = January 31, 2006 - ------------------------------------------------------------------------------------------------------------------------------------ Description = Lease for retail space Cure amt = $19,603.76** (plus Method of curing default & loss = Cash at White Flint mall, Kensington, MD attorneys' fees and costs) Actual pecuniary loss = 0 Means of assuring future performance = Business Lessor's name = Lerner Corporation Operations Lessee's name = Debtor Expiration date = August 31, 2008 - ------------------------------------------------------------------------------------------------------------------------------------ Description = Lease for retail space Cure amt = $21,251.61** (plus Method of curing default & loss = Cash at Park Meadows attorneys' fees and costs) Actual pecuniary loss = 0 Means of assuring future performance = Business Lessor's name = Rouse Company, Rouse Operations Property Management, Inc. Lessee's name = Debtor Expiration date = September 30, 2006 - ------------------------------------------------------------------------------------------------------------------------------------ Description = Lease for retail space Cure amt = $18,577.51** Method of curing default & loss = Cash at the Scottsdale Fashion Square, Actual pecuniary loss = 0 Scottsdale, AZ Means of assuring future performance = Business Operations Lessor's name = Westcor Lessee's name = Debtor Expiration date = December 31, 2007 - ------------------------------------------------------------------------------------------------------------------------------------
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==================================================================================================================================== LEASES ARREARS/DMGS METHODS OF CURE - ------------------------------------------------------------------------------------------------------------------------------------ Description = Lease for retail space Cure amt = $12,191.89** (plus Method of curing default & loss = Cash at the Coastland Center, Naples, FL attorneys' fees and costs) Actual pecuniary loss = 0 Means of assuring future performance = Business Lessor's name = General Operations Growth/Coastland Center, LP Lessee's name = Debtor Expiration date = November 1, 2006 - ------------------------------------------------------------------------------------------------------------------------------------ Description = Lease for retail space Cure amt = $14,129.35** (plus Method of curing default & loss = Cash at Falls Shopping Center, Miami, FL attorneys' fees and costs) Actual pecuniary loss = 0 Means of assuring future performance = Business Lessor's name = Taubman Operations Falls/Shopping Center Assoc. Lessee's name = Debtor Expiration date = March 31, 2007 ====================================================================================================================================
** The cure amounts are based on the figures alleged by the various landlords. 41 EXHIBIT B - EXECUTORY CONTRACTS TO BE ASSUMED With the exception of the real property leases specifically set forth in Exhibit A, the Debtor will not assume any executory contracts. 42