Second Amended Plan of Reorganization for The Walking Company and Alan's Shoes, Inc.
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This agreement is the Second Amended Plan of Reorganization for The Walking Company, a California corporation, and Alan's Shoes, Inc., its Arizona subsidiary, both of which filed for Chapter 11 bankruptcy. The plan outlines how the companies' assets will be acquired by a new entity owned by Big Dogs Holdings, Inc. and certain creditors, how new funding will be provided, and how creditors will be paid. It sets out the terms for creditor payments, new ownership structure, and the process for emerging from bankruptcy, subject to court approval and specific financial contributions.
EX-2.1 11 exhibit2-1.txt EXHIBIT 2.1 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 ------------------------------------ --------------------------------- --------------------------------- ------------------------------------ --------------------------------- ---------------------------------
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.
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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
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
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 -----------------
