united states bankruptcy court for the district of

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Case:09-10367-HRT Doc#:803 Filed:09/28/10
Entered:09/28/10 15:26:45 Page1 of 67
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLORADO
In re:
SHANE CO.
EIN 84-0163760
Debtor,
Case No. 09-10367-HRT
Chapter I1
JOINT AMENDED PLAN OF REORGANIZATION PROPOSED BY SHANE CO.
AND OFFICIAL COMMITTEE OF UNSECURED CREDITORS
Dated September 28, 2010
FAIRFIELD AND WOODS, P.C.
Caroline C. Fuller, #14403
Wells Fargo Centre
1700 Lincoln, Suite 2400
Denver, CO 80203-4524
Telephone: (303) 830-2400
Facsimile : (303) 830-1033
E-mail: [email protected]
SKADDEN, ARPS, SLATE, MEAGHER &
FLOM LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899-0636
Attn: Gregg M. Galardi, Esq.
Telephone: (302) 651-3000
Facsimile : (302) 651-3001
DAVIS, GRAHAM & STUBBS, LLP
Christopher L. Richardson , #13437
1550 Seventeenth Street , Suite 500
Denver, CO 80202
Telephone : (303) 892-9400
Facsimile : (303) 893-1379
Email : chris . [email protected]
COHEN TAUBER SPIEVACK &
WAGNER P.C.
Joseph Vann
Robert A. Boghosian
420 Lexington Avenue, Suite 2400
New York, NY 101070
Telephone : (212) 381-8726
Facsimile : (212) 586-5090
Email: [email protected]
ATTORNEYS FOR SHANE CO.
ATTORNEYS FOR THE OFFICIAL
COMMITTEE OF UNSECURED
CREDITORS
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TABLE OF CONTENTS
PLAN INTRODUCTION AND SUMMARY ..............................................................................1
ARTICLE I
DEFINED TERMS AND RULES OF INTERPRETATION ....................2
ARTICLE If
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS ...........18
2.1.
Introduction ............................................................................................................ 18
2.2.
Class I . ..................................................................................................................18
2.3.
Class 2 ....................................................................................................................18
2.4.
Class 3 ....................................................................................................................18
2.5.
Class 4 .................................................................................................................... 18
2.6.
Class 5 ....................................................................................................................18
2.7.
Class 6 .................................................................................................................... 18
2.8.
Class 7 ...................................................................................................................18
2.9.
Class 8 ....................................................................................................................18
ARTICLE III
TREATMENT OF CLAIMS AND EQUITY INTERESTS ....................19
3.1.
Administrative Expenses ........................................................................................19
3.2.
Priority Tax Claims ................................................................................................19
3.3.
Corundum Claim ....................................................................................................19
3.4.
Class I Non-Tax Priority Claims .........................................................................20
3.5.
Class 2 - Suresh Claim ..........................................................................................20
3.6.
Class 3- Other Secured Claims ..............................................................................21
3.6.1. Class 3A - Qwest Secured Claim .............................................................21
3.6.2. Class 3-C - Secured Tax Claims ...............................................................21
3.7.
Class 4
Convenience Class .................................................................................21
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3.8.
Class 5 - General Unsecured Claims ....................................................................22
3.9.
Class 6 - TMS Claim .............................................................................................22
3.10.
Class 7 - Consignment Claims ..............................................................................23
3.11.
Class 8 -Equity Interests .......................................................................................23
3.12.
Reservation of Rights Regarding Claims ...............................................................23
ARTICLE IV
MEANS FOR EXECUTION OF PLAN ....................................................23
4.1.
Vesting of Assets; Release of Liens ........................................................................23
4.2.
Continued Corporate Existence .............................................................................23
4.3.
Officers and Directors of Reorganized Debtor ......................................................24
4.4.
Indemnification of Debtor's Directors, Managers, Officers, and Employees . ...... 24
4.5.
Tax Share Amount Advances .................................................................................24
4.6.
Professional Retention ...........................................................................................25
4.7.
Limitations on TMS Compensation ........................................................................25
4.8.
Tax Dividends and Equalization Distributions ......................................................25
4.9.
Waiver of Preference Actions; Preservation and Pursuit of Causes ofAction and
Avoidance Actions; Resulting Claim Treatment ....................................................25
4.14.
Effectuating Documents; Further Transactions ....................................................26
4.11.
Exemption From Certain Transfer Taxes ..............................................................26
4.12.
Corporate Action ...................................................................................................26
4.13.
Reorganized Debtor's Obligations Under the Plan ...............................................27
4.14.
Taxes ......................................................................................................................28
4.15.
Operations Between Confirmation Date and Effective Date ................................. 28
4.16.
Transactions on Business Days .. ...........................................................................28
4.17.
United States Trustee's Fees ..................................................................................28
ii
4.18.
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Expansion Plans .....................................................................................................28
ARTICLE V
PROVISIONS GOVERNING DISTRIBUTIONS ...................................28
5.1.
Distributions for Allowed Claims ..........................................................................28
5.2.
Interest on Claims; Dividends ...............................................................................29
5.3.
Means of Cash Payment .........................................................................................29
5.4.
Fractional Distributions ........................................................................................29
5.5.
Delivery of Distributions ........................................................................................29
5.6.
Application of Distribution Record Date ...............................................................30
5.7.
Withholding, Payment, and Reporting Requirements ............................................30
5.8.
Setoffs .....................................................................................................................31
5.9.
No Distribution in Excess ofAllowed Amounts .....................................................31
ARTICLE VI
PROCEDURES FOR RESOLVING DISPUTED, CONTINGENT AND
UNLIQUIDATED CLAIMS AND DISTRIBUTIONS WITH RESPECT
THERETO ................................................................................................... 31
6.1.
Objections to Claims; Estimation Proceedings .....................................................31
6.2.
Authority to Prosecute Objections .........................................................................32
6.3.
Treatment of Disputed Claims ...............................................................................32
6.4.
Provisions for Disputed Claims .............................................................................32
6.5.
Accounts; Escrows; Reserves ................................................................................33
ARTICLE VII
EXECUTORY CONTRACTS AND UNEXPIRED LEASES .................33
7.1.
Assumption .............................................................................................................33
7.2.
Cure Rights for Executory Contracts and Unexpired Leases Assumed Under Plan.33
7.3.
Rejection Damages Bar Date for Rejections Pursuant to Plan .............................34
7.4.
Rejection of Executory Contracts and Unexpired Leases ......................................34
7.5.
Assumption of Customer Obligations ....................................................................34
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7.6.
Treatment of Compensation and Benefit Programs .......:.......................................34
7.7.
Certain Indemnification Obligations Owed by Debtor ..........................................35
7.8.
Continuing Obligations Owed to Debtor ...............................................................35
7.9.
Limited Extension of Time to Assume or Reject .....................................................36
7.10.
Post-petition Contracts and Leases .......................................................................37
7.11.
Treatment of Claims Arising From Assumption or Rejection ................................37
ARTICLE VIII
CONDITIONS PRECEDENT TO CONFIRMATION AND
CONSUMMATION OF THE PLAN .........................................................37
8.1.
Conditions to Confirmation ...................................................................................37
8.2.
Conditions to Effective Date ..................................................................................38
8.3.
Waiver of Conditions ............................................................................................. 38
8.4.
Effects of Failure of Conditions to Effective Date .................................................39
ARTICLE IX
PLAN COMMITTEE ..................................................................................39
9.1.
Formation of Plan Committee ...............................................................................39
9.2.
Duties and Operations of Plan Committee ............................................................39
9.3.
Rights and Powers of Plan Committee ..................................................................40
9.4.
Tenure of Plan Committee .....................................................................................40
9.5.
Retention, Compensation and Reimbursement of Plan Committee and
Professionals .......................................................................................................... 40
9.6.
Financial Reporting ...............................................................................................41
9.7.
Confidentiality ........................................................................................................41
9.8.
Limitation on Liability of Plan Committee ............................................................41
9.9.
Successor to Plan Committee .................................................................................41
9.10.
Status of Creditors' Committee as Plan Proponent ...............................................42
ARTICLE X
GENERAL PROVISIONS ..........................................................................42
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10.1.
Administrative Expenses ........................................................................................42
10.2.
Professional Fee Claims ........................................................................................42
10.3.
Modifications and Amendments .............................................................................43
10.4.
Substantial Consummation ....................................................................................44
10.5.
Severability of Plan Provisions ..............................................................................44
10.6.
Successors and Assigns and Binding Effect ...........................................................44
10.7.
Compromises and Settlements ...............................................................................44
10.8.
Releases and Related Matters ................................................................................44
10.8.1. Releases by Debtor ....................................................................................44
10.8.2. Releases by Holders of Claims ..................................................................45
10.9.
Discharge of the Debtor .........................................................................................46
10.10. Injunction ................................................
...........................................................46
10.11. Exculpation and Limitation of Liability .................................................................47
10.12. Term of Injunctions or Stays ..................................................................................48
10.13. Revocation, Withdrawal, or Nan-Consummation ..................................................48
10.14. Plan Supplement ....................................................................................................48
10.15. Notices ....................................................................................................................49
10.16. Computation of Time ..............................................................................................50
10.17. Governing Law .......................................................................................................50
10.18. Binding Nature .......................................................................................................50
10.19. Closing of Case ......................................................................................................50
ARTICLE XI
RETENTION OF JURISDICTION ........................................................... 50
11.1.
Scope of Retention of Jurisdiction .........................................................................50
11.2.
Failure of the Bankruptcy Court to Exercise Jurisdiction .....................................52
V
ARTICLE XII
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CONFIRMATION NOTWITHSTANDING REQUIREMENTS OF 11
U.S.C. §1129(a)(8) ........................................................................................52
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Shane Co., ("Debtor" or "Shane") and the Official Committee of Unsecured Creditors
(the "Committee"), by and through their undersigned counsel, hereby respectfully submit their
Joint Amended Plan of Reorganization.
PLAN INTRODUCTION AND SUMMARY
This Joint Plan of Reorganization has been proposed by Shane Co . and the Unsecured
Creditors ' Committee appointed to represent the interests of general unsecured creditors in the
Shane Co . bankruptcy case. The Plan calls for the continued operation of the company , and for
the payment in full of loans secured by certain assets of the company , over time, as agreed to by
the secured lenders and Shane. It also calls for distributions to creditors holding general
unsecured claims, from available revenues and/or assets of the company (other than a
convenience class of small claims which will be paid promptly after Confirmation of the Plan),
which will continue , with certain limited exceptions, until the allowed general unsecured claims
have been paid in full. It further calls for the grant of a junior security interest in the inventory of
the company to secure a portion of the outstanding obligations to the general unsecured creditors.
Thomas M. Shane, who has, directly and indirectly, made loans to the company in excess of $30
million, has agreed, on behalf of his affiliated entity Corundum Financial Ventures LLC, to defer
the repayment of the principal obligations on the $10. 5 million debtor-in-possession loan, all
payments on account of $20 million in loans he made prior to the bankruptcy filing, and on
account of certain other claims which he holds against the company totaling approximately $3
million, while payments are made to the general unsecured creditors . In addition, Mr. Shane has
agreed to loan to the company fifty percent of certain federal income tax refunds he has and will
collect in the future on account of net operating losses of the company, to help fund the
obligations of the company under the Plan. The Plan provides that Mr. Shane and various family
trusts will retain their current ownership interests in the company.
Reference is made to the Disclosure Statement (as defined below) for a discussion of (i)
the Debtor's history, businesses, properties, results of operations , and projections for future
operations, (ii) a summary and analysis of this Plan and (iii ) certain related matters , including
risk factors relating to the consummation of this Plan and Distributions (as defined below) to be
made under this Plan. The Debtor and the Committee are the proponents of the Plan (the
"Proponents") within the meaning of section 1129 of the Bankruptcy Code (as defined below).
All Holders of Claims who are entitled to vote on the Plan are encouraged to read the
Plan and the Disclosure Statement in their entirety before voting to accept or reject the Plan.
Subject to certain restrictions and requirements set forth in section 1127 of the Bankruptcy Code,
Rule 3019 of the Bankruptcy Rules (as defined below), and Article 10 of the Plan, the Debtor
and the Committee reserve the right, to alter, amend, modify, revoke, or withdraw the Plan prior
to its substantial consummation, but any alteration, amendment, or modification is subject to the
consent of Suresh.
No solicitation materials , other than the Disclosure Statement and related materials
transmitted therewith have been approved for use in soliciting acceptances and rejections of this
Plan. Nothing in the Plan should be construed as constituting a solicitation of acceptances of the
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Plan unless and until the Disclosure Statement has been approved and distributed to all Holders
of Claims and Equity Interests to the extent required by Bankruptcy Code section 1125.
ALL HOLDERS OF CLAIMS ENTITLED TO VOTE ON THE PLAN ARE
ENCOURAGED TO READ CAREFULLY THE DISCLOSURE STATEMENT (INCLUDING
ALL EXHIBITS THERETO) AND THE PLAN, EACH IN ITS ENTIRETY, BEFORE
VOTING TO ACCEPT OR REJECT THE PLAN.
ARTICLE I
DEFINED TERMS AND RULES OF INTERPRETATION
For purposes of the Plan, except as expressly provided or unless the context otherwise
requires, (a) all capitalized terms used in the Plan and not otherwise defined in the Plan shall
have the meanings ascribed to them in Article I of the Plan or any exhibit hereto, (b) any
capitalized term used in the Plan that is not defined in the Plan, but is defined in the Bankruptcy
Code or the Bankruptcy Rules , shall have the meaning ascribed to that term in the Bankruptcy
Code or the Bankruptcy Rules, as applicable , (c) whenever the context requires , such terms shall
include the plural as well as the singular number, the masculine gender shall include the
feminine, and the feminine gender shall include the masculine , (d) any reference in the Plan to a
contract, instrument, release, indenture, or other agreement or document being in a particular
form or on particular terms and conditions means that such document shall be substantially in
such form or substantially on such terms and conditions , (e) any reference in the Plan to an
existing document or exhibit means such document or exhibit as it may be amended , modified,
or supplemented from time to time, (f) unless otherwise specified, all references in the Plan to
sections, articles, schedules , and exhibits are references to sections , articles, schedules, and
exhibits of or to the Plan, (g) the words "herein," "hereof, " and "hereto" refer to the Plan in its
entirety rather than to a particular portion of the Plan, (h) captions and headings to articles and
sections are inserted for convenience of reference only and are not intended to be a part of or to
affect the interpretation of the Plan, and (i) the rules of construction set forth in section 102 of
the Bankruptcy Code and in the Bankruptcy Rules shall apply:
1.1.
"Actual Month End Cash Balance " means the actual aggregate Book Cash
recorded by the Debtor at the end of each fiscal month during the Term of the Plan. The
financial statements evidencing the Actual Month End Cash Balance shall include either line
items or footnotes for Restricted Cash.
1.2.
"Administrative Expense " means a Claim arising under Bankruptcy Code section
507(a)(2) for costs and expenses of administration of the Chapter 11 Case under Bankruptcy
Code sections 503(b), 507(b) or 1114(e)(2), to the extent not previously paid , including, but not
limited to , (a) any actual and necessary costs and expenses incurred after the Petition Date of
preserving the Estate and operating the business of the Debtor (such as wages , salaries and
commissions for services rendered after the commencement of the Chapter 11 Case and
payments for inventory, leased equipment and premises), (b) all other Claims entitled to
administrative claim status pursuant to a Final Order, but excluding Priority Tax Claims, Non-
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Tax Priority Claims and Professional Fee Claims, (c) all fees and charges assessed against the
Estate under chapter 123 of title 28, United States Code; (d) all Claims that are entitled to be
treated as Administrative Expenses pursuant to a Final Order under §546(c)(2)(A) of the
Bankruptcy Code; and (e) Allowed Cure Costs.
"Administrative Expense Bar Date" means sixty (60) days after the Effective
1.3.
Date, or such later date as the Court may set as the deadline for filing any Administrative
Expense or Claim for Cure Costs.
"Administrative Expense Objection Deadline " means the last day for Filing an
1.4.
objection to any Administrative Expense Request, which shall be the later of (a) 90 days after the
Effective Date, (b) 30 days after the Filing of such Administrative Expense Request or (c) such
other date specified in this Plan or ordered by the Bankruptcy Court. The Filing of a motion to
extend the Administrative Expense Objection Deadline prior to its expiration shall automatically
extend the Administrative Expense Objection Deadline until a Final Order is entered on such
motion. In the event that such motion to extend the Administrative Expense Objection Deadline
is denied by the Bankruptcy Court, the Administrative Expense Objection Deadline shall be the
later of the current Administrative Expense Objection Deadline (as previously extended, if
applicable) or 30 days after the Bankruptcy Court's entry of an order denying the motion to
extend the Administrative Expense Objection Deadline.
"Administrative Expense Request" means a request for the payment of an
1.5.
Administrative Expense.
1.6.
"Allowed, " when used with respect to a Claim, means a Claim or any portion
thereof (a) that has been allowed by a Final Order, (b) that either (y) has been scheduled as a
liquidated, non-contingent, and undisputed Claim in an amount greater than zero on the
Schedules, or (z) is the subject of a timely filed Proof of Claim as to which either (i) no objection
to its allowance has been Filed (either by way of objection or amendment to the Schedules) on or
before the latest of any limitation fixed by the Bankruptcy Code, any order of the Bankruptcy
Court, and the Claims Objection Deadline or (ii) any objection to its allowance has been settled,
waived through payment, withdrawn, or denied by a Final Order, or (c) that is expressly allowed
in a liquidated amount in the Plan; provided, however, that with respect to an Administrative
Expense, "Allowed Claim" means an Administrative Expense as to which a timely written
request for payment has been made by the Administrative Expense Bar Date and as to which the
Debtor, Reorganized Debtor, or any other party in interest (x) has not interposed a timely
objection by Administrative Expense Objection Deadline or (y) has interposed a timely objection
and such objection has been settled, waived through payment, withdrawn, or has been denied by
a Final Order; rovided further, however, that for purposes of determining the status (i.e.,
Allowed or Disputed) of a particular Claim prior to the expiration of the period fixed for Filing
objections to the allowance or disallowance of Claims, any such Claim that has not been
previously allowed or disallowed by a Final Order or the Plan shall be deemed a Disputed Claim
unless such Claim is specifically identified by the Debtor as being an Allowed Claim. Unless
otherwise expressly provided in the Plan, section 506(b) of the Bankruptcy Code, or a Final
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Order, "Allowed Claim" shall not include interest or any other amounts accruing on, in
connection with, or with respect to , such Allowed Claim from and after the Petition Date.
1.7.
described.
"Allowed... Claim" means an Allowed Claim of the particular type or Class
"Annual Budget " means the annual budget for the Reorganized Debtor's next
1.8.
fiscal year which shall be presented by the Reorganized Debtor to the Plan Committee on or
before the last fiscal day of each year. The Annual Budget shall contain projections for income
and expenditures that are consistent with the Reorganized Debtor's prior performance and
projected sales and operating expenses consistent with economic and consumer trends for the
upcoming fiscal year . The Annual Budget shall also contain a projected balance sheet report and
cash flow statement report to include other transactions excluded from the statement of
operations that impact Stated Month End Cash Balance for the corresponding periods of
projected sales and expenses , including either line items or footnotes for Restricted Cash. The
Annual Budget shall follow the template used for the Reorganized Debtor' s balance sheet, profit
and loss statement , and cash flow reports provided to the Creditors Committee during the
Chapter 11 Case.
1.9.
"Assets " means all property rights and interests owned by the Estate as of the
Effective Date , whether real or personal , tangible or intangible , legal or equitable, including
liabilities and chores in action.
1.10. "Avoidance Actions " means Causes of Action arising under Bankruptcy Code
sections 502, 510, 544, 545 , 548, 550, 551 or 553 (b), or under related state or federal statutes and
common law, including , without limitation, fraudulent transfer laws, whether or not litigation is
commenced to prosecute such Causes of Action, but expressly excluding any Preference Actions.
1.11. "Ballot " means each of the ballot forms distributed to each Holder of a Claim or
Equity Interest entitled to vote to accept or reject this Plan.
L 12. "Bankruptcy Code " means Title 11 of the United States Code, as in effect on the
Petition Date or thereafter amended and as applicable to the Chapter 11 Case.
1.13.
Colorado.
"Bankruptcy Court " means the United States Bankruptcy Court for the District of
1.14. "Bankruptcy Rules " means, collectively, the Federal Rules of Bankruptcy
Procedure and the Official Bankruptcy Forms , as amended, the Federal Rules of Civil Procedure,
as amended and as applicable to the Chapter 11 Case or proceedings therein, as the case may be,
and the Local Rules of Bankruptcy Practice and Procedure for the United States Bankruptcy
Court for the District of Colorado, as in effect on the Petition Date or thereafter amended.
1.15. "Bar Date " means (i) with respect to Claims arising from the rejection of an
Executory Contract pursuant to the Plan, thirty ( 30) days after the Confirmation Date; (ii) with
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respect to Claims arising from the rejection of an Executory Contract pursuant to Bankruptcy
Court Order entered prior to the Confirmation Date, the later of June 29 , 2009, or thirty (30) days
after entry of the Final Order authorizing the rejection of such Executory Contract; (iii) with
respect to Administrative Expense Claims, and Professional Fee Claims , the Administrative
Expense Bar Date ; (iv) with respect to a Claim of any creditor whose Claim has been reduced,
deleted or the status of which has been changed in connection with the Debtor amending its
Schedules, the later of the otherwise applicable Bar Date and 30 days after such Creditor is
served with notice that the Debtor has amended its Schedules; (v) with respect to all other Claims
of governmental units, July 13, 2009; and (vi) with respect to all other Claims against the Debtor,
June 29, 2009, or any extension of such date approved by the Debtor or the Bankruptcy Court.
1.16.
"Book Cash " means Cash.
1.17. "Business Day" means any day other than a Saturday , Sunday, or "legal holiday"
as that term is defined in Bankruptcy Rule 9006(a).
1.18. "Cash " or "Book Cash " means book cash, other than Restricted Cash, of the
Debtor on hand as of any given date, including , but not limited to , cash and cash equivalents,
readily marketable direct obligations of the United States of America or any State or local
municipality, bonds, and certificates of deposit issued by banks.
1.19. "Cash Collateral Order" means that Final Order (i) Authorizing Use of Cash
Collateral, (ii) Granting Adequate Protection, and (iii) Modifying the Automatic Stay entered by
the Bankruptcy Court on February 18, 2009 , as such Cash Collateral Order may be amended or
extended thereafter.
1.20. "Causes of Action " means any and all claims, actions, proceedings , causes of
action, Avoidance Actions , suits, accounts , controversies , agreements, promises, rights of action,
rights to legal remedies , rights to equitable remedies , rights to payment and Claims, whether
known, unknown, reduced to judgment, not reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, secured or unsecured and whether
asserted or assertable directly or derivatively , in law, equity or otherwise, that the Debtor and/or
its Estate may hold against any Person , but excluding those released , exculpated or waived
pursuant to the Plan, the Confirmation Order , the Cash Collateral Order, and the DIP Order.
1.21. "Chapter 11 Case" means the case under chapter 11 of the Bankruptcy Code
commenced by the Debtor in the Bankruptcy Court.
1.22. "Claim" means a "claim" as defined in Bankruptcy Code section 101(5) or
Administrative Expense Request , whether arising before or after the Petition Date.
1.23. "Claims Objection Deadline " means, (i) as to Administrative Expenses, the
Administrative Expense Objection Deadline; ( ii) as to Professional Fee Claims , the Professional
Fee Claims Objection deadline ; ( iii) as to claims asserted as a result of the rejection of an
Executory Contract under the Plan, thirty ( 30) days after the bar date for the assertion of such
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claim set forth in Section 7.3, and (iv) as to all other Claims, the later of (a) ten (10) days prior to
the Voting Deadline or (b) thirty ( 30) days after entry of a Final Order under section 502 0) of the
Bankruptcy Code reinstating any Claim previously disallowed ; provided that the deadlines set
forth in subclauses (i), (ii), and (iii) of this definition may be extended by order of the
Bankruptcy Court upon motion of the Debtor, the Reorganized Debtor, or any other party in
interest, and that the deadline set forth in clause (iv) of this definition may be extended only upon
the consent of the Creditors ' Committee or Plan Committee, as applicable.
1.24.
"Claimholder" means a Holder of a Claim.
1.25. "Class " means a category of Holders of Claims or Equity Interests , as described
in Articles 2 and 3 of the Plan.
1.26. "Class Ballot" means the form of Ballot issued to Holders of Claims or Equity
Interests in a particular Class.
1.27. "Class 5 Claim Amount " means the aggregate principal amount of all Allowed
Class 5 Claims as of the Effective Date , together with (a) any accrued and unpaid interest to
which the Holders of Allowed Class 5 Claims may be entitled under the Plan or the Class 5 Note
Documents ; and (b) any costs and fees (including reasonable attorneys' fees) pursuant to the
Class 5 Note Documents, as reduced from time to time by payments made by the Reorganized
Debtor to the Holders of Allowed Class 5 Claims pursuant to the Plan.
1.28. "Class 5 Note Documents" means those documents set forth on Exhibit Ito the
Plan, which shall be executed by the Reorganized Debtor in favor of , and delivered to the Plan
Committee, as representative for the benefit of all Class members , to evidence the Reorganized
Debtor's obligations under the Plan to repay the Class 5 Claim Amount in accordance with the
Plan, and to evidence and perfect the Class 5 Security Interest.
1.29. "Class 5 Secured Claim Amount " means the lesser of (i) the aggregate
outstanding Class 5 Claim Amount and (ii) the sum of (a) $10 ,000,000 . 00, (b) an amount equal
to the principal amount of any Tax Share Amount Advances made in accordance with the Plan
and (c), fifty percent (50%) of any Projected Amount Shortfall; provided that , upon any default
by the Reorganized Debtor under the Class 5 Note Documents or the Plan, the Class 5 Secured
Claim Amount shall also include the reasonable fees and costs (including reasonable attorneys'
fees) incurred in enforcing any remedies set forth in the Class 5 Note Documents ; provide d that
any increase in the Class 5 Secured Claim Amount as a result of subsections (b) and (c) hereof
shall be retroactive to the Effective Date ; and further provided that, if, prior to the indefeasible
payment in full of the Class 5 Claim Amount, a New Inventory Lien is granted , hypothecated,
created or allowed to exist, without the consent of the Plan Committee , the Class 5 Secured
Claim Amount shall automatically be increased to the then outstanding Class 5 Claim Amount,
retroactive to the Effective Date.
1.30. "Class 5 Security Interest" means the security interests and liens that shall be
granted to the Holders of Allowed Class 5 Claims pursuant to the Class 5 Note Documents to
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secure the Class 5 Secured Claim Amount, which Liens and security interests shall consist of a
validly perfected security interest and Lien in all inventory of the Reorganized Debtor; provided,
however, that the Class 5 Security Interests shall at all times be junior to (a) the Suresh Claim
and any Allowed Administrative Expenses and Allowed Consignment Claims of Suresh incurred
prior to the Effective Date, and (b) to the security interests of Corundum in the Corundum
Collateral. Upon indefeasible payment in full of the Class 5 Claim Amount, the Class 5 Security
Interests shall be released.
1.31. "Collateral" means any property or interest in property of the Debtor's Estate
subject to a Lien to secure the payment or performance of a Claim, which Lien is not subject to
avoidance under the Bankruptcy Code or otherwise invalid under the Bankruptcy Code or
applicable state law.
1.32. "Confirmation" means entry of an Order by the Bankruptcy Court confirming
this Plan in accordance with § 1129 of the Bankruptcy Code.
1.33. "Confirmation Date " means the date on which the Confirmation Order is entered
on the docket maintained by the clerk of the Bankruptcy Court.
1.34. "Confirmation Hearing" means the hearing held by the Bankruptcy Court to
consider Confirmation of the Plan, as such hearing may be adjourned or continued from time to
time.
1.35. "Confirmation Order" means the order entered confirming the Plan pursuant to §
1129 of the Bankruptcy Code.
1.36. "Consignment Claims" means those Claims of Consignment Vendors arising out
of Consignment Transactions.
1.37. "Consignment Transaction" means a transaction with the Debtor, regardless of its
form, but in the ordinary course of the Debtor's business, in which merchandise is or was
delivered by a Consignment Vendor to the Debtor prior to the Effective Date for the purpose of
sale and, in the course of dealing, or under industry practice, payment to the Consignment
Vendor is or was deferred until after the sale of the merchandise.
1.38. "Consignment Vendor" means any supplier of merchandise to the Debtor in a
Consignment Transaction.
1.39. "Consummation or Consummate" means the occurrence of the transactions and
satisfaction or waiver of the conditions necessary for the Plan to become effective.
1.40. "Contingent" means, with reference to a Claim, a Claim that has not accrued or is
not otherwise payable and the accrual of which, or the obligation to make payment on which, is
dependent upon a future event that may or may not occur.
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1.41. "Convenience Claim" means a General Unsecured Claim for which the Allowed
amount of such Claim is no more than $7,500.00.
1.42. "Corundum " means Corundum Financial Ventures LLC, a Colorado limited
liability company.
1.43. "Corundum Claim means the claim of Corundum arising out of debtor-inpossession financing provided by Corundum to the Debtor pursuant to the Corundum Loan
Agreement which, with the consent of Corundum , will be restructured pursuant to the Plan,
together with any Tax Share Amount Advances.
1.44.
"Corundum Collateral " means the Collateral securing the Corundum Claim.
1.45. "Corundum Exit Loan Documents " means the loan documents in the form
attached hereto as Exhibit 2, to be executed by the Reorganized Debtor and Corundum as of the
Effective Date of the Plan, evidencing the terms of repayment of the Corundum Claim provided
for in the Plan.
1.46. "Corundum Loan Agreement " means the Amended and Restated Loan and
Security Agreement, dated as of January 16, 2009, entered into by and between the Debtor and
Corundum and approved by the DIP Order.
1.47.
"Creditor" means a " creditor" as defined in Bankruptcy Code section 101(10).
1.48. "Creditors Committee " means the Unsecured Creditors Committee appointed by
the United States Trustee in the case pursuant to section 1102 (a) of the Bankruptcy Code on
January 22, 2009, as the appointment may be amended from time to time.
1.49. "Cure " means the distribution of Cash, or such other property as may be agreed
upon by the parties or ordered by the Bankruptcy Court , with respect to the assumption or
assumption and assignment of an executory contract or unexpired lease , pursuant to Bankruptcy
Code section 365(b), in an amount equal to all unpaid monetary obligations, without interest, or
such other amount as may be agreed upon by the parties , under such executory contract or
unexpired lease, to the extent such obligations are enforceable under the Bankruptcy Code and
applicable bankruptcy law.
1.50. "Cure Costs" means the amount necessary to Cure any pre-petition defaults and
post-petition defaults arising under those unexpired leases and Executory Contracts to be
assumed by the Reorganized Debtor prior to or through the Plan, as set forth in Article 7 of the
Plan.
1.51.
"Debtor" means Shane Co.
1.52. "DIP Order" means the Final Order Pursuant to 11 U.S.C. §§ 105, 363 and 364
and Federal Rules of Bankruptcy Procedure 2002, 4001 and 9014 Authorizing Debtor to Obtain
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Postpetition Financing, entered by the Bankruptcy Court on February 18, 2009 , as such DIP
Order may be amended or extended thereafter.
1.53. "Disallowed Claim " means a Claim, or any portion thereof, that (a) has been
disallowed by a Final Order, (b) is scheduled at zero or is contingent , disputed or unliquidated
and as to which no Proof of Claim has been filed by the applicable Bar Date or deemed timely
filed with the Bankruptcy Court pursuant to either the Bankruptcy Code or any Final Order or
under applicable law, or (c) is not scheduled and as to which (i) no Proof of Claim has been filed
by the applicable Bar Date or deemed timely filed with the Bankruptcy Court pursuant to either
the Bankruptcy Code or any Final Order or under applicable law, or (ii) no Administrative
Expense Request has been filed by the Administrative Expense Bar Date or deemed timely filed
with the Bankruptcy Court pursuant to either the Bankruptcy Code or any Final Order or under
applicable law.
1.54. "Disclosure Statement " means the disclosure statement (including all exhibits
, 2010, relating to this Plan, distributed in
and schedules thereto) dated September
accordance with Bankruptcy Code sections 1125 and 1126 and Bankruptcy Rule 3018.
1.55. "Disputed Claim" means a Claim, or any portion thereof, that is neither an
Allowed Claim nor a Disallowed Claim.
1.56.
described.
"Disputed... Claim " means a Disputed Claim of the particular type or Class
1.57. "Disputed Claim Amount" means (a) if a liquidated amount is set forth in the
Proof of Claim relating to a Disputed Claim , (i) the liquidated amount set forth in the Proof of
Claim relating to the Disputed Claim; (ii) an amount agreed to by the Debtor or the Reorganized
Debtor, as applicable, and the Holder of such Disputed Claim ; or (iii) if a request for estimation
is filed by any party, the amount at which such Disputed Claim is estimated by the Court; (b) if
no liquidated amount is set forth in the Proof of Claim relating to a Disputed Claim, (i) an
amount agreed to by the Debtor or the Reorganized Debtor, as applicable , and the Holder of such
Disputed Claim or (ii) the amount estimated by the Court with respect to such Disputed Claim;
or (c) if the Disputed Claim was listed on the Schedules as unliquidated , contingent or disputed
and no Proof of Claim was filed, or deemed to have been filed , by the applicable Bar Date and
the Claim has not been resolved by written agreement of the parties or an order of the Court,
zero.
1.58. "Disputed Claims Reserve" means the reserve of Cash established and
maintained by the Debtor and the Reorganized Debtor to pay Disputed Claims upon allowance
by the Bankruptcy Court.
1.59. "Distribution" means any distribution by the Reorganized Debtor made pursuant
to the Plan to the Holders of Allowed Claims (including, without limitation, pursuant to the Class
5 Note Documents), or Equity Interests.
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1.60. "Distribution Date " means the date upon which a Distribution is made in
accordance with the Plan to Holders of Allowed Claims entitled to receive Distributions under
the Plan.
1.61. "Distribution Record Date" means the record date for determining entitlement to
receive Distributions under the Plan on account of Allowed Claims, which date, (a) as to all
Classes of Claims other than Administrative Expenses not incurred in the ordinary course of
business and Class 5 Claims, shall be the third (3rd) Business Day after the Confirmation Date at
5:00 p.m. prevailing Mountain time, and (b) as to Administrative Expenses not incurred in the
ordinary course of business, including Administrative Expenses of Professionals, shall be the
Administrative Expense Bar Date; and (c) as to Class 5 Claims, shall be thirty (30) days prior to
each Distribution Date.
1.62. "Effective Date " means the later of ( a) the tenth Business Day after the date of
entry of the Confirmation Order or (b) the first Business Day following satisfaction of all
conditions to effectiveness of this Plan as set forth in Section 8.2 of the Plan ; provided, however,
if the Confirmation Order is stayed , the Effective Date shall be the later of the first Business Day
following (y) the day on which an order vacating or terminating such stay is entered on the
docket or (z) satisfaction of all conditions to effectiveness of this Plan as set forth in Section 8.2
of the Plan.
1.63. "Entity" means a person, estate, trust, governmental unit, and United States
Trustee, within the meaning of Bankruptcy Code section 101(15).
1.64. "Equalization Distributions" means, in respect of a Tax Dividend, cash dividends
and distributions paid by the Debtor or Reorganized Debtor to its Equity Interest Holders,
substantially contemporaneously with a Tax Dividend, for the sole purpose of providing cash to
each Equity Interest Holder from the combination of such Tax Dividend and such additional
distributions in an amount which provides such Equity Interest Holder with an aggregate amount
of Tax Dividend and such additional distributions proportionate to each such Holder's Equity
Interest, provided that such additional distribution(s) shall be the minimum necessary to carry out
such purpose.
1.65.
time to time.
"Equity Interest" means any interest in the common stock of the Debtor from
1.66. "Estate" means the estate created pursuant to § 541 of the Bankruptcy Code by
Debtor's petition.
1.67. "Excess Cash " means the Actual Month End Cash Balance less the Stated Month
End Cash Balance, if a positive number, and as further adjusted as per illustration set forth in the
Class 5 Note Documents.
1.68. "Excess Cash Amount" means the Excess Cash of the Debtor, if any, determined
at the end of any fiscal period.
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1.69. "Executory Contract" means any executory contract or unexpired lease of real or
personal property, as contemplated by §§ 365, 1113, and 1114 of the Bankruptcy Code in effect
on the Petition Date, between the Debtor and any third party.
1.70. "Face Amount" means (a) when used in reference to a Disputed Claim, the
Disputed Claim Amount and (b) when used in reference to an Allowed Claim, the Allowed
Claim amount.
1.71. "File, Filed or Filing" means file, filed or filing with the Bankruptcy Court or its
authorized designee in the Chapter 11 Case.
1.72. "Final Order " means an order or judgment of the Bankruptcy Court , as entered
on the docket in the Chapter 11 Case, or of another court of competent jurisdiction, the operation
or effect of which has not been stayed, reversed , or amended, and as to which order or judgment
(or any revision, modification, or amendment thereof) the time to appeal or seek review or
rehearing or leave to appeal has expired and as to which no appeal or petition for review or
rehearing was filed or, if filed, no appeal or petition for review or rehearing remains pending;
provided , however, that the possibility that a motion under Rule 59 or Rule 60 of the Federal
Rules of Civil Procedure, or any analogous rule under the Bankruptcy Rules, may be filed with
respect to such order or j udgment shall not cause such order or judgment not to be a Final Order.
1.73. "General Unsecured Claim " means a Claim arising prior to the Petition Date that
is not an Administrative Expense , a Professional Fee Claim, a Secured Tax Claim , a Secured
Claim, a Non-Tax Priority Claim, a Priority Tax Claim, a Convenience Claim or the TMS Claim.
1.74.
"Holder " means an Entity holding a Claim or Equity Interest.
1.75. "Impaired" means, when used with reference to a Claim, a Claim that is impaired
within the meaning of § 1124 of the Bankruptcy Code.
1.76. "Indemnification Obligation" means any obligation of the Debtor to indemnify,
reimburse, or provide contribution to any present or former officer, director, or employee, or any
present or former Professionals , advisors , or representatives of the Debtor, pursuant to by-laws,
articles of incorporation, contract, or otherwise as may be in existence immediately prior to the
Petition Date; provided, however, that such term shall not include any obligation that constitutes
a Subordinated 510(b) Claim or Subordinated 510(c) Claim.
1.77.
"Initial Distribution Date " means on or as soon as practicable after the Effective
1.78.
"Internal Revenue Code " means the Internal Revenue Code of 1986, as amended.
Date.
1.79. "Lien" means any lien, security interest, pledge, title retention agreement,
encumbrance, charge, mortgage or hypothecation to secure payment of a debt or performance of
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an obligation, other than, in the case of securities and any other equity ownership interests, any
restrictions imposed by applicable United States or foreign securities laws.
1.80. "Liquidation " means a total wind-down of the Reorganized Debtor ' s business
operations, or a sale of all of the assets of the Reorganized Debtor pursuant to a sale or series of
sales such as going concern sales, or "going-out-of-business," "store closing" or similar themed
sales.
1.81. "New Inventory Lien" means a Lien on or in the Reorganized Debtor ' s inventory
or proceeds thereof, other than the Lien of Corundum pursuant to the Corundum Exit Loan
Documents and the Lien pursuant to the Class 5 Note Documents.
1.82. "Non-Tax Priority Claim" means a Claim entitled to priority pursuant to
Bankruptcy Code section 507(a), other than a Priority Tax Claim or an Administrative Claim.
1.83.
"Person" means a "person" within the meaning of Bankruptcy Code section
101(41).
1.84.
"Petition Date" means January 12, 2009.
1.85.
"Plan" means this Plan of Reorganization, together with all exhibits annexed
hereto, and such amendments, if any, as may be proposed from time to time by the Debtor.
1.86.
"Plan Committee " means the committee formed pursuant to Article 9 of the Plan.
1.87. "Plan Committee Fees and Expenses " means the fees and expenses incurred by
professional advisors retained by the Plan Committee in accordance with Section 9.5 of the Plan,
together with the out -of-pocket expenses incurred by the members of the Plan Committee.
1.88. "Plan Supplement" means that certain compilation of documents , schedules and
exhibits to be filed no later than thirty (30) days before the Confirmation Hearing, as such
compilation may be amended, supplemented or modified from time to time until the
Confirmation Hearing in accordance with the terms hereof and the Bankruptcy Code and
Bankruptcy Rules and comprising of, without limitation, the following: (a) Schedule 7.1 (the
schedule of Executory Contracts to be assumed and Cure Costs related thereto), and (b) Schedule
7.4 (the schedule of Executory Contracts to be rejected).
1.89. "Preference Action (s) " means, individually and collectively, any action that may
be brought by the Debtor or the Reorganized Debtor under section 547 of the Bankruptcy Code.
1.90. "Prime Rate " means the Wall Street Journal Prime Rate, as published from time
to time by the Wall Street Journal.
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1.91. "Prior Written Consent " means, in connection with any action requiring the
consent of the Plan Committee , the following process for securing approval of the Plan
Committee of such action:
1.91.1. The Reorganized Debtor shall submit to the Plan Committee , through its
counsel, the proposed action to be taken by the Reorganized Debtor , together with such
supporting documentation and explanation as is appropriate , in the reasonable judgment of the
Reorganized Debtor, to provide the Plan Committee with sufficient information to consent or
object to the proposed action;
1.91.2. The Plan Committee shall have a period of ten (10) Business Days from
receipt of the proposed action to request additional information regarding the proposed action,
and to respond to the proposed action, by indicating its consent to or objection to the proposed
action;
1.91.3. If the Plan Committee consents to the proposed action , the Reorganized
Debtor may proceed to implement the proposed action;
1.91.4. If the Plan Committee objects, the parties shall use reasonable efforts to
resolve such objection , failing which the Reorganized Debtor may seek approval of the proposed
action from the Bankruptcy Court, including seeking to reopen the Chapter 11 Case, as
necessary, with the Plan Committee reserving all objections thereto;
1.91.5. If the Plan Committee fails to respond to the proposed action within ten
(10) Business Days, the Plan Committees consent to the proposed action shall be deemed
granted.
1.92. "Priority Tax Claim " means a Claim of a governmental unit of the kind specified
in Bankruptcy Code section 502(i), 507(a)(8) or 1129(a)(9)(C).
1.93. "Pro Rata" means, at any time, the proportion that the Face Amount of an
Allowed Claim in a particular Class bears to the aggregate Face Amount of all Allowed Claims
in such Class, unless the Plan provides otherwise.
1.94. "Professional" means any professional or person employed or appointed in the
Debtor's bankruptcy case pursuant to §§ 327, 330, 1103 or 1104 of the Bankruptcy Code or
otherwise and any Professional seeking compensation or reimbursement of expenses in
connection with the Debtor' s case pursuant to §503(b)(4) of the Bankruptcy Code.
1.95. "Professional Fee Claim " means a Claim of a Professional for compensation or
reimbursement of costs and expenses relating to services incurred after the Petition Date and
prior to and including the Effective Date, and a Claim of a member of the Creditors Committee
for reimbursement of expenses incurred for serving on the Creditors Committee.
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1.96. "Professional Fee Claim Bar Date " means sixty (60) days after the Effective
Date, or such later date as the Court may set as the deadline for filing any Administrative
Expense or Claim for Cure Costs.
1.97. "Professional Fee Claim Objection Deadline " means the last day for Filing an
objection to any Professional Fee Claim , which shall be the later of (a) 21 days after the Filing of
such Professional Fee Claim or (b) such other date specified in this Plan or ordered by the
Bankruptcy Court.
198. "Proof ofClaim " means a proof of claim, including, but not limited to, any
Administrative Expense Request, filed with the Bankruptcy Court in connection with the Chapter
11 Case pursuant to section 501 of the Bankruptcy Code.
1.99. "Projected Amount " means, as to each fiscal year set forth immediately below,
the corresponding projected amount for such year:
YEAR
PROJECTED AMOUNT
Fiscal Year ending January 28, 2012
$10,000,000
Fiscal Year ending February 2, 2013
$11 , 000,000
Fiscal Year ending February 1, 2014
$11,000,000
1.100. "Projected Amount Shortfall " means, for fiscal years ending January 28, 2012,
February 2, 2013 , and February 1, 2014, the amount by which the actual Distributions to Holders
of Allowed Class S Unsecured Claims are less than the Projected Amount for such year.
1.101. "Qwest" means Qwest Communications Corporation.
1.102. "Qwest Claim" means the Allowed Secured Claim of Qwest.
1.103. "Qwest Stipulation " means the Stipulation Between the Debtor and Qwest
Communications Company, LLC, dated February 24, 2010, and approved by the Court by Order
Granting Motion to Approve Stipulation Between Debtor and Qwest Communications Company,
LLC and to Assume Qwest Total Advantage Agreement entered on May 5, 2010.
1.104. "Reinstated or Reinstatement" means (i) leaving unaltered the legal, equitable
and contractual rights to which a Claim entitles the Claim Holder so as to leave such Claim
unimpaired in accordance with Bankruptcy Code section 1124 or (ii) notwithstanding any
contractual provision or applicable law that entitles the Claim Holder to demand or receive
accelerated payment of such Claim after the occurrence of a default ( a) curing any such
monetary default that occurred before or after the Petition Date , other than a default of a kind
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specified in Bankruptcy Code section 365(b)(2); (b) reinstating the maturity of such Claim as
such maturity existed before such default; (c) compensating the Claim Holder for any damages
incurred as a result of any reasonable reliance by such Holder on such contractual provision or
such applicable law; and (d) not otherwise altering the legal, equitable , or contractual rights to
which such Claim entitles the Claim Holder.
1.105. "Reorganized Debtor " means Shane Co ., as reorganized pursuant to the terms of
the Plan, after the Effective Date of the Plan.
1.106. "Restricted Cash" means Cash that is subject to legal restriction on use , including
Cash on deposit in employee flexible spending accounts, health savings accounts, tax deposit
accounts, and other similar accounts, together with Cash that is the property of any affiliate of
the Debtor, including Shane Co . Thailand; which Cash may nevertheless be reported on the
financial statements of the Debtor or Reorganized Debtor.
1.107. "Schedules" means the schedules of assets and liabilities, and the statements of
financial affairs filed by the Debtor pursuant to Bankruptcy Code section 521 and the
Bankruptcy Rules , as such schedules have been or may be further modified, amended or
supplemented in accordance with Bankruptcy Rule 1009 or orders of the Bankruptcy Court.
1.108. "Secured Claim" means a Claim that is secured by a Lien which is not subject to
avoidance under the Bankruptcy Code or otherwise invalid under the Bankruptcy Code or
applicable state law, on property in which an Estate has an interest , or a Claim that is subject to
setoff under section 553 of the Bankruptcy Code; to the extent of the value of the holder's
interest in the Estate ' s interest in such property or to the extent of the amount subject to setoff, as
applicable; as determined by a Final Order pursuant to section 506(a) of the Bankruptcy Code, or
in the case of setoff, pursuant to section 553 of the Bankruptcy Code, or in either case as
otherwise agreed upon in writing by the Debtor or the Reorganized Debtor and the Holder of
such Claim. The amount of any such Claim secured by such a lien that exceeds the value of the
holder's interest in the Estate's interest in property or the amount subject to setoff shall be treated
as a General Unsecured Claim.
1.109. "Secured Tax Claim" means a Claim of a governmental unit for the payment of a
tax assessed against property of the Estate that is secured by a Lien on property of the Estate.
1.110. "Stated Month End Cash Balance" means, as to any fiscal month, the ending
Book Cash balance projected in the Annual Budget to be held by the Reorganized Debtor on the
last day of such fiscal month. The financial statements evidencing the Stated Month End Cash
Balance shall include either line items or footnotes for Restricted Cash.
1.111. "Suresh " means M. Suresh Company Pvt Ltd.; M. Suresh Jewellery Pvt Ltd.;
Twinklediam , Inc.; SDC Designs, LLC; and Weindling International , LLC, collectively.
1.112. "Suresh Claim " means the Allowed Secured Claim of Suresh pursuant to the
Suresh Supply Agreement as of the Petition Date, which , as of the Petition Date was in the
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principal amount of $12,625,000. The Suresh Claim does not include Allowed Administrative
Expenses and Allowed Consignment Claims held by Suresh incurred prior to the Effective Date.
1.113. "Suresh Collateral" means the Collateral securing the Suresh Claim, as defined
in greater detail in the Cash Collateral Order.
1.114. "Suresh Supply Agreement" means that Supply Agreement dated September 5,
2008, between the Debtor and Suresh.
1.115. "Tax Benefit " means the dollar value of any federal income tax refund, to the
extent actually received or utilized by TMS, and to which TMS may be, or may become, entitled
by reason of a net operating loss carryback reported on TMS's tax return and attributable solely
to the operating losses reported in any tax return filed or amended by the Debtor or the
Reorganized Debtor for fiscal years ended on or after January 31, 2008 , through the expiration of
the Term. A Tax Benefit shall also include any federal tax refund actually received or utilized by
TMS of estimated tax payments made on account of income anticipated to be reported by Debtor
or Reorganized Debtor for a particular fiscal year and for which a Tax Dividend has been paid to
TMS, which income is not actually realized by the Debtor or Reorganized Debtor in such year.
Notwithstanding the foregoing, all Tax Benefits shall be calculated and determined exclusive of
any income or losses unrelated to the Debtor that may be reflected or included on TMS's
personal tax return( s) for the relevant tax period (s). If necessary, a Tax Benefit attributable to a
fiscal year of the Debtor or Reorganized Debtor containing the expiration date of the Term shall
be calculated by conducting an interim closing of its books as of such date.
1.116. "Tax Dividend" means a cash dividend and/or distribution made by the Debtor or
Reorganized Debtor to Holders of Equity Interests equal to the incremental amount of taxes,
interest and penalties they are obligated to pay solely by reason of the income of the Debtor or
Reorganized Debtor passed through to such Holder and required to be reported on such Holders'
tax returns, or any amended returns filed by Debtor, Reorganized Debtor or any such Holder
reporting or correcting the same , or by reason of any examination by taxing authorities resulting
in adjustments to the Debtor or Reorganized Debtor ' s income or loss or liability for repayment of
refunds previously received ( except to the extent such liability for repayment results in a Paid
Tax Repayment Obligation as described in Section 3.3), for any taxable year or a portion thereof
during which the Debtor or Reorganized Debtor is a Subchapter S corporation for tax purposes.
Tax Dividends shall also be paid to reimburse such Holders for incremental tax compliance costs
and costs of representation before taxing authorities or other tribunals in defending their tax
positions, to the extent such costs are incurred by them by reason of Debtor or Reorganized
Debtor' s status as a Subchapter S corporation . Tax Dividends and Equalization Distributions
shall be calculated so that each Equity Interest Holder is provided with sufficient funds to service
that Equity Interest Holder' s incremental tax liabilities and such other costs , and so that the
aggregate of the Tax Dividends and associated Equalization Distributions are distributed to all
Equity Interest Holders in proportion to their respective percentage Equity Interests. Thus, the
Equity Interest Holder requiring the greatest dollar amount of Tax Dividend per percentage point
of Equity Interest to service its respective burden of incremental tax amount and other costs shall
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be identified ( the "Maximum Per Percentage Point Dollar Amount"), and each Equity Interest
Holder shall receive an aggregate of the Tax Dividend and the Equalization Distribution equal to
the Maximum Per Percentage Point Dollar Amount times such Equity Interest Holder's number
of percentage points of Equity Interest.
1.117. "Tax Share Amount " means one-half (112) of a Tax Benefit.
1.118. "Tax Share Amount Advance " means the loan of a Tax Share Amount made by
TMS, through Corundum , to the Reorganized Debtor for distribution to the holders of Allowed
Claims in Class 5, in accordance with the Class 5 Note Documents and Section 3.8.1 hereof.
1.119. "Term " means the period from the Effective Date until the date upon which all
Allowed Claims in Class 5 have been indefeasibly satisfied in full.
1.120. "TMS" means Thomas M. Shane.
1.121. "TMS Claims" means (a) any and all Allowed Unsecured Claims of TMS arising
prior to the Petition Date, whether on account of loans, deferred marketing fees , compensation or
otherwise, and any pre-petition or post-petition interest, fees, and costs related thereto (but
expressly excluding any interest held by TMS in Corundum or the Corundum Claim ) and (b) any
other claims deemed under this Plan to be a TMS Claim, including , but not limited to , interest
accrued on Tax Share Amount Advances ; but expressly excluding subrogation rights of TMS, as
set forth in Section 3.5.3 of the Plan.
1.122. "Unimpaired" means, with respect to a Claim, Class, or Equity Interest, a Claim,
Class or Equity Interest that is not impaired within the meaning of Bankruptcy Code section
1124.
1.123. "Unsecured Claim " means a Claim arising prior to the Petition Date against the
Debtor that is neither a. Secured Claim nor entitled to priority under the Bankruptcy Code or any
order of the Court, which Claim may be a. General Unsecured Claim , a Convenience Claim, or
the TMS Claim.
1.124. "U. S. Trustee " means the Office of the United States Trustee for the District of
Colorado.
1.125. "Voting Deadline " means November 3, 2010 at 4:00 p.m. Pacific Time, the date
and time by which all Ballots to accept or reject the Plan must be received in order to be counted,
as set by order of the Bankruptcy Court.
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ARTICLE 11
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS
2.1.
Introduction.
2.1.1. All Claims and Equity Interests except Administrative Expenses and
Priority Tax Claims are placed in the Classes set forth below . In accordance with Bankruptcy
Code section 1123(a)(1 ), Administrative Expenses, Priority Tax Claims, and the Corundum
Claim have not been classified, and the respective treatment of such unclassified Claims is set
forth below in Sections 3.1 to 3.3 of the Plan.
2.1.2. A Claim or Equity Interest is placed in a particular Class only to the extent
that the Claim or Equity Interest falls within the description of that Class , and is classified in
other Classes to the extent that any portion of the Claim or Equity Interest falls within the
description of such other Classes . A Claim is also placed in a particular Class for the purpose of
receiving Distributions pursuant to the Plan only to the extent that such Claim is an Allowed
Claim in that Class and such Claim has not been paid , released, or otherwise settled prior to the
Effective Date.
2.1.3. Unclassified Claims and Unimpaired Claims are not entitled to vote on the
Plan. Impaired Claims are entitled to vote on the Plan.
2.2.
Class 1 consists of the Priority Non-Tax Claims . This Class is Unimpaired.
2.3.
Class 2 consists of the Secured Claim of Suresh . This Class is Impaired.
2.4.
Corundum.
Class 3 consists of Secured Claims other than those held by Suresh and
2.4.1. Class 3A consists of the Qwest Claim . This Class is Unimpaired.
2.4.2. Class 3B consists of Secured Tax Claims . This Class is Unimpaired.
2.5.
Class 4 consists of all Convenience Claims. This Class is Impaired.
2.6.
Class S consists of all General Unsecured Claims other than those in Classes 4
and 6. This Class is Impaired.
2.7.
Class 6 consists of the TMS Claim . This Class is Impaired.
2.8.
Class 7 consists of Consignment Claims. This Class is Unimpaired.
2.9.
Class 8 consists of the Equity Interests in the Debtor outstanding as of the Petition
Date. This Class is Unimpaired.
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ARTICLE III
TREATMENT OF CLAIMS AND E QUITY INTERESTS
3.1.
Administrative Expenses. Unless they agree to other treatment, each Holder of an
Allowed Administrative Expense shall receive on account of such Administrative Expense, in
full satisfaction, settlement, release and discharge of and in exchange for such Allowed
Administrative Expense, Cash in the amount of the unpaid portion of the pace Amount of such
Allowed Administrative Expense, on, or as soon as reasonably practicable after the later of (i)
the Initial Distribution Date; or (ii) the date such Administrative Expense becomes an Allowed
Administrative Expense; provided, however, that Allowed Administrative Expenses with respect
to liabilities incurred by the Debtor in the ordinary course of business during the Chapter 11 Case
(i.e., obligations arising out of goods and services sold and delivered and Consignment Claims
incurred prior to the Effective Date) shall be paid in the ordinary course of business in
accordance with the terms and conditions of any agreements relating thereto; provided further,
that in no event shall a post-petition obligation that is contingent or disputed and subject to
liquidation through pending or prospective litigation, including, but not limited to, alleged
obligations arising from personal injury, property damage, products liability, consumer
complaints, employment law (excluding claims arising under workers' compensation law),
secondary payor liability, or any other disputed legal or equitable claim based on tort, statute,
contract, equity, or common law, be considered to be an obligation which is payable in the
ordinary course of business. Any Administrative Expense not incurred and due and payable in
the ordinary course of business which is not filed by the Administrative Expense Bar Date, as it
may be extended by Bankruptcy Court order, shall be barred.
3.2.
Priority Tax Claims. Except to the extent that an Allowed Priority Tax Claim has
been paid prior to the Initial Distribution Date, each Holder of an Allowed Priority Tax Claim
shall be entitled to receive, in fiilI satisfaction, settlement, release, and discharge of and in
exchange for such Allowed Priority Tax Claim, on the Initial Distribution Date, Cash equal to
the unpaid portion of such Allowed Priority Tax Claim.
3.3.
Corundum Claim. The financing provided by Corundum pursuant to the DIP
Order shall be restructured and repaid as set forth in the Corundum Exit Loan Documents
attached hereto as Exhibit 2, or on no less favorable terms to which the Debtor or Reorganized
Debtor, Corundum and Plan Committee shall have agreed upon in writing, which Corundum Exit
Loan Documents shall be executed by the Reorganized Debtor on or before the Effective Date.
The Holder of the Corundum Claim shall retain its Lien in the Corundum Collateral or the
proceeds of the Corundum Collateral (to the extent that such Corundum Collateral is sold by the
Reorganized Debtor free and clear of such Lien) as provided for in the DIP Order, together with
all replacement Liens granted Corundum pursuant to the Cash Collateral Order, as further
provided in the Corundum Exit Loan Documents. To the extent that Tax Share Amount
Advances are made pursuant to the Plan, such Tax Share Amount Advances shall be made for
the sole purpose of, and conditioned upon, the Reorganized Debtor making immediate
Distributions of same to holders of Allowed Class 5 Claims in accordance with Section 3.8.1
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hereof. The principal amount of such Tax Share Amount Advances shall become a part of the
Corundum Claim, shall also be secured by the Lien in the Corundum Collateral, and shall be
repaid pursuant to the Corundum Exit Loan Documents. Interest on such Tax Share Amount
Advances shall accrue pursuant to the Corundum Exit Loan Documents, but, as set forth therein,
shall be treated as a part of the TMS Claim in Class 6 of the Plan; provided, however that, if, as
the result of an amendment to a tax return or an income tax return audit, TMS is required to
repay any portion of a Tax Benefit to the Internal Revenue Service (a "Tax Repayment
Obligation"), then the Company shall immediately repay to Corundum (i) one-half of the Tax
Repayment Obligation, but not to exceed the Tax Share Amount Advances made by Corundum
(the "Principal"), plus (ii) one-half of any interest and penalties payable by TMS to the Internal
Revenue Service in respect of such Tax Repayment Obligation (the "Interest and Penalties") (the
Interest and Penalties, together with the Principal, collectively, the "Paid Tax Repayment
Obligation"), whereupon any balance of the Tax Share Amount Advances and Corundum's lien
securing Tax Share Amount Advances shall be reduced by the Principal, and any interest accrued
on such Principal under the Corundum Exit Loan Documents shall be waived.
Class 1 Non-Tax Priority Claims. On, or as soon as reasonably practicable after
3.4.
the later of (a) the Initial Distribution Date, or (b) the date on which an Allowed Non-Tax
Priority Claim becomes payable pursuant to and as specified by a Final Order, the Holder of such
Allowed Non-Tax Priority Claim shall receive, in full satisfaction, settlement, release, and
discharge of and in exchange for such Allowed Non-Tax Priority Claim, either (i) Cash equal to
the unpaid portion of the Face Amount of such Allowed Non-Tax Priority Claim or (ii) such
other less favorable treatment as to which the applicable Debtor or Reorganized Debtor and such
Holder shall have agreed upon in writing.
3.5.
Class 2 - Suresh Claim.
3.5.1. The Holder of the Suresh Claim shall retain its Lien in the Suresh
Collateral and the proceeds of the Suresh Collateral (to the extent that such Suresh Collateral is
sold by the Reorganized Debtor free and clear of such Lien) to the same extent and with the same
priority as such Lien held as of the Petition Date and as provided for in the Cash Collateral Order
and DIP Order, until such time as the Holder has been paid Cash equal to the value of its
Allowed Secured Claim. Such Lien shall be junior to the Lien held by Corundum in the
Corundum Collateral, and shall be a senior Lien as to all other assets of the Reorganized Debtor,
except to the extent a Secured Tax Claim, by operation of law, is senior to the Lien held by
Suresh in the Suresh Collateral. The Suresh Claim shall also include accrued and unpaid
interest, as of the Petition Date, at the rate of 11 % per annum, together with costs and reasonable
attorneys' fees as agreed by Suresh and the Reorganized Debtor or as Allowed by Final Order.
The Suresh Claim will continue to accrue interest at the rate of 11 % per annum, from the Petition
Date until it is repaid in full. The Suresh Claim will be paid in weekly installments of
$125,000.00 of principal, plus interest, until the Suresh Claim is paid in full; provided, however
that, if not sooner paid, the Suresh Claim will be paid in full on or before Effective Date. In
addition, from the Petition Date and continuing after the Effective Date until payment in full of
the Suresh Claim, Suresh will be entitled to the reimbursement of its reasonable fees and costs, if
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any, in accordance with the agreements between Suresh and the Debtor and the Cash Collateral
Order, within five ( 5) Business Days after submission of requests for reimbursement , as provided
for in the Cash Collateral Order . Within three (3) Business Days of receipt of any notice of
default from Suresh, the Debtor or Reorganized Debtor shall provide the Plan Committee with a
copy of such notice of default.
3.5.2. To the extent that TMS has posted collateral to secure the Suresh Claim,
such collateral shall be returned to TMS upon payment in full of the Suresh Claim.
3.5.3. The Suresh Supply Agreement shall automatically be rejected and
terminated as of the Effective Date, and Suresh shall not assert nor hold an Allowed Claim on
account of rejection or other breach by the Debtor under the Suresh Supply Agreement;
provided, however, notwithstanding such rejection and termination , Suresh shall retain its Lien
in the Suresh Collateral until the Suresh Claim has been paid in full.
3.5.4. The Class 5 Security Interest shall be subordinate to all Liens and Claims
of Suresh, including the Suresh Claim and Allowed Administrative Expenses and Allowed
Consignment Claims incurred by Suresh prior to the Effective Date.
3.6.
Class 3- Other Secured Claims.
3.6.1. Class 3-A - Qwest Secured Claim. The Holder of the Qwest Secured
Claim shall retain the lien on the Collateral securing the Qwest Secured Claim until such time as
the Qwest Secured Claim has been paid in full . The Qwest Secured Claim shall be paid in
accordance with the terms of the Qwest Stipulation.
3.6.2. Class 3-C - Secured Tax Claims. On, or as soon as reasonably practicable
after the later of (a) the Initial Distribution Date or (b) the date on which the Secured Tax Claim
becomes an Allowed Secured Tax Claim, the Holder of such Allowed Secured Tax Claim shall
receive, in full satisfaction, settlement, release and discharge of and in exchange for, such
Allowed Secured Tax Claim, Cash equal to the value of its Allowed Secured Tax Claim, together
with interest thereon at the non-default rate provided by applicable federal or state law regarding
the accrual of interest on account of such Secured Tax Claim , from the Petition Date until
payment in full. Any Holder of a Secured Tax Claim shall retain its Lien in the Collateral or the
proceeds of the Collateral (to the extent that such Collateral is sold by the Debtor free and clear
of such Lien) to the same extent and with the same priority as such Lien held as of the Petition
Date until such time as (A) the Holder of such Secured Tax Claim has been paid Cash equal to
the value of its Allowed Secured Tax Claim or (B) such purported Lien has been determined by
an order of the Bankruptcy Court to be invalid or otherwise avoidable.
3.7.
Class 4 - Convenience Class. The Holders of Class 4 Unsecured Claims will be
paid the Face Amount of their Claims, subject to a maximum payment of $7,500, on the later of
the Initial Distribution Date or January 31, 2011.
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Class 5 -- General Unsecured Claims.
3.8.1. The Class 5 Claim Amount shall be paid from Cash of the Reorganized
Debtor and the Tax Share Amount Advances pursuant to and in accordance with the terms and
provisions of this Plan and the Class 5 Note Documents set forth in Exhibit 1, which shall be
executed by the Reorganized Debtor on the Effective Date. The Holders of Allowed Class 5
Claims may elect to receive discounted prepayment of their Allowed Claims, to the extent of
available funds, in accordance with the provisions of the Class 5 Note Documents . The Plan
Committee shall be the designated agent of the Holders of all Allowed Class 5 Claims, for
purposes of enforcing the rights and remedies available to all Holders of Allowed Class 5
Claims, as set forth in this Plan, and the Class 5 Note Documents.
3.8.2. The Class 5 Secured Claim Amount shall be secured by the Class 5
Security Interest, as set forth in greater detail in the Class 5 Note Documents. Notwithstanding
any provision in the Class 5 Note Documents or this Plan to the contrary, the Class 5 Security
Interest shall be subordinate to the Liens and Claims of Suresh including the Suresh Claim and
Allowed Administrative Expenses and Allowed Consignment Claims incurred by Suresh prior to
the Effective Date.
3.8.3. To the extent that TMS has posted collateral to secure any Allowed Class
5 Claim, or has posted a personal guaranty in favor of the Holder of an Allowed Class 5 Claim
and makes payments to such Holder on account of such personal guaranty , TMS shall be
subrogated to the claim of such Holder , and shall receive the final Distributions to be made under
the Plan on account of such Holder's Allowed Class 5 Claim , to the extent of the value of the
collateral posted, or the actual payments made on account of such personal guaranty and such
subrogation rights of TMS shall be treated and paid as if they were Allowed Class 5 Claims.
3.9.
Class 6 - TMS Claim.
3.9.1. Repayment of the TMS Claim shall be subordinated to the Allowed Class
5 Claims to the extent provided for herein and in the Class 5 Note Documents, and any
repayment or Distribution on account of the TMS Claim shall be deferred and not paid until the
indefeasible payment in full of the Allowed Class 5 Claim Amount. Interest shall accrue on the
TMS Claim at the rate of eleven percent ( 11%) per annum, but payment of interest shall also be
subordinated and deferred pending indefeasible payment in full of the Allowed Class 5 Claim
Amount. Upon indefeasible payment in full of the Allowed Class 5 Claim Amount, the
Reorganized Debtor shall repay the TMS Claim on such terms and conditions to which the
parties may then agree.
3.9.2. In the event of a Liquidation of the Reorganized Debtor, and after
payment in full of the Corundum Claim, the Suresh Claim (together with any Administrative
Expenses held by Suresh), and the Class 5 Secured Claim, the then outstanding balance of the
TMS Claim (inclusive of any interest allowable under this Plan ), subject to a cap on the TMS
Claim of Twenty-Two Million Seven Hundred Seventy-Nine Thousand Twenty-One Dollars
($22,779,021. 00), shall share in the proceeds realized from such Liquidation , on a pari passu
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basis, with the then outstanding Allowed Class 5 Claim Amount, and with any other outstanding
unsecured obligations of the Reorganized Debtor.
3.9.3. The subrogation rights of TMS on account of personal guaranties made by
him for the benefit of Holders of Allowed Claims, as provided for in Sections 3.5.2 and 3.8.3,
shall not be a part of the TMS Claim but shall, instead, be treated as an Allowed Claim in the
same Class as the Holder of such Allowed Claim.
3.10. Class 7 - Consignment Claims. Allowed Claims in Class 7 shall be Reinstated
and shall be paid in accordance with the terms of the Consignment Transactions between each
Consignment Vendor and the Debtor subject to the following . All Consignment Transactions
shall be deemed to be Executory Contracts which shall be deemed assumed by the Debtor in
accordance with Article 7 below. The interests of each Consignment Vendor in consigned
merchandise delivered by that Consignment Vendor to the Debtor that is in the Debtor's
possession as of the Effective Date shall be deemed perfected for a period of two (2 ) years after
the Effective Date, without the necessity of the filing of a UCC financing statement or other
similar filing.
3.11. Class 8 -Equity Interests. The Holders of the Equity Interests in the Debtor shall
retain their Equity Interests in the Reorganized Debtor.
3.12. Reservation of Rights Regarding Claims. Except as otherwise explicitly provided
in the Plan, the DIP Order or the Cash Collateral Order, nothing shall affect the Debtor's or the
Reorganized Debtor ' s rights and defenses , both legal and equitable , with respect to any Claims,
including, but not limited to , all rights with respect to legal and equitable defenses to alleged
rights of setoff or recoupment.
ARTICLE IV
MEANS FOR EXECUTION OF PLAN
4.1.
Vesting of Assets; Release of Liens. Except as otherwise provided herein, the
property of the Debtor' s Estate ( including Causes of Action and Avoidance Actions ) shall vest in
the Reorganized Debtor on the Effective Date, free and clear of all Liens, Claims and Equity
Interests (other than as expressly provided in the Plan). Thereafter, the Reorganized Debtor may
operate its business and may use, acquire , and dispose of such property free of any restrictions of
the Bankruptcy Code, the Bankruptcy Rules, and the Bankruptcy Court. As of the Effective
Date, all such property of the Reorganized Debtor shall be free and clear of all Liens, Claims,
and Equity Interests , except as specifically provided in the Plan or the Confirmation Order and
the Reorganized Debtor shall receive the benefit of any and all discharges under the Plan.
4.2.
Continued Corporate Existence. The Debtor shall continue to exist as the
Reorganized Debtor after the Effective Date, in accordance with the laws of the State of
Colorado, and pursuant to its articles of incorporation and by-laws in effect prior to the Effective
Date, except to the extent such articles of incorporation and by-laws are amended pursuant to the
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Plan. The articles of incorporation and bylaws of the Reorganized Debtor shall be amended as
necessary to satisfy the provisions of the Plan and the Bankruptcy Code and shall include, among
other things, pursuant to section 1123(x )(6) of the Bankruptcy Code, a provision prohibiting the
issuance of non-voting equity securities , but only to the extent required by section 1123 (a)(6) of
the Bankruptcy Code.
4.3.
Officers and Directors of Reorganized Debtor . The existing officers and board of
directors of the Debtor shall become the officers and board of directors of the Reorganized
Debtor on the Effective Date ; provided, however that during the Term of the Plan, the Board of
Directors shall consist of no more than five Persons.
4.4.
Indemnification of Debtor's Directors, Managers, Officers, and Employees.
4.4.1. As of the Effective Date, the Debtor may amend its Certificate of
Incorporation and/or Bylaws to the extent necessary to provide for the indemnification , defense,
reimbursement, exculpation and/or limitation of liability of, and advancement of fees and
expenses to, directors and officers and employees of the Debtor who were directors, officers or
employees of the Debtor at any time prior to the Effective Date at least to the same extent as
provided in the certificate of incorporation and bylaws of the Debtor in effect on the Petition
Date, against any damages, liabilities , obligations, claims or causes of action whether direct or
derivative, liquidated or unliquidated , fixed or contingent, disputed or undisputed, matured or
unmatured, known or unknown , foreseen or unforeseen, asserted or unasserted, to the fullest
extent permitted by applicable law in the State of Colorado in connection with any event
occurring before the Petition Date , provided that the foregoing shall exclude actions or omissions
resulting from gross negligence or willful misconduct.
4.4.2. Upon and after the Effective Date, the Debtor or the Reorganized Debtor,
as the case may be, may, in its sole discretion , continue to maintain director and officer insurance
coverage for those Persons covered by any such policies in effect during the pendency of the
Chapter 11 Case.
4.4.3. On or as of the Effective Date, the Reorganized Debtor may enter into
separate written agreements providing for the indemnification of each Person who is a director,
officer, or key employee (as such key employees are identified by the Chief Executive Officer)
of the Reorganized Debtor as of the Effective Date to the fullest extent permitted by applicable
law in the state of Colorado.
4.5.
Tax Share AmountAdvances. On or before the Effective Date, TMS, through
Corundum , shall advance to the Debtor all Tax Share Amounts on account of Tax Benefits
actually received or utilized by TMS as of the Effective Date. Within two (2) weeks after receipt
or utilization by TMS of any additional Tax Benefits, TMS, through Corundum or otherwise,
shall advance to the Reorganized Debtor the Tax Share Amount on account of such Tax Benefits.
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4.6.
Professional Retention. The Reorganized Debtor may, without application to or
approval by the Bankruptcy Court , retain professionals and pay reasonable professional fees and
expenses in connection with services rendered to it after the Effective Date.
Limitations on TMS Compensation. During the Term of the Plan, the
4.7.
compensation paid to TMS shall not exceed $ 1,425,000 .00 per fiscal year. The Debtor may
accrue additional compensation or other benefits to or for the benefit of TMS during the Term of
the Plan; provided that all such accrued and deferred compensation or other benefits shall
become part of the Allowed TMS Claim and shall be subordinate to and shall not be paid until all
Allowed Class 5 Claims have been indefeasibly paid in full. No Distribution received by TMS
pursuant to Section 3.8.3 hereof shall be considered compensation to TMS subject to the
limitations set forth in this Section.
4.8.
Tax Dividends and Equalization Distributions. During the Term of the Plan, the
Debtor or Reorganized Debtor shall issue Tax Dividends and Equalization Distributions to
Holders of the Equity Interests of the Debtor or Reorganized Debtor . Such Tax Dividends and
associated Equalization Distributions shall be estimated by the Debtor or Reorganized Debtor
and shall be distributed on a quarterly basis so as to permit the Equity Interest Holders to timely
pay estimated taxes . Following the close of each calendar year and the determination of actual
such tax liabilities, any overpayment by Debtor or Reorganized Debtor shall be applied to the
next due quarterly Tax Dividend and Equalization Distributions, and any underpayment shall be
promptly distributed to the Equity Interest Holders so as to permit them to make timely payment
of such tax liabilities without penalty . Any Tax Dividends and Equalization Distributions shall
be determined after applying any available loss carry forwards attributable solely to the operating
losses of the Debtor or Reorganized Debtor. TMS shall be required to carry back TMS's net
operating losses which are solely attributable to the operating losses of the Debtor or
Reorganized Debtor to the extent permitted by the Internal Revenue Code and to the extent the
carry back of such operating losses may realize a Tax Benefit. Any operating losses of the
Debtor or Reorganized Debtor the carry back of which would not generate a Tax Benefit shall be
carried forward instead. TMS shall amend tax returns filed prior to the Effective Date, to the
extent necessary to carry back operating losses in order to generate Tax Benefits in a manner
consistent with this Section . Prior to the making of a Tax Dividend or Equalization Distribution
by the Reorganized Debtor, the Reorganized Debtor 's independent accountant involved in the
preparation of income tax returns for the Reorganized Debtor shall deliver a written statement to
the Plan Committee that such accountant has reviewed this Section of the Plan and that the Tax
Dividend and/or Equalization Distribution , as the case may be, has been calculated in accordance
with this Section based on the Debtor's or Reorganized Debtor ' s estimates of its income.
4.9.
Waiver of Preference Actions; Preservation and Pursuit of Causes of Action and
Avoidance Actions; Resulting Claim Treatment.
4.9.1. Except as otherwise provided in the Plan or the Confirmation Order, or in
any contract , instrument, release , indenture , or other agreement entered into in connection with
the Plan, in accordance with section 1123(b) of the Bankruptcy Code, on the Effective Date, the
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Debtor or Reorganized Debtor shall waive all of its respective rights and interests in Preference
Actions that the Debtor or Reorganized Debtor may hold against any Entity.
4.9.2. Except (i) as otherwise provided in the Plan, the DIP Order, the Cash
Collateral Order, or the Confirmation Order and (ii) as otherwise provided in any contract,
instrument, release, indenture, or other agreement entered into in connection with the Plan, the
Reorganized Debtor shall retain all of its Causes of Action and Avoidance Actions (other than
Preference Actions) that the Debtor or Reorganized Debtor may hold against any Entity. The
Reorganized Debtor shall retain and may enforce , sue on, settle, or compromise all such Causes
of Action and Avoidance Actions (other than Preference Actions), or may decline to do any of
the foregoing with respect to any such Causes of Action and Avoidance Actions. The
Reorganized Debtor may pursue such retained Causes of Action and Avoidance Actions (other
than Preference Actions) as appropriate , in accordance with the best interests of the Reorganized
Debtor.
4.9.3. If, as a result of the pursuit of any Causes of Action or Avoidance Actions,
a Claim would arise from a recovery pursuant to section 550 of the Bankruptcy Code after
Distributions under the Plan have commenced , making it impracticable to treat the Claim in
accordance with the applicable provisions of Article 5 of the Plan, the Reorganized Debtor shall
be permitted to reduce the recovery by an amount that reflects the value of the treatment that
would have been accorded to the Claim under the Plan , thereby effectively treating the Claim
through the reduction.
4.10. Effectuating Documents; Further Transactions. The Chief Executive Officer, the
Chief Financial Officer, or any other appropriate officer of the Reorganized Debtor, as the case
may be, shall be authorized to execute , deliver, file, or record such contracts, instruments,
releases, indentures, and other agreements or documents , and take such actions as may be
necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan.
The Secretary or Assistant Secretary of the Reorganized Debtor , as the case may be, shall be
authorized to certify or attest to any of the foregoing actions.
4.11. Exemption From Certain Transfer Taxes. Pursuant to section 1146(a) of the
Bankruptcy Code, the issuance, transfer , or exchange of a security, or the making or delivery of
an instrument of transfer from the Debtor to the Reorganized Debtor or any other Person or
Entity pursuant to this Plan, shall not be subject to any document recording tax, stamp tax,
conveyance fee, intangibles or similar tax, mortgage tax, stamp act, real estate transfer tax,
mortgage recording tax, or other similar tax or governmental assessment, and the Confirmation
Order shall direct the appropriate state or local governmental officials or agents to forego the
collection of any such tax or governmental assessment and to accept for filing and recordation
any of the foregoing instruments or other documents without the payment of any such tax or
governmental assessment.
4.12. Corporate Action. On the Effective Date, the appointment of directors , officers
and/or managers of the Reorganized Debtor, and all actions contemplated hereby shall be
authorized and approved in all respects pursuant to the Plan. All matters provided for herein
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involving the corporate structure of the Debtor or Reorganized Debtor, and any corporate action
required by the Debtor or Reorganized Debtor in connection with the Plan, shall be deemed to
have occurred and shall be in effect, without any requirement of further action by the
shareholders, officers, or directors of the Debtor or Reorganized Debtor. On the Effective Date,
the appropriate officers of the Reorganized Debtor are authorized and directed to issue, execute,
and deliver the agreements, documents, securities, and instruments contemplated by the Plan in
the name of and on behalf of the Reorganized Debtor without the need for any required
approvals, authorizations, or consents, except for any express consents required under the Plan.
4.13.
Reorganized Debtor's Obligations Under the Plan.
4.13.1. From and after the Effective Date, the Reorganized Debtor shall exercise
its reasonable discretion and business judgment to perform the obligations under the Plan of the
Debtor. The Plan will be administered and actions will be taken in the name of the Debtor and
the Reorganized Debtor. From and after the Effective Date, the Reorganized Debtor shall
conduct, among other things, the following tasks:
(a)
administer the Plan and take all steps and execute all instruments
and documents necessary to effectuate the Plan;
(b)
pursue (including, as it determines through the exercise of its
business judgment, prosecuting, enforcing, objecting to, litigating, reconciling, settling,
abandoning, and resolving) all of the rights, claims, Causes of Action, defenses, and
counterclaims retained by the Debtor or the Reorganized Debtor;
(c)
reconcile Claims and resolve Disputed Claims, and administer the
Claims allowance and disallowance processes as set forth in the Plan, including objecting to,
prosecuting, litigating, reconciling, settling, and resolving Claims and Disputed Claims in
accordance with the Plan;
(d)
make decisions regarding the retention, engagement, payment, and
replacement of professionals, employees and consultants;
(e)
administer the Distributions under the Plan, including (i) making
Distributions in accordance with the terms of the Plan, and (ii) filing with the Bankruptcy Court
such reports as may be required to be filed regarding the Distributions made and to be made to
the Holders of Allowed Claims, until the Bankruptcy Case is closed;
(f)
exercise such other powers as necessary or prudent to carry out the
(g)
file appropriate tax returns; and
(h)
take such other action as may be necessary or appropriate to
provisions of the Plan;
effectuate the Plan.
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4.14. Taxes. The Reorganized Debtor shall succeed to all tax attributes of the Debtor.
The Reorganized Debtor shall be responsible for the filing of appropriate federal and state
income tax returns , and for the payment, out of Estate Assets only , of any taxes due thereunder
for income generated by the Estate prior to the Effective Date.
4.15. Operations Between Confirmation Date and Effective Date. The Debtor shall
continue to operate as debtor in possession during the period from the Confirmation Date
through and until the Effective Date in the ordinary course of business.
4.16. Transactions on Business Days. If the date on which a transaction may occur
under this Plan shall occur on a day that is not a Business Day, then such transaction shall
instead occur on the next succeeding Business Day.
4.17. United States Trustee's Fees. The Reorganized Debtor shall file all necessary
reports, and shall pay all quarterly fees, due the United States Trustee pursuant to 28 U.S.C.
§ 1930(a)( 6), until this Bankruptcy Case is dismissed , converted, or closed.
4.18. Expansion Plans. Should (a) the Reorganized Debtor, in the exercise of its
reasonable business judgment, seek to expand its business operations , whether through
expansion into new stores , acquisition of existing operations owned by third parties, or
otherwise, at any time prior to the indefeasible payment in full of all Allowed Class 5 Claims,
and (b) the implementation of such expansion plans results in a material and unreasonable
variance from the Annual Budget, or which would require the use of capital which would
otherwise be Excess Cash available for distribution to the Holders of Allowed Class 5 Claims;
then such expansion plans shall be subject to the Prior Written Consent of the Plan Committee.
The Prior Written Consent of the Plan Committee may be conditioned , among other things, upon
the accrual and payment of interest, at the Prime Rate, on account of any Excess Cash that would
otherwise have been available for Distribution to Holders of Allowed Class 5 Claims and which
Distributions are deferred as a result of the expansion plans . Nothing in this Section or the Plan
shall preclude the Reorganized Debtor, in the exercise of its reasonable business judgment, from
closing one or more , but fewer than all, stores , without the Prior Written Consent of the Plan
Committee.
ARTICLE V
PROVISIONS GOVERNING DISTRIBUTIONS
5.1.
Distributions for Allowed Claims.
5.1.1. Except as otherwise provided herein or as ordered by the Bankruptcy
Court, all Distributions to Holders of Allowed Claims as of the applicable Distribution Date shall
be made on or as soon as practicable after the applicable Distribution Date . Distributions on
account of Claims that first become Allowed Claims after the applicable Distribution Date shall
be made pursuant to Section 5.5 of the Plan and on such day as selected by the Reorganized
Debtor, in its sole discretion.
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5.1.2. The Reorganized Debtor shall have the right, in its sole and absolute
discretion, to accelerate any Distribution Date occurring after the Effective Date if the facts and
circumstances so warrant.
5.1.3. All Distributions made by the Debtor shall be in exchange for, and in
complete satisfaction, settlement, discharge, and release of, all Claims of any nature whatsoever
against the Debtor or any of its assets or properties as set forth in Sections 10.9.2 and 10.10 of
the Plan.
5.1.4. Where more than one creditor holds an Allowed Claim in a Class, and a
Distribution to be made to that Class is not sufficient to pay all Allowed Claims in that Class in
full, Distributions to the Holders of Allowed Claims in that Class shall be made on a Pro Rata
basis.
5.2.
Interest on Claims; Dividends. Unless otherwise specifically provided for in the
Plan or the Confirmation Order, post-petition interest shall not accrue or be paid on Claims, and
no Holder of a Claim shall be entitled to interest accruing on or after the Petition Date on any
Claim.
5.3.
Means of Cash Payment. Cash payments under this Plan shall be in U.S. funds,
and shall be made, at the option, and in the sole discretion, of the Reorganized Debtor, by (i)
checks drawn on or (ii) wire transfers from a domestic bank selected by the Reorganized Debtor.
Cash payments to foreign creditors may be made, at the option, and in the sole discretion, of the
Reorganized Debtor, in such funds and by such means as are necessary or customary in a
particular foreign jurisdiction. Cash payments made pursuant to this Plan in the form of checks
issued by the Reorganized Debtor shall be null and void if not cashed within 90 days of the date
of the issuance thereof. For purposes of effectuating Distributions under the Plan, any Claim
denominated in foreign currency shall be converted to U.S. Dollars pursuant to the applicable
published exchange rate in effect on the Petition Date.
5.4.
Fractional Distributions. Notwithstanding any other provision of the Plan to the
contrary, no payment of fractional cents shall be made pursuant to the Plan. Whenever any
payment of a fraction of a cent under the Plan would otherwise be required, the actual
Distribution made shall reflect a rounding of such fraction to the nearest whole penny (up or
down), with half cents or more being rounded up and fractions less than half of a cent being
rounded down.
5.5.
Delivery of Distributions. Distributions to Holders of Allowed Claims shall be
made by the Reorganized Debtor (a) at the addresses set forth on the Proofs of Claim filed by
such Holders, (b) at the addresses reflected in the Schedules if no Proof of Claim has been filed,
or (c) at the addresses set forth in any written notices of address changes delivered to the Debtor
or the Reorganized Debtor after the date of any related Proof of Claim or after the date of the
Schedules if no Proof of Claim was filed. If any Holder's Distribution is returned as
undeliverable, no further Distributions to such Holder shall be made unless and until the
Reorganized Debtor is notified of such Holder's then current address, at which time all missed
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Distributions shall be made to such Holder without interest; provided, however, that such
Distributions shall be deemed unclaimed property under section 347(b) of the Bankruptcy Code
at the expiration of one year from the making of such Distribution. After such one-year period,
all remaining Distributions to which such Holder would be entitled under the Plan shall be
deemed unclaimed property and shall revert to the Reorganized Debtor and the Claim of any
other holder to such property or interest in property shall be discharged and forever barred
notwithstanding any applicable federal or state escheat, abandoned or unclaimed property laws to
the contrary.
Application of Distribution Record Date. The Debtor or Reorganized Debtor, as
5.6.
applicable, shall maintain a register of all Allowed Claims, the Holders thereof, assignments
thereof, distributions made on account thereof, and the balance outstanding (the "Claims
Register"). At the close of business on each Distribution Record Date, the Claims Register for
all Claims shall be closed, and there shall be no further changes in the record Holders of such
Claims. Except as provided herein, the Reorganized Debtor shall have no obligation to
recognize any transfer of Claims occurring after each Distribution Record Date and before its
related Distribution Date, and shall be entitled instead to recognize and deal for all purposes
hereunder with only those record Holders stated on the Claims Register as of the close of
business on each Distribution Record Date, on account of Distributions to be made on the next
Distribution Date. The Reorganized Debtor shall have no obligation to recognize the assignment
of any Allowed Claim absent receipt of written notice of such assignment, in conformance with
the requirements of the Bankruptcy Code and Bankruptcy Rules.
5.7.
Withholding, Payment, and Reporting Requirements. In connection with the Plan
and all Distributions under the Plan, the Reorganized Debtor shall, to the extent applicable,
comply with all tax withholding, payment, and reporting requirements imposed by any federal,
state, provincial, local, or foreign taxing authority, and all Distributions under the Plan shall be
subject to any such withholding, payment, and reporting requirements. The Reorganized Debtor
shall be authorized to take any and all actions that may be necessary or appropriate to comply
with such withholding, payment, and reporting requirements. Notwithstanding any other
provision of the Plan, (a) each Holder of an Allowed Claim that is to receive a Distribution
pursuant to the Plan shall have sole and exclusive responsibility for the satisfaction and payment
of any tax obligations imposed by any governmental unit, including income, withholding, and
other tax obligations, on account of such Distribution, and including, in the case of any Holder of
a Disputed General Unsecured Claim that has become an Allowed General Unsecured Claim,
any tax obligation that would be imposed upon the Reorganized Debtor in connection with such
Distribution, and (b) no Distribution shall be made to or on behalf of such Holder pursuant to the
Plan unless and until such Holder has made arrangements satisfactory to the Reorganized Debtor
for the payment and satisfaction of such withholding tax obligations or such tax obligation that
would be imposed upon the Reorganized Debtor in connection with such Distribution. Any
property to be distributed pursuant to the Plan shall, pending the implementation of such
arrangements, be treated as an undeliverable Distribution pursuant to Section 5.5 of the Plan.
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5.8.
Setoffs. The Reorganized Debtor may, but shall not be required to, set off against
any Claim or any Allowed Claim, and the payments or other Distributions to be made pursuant
to the Plan in respect of such Claim, claims of any nature whatsoever that the Debtor or the
Reorganized Debtor may have against the Holder of such Claim; provided , however, that neither
the failure to do so nor the allowance of any Claim hereunder shall constitute a waiver or release
by the Reorganized Debtor of any such claim that the Debtor or the Reorganized Debtor may
have against such Holder.
5.9.
No Distribution in Excess of Allowed Amounts. Notwithstanding anything to the
contrary herein, no Holder of an Allowed Claim shall receive in respect of such Claim any
Distribution of a value as of the Effective Date in excess of the Allowed amount of such Claim
(excluding payments on account of interest , costs, and/or fees due and payable from and after the
Effective Date pursuant to the Plan, if any).
ARTICLE VI
PROCEDURES FOR RESOLVING DISPUTED , CONTINGENT AND UNLIQUIDATED
CLAIMS AND DISTRIBUTIONS WITH RESPECT THERETO
6.1.
Objections to Claims; Estimation Proceedings.
6.1.1. Except asset forth in the Plan or any applicable Court order, all objections
to Claims must be filed and served on the Holders of such Claims by the applicable Claims
Objection Deadline, as the same may be extended by the Bankruptcy Court. If a timely objection
has not been fled to a Proof of Claim or the Schedules have not been amended with respect to a
Claim that (i) was scheduled by the Debtor in the Schedules but (ii) was not scheduled in the
Schedules as contingent, unliquidated, and/or disputed, the Claim to which the Proof of Claim or
scheduled Claim relates will be treated as an Allowed Claim if such Claim has not been allowed
earlier. Notice of any motion for an order extending any Claims Objection Deadline shall be
required to be given only to those persons or entities that have requested notice in the Chapter 11
Case, or to such persons as the Bankruptcy Court shall order.
6.1.2. The Debtor (prior to the Effective Date) or Reorganized Debtor may, at
any time, request that the Bankruptcy Court estimate any contingent or unliquidated Claim
pursuant to section 502(c) of the Bankruptcy Code, regardless of whether the Debtor or the
Reorganized Debtor have previously objected to such Claim or whether the Bankruptcy Court
has ruled on any such objection , and the Bankruptcy Court shall retain jurisdiction to estimate
any Claim at any time during litigation concerning any objection to any Claim , including during
the pendency of any appeal relating to any such objection. In the event the Bankruptcy Court so
estimates any contingent or unliquidated Claim, that estimated amount shall constitute either the
Allowed amount of such Claim or a maximum limitation on such Claim , as determined by the
Bankruptcy Court, as applicable . If the estimated amount constitutes a maximum limitation on
such Claim, the Reorganized Debtor may elect to pursue any supplemental proceedings to object
to any ultimate payment on such Claim . All of the aforementioned Claims objection , estimation,
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and resolution procedures are cumulative and are not necessarily exclusive of one another.
Claims may be estimated and thereafter resolved by any permitted mechanisms.
6.2.
Authority to Prosecute Objections. After the Effective Date, only the
Reorganized Debtor shall have the authority to file objections to Claims and to settle,
compromise, withdraw, or litigate to judgment objections to Claims , including, without
limitation, Claims for reclamation under section 546(c) of the Bankruptcy Code. The
Reorganized Debtor may settle or compromise any Disputed Claim without approval of the
Bankruptcy Court; provided, however, that the settlement of any Disputed Claim resulting in an
Allowed Claim of $150,000 or more shall require the Prior Written Consent of the Plan
Committee.
6.3.
Treatment of Disputed Claims.
6.3.1. Notwithstanding any other provisions of the Plan, no payments or
Distributions will be made on account of a Disputed Claim or, if less than the entire Claim is a
Disputed Claim, the portion of a Claim that is Disputed, until such Disputed Claim becomes an
Allowed Claim.
6.3.2. The Reorganized Debtor shall , on the applicable Distribution Dates, make
Distributions on account of any Disputed Claim that has become an Allowed Claim. Such
Distributions shall be made pursuant to the provisions of the Plan governing the applicable Class.
Such Distributions shall be based upon the Distributions that would have been made to the
Holder of such Claim under the Plan if the Disputed Claim had been an Allowed Claim on the
Effective Date in the amount ultimately Allowed.
6.4.
Provisions for Disputed Claims. On the Initial Distribution Date and on each
subsequent Distribution Date, the Debtor or Reorganized Debtor shall withhold on a Pro Rata
basis from Cash that would otherwise be distributed to Classes of Claims entitled to Distributions
under the Plan on such date , and reserve in a separate Disputed Claims Reserve, such Cash as
may be necessary to equal one hundred percent ( 100%) of Distributions to which Holders of
such Disputed Claims would be entitled under this Plan if such Disputed Claims were Allowed
Claims in their Disputed Claim Amounts. If the Debtor or Reorganized Debtor elects not to
request an estimation from the Bankruptcy Court with respect to a Disputed Claim that is
contingent or unliquidated , the Debtor or Reorganized Debtor shall withhold from Distribution
and deposit Cash in the Disputed Claims Reserve based upon the good faith estimate of the
amount of such Claim by the Debtor or Reorganized Debtor. The Debtor or Reorganized Debtor
will deposit Cash that is withheld as the applicable Disputed Claims Reserve in an appropriate
manner to ensure the safety of the deposit , and, in the exercise of reasonable business judgment,
invest such Cash in an interest- bearing account or other short-term instrument . Nothing in this
Plan or the Disclosure Statement shall be deemed to entitle the Holder of a Disputed Claim to
postpetition interest on such Claim, however, except as otherwise expressly provided for in the
Plan.
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6.5.
Accounts; Escrows; Reserves. The Debtor and Reorganized Debtor shall, subject
to and in accordance with the provisions of this Plan (a) establish one or more general accounts
into which shall be deposited all funds not required to be deposited into any other account,
reserve or escrow, (b) create, fund and withdraw funds from, as appropriate, the Disputed Claims
Reserve and (c) will deposit Cash that is withheld as the applicable Disputed Claims Reserve in
an appropriate manner to ensure the safety of the deposit, and, in the exercise of reasonable
business judgment, invest such Cash in an interest-bearing account or other short-term
instrument. Nothing in this Plan or the Disclosure Statement shall be deemed to entitle the
Holder of a Disputed Claim to postpetition interest on such Claim, however, except as otherwise
expressly provided for in the Plan.
ARTICLE VII
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
7.1.
Assumption. Except as otherwise provided in the Plan, or in any contract,
instrument, release, indenture, or other agreement or document entered into in connection with
the Plan, as of the Effective Date, the Debtor shall be deemed to have assumed each pre-petition
written executory contract and unexpired lease to which it is a party unless such executory
contract or unexpired lease (a) was previously assumed or rejected upon motion by a Final
Order, (b) previously expired or terminated pursuant to its own terms, (c) is listed on the
Schedule of Rejected Contracts and Leases set forth on Schedule 7.4 hereto, (d) is the subject of
any pending motion, including to assume, to assume on modified terms, to reject or to make any
other disposition filed by the Debtor on or before the Confirmation Date, or (e) constitutes a
contract evidencing or including obligations for borrowed money or prepetition obligations to
vendors of goods and services. Without limiting the generality of the foregoing, all leases,
contracts and licenses set forth on Schedule 7. 1, which Schedule 7.1 will be filed with the Plan
Supplement, shall be assumed by the Debtor. The Confirmation Order shall constitute an order of
the Bankruptcy Court under section 365(a) of the Bankruptcy Code approving the assumption
and/or assignment of pre-petition executory contracts and unexpired leases set forth on Schedule
7_l, as of the Effective Date. Notwithstanding anything to the contrary herein, the Debtor and
the Reorganized Debtor reserve the right to assert that any license, franchise and partially
performed contract is a property right and not an executory contract. To the extent applicable,
all executory contracts and unexpired leases of the Reorganized Debtor assumed pursuant to the
Plan shall be deemed modified such that the transactions contemplated by the Plan shall not be a
"change of control," however such term may be defined in the relevant executory contract or
unexpired lease, and any required consent under any such contract or lease shall be deemed
satisfied by the Confirmation of the Plan, and all executory contracts and unexpired leases
assumed pursuant to the Plan shall be assumed notwithstanding any provisions therein that
purport to modify the Debtor' s rights as a result of the commencement of the Chapter 1 I Case.
7.2.
Cure Rights for Executory Contracts and Unexpired Leases Assumed Under Plan.
Any monetary amounts by which each executory contract and unexpired lease to be assumed
pursuant to the Plan is in default shall be satisfied, under section 365(b)(1) of the Bankruptcy
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Code, by Cure. If there is a dispute regarding (a) the nature or amount of any Cure Costs, (b) the
ability of the Reorganized Debtor to provide "adequate assurance of future performance" (within
the meaning of section 365 of the Bankruptcy Code) under the contract or lease to be assumed,
or (c) any other matter pertaining to assumption, Cure shall occur following the entry of a Final
Order resolving the dispute and approving the assumption or assumption and assignment, as the
case may be; provided, however, that, at any time prior to the Confirmation Hearing, the Debtor
or Reorganized Debtor, as applicable, shall be authorized to amend the Plan Supplement to reject
any executory contract or unexpired lease to the extent the Debtor or Reorganized Debtor, in the
exercise of its sound business judgment, concludes that the amount of the Cure Costs as
determined by such Final Order, renders assumption of such executory contract or unexpired
lease unfavorable to the Debtor or Reorganized Debtor. Cure Costs are listed on Schedule 7. 1,
which shall be filed with the Plan Supplement. If no Cure Costs for an assumed executory
contract or unexpired lease are listed on Schedule 7. 1, the Cure Cost shall be deemed to be $0.
Rejection Damages Bar Date for Rejections Pursuant to Plan. If the rejection of
7.3.
an executory contract or unexpired lease pursuant to the Plan results in a Claim, then such Claim
shall be forever barred and shall not be enforceable against the Debtor or Reorganized Debtor
unless a Proof of Claim is filed with the claims agent and served upon counsel to the
Reorganized Debtor within thirty (30) days after entry of the Confirmation Order. The foregoing
applies only to Claims arising from the rejection of an executory contract or unexpired lease; any
other Claims held by a party to a rejected contract or lease shall have been evidenced by a Proof
of Claim filed by earlier applicable Bar Dates or shall be barred and unenforceable.
7.4.
Rejection of Executory Contracts and Unexpired Leases. The contracts and leases
set forth on Schedule 7.4 shall be deemed rejected as of the Effective Date, which Schedule 7.4
shall be filed as a part of the Plan Supplement. The Debtor reserves the right, at any time prior to
the Confirmation Hearing, except as otherwise specifically provided in the Plan, to seek to reject
any executory contract or unexpired lease to which the Debtor is a party and to file a motion
requesting authorization for the rejection of any such executory contract or unexpired lease.
7.5.
Assumption of Customer Obligations. On the Effective Date, the Reorganized
Debtor shall assume the Debtor's ordinary course gift card obligations, customer warranties,
customer exchange programs, customer upgrade programs, layaway deposit obligations, and all
such similar customer satisfaction programs and obligations maintained by the Debtor for the
benefit of its customers; provided that such claims (i) arise from merchandise or gift cards sold in
the ordinary course and (ii) shall not include any escheatment claims asserted by any
governmental entity or any similar claim. The assumed liability of the Reorganized Debtor shall
be subject to such limitations as the Reorganized Debtor may impose after the Effective Date in
the ordinary course of business.
7.6.
Treatment of Compensation and Benefit Programs. Except to the extent (i)
otherwise provided for in the Plan, (ii) previously assumed or rejected by an order of the
Bankruptcy Court entered on or before the Confirmation Date, (iii) the subject of a pending
motion to reject filed by the Debtor on or before the Confirmation Date, or (iv) previously
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terminated, all ordinary course employee compensation and benefit programs of the Debtor in
effect during the pendency of the Chapter 11 Case, including all health and welfare plans, 401(k)
plans, vacation benefits, pension plans within the meaning of Title IV of the Employee
Retirement Income Security Act of 1974, as amended, and all benefits subject to sections 1114
and I I29(a)(13) of the Bankruptcy Code, entered into before or after the Petition Date and in
effect during the pendency of the Chapter 11 Case, shall be deemed to be, and shall be treated as
though they are, executory contracts that are assumed pursuant to section 365 of the Bankruptcy
Code and Section 7.1 of the Plan. Nothing contained herein shall be deemed to modify the
existing terms of such employee compensation and benefit programs, including, without
limitation, the Debtor's and the Reorganized Debtor's rights of termination and amendment
thereunder.
7.7.
Certain Indemnification Obligations Owed by Debtor.
7.7.1. Subject to the provisions of Section 4.4.1 of this Plan and the occurrence
of the Effective Date, the obligations of the Debtor as provided in the Debtor's certificate of
incorporation and bylaws as in effect through the Effective Date and under applicable law or
other applicable agreements as in effect through the Effective Date to indemnify, defend,
reimburse, exculpate, advance fees and expenses to, or limit the liability of, the current and
former directors, officers and employees of the Debtor against any damages, liabilities,
obligations, claims or causes of action whether direct or derivative, liquidated or unliquidated,
fixed or contingent, disputed or undisputed, matured or unmatured, known or unknown, foreseen
or unforeseen, asserted or unasserted, shall survive confirmation of the Plan, remain unaffected
thereby after the Effective Date and not be discharged under section 1141 of the Bankruptcy
Code or otherwise, irrespective of whether such indemnification, defense, advancement,
reimbursement, exculpation or limitation is owed in connection with an event occurring before or
after the Petition Date. Any Claim based on the Debtor's obligations under the Plan shall not be
subject to any objection in either case by reason of section 502(e)(1)(B) of the Bankruptcy Code
to the fullest extent permitted by applicable law in the State of Colorado in connection with any
event occurring before the Petition Date, provided that the foregoing shall exclude actions or
omissions resulting from gross negligence or willful misconduct.
7.7.2. Indemnification Obligations owed to any Professionals retained pursuant
to sections 327 or 328 of the Bankruptcy Code and order of the Bankruptcy Court, to the extent
that such Indemnification Obligations relate to the period after the Petition Date, excluding
claims resulting from gross negligence, willful misconduct, breach of fiduciary duty, selfinterested transactions or intentional tort, shall be deemed to be, and shall be treated as though
they are, executory contracts that are assumed pursuant to section 365 of the Bankruptcy Code
and Section 7.1 of the Plan.
7.8.
Continuing Obligations Owed to Debtor.
7.8.1. Any confidentiality agreement entered into between the Debtor and any
Person or Entity requiring the parties to maintain the confidentiality of each other's proprietary
information shall be deemed to be, and shall be treated as though it is, an executory contract that
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is assumed and assigned pursuant to section 365 of the Bankruptcy Code and Section 7.1 of the
Plan.
7.8.2. Any indemnity agreement entered into between the Debtor and any
supplier of goods or services requiring the supplier to provide insurance in favor of the Debtor,
to warrant or guarantee such supplier ' s goods or services, or to indemnify the Debtor for claims
arising from the goods or services shall be deemed to be , and shall be treated as though it is, an
executory contract that is assumed and assigned pursuant to section 365 of the Bankruptcy Code
and Section 7.1 of the Plan; provided, however, that if any party thereto asserts any Cure Cost, at
the election of the Debtor or Reorganized Debtor , such agreement shall not be deemed assumed,
and shall instead be rejected pursuant to section 365 of the Bankruptcy Code under the Plan.
7.8.3. Continuing obligations of third parties to the Debtor under insurance
policies, contracts, or leases that have otherwise ceased to be executory or have otherwise
expired on or prior to the Effective Date , including, without limitation , continuing obligations to
pay insured claims , to defend against and process claims, to refund premiums or overpayments,
to provide indemnification, contribution or reimbursement , to grant rights of first refusal, to
maintain confidentiality, or to honor releases , shall continue and shall be binding on such third
parties notwithstanding any provision to the contrary in the Plan, unless otherwise specifically
terminated by the Debtor or by order of Bankruptcy Court.
7.8.4. To the extent any insurance policy under which the insurer has a
continuing obligation to pay the Debtor or a third party on behalf of the Debtor is held by the
Bankruptcy Court to be an executory contract, such insurance policy shall be treated as though it
is an executory contract that is assumed pursuant to section 365 of the Bankruptcy Code and
Section 7 . 1 of the Plan. Any and all Claims (including Cure Costs) arising under or related to
any insurance policies or related insurance agreements that are assumed by the Debtor prior to or
as of the Effective Date: (i) shall not be discharged; (ii) shall be Allowed Administrative Claims;
and (iii) shall be paid in full in the ordinary course of business of the Reorganized Debtor as set
forth in Section 3.1 of the Plan.
7.9.
Limited Extension of Time to Assume or Reject.
7.9.1. In the event of a dispute as to whether a contractor lease is executory or
unexpired, the right of the Debtor or the Reorganized Debtor to move to assume or reject such
contract or lease shall be extended until the date that is thirty ( 30) days after entry of a Final
Order determining that the contract or lease is executory or unexpired.
7.9.2. In the event the Debtor or the Reorganized Debtor becomes aware after
the Confirmation Date of the existence of an executory contract or unexpired lease that was not
included in the Schedules , the right of the Reorganized Debtor to move to assume or reject such
contract or lease shall be extended until the date that is thirty (30) days after the date on which
the Reorganized Debtor receives written notice of the existence and terms of such contract or
lease ( an "Unknown Contract "), Such Unknown Contract may be assumed or rejected by the
Reorganized Debtor . The limited extension of the time to assume or reject provided by this
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Section 7 . 9 shall not apply to unexpired leases of non-residential real property or any written
amendments or modifications thereto that are included in the Schedules.
7.10. Post petition Contracts and Leases. The Debtor shall not be required to assume
or reject any contract or lease entered into by the Debtor after the Petition Date. Any such
contract or lease shall continue in effect in accordance with its terms after the Effective Date,
unless the Reorganized Debtor has obtained a Final Order approving rejection or other
termination of such contract and lease.
7.11. Treatment of Claims Arising From Assumption or Rejection. All Allowed Claims
for Cure Costs arising from the assumption of any executory contract or unexpired lease shall be
treated as Administrative Claims pursuant to Section 3.1 of the Plan; all Allowed Claims arising
from the rejection of an executory contract or unexpired lease shall be treated , to the extent
applicable, as General Unsecured Claims , unless otherwise ordered by Final Order; and all other
Allowed Claims relating to an executory contract or unexpired lease shall have such status as
they may be entitled to under the Bankruptcy Code as determined by Final Order.
ARTICLE VIII
CONDITIONS PRECEDENT TO CONFIRMATION AND
CONSUMMATION OF THE PLAN
8.1.
Conditions to Confirmation. The following conditions precedent to the entry of
the Confirmation Order must be satisfied:
8.1.1. An order finding that the Disclosure Statement contains adequate
information pursuant to section 1125 of the Bankruptcy Code shall have been entered;
8.1.2. The Debtor and the Creditors Committee shall have agreed upon a form of
Confirmation Order in form and substance reasonably satisfactory to each which shall, among
other things:
8.1.3. provide that the Debtor and the Reorganized Debtor are authorized and
directed to take all actions necessary or appropriate to enter into , implement, and consummate
the contracts, instruments , releases, leases, indentures and other agreements or documents
created in connection with the Plan;
8.1.4. provide that notwithstanding Rule 3020(e) of the Bankruptcy Rules, the
Confirmation Order shall be immediately effective, subject to the terms and conditions of the
Plan.
8.1.5. An inventory count and appraisal of the Debtor's inventory shall have
been conducted within sixty (60) days prior to the first date set for hearing on Confirmation of
the Plan, by an independent third party mutually agreeable to the Debtor and the Creditors
Committee; provided, however, the details of such inventory count and appraisal shall be
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disclosed only to the Professionals retained by the Creditors Committee, and not the members of
the Creditors Committee; further provided that the Professionals retained by the Creditors
Committee may provide to the members of the Creditors Committee a summary of the findings
and results of such count and appraisal, including the total inventory on hand and assigned value
thereof.
8.2.
Conditions to Effective Date . The following conditions precedent must be
satisfied or waived on or prior to the Effective Date in accordance with Section 8.3 of the Plan:
8.2.1. the Confirmation Order shall have been entered and be final and nonappealable and not stayed, vacated, or reversed;
8.2.2. no request for revocation of the Confirmation Order shall have been made
or remain pending;
8.2.3. all material authorizations, consents , and regulatory approvals required, if
any, in connection with consummation of the Plan shall have been obtained;
8.2.4. all material actions, documents , and agreements necessary to implement
the Plan shall have been effected or executed;
8.2.5. TMS shall be employed and acting in the capacity of President and Chief
Executive Officer of the Debtor;
8.2.6. the Debtor shall have in immediately available Cash sums sufficient to pay
all Administrative Expenses, Professional Fees, Priority Tax Claims, and Class 1 and 4 Claims,
and any other obligations to be paid as of the Initial Distribution Date , all in an amount
determined by the Debtor and/or Reorganized Debtor in the exercise of reasonable business
judgment; and, in addition, the Debtor shall have necessary Cash to provide sufficient working
capital for the Debtor's future business operations;
8.2.7. the Debtor shall not have incurred a material adverse change in the value
of its business, assets, or operations, in comparison to the financial statements and financial
projections set forth in the Disclosure Statement; and
8.2.8. All inventory analysis and reconciliation by the Debtor shall have been
completed, and the Debtor has, and represents and warrants to the Creditors Committee that it
has, appropriate working knowledge of (i) all of its inventory on hand, and (ii) the proper mix
and balance of inventory needed for its business.
8.3.
Waiver of Conditions. Each of the conditions set forth in Section 8.1 may be
waived in whole or in part by the Debtor and the Creditors Committee. Each of the conditions
set forth in Section 8.2 may be waived in whole or in part by the Debtor, after consultation with
and subject to approval of the Creditors Committee and, as to the condition set forth in Section
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8.2.7, after consultation with Corundum, without any notice to any other parties -in-interest or the
Bankruptcy Court and without a hearing.
Effects of Failure of Conditions to Effective Date. If the Effective Date does not
8.4.
occur on or prior to December 23, 2010, which date may be extended by written agreement of
the Debtor and the Creditors Committee , and upon notification submitted by the Debtor to the
Bankruptcy Court: ( a) the Confirmation Order shall be vacated and all provisions contained
therein, including without limitation, any provisions relating to discharge, shall be null and void,
(b) no Distributions under the Plan shall be made, (c) the Debtor and all Holders of Claims and
Equity Interests shall be restored to the status quo ante as of the day immediately preceding the
Confirmation Date as though the Confirmation Date had never occurred , and (d) the Debtor's
obligations with respect to the Claims and Equity Interests shall remain unchanged and nothing
contained in the Plan shall constitute or be deemed a waiver or release of any Claims or Equity
Interests by or against the Debtor or any other person or to prejudice in any manner the rights of
the Debtor or any person in any further proceedings involving the Debtor.
ARTICLE IX
PLAN COMMITTEE
9.1.
Formation of Plana Committee. On the Effective Date, the Plan Committee will be
automatically formed and composed of those members of the Creditors ' Committee willing to
serve in such capacity , who may continue to serve on the Plan Committee even if they no longer
hold Allowed Class 5 Claims. The Plan Committee may adopt such articles, by-laws, and/or
rules governing its operations as the Plan Committee may reasonably determine . If, at any time,
the Plan Committee should fall below three (3) members , the then remaining members of the
Plan Committee may designate as a replacement to fill such vacancy (a) one of the twenty (20)
largest unsecured creditors either scheduled by the Debtor in its Schedules or pursuant to a filed
proof of claim that is then still the holder of an Allowed Class 5 Claim and is willing to serve, or,
(b) in the event no such Person exists, one of the holders of the next largest Allowed Class 5
Claims scheduled by the Debtor in its Schedules or pursuant to a filed proof of claim, that is then
the holder of an Allowed Class 5 Claim and is willing to serve (each a "Replacement Member").
For avoidance of doubt, any Replacement Member must have been the holder of an Allowed
Class 5 Claim as of the Petition Date to be eligible to serve on the Plan Committee. Any
Replacement Member of the Plan Committee shall resign if it no longer holds an Allowed Class
5 Claim against the Debtor. If membership on the Plan Committee drops below three (3)
members and the remaining members of the Plan Committee cannot identify another creditor
willing to serve on the Plan Committee within ninety (90) days thereafter, a successor to the Plan
Committee shall be selected in accordance with Section 9.9 herein.
9.2.
Duties and Operations of Plan Committee. The Plan Committee shall monitor the
Distributions to Holders of Allowed Class 5 Claims under the Plan, and shall have the right to
review and consent to those matters requiring Prior Written Consent of the Plan Committee.
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9.3.
Rights and Powers ofPlan Committee. The Plan Committee shall have the
following rights and powers , and no others:
9.3.1. Review the Reorganized Debtor's Annual Budget;
9.3.2. Monitor the Reorganized Debtor in the calculation and making of
Distributions to Holders of Allowed Class 5 Claims and exercise any right provided under this
Plan or under the Class 5 Note Documents;
9.3.3. Raise with the Bankruptcy Court, or another court of competent
jurisdiction, any claimed default under the Class 5 Note Documents or under this Plan.
9.3.4. In accordance with Section 9.5 hereof, employ such Professionals as the
Plan Committee reasonably determines.
9.4.
Tenure of Plan Committee. Unless sooner terminated pursuant to the provisions
of this Section, the Plan Committee shall dissolve (and retained Professionals, if any, shall be
terminated) when the Class 5 Claim Amount has been indefeasibly satisfied in full.
9.5.
Retention, Compensation and Reimbursement of Plan Committee and
Professionals. Members of the Plan Committee shall receive no compensation in connection
with their service on the Plan Committee. All reasonable out-of-pocket expenses incurred by
members of the Plan Committee shall be reimbursable as a post-Effective Date operating
expense of the Reorganized Debtor. Any professionals retained by the Plan Committee shall be
entitled to reasonable compensation for services rendered at the prevailing rates in the
community for the services provided by such professional, and reimbursement of reasonable outof-pocket expenses reasonably incurred in providing such services; provided however, absent a
default by the Reorganized Debtor in the performance of its obligations to the Holders of
Allowed Class 5 Claims under this Plan or the Class 5 Note Documents, the fees and costs of
professionals retained by the Plan Committee shall not exceed 550,000.00 in each fiscal year of
the Reorganized Debtor. Statements of Plan Committee Fees and Expenses will be provided to
the Reorganized Debtor. In the absence of notice given by the Reorganized Debtor to the Plan
Committee within ten (10) Business Days of receipt of the statements of its objection to the
payment of such statements, the Reorganized Debtor shall promptly pay such statements, subject
to the annual cap thereon. In the event of any objection, absent consensual resolution of the
parties, the Plan Committee and/or its professionals may submit its request for compensation to
the Bankruptcy Court for approval, with the Reorganized Debtor reserving all objections thereto.
In the event that the Plan Committee and/or its professionals recovers the full amount of the
compensation so requested, then the Plan Committee and/or its professionals shall, in addition,
recover the reasonable fees and costs incurred in connection with such dispute. If the
Reorganized Debtor disputes the reasonableness of the fees and costs incurred by the Plan
Committee, then such dispute shall be resolved by agreement of the parties and, if no agreement,
will be determined by the Bankruptcy Court. In the event that the Plan Committee and/or its
professionals recovers less than all of the compensation so requested, then the parties shall agree,
or, if the parties are unable to agree , the Bankruptcy Court shall determine, whether either party
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is entitled to an award of reasonable fees and costs in connection with such dispute, and the
amount thereof. If the parties agree, or the Bankruptcy Court awards, fees and costs to the
Debtor or Reorganized Debtor in connection with such dispute, such award shall be an offset
against the Class 5 Claim Amount. If the parties agree, or the Bankruptcy Court awards, any
fees and costs pursuant to this Section to the Plan Committee in connection with such dispute,
the Reorganized Debtor shall promptly pay such award. All fees and costs awarded to the Plan
Committee and/or its professionals in connection with a compensation dispute hereunder shall be
outside the scope of the $50,000 limit on fees and expenses set forth in this Section 9.5.
Financial Reporting. The Reorganized Debtor shall provide those financial
9.6.
reports to the Plan Committee required to be provided in the Class 5 Note Documents.
9.7.
Confidentiality. All financial reports received by members of the Plan
Committee, and any other information regarding the business and operations of the Debtor or
Reorganized Debtor acquired by a Plan Committee member through participation on the
Creditors Committee or the Plan Committee , shall be deemed confidential, unless such financial
report or other information has become otherwise publicly available or disclosed in a nonconfidential manner, and any such confidential information may be disclosed by any Plan
Committee member only to legal counsel or other professional advisors , business co-owners and
key employees of such Plan Committee member, each of whom shall also be subject to the
confidentiality provisions of this Section . Notwithstanding the provisions of Section 9.8 of the
Plan, any violation of the confidentiality provisions of this Section shall entitle the Reorganized
Debtor to seek appropriate relief from the Bankruptcy Court, including, but not limited to,
injunction and damages, from the applicable Plan Committee member.
9.8.
Limitation on Liability of Plan Committee. Subject to applicable law, no member
of the Plan Committee shall be liable for any act taken or omitted as a member of the Plan
Committee while acting in good faith and in the exercise of reasonable judgment; nor shall any
member of the Plan Committee be liable in any event except for gross negligence or willful fraud
or willful misconduct. The foregoing limitation on liability shall apply equally to the agents
and/or employees of a member of the Plan Committee acting on behalf of a member of the Plan
Committee in the fulfillment of the member's duties hereunder.
99.
Successor to Plan Committee. If membership on the Plan Committee drops below
three (3) members and the remaining members of the Plan Committee cannot identify another
creditor willing to serve on the Plan Committee within ninety (90) days thereafter in accordance
with Section 9.1 above, the remaining members of the Plan Committee in place and the
Reorganized Debtor shall agree to the appointment of a successor to the Plan Committee for
purposes of serving as the agent for the Holders of Allowed Class 5 Claims in enforcing their
rights under this Plan and the Class 5 Note Documents, which successor shall be an individual
with demonstrated and sophisticated expertise in the retail jewelry industry, and shall agree on
reasonable compensation to be paid to such successor. If the Reorganized Debtor and the Plan
Committee are unable to agree on the designation of a successor, the parties may return to the
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Bankruptcy Court, or another court of competent j urisdiction, to request that the Court determine
an appropriate successor.
9.10. Status of Creditors' Committee as Plan Proponent. Notwithstanding any
provision of this Plan to the contrary, the Creditors Committee ' s status as a Plan Proponent shall
not limit its right or the right of the Plan Committee to enforce the terms and conditions of this
Plan or the Class 5 Note Documents , or to exercise the rights and powers granted the Plan
Committee hereunder , against the Debtor, Reorganized Debtor, or any other Person or Entity.
ARTICLE X
GENERAL PROVISIONS
10.1. Administrative Expenses. All Administrative Expense Requests (other than asset
forth in this Section 10.1 of the Plan) must be made by application filed with the Bankruptcy
Court and served on counsel for the Reorganized Debtor on or before the Administrative
Expense Bar Date. In the event that the Reorganized Debtor objects to an Administrative
Expense, the Bankruptcy Court shall determine the Allowed amount of such Administrative
Expense. Notwithstanding the foregoing, no application seeking payment of an Administrative
Expense need be filed with respect to an undisputed post-petition obligation which was paid or is
payable by the Debtor in the ordinary course of business;w,
rovided, however, that (a) in no
event shall a post-petition obligation that is contingent or disputed and subject to liquidation
through pending or prospective litigation, including, but not limited to, alleged obligations
arising from personal injury, property damage, products liability, consumer complaints,
employment law (excluding claims arising under workers' compensation law), secondary payor
liability, or any other disputed legal or equitable claim based on tort, statute, contract, equity, or
common law, be considered to be an obligation which is payable in the ordinary course of
business; and (b) no application seeking payment of an Administrative Expense need be filed
with respect to Cure Costs owing under an executory contract or unexpired lease if the amount of
Cure Costs are fixed or proposed to be fixed by order of the Bankruptcy Court pursuant to a
motion to assume and fix the amount of Cure Costs filed by the Debtor and a timely objection
asserting an increased amount of Cure Costs filed by the non-Debtor party to the subject contract
or lease; provided further, however, that post-petition statutory tax claims shall not be subject to
the Administrative Expense Bar Date.
10.2. Professional Fee Claims. All final requests for payment of Professional Fee
Claims pursuant to sections 327, 328, 330, 331, 503(b), or 1103 of the Bankruptcy Code must be
made by application filed with the Bankruptcy Court and served on the Reorganized Debtor, its
counsel, counsel to the Creditors Committee, and other necessary parties-in-interest on or before
the Professional Fee Claim Bar Date, unless otherwise ordered by the Bankruptcy Court.
Objections to such applications must be filed and served on the Reorganized Debtor, their
counsel, counsel to the Creditors Committee and the requesting Professional or other entity on or
before the Professional Fee Claim Objection Date. Allowed Professional Fees shall be paid by
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the Reorganized Debtor as soon as practicable after the later of (a) the Effective Date or (b) the
Professional Fee Claim becomes an Allowed Claim.
10.3.
Modifications and Amendments.
10.3.1.
The Debtor, with the consent of the Creditors' Committee and Suresh,
may alter, amend, or modify the Plan or any exhibits thereto under section 1127(a) of the
Bankruptcy Code at any time prior to the Confirmation Date. The Debtor shall provide partiesin-interest with notice of such amendments or modifications as may be required by the
Bankruptcy Rules or order of the Bankruptcy Court. A Holder of a Claim that has accepted the
Plan shall be deemed to have accepted the Plan, as altered, amended, modified, or clarified, if the
proposed alteration, amendment, modification, or clarification does not materially and adversely
change the treatment of the Claim of such Holder. In the event of any dispute as to whether such
proposed alteration , amendment, modification, or clarification materially and adversely changes
the treatment of the Claim of any such Holder, the Debtor shall bear the burden of demonstrating
that such proposed alteration , amendment, modification, or clarification does not materially
adversely change the treatment of the Claim of such Holder.
10.3.2.
After the Confirmation Date and prior to substantial consummation (as
defined in section 1101(2) of the Bankruptcy Code) of the Plan, the Debtor or Reorganized
Debtor, as applicable , may, after consultation with the Creditors Committee or Plan Committee,
as applicable , and Suresh , under section 1127(b) of the Bankruptcy Code, institute proceedings
in the Bankruptcy Court to remedy any defect or omission or to reconcile any inconsistencies in
the Plan, the Disclosure Statement approved with respect to the Plan, or the Confirmation Order,
and such matters as may be necessary to carry out the purpose and effect of the Plan so long as
such proceedings do not adversely affect the treatment of Holders of Claims under the Plan;
provided, however, that, to the extent required, prior notice of such proceedings shall be served
in accordance with the Bankruptcy Rules or an order of the Bankruptcy Court . A Holder of a
Claim that has accepted the Plan shall be deemed to have accepted the Plan , as altered, amended,
modified, or clarified, if the proposed alteration, amendment, modification, or clarification does
not materially and adversely change the treatment of the Claim of such Holder. In the event of
any dispute as to whether such proposed alteration , amendment, modification , or clarification
materially and adversely changes the treatment of the Claim of any such Holder, the Debtor or
Reorganized Debtor, as the case may be , shall bear the burden of demonstrating that such
proposed alteration, amendment, modification, or clarification does not materially adversely
change the treatment of the Claim of such Holder.
10.3.3.
Before or after confirmation, or in the Confirmation Order, the Debtor
or Reorganized Debtor , as applicable, may, after consultation with the Creditors Committee or
Plan Committee, as applicable, and Suresh, may, with approval of the Bankruptcy Court, and so
long as it does not materially or adversely affect the interests of creditors , remedy any defect or
omission, or reconcile any inconsistencies in the Plan or amend the Plan , in such manner as may
be necessary to carry out the purposes and intent of the Plan.
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10.4. Substantial Consummation. Substantial consummation of the Plan under section
1101(2) of the Bankruptcy Code shall be deemed to occur on the Initial Distribution Date.
10.5. Severability of Plan Provisions. If, prior to Confirmation, any term or provision
of the Plan is held by the Bankruptcy Court to be invalid, void, or unenforceable, the Bankruptcy
Court, at the request of the Debtor, shall have the power to alter and interpret such term or
provision to make it valid or enforceable to the maximum extent practicable, consistent with the
original purpose of the term or provision held to be invalid, void, or unenforceable, and such
term or provision shall then be applicable as altered or interpreted. Notwithstanding any such
holding, alteration , or interpretation, the remainder of the terms and provisions of the Plan shall
remain in full force and effect and shall in no way be affected, impaired, or invalidated by such
holding, alteration, or interpretation. The Confirmation Order shall constitute a judicial
determination and shall provide that each term and provision of the Plan, as it may have been
altered or interpreted in accordance with the foregoing, is valid and enforceable pursuant to its
terms.
10.6. Successors and Assigns and Binding Effect. Except as expressly otherwise
provided herein, the rights, benefits, and obligations of any Person or Entity named or referred to
in the Plan shall be binding on , and shall inure to the benefit of, any heir, executor , administrator,
personal representative , successor, or assign of such Person or Entity, including, but not limited
to, the Reorganized Debtor and all other parties-in -interest in the Chapter 11 Case.
10.7. Compromises and Settlements. From and after the Effective Date, the
Reorganized Debtor may compromise and settle various Claims against it, Causes of Action,
and/or Avoidance Actions that it may have against other Persons or Entities without any further
approval by the Bankruptcy Court (whether or not any proceeding regarding such Claim, Cause
of Action, or Avoidance Action was pending before the Bankruptcy Court prior to the Effective
Date), but any compromises or settlements resulting in an Allowed Claim in the amount of
$150,000 or more, or resulting in the recovery by the Reorganized Debtor of the sum of
$150,000 or more, shall require the Prior Written Consent of the Plan Committee. Until the
Effective Date, the Debtor expressly reserves the right to compromise and settle (subject to the
approval of the Bankruptcy Court) Claims against it, Avoidance Actions, Causes of Action or
other claims that it may have against other Persons or Entities.
10.8.
Releases and Related Matters.
10.8,1.
Releases by Debtor. As of the Effective Date, for good and valuable
consideration, the adequacy of which is hereby confirmed, the Debtor, the Reorganized Debtor,
the Estate and any Person or Entity seeking to exercise the rights of the Debtor's estate,
including, without limitation, any successor to the Debtor or any estate representative appointed
or selected pursuant to section 1123(b)(3) of the Bankruptcy Code, shall be deemed to forever
release, waive, and discharge all claims, obligations, suits, judgments, damages, demands, debts,
rights, Causes of Action (including claims or causes of action arising under Chapter 5 of the
Bankruptcy Code), and liabilities whatsoever in connection with or related to the Debtor, the
conduct of the Debtor's business, the Chapter 11 Case, or the Plan (other than the rights of the
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Debtor and the Reorganized Debtor to enforce the Plan and the contracts, instruments, releases,
indentures, and other agreements or documents delivered thereunder), whether liquidated or
unliquidated, fixed or contingent, matured or unmatured, known or unknown, foreseen or
unforeseen, then existing or thereafter arising, in law, equity, or otherwise, that are based in
whole or part on any act, omission, transaction, event, or other occurrence taking place on or
prior to the Effective Date in any way relating to the Debtor, the conduct of the Debtor's
business, the Reorganized Debtor, the Chapter 1 l Case, or the Plan, and that may be asserted by
or on behalf of the Debtor, the Estate, or the Reorganized Debtor against (i) any of the present or
former shareholders, directors, officers, employees or advisors of the Debtor who served in such
capacities as of or after the Petition Date, and expressly including Thomas M. Shane, Rordan B.
Shane, Kelsey B. Shane, Roberta K. Shane, Orawan Jittapinitmat, and Corundum, excluding
claims resulting from gross negligence, willful misconduct, breach of fiduciary duty, selfinterested transactions or intentional tort; (ii) any Professionals of the Debtor; (iii) the Creditors
Committee, its Professionals, members, and its and their advisors, respectively (but not its
members in their individual capacities) and (iv) Suresh (collectively, the "Released Parties");
provided, however, that nothing in this Section 10.8.1 shall be deemed to prohibit the
Reorganized Debtor from asserting and enforcing any claims, obligations, suits, judgments,
demands, debts, rights, causes of action or liabilities it may have against any employee
(including directors and officers) for alleged breach of confidentiality, or any other contractual
obligations owed to the Debtor or the Reorganized Debtor, including non-compete and related
agreements or obligations. Nothing herein constitutes a waiver of any right of the Reorganized
Debtor to (i) enforce all rights and claims concerning any and all intellectual property (including,
without limitation, trademarks, copyrights, patents, customer lists, trade secrets and confidential
or proprietary business information), all of which rights are expressly reserved and not released
and (ii) assert any defense based on whether or not applicable standards have been met,
Releases by Holders of Claims. Subject to the limitations found in
10.8.2.
§ 1125(e) of the Bankruptcy Code, and except to the extent prohibited or limited by applicable
law, on the Effective Date, each Holder of a Claim or Interest shall, except as otherwise
expressly provided in the Plan, in return for the rights provided in the Plan, be deemed to forever
release , waive, and discharge all claims, obligations, suits, judgments, damages, demands, debts,
rights, causes of action, and liabilities whatsoever against the Released Parties in connection
with or related to the Debtor, the conduct of the Debtor's business, the Chapter 11 Case, or the
Plan (other than the rights under the Plan or reserved in the Plan and the contracts, instruments,
releases, indentures, and other agreements or documents delivered thereunder), whether
liquidated or unliquidated, fixed or contingent, matured or unmatured, known or unknown,
foreseen or unforeseen, then existing or thereunder arising, in law, equity, or otherwise, that are
based in whole or part on any act, omission, transaction, event, or other occurrence taking place
on or prior to the Effective Date in any way relating to the Debtor, the conduct of the Debtor's
business, the Chapter 11 Case, or the Plan; provided, however, that nothing in the Plan shall be
deemed to prohibit any party from asserting or enforcing any direct contractual obligation
against any Released Party, with all rights and defenses to such claims being reserved by the
Released Party.
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10.9. Discharge of the Debtor. Except as otherwise provided herein or in the
Confirmation Order, all consideration distributed under the Plan shall be in exchange for, and in
complete satisfaction, settlement, discharge, and release of, all Claims of any nature whatsoever
against the Debtor or any of its assets or properties and, regardless of whether any property shall
have been abandoned by order of the Bankruptcy Court, retained, or distributed pursuant to the
Plan on account of such Claims, upon the Effective Date, the Debtor shall be deemed discharged
and released under section 1141(d)(1)(A) of the Bankruptcy Code from any and all Claims,
including, but not limited to, demands and liabilities that arose before the Effective Date,
Professional Fees, Administrative Expenses and all debts of the kind specified in section 502 of
the Bankruptcy Code, whether or not (A) a Proof of Claim based upon such debt is filed or
deemed filed under section 501 of the Bankruptcy Code, (B) a Claim based upon such debt is
Allowed under section 502 of the Bankruptcy Code, (C) a Claim based upon such debt is or has
been disallowed by order of the Bankruptcy Court, or (D) the Holder of a Claim based upon such
debt accepted the Plan. As of the Effective Date, except as provided in the Plan or the
Confirmation Order, all Persons shall be precluded from asserting against the Debtor or the
Reorganized Debtor or any of their assets or properties, any other or further claims, debts, rights,
causes of action, claims for relief, liabilities, or equity interests relating to the Debtor based upon
any act, omission, transaction, occurrence, or other activity of any nature that occurred prior to
the Effective Date. In accordance with the foregoing, except as provided in the Plan or the
Confirmation Order, the Confirmation Order shall be a judicial determination of discharge of all
such Claims and other debts and liabilities against the Debtor, pursuant to sections 524 and 1141
of the Bankruptcy Code, and such discharge shall void any judgment obtained against the Debtor
at any time, to the extent that such judgment relates to a discharged Claim. None of the
foregoing shall preclude an applicable governmental taxing authority from conducting a tax audit
covering the postpetition, pre-Effective Date period or from asserting and recovering a claim
arising from such tax audit, to the extent such claim is an Allowed Claim.
10.10. Injunction.
10.10.1. Except as provided in the Plan or the Confirmation Order, including
Section 10. 10.5 below, as of the Effective Date, all Persons that have held, currently hold, may
hold, or allege that they hold, a Claim or other debt or liability that is discharged are permanently
enjoined from taking any of the following actions against the Debtor, the Reorganized Debtor, or
their property on account of any such discharged Claims, debts, or liabilities: (i) commencing or
continuing, in any manner or in any place, any action or other proceeding; (ii) enforcing,
attaching, collecting, or recovering in any manner any judgment, award, decree, or order; (iii)
creating, perfecting, or enforcing any Lien or encumbrance; (iv) asserting a setoff or right of
subrogation of any kind against any debt, liability, or obligation due to the Debtor or the
Reorganized Debtor; or (v) commencing or continuing any action, in each such case in any
manner, in any place, or against any Person that does not comply with or is inconsistent with the
provisions of the Plan.
10.10.2. Except as provided in Section 10.10.5 below, as of the Effective Date,
all Persons that have held, currently hold, or may hold, a Claim, obligation, suit, judgment,
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damage, demand, debt, right, cause of action, or liability that is released, pursuant to Section
10.8.2 of the Plan, are permanently enjoined from taking any of the following actions on account
of such released Claims, obligations, suits, judgments, damages, demands, debts, rights, causes
of action, or liabilities: (i) commencing or continuing, in any manner or in any place, any action
or other proceeding; (ii) enforcing, attaching, collecting, or recovering in any manner any
judgment, award, decree, or order; (iii) creating, perfecting, or enforcing any Lien or
encumbrance; (iv) asserting a setoff against any debt, liability, or obligation due to any Releasee;
or (v) commencing or continuing any action , in any manner, in any place, or against any Person
that does not comply with or is inconsistent with the provisions of the Plan.
10.10.3. Without limiting the effect of the foregoing provisions of this Section
10. I 1 upon any Person, by accepting Distributions pursuant to the Plan, each Holder of an
Allowed Claim receiving a Distribution pursuant to the Plan shall be deemed to have specifically
consented to the injunctions set forth in this Section 10.10.
10.10.4. Nothing in this Section 10.10 shall impair (i) the rights of any Holder
of a Disputed Claim to establish its Claim in response to an objection filed by the Debtor or the
Reorganized Debtor, (ii) the rights of any defendant in an Avoidance Action filed by the Debtor
to assert defenses in such action, or (iii) the rights of any party to an executory contract or
unexpired lease that has been assumed by the Debtor pursuant to an order of the Bankruptcy
Court or the provisions of the Plan to enforce such assumed contract or lease.
10.10.5. Nothing in this Section 10.10 shall impair the rights of Corundum;
Suresh (notwithstanding termination of the Supply Agreement); Qwest; the Holder of any
Allowed Tax Claim, Secured Tax Claim, or Allowed Priority Non-Tax Claim; the Holder of any
Administrative Expense or Consignment Claim incurred as of the Effective Date; or the Plan
Committee on behalf of Holders of Allowed Class 5 Claims, to enforce the obligations of the
Reorganized Debtor arising under this Plan to it, in the event of a default by the Reorganized
Debtor hereunder, and the permanent injunction provided for in Section 10.
will be dissolved
as to such creditor or Plan Committee to allow it to bring action against the Reorganized Debtor
under the Corundum Exit Loan Documents, the Suresh Supply Agreement, or the Class 5 Note
Documents, respectively, and/or under the terms of the Plan, and/or applicable state law.
10.11. Exculpation and Limitation of Liability.
10.11.1. Except to the extent prohibited or limited by applicable law, none of
the Debtor, the Reorganized Debtor, the Creditors Committee (as to itself or any of its members),
or the Plan Committee (as to itself or any of its members) or any of their respective present or
former members, officers, managers, directors, employees, advisors, Professionals, agents, or
partners, shall have or incur any liability to any Holder of a Claim or an Equity Interest, or any
other party-in-interest, or any of their respective agents, employees, representatives, advisors,
attorneys, or affiliates, or any of their successors or assigns, for any act or omission in
connection with, relating to, or arising out of, the Chapter 11 Case, the formulation, negotiation,
or implementation of the Plan, the solicitation of acceptances of the Plan, the pursuit of
Confirmation of the Plan, the Confirmation of the Plan, the consummation of the Plan, or the
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administration of the Plan or the property to be distributed under the Plan, except for acts or
omissions that are the result of fraud , gross negligence, or willful misconduct; provided further,
however, that the foregoing is not intended to limit or otherwise impact any defense of qualified
immunity that may be available under applicable law.
10.11.2. Except to the extent prohibited or limited by applicable law, no Holder
of a Claim or an Equity Interest, no other party-in-interest, none of their respective agents,
employees, representatives, advisors, attorneys, or affiliates, and none of their respective
successors or assigns shall have any right of action against the Debtor, the Reorganized Debtor,
the Creditors Committee ( as to itself or any of its members), or the Plan Committee (as to itself
or any of its members) or of their respective present or former members , officers, managers,
directors, employees, advisors, Professionals, agents, or partners , for any act or omission in
connection with , relating to, or arising out of, the Chapter 11 Case , the formulation, negotiation,
or implementation of the Plan, solicitation of acceptances of the Plan, the pursuit of
Confirmation of the Plan, the Confirmation of the Plan, the consummation of the Plan, or the
administration of the Plan or the property to be distributed under the Plan, except for acts or
omissions which are the result of fraud , gross negligence , or willful misconduct.
10.12. Term of Injunctions or Stays. Unless otherwise provided herein or in the
Confirmation Order, all injunctions or stays provided for in the Chapter I I Case under sections
105 or 362 of the Bankruptcy Code or otherwise, and extant on the Confirmation Date
(excluding any injunctions or stays contained in the Plan or the Confirmation Order), shall
remain in full force and effect until the Effective Date.
10.13. Revocation, Withdrawal, or Non-Consummation. The Debtor reserves the right to
revoke or withdraw the Plan at any time prior to the Confirmation Date and to file subsequent
plans of reorganization. If the Debtor revokes or withdraws the Plan prior to the Confirmation
Date, or if Confirmation or the Effective Date does not occur , then (a) the Plan shall be null and
void in all respects, (b) any settlement or compromise embodied in the Plan (including the fixing
or limiting to an amount certain any Claim or Class of Claims ), assumption or rejection of
executory contracts or leases effected by the Plan, and any document or agreement executed
pursuant to the Plan shall be deemed null and void , and (c) nothing contained in the Plan, and no
acts taken in preparation for consummation of the Plan, shall (i) constitute or be deemed to
constitute a waiver or release of any Claims against , or any Equity Interests in, the Debtor, or any
Avoidance Actions, Causes of Action or other claims by or against the Debtor, the Creditors
Committee, or any Person or Entity, (ii) prejudice in any manner the rights of the Debtor, the
Creditors Committee, or any Person or Entity in any further proceedings involving the Debtor, or
(iii) constitute an admission of any sort by the Debtor, the Creditors Committee , or any other
Person or Entity.
10.14. Plan Supplement. The Plan Supplement shall be filed with the Bankruptcy Court
at least thirty (30) days prior to date initially set for the Confirmation Hearing or by such later
date as may be established by order of the Bankruptcy Court. To the extent any exhibit or
schedule to the Plan (other than the Class 5 Note Documents and the Corundum Exit Loan
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Documents) is inconsistent with the terms of the Plan, unless otherwise ordered by the
Bankruptcy Court, the non-exhibit portion of the Plan shall control.
10.15. Notices. Any notice, request, or demand required or permitted to be made or
provided under the Plan shall be (a) in writing, (b) served by (i) certified mail, return receipt
requested , (ii) hand delivery, (iii) overnight delivery service, (iv) first class mail, or (v) facsimile
transmission, and (c) deemed to have been duly given or made when actually delivered or, in the
case of notice by facsimile transmission, when received and telephonically confirmed , addressed
as follows:
SHANE CO.
8085 S . Chester Street, Suite 300
Attn: Bill Richins
Telephone: (303) 792-3500
Facsimile : (303) 649-4999
with a copy to the Debtor' s counsel:
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
One Rodney Square
P.Q. Box 636
Attn: Gregg M . Galardi, Esq.
Telephone : (302) 651-3000
Facsimile : (302) 651-3001
And
1700 Lincoln Street, Suite 2400
Denver, CO 80203
Attn: Caroline C. Fuller
Telephone: (303) 830-2400
Facsimile : (303) 830-1033
and a copy to the Creditors Committee ' s counsel:
COHEN TAUBER SPIEVACK & WAGNER, P.C.
New York, NY 10170
Attn: Joseph Vann and Robert Boghosian
Telephone: (212) 586-5800
Facsimile: (212) 428-6737
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and
1550 17th Street, Suite 500
Denver, CO 80202
Attn: Christopher Richardson
Telephone : (303) 892-7420
Facsimile : (303) 893-1379
10.16. Computation of Time. In computing any period of time prescribed or allowed by
the Plan, the provisions of Rule 9006 (a) of the Bankruptcy Rules shall apply.
10.17. Governing Law. Unless a rule of law or procedure is supplied by federal law
(including the Bankruptcy Code and Bankruptcy Rules), the laws of the State of Colorado shall
govern the construction and implementation of the Plan and (except as may be provided
otherwise in any such agreements, documents, or instruments) any agreements, documents, and
instruments executed in connection with the Plan and shall govern corporate governance matters
with respect to the Debtor, in each case without giving effect to the principles of conflicts of law
thereof.
10.18. Binding Nature. From and after entry of the Confirmation Order, the provisions
of the Plan shall be binding on the Debtor and all holders of Claims and Equity Interests whether
or not such persons or entities have accepted the Plan.
10.19. Closing of Case. This case will remain open to administration after confirmation
of the Plan, but subject to the terms and provisions of the Plan, until the Court enters an order,
upon its own motion or motion of a party in interest, in either case after notice and a hearing,
closing the case to further administration. The Debtor shall be discharged upon entry of the
Confirmation Order.
ARTICLE XI
RETENTION OF JURISDICTION
11.1. Scope of Retention ofJurisdiction. Under sections 105(a) and 1142 of the
Bankruptcy Code, and notwithstanding entry of the Confirmation Order and occurrence of the
Effective Date, and except as otherwise ordered by the Bankruptcy Court, the Bankruptcy Court
shall retain exclusive jurisdiction over all matters arising out of, and related to, this Chapter 11
Case and the Plan to the fullest extent permitted by law (provided, however, that notwithstanding
the foregoing, with respect to all civil proceedings arising in or related to the Chapter I 1 Case
and the Plan, the Bankruptcy Court shall have original but not exclusive jurisdiction, in
accordance with section 1334(b) of title 28 of the United States Code), including, among other
things, jurisdiction to:
50
Entered:09/28/10 15:26:45 Page58 of 67
11.1.1.
allow, disallow, determine, liquidate, classify, estimate , or establish
the priority, secured, or unsecured status of any Claim not otherwise Allowed under the Plan
(other than personal injury or wrongful death Claims, unless agreed by the Holder), including the
resolution of any request for payment of any Administrative Claim and the resolution of any
objections to the allowance or priority of Claims;
11.1.2.
hear and determine all applications for compensation and
reimbursement of expenses of Professionals under the Plan or under sections 327, 328, 330, 331,
503 (b), 1103, and 1129(a)(4) of the Bankruptcy Code; provided, however, that from and after the
Effective Date, the payment of the fees and expenses of the retained Professionals of the
Reorganized Debtor and the Plan Committee Fees and Expenses shall be made in the ordinary
course of business and shall not be subject to the approval of the Bankruptcy Court;
11.1.3.
hear and determine all matters with respect to the assumption or
rejection of any executory contract or unexpired lease to which the Debtor is a party or with
respect to which the Debtor may be liable, including, if necessary, the nature or amount of any
required Cure Costs or the liquidation or allowance of any Claims arising therefrom;
11.1.4.
effectuate performance of and payments under the provisions of the
Plan and enforce remedies upon any default under the Plan;
11.1.5.
hear and determine any and all adversary proceedings, motions,
applications, and contested or litigated matters arising out of, under, or related to, the Chapter I 1
Case, the Avoidance Actions, the Causes of Action or the Plan;
11.1.6.
enter such orders as may be necessary or appropriate to execute,
implement, or consummate the provisions of the Plan and all contracts, instruments, releases, and
other agreements or documents created in connection with the Plan, the Disclosure Statement or
the Confirmation Order;
11.1.7.
enter and implement such orders as may be appropriate in the event the
Confirmation Order is for any reason stayed, revoked, modified or vacated;
11.1.8.
hear and determine disputes arising in connection with the
interpretation, implementation, consummation, or enforcement of the Plan, including disputes
arising under agreements, documents, or instruments executed in connection with the Plan;
11.1.9.
consider any amendments to or modifications of the Plan, cure any
defect or omission, or reconcile any inconsistency in any order of the Bankruptcy Court,
including, without limitation, the Confirmation Order;
11.1.10. issue injunctions, enter and implement other orders, or take such other
actions as may be necessary or appropriate to restrain interference by any Person or Entity with
the implementation , consummation, or enforcement of the Plan or the Confirmation Order;
51
Entered:09/28/10 15:26:45 Page59 of 67
11.1.11. enforce, interpret, and determine any disputes arising in connection
with any stipulations, orders, judgments, injunctions, releases, exculpation, indemnifications,
and rulings entered in connection with the Chapter 11 Case (whether or not the Chapter I 1 Case
has been closed);
11.1.12. hear and determine matters concerning state, local and federal taxes in
accordance with sections 346, 505 and 1146 of the Bankruptcy Code (including the expedited
determination of taxes under section 505(b) of the Bankruptcy Code);
11.1.13. except as otherwise limited herein, recover all assets of the Debtor and
property of the Estate, wherever located;
11.1.14. hear and determine all disputes involving the existence , nature, or
scope of the Debtor' s discharge;
11.1.15. hear and determine all disputes involving or in any manner implicating
the exculpation provisions granted under Section 10.12 of the Plan;
11.1.16. hear and determine such other matters as may be provided in the
Confirmation Order or as may be authorized under, or not inconsistent with, provisions of the
Bankruptcy Code; and
11.1.17.
enter a final decree closing the Chapter 11 Case.
11.2. Failure of the Bankruptcy Court to Exercise Jurisdiction. If the Bankruptcy
Court abstains from exercising, or declines to exercise, jurisdiction or is otherwise without
jurisdiction over any matter arising in, arising under, or related to the Chapter I 1 Case, the
provisions of this Article 11 shall have no effect upon and shall not control, prohibit, or limit the
exercise of jurisdiction by any other court having jurisdiction with respect to such matter. The
Court's retention of jurisdiction shall not be deemed to waive the limitation period within which
an action may be brought to revoke Confirmation of the Plan.
ARTICLE XII
CONFIRMATION NOTWITHSTANDING REQUIREMENTS OF 11 U.S.C. 41129(a)(S)
To the extent that any impaired Class rejects the Plan or is deemed to have rejected the
Plan, the Debtor and Creditors Committee shall request Confirmation of the Plan, as it may be
modified from time to time, under section 1129(b) of the Bankruptcy Code. The Debtor reserves
the right to alter, amend, or modify the Plan, the Plan Supplement, or any schedule or exhibit,
including to amend or modify it to satisfy the requirements of section 1129(b) of the Bankruptcy
Code, if necessary, after consultation and with the consent of the Creditors Committee.
52
Entered:09/28/10 15:26:45 Page60 of 67
SHANE CO.
DEBTOR AND DEBTOR IN
POSSESSION
UNSECURED CREDITORS'
COMMITTEE OF SHANE CO.
/s/ Thomas M. Shane
Thomas M. Shane, President
BY: /s/ Milan Mehta
Milan Mehta, Chairman
Disons Gems, Inc.
/s/ Caroline C. Fuller
Caroline C. Fuller, #14403
Wells Fargo Center
1700 Lincoln, Suite 2400
Denver, CO 80203-4524
Telephone: (303) 830-2400
Facsimile: (303) 830-1033
E-mail: [email protected]
Is/ Christopher L. Richardson
Christopher L. Richardson , #13437
1550 Seventeenth Street , Suite 500
Denver, CO 80202
Telephone : (303) 892-9400
Facsimile : (303) 893-1379
Email : [email protected]
COHEN TAUBER SPIEVACK &
WAGNER P.C.
Joseph Vann
Robert A. Boghosian
New York, NY 101070
Telephone : (212) 381-8726
Facsimile : (212) 586-5090
Email : [email protected]
SKADDEN, ARPS, SLATE, MEAGHER &
FLOM LLP
One Rodney Square
P.O. Box 636
Attn: Gregg M. Galardi, Esq.
Telephone: (302) 651-3000
Facsimile : (302) 651-3001
ATTORNEYS FOR SHANE CO.
ATTORNEYS FOR THE OFFICIAL
COMMITTEE OF UNSECURED
CREDITORS
53
Entered:09/28/10 15:26:45 Page61 of 67
Schedule 7.1
Executory Contracts and Unexpired Leases to be Assumed as of Effective Date and Attendant
Cure Costs
Entered:09/28/10 15:26:45 Page62 of 67
SCHEDULE 7.1
SCHEDULE OF EXECUTORY CONTRACTS TO BE ASSUMED
The Company reserves the right to amend Schedule 7.1 at any time prior to the deadline
for submission of the Plan Supplement.
REAL PROPERTY LEASES
Landlord
LHW, LLC
Attn: Lorraine H. Wright
9790 E. Arapahoe
46 Whitehall
Rd'
Greenwood Village
Newport Beach, CA 92660
Lease Description
Location
Lease dated April 15, 2005, as amended by
Cure Costs
$72,263.35
Lease Amendment dated May 22, 2009
CO
RH Shane Plaza Associates, LLC
c/o Rosen Properties
Attn: Wanda Holtz
1715 114 th
Avenue SE, Suite 212
Bellevue, WA 98004
18833 28th Avenue
West Lynnwood ,
Shopping Center Lease dated April 23, 1996,
$14,589.00
as amended by Amendment to Lease Number
WA
I dated as of April 24, 2006 and Lease
Amendment dated as of August 6, 2009
2530 N. Main
Street Walnut
Retail Lease dated December 8 1999, as
amended by Lease Amendment dated July 29,
Creek, CA
2009
M&J Wilkow, Ltd.
Attn: Vivian Fields
180 North Michigan Avenue , Suite
200
Chicago, IL 60601-7489
Modena Investment , LP
& Sunnyvale Holding, LLC
Attn: Henry Lai
14550 Oak Street
Saratoga, CA 95070
21255 Stevens
Creek Blvd.
Cupertino, CA
Shopping Center Lease dated as of February
2, 1998, as amended by First Amendment to
Lease dated as of December 2, 2002, Second
Amendment to Lease dated as of January 18,
$0.00
$15,004.42
2008, Third Amendment dated as of August
6, 2009, and Fourth Amendment to Lease
dated May 24, 2010
Ross D. Stokes
S.I. Real Estate
4077 Canyon View Place
Sandy, UT 84092
Joseph & Patricia Arrighi
40 Atherton Oaks
Novato, CA 94945
7182 S. State Street
Lease Agreement dated as of September 15,
Midvale, Utah
2006
3300 Steve
Reynolds Blvd.
Lease Agreement dated as of April 18, 2005,
as amended by Lease Amendment dated April
Duluth, GA
2, 2009
$8 , 244.84
$8 ,225.79
Temple Properties II, LLC
Attn: Bill Stoops
930 East 66th Street
Indianapolis, IN 46220
Street
8 111 E .
Indianapolis,
ndianapol, IN
Lease Agreement dates as of April 18, 2005,
,as amended by First Amendment to Lease
dated June 18, 2009
$10,053.74
Entered:09/28/10 15:26:45 Page63 of 67
Ganesh Properies, LLC
Attn: Sdnhya & Sivia Yerramilli
4825 Massey Lane
$9,139.77
Fair Oaks, CA 95628
GE Commercial Finance Business
Property
Attn: Kayla A. Awitten
2515 Hurstbourne
Gem Ln .
Louisville, KY
Lease dated April 18, 2005 , as amended by
Lease Amendment dated January 8, 2010
10900 NE 4" Street
Bellevue, WA 98004
CSM Westridge, Inc.
Attn: Brian Averbeck
SDS 12- 1243
P.O. Box 86
Minneapolis, MN 55486
Tamarack Village Shopping Center
c/o Robert Muir Company
Attn: Charlie Peterson
7650 Edinborough Way, Suite 375
Edina, MN 55435
CRT-Kennesaw Georgia, LLC
6204 Ridgemont Drive
Oakland , CA 94619
11300 Wayzata
Blvd ., Suite A
Minnetonka , MN
8404 Tamarack
Village
Woodbury, MN
735 Ernest W .
Barrett Pkwy NW
Shopping Center Lease dated November 19,
$12,729.84
1996, as amended by Addenda dated
November 18, 1996k , September 5, 1997, and
September 19° 2006 , and August 6, 2009
$4,572.46
Lease dated November 21, 1996, as amended
by Lease Amendment.dated June 18, 2009
Lease Agreement dated as of April 14, 2005
$6,550.17
Kennesaw, GA
10855 Haynes Bridge Road
(EPIC)(TGS)(ALLJ) LLC
c/o EpiCity Real Estate Services
10885 Haynes
Attn: Tom Stokes , Jr.
2215 Perimeter Park Drive , Suite 1
Bridge Road
Alpharetta, GA
Lease Agreement dated as of April 18, 2005
Carrere, LLC & KMM&C, LLC
Attn: Bob Pechoultres
2767 Octavia Street
366 N. Sunrise
Avenue
Lease Agreement dated as of April 18, 2005 ,
as amended by Lease Amendment dated July
San Francisco, CA 94123
Roseville, CA
24, 2009
$9,444.43
Atlanta, GA 30341
$10,967.73
Zorich Family Partnership, LLP
Attn: Nick Zorich Sr.
129 3rd Ave., Suite 702
Kirkland, WA 98033
$25,001.10
3006 Mallory Lane
CTJ-BFA Nashville LLG
Nashville, TN
24725 W. Twelve Mile Road,
Lease Agreement dated as of April 18, 2005,
as amended by Lease Amendment dated July
23,2009
Suite 130
Southfield, Ml 48034
Robert P. Ramm Revocable Trust.
The R. H. Johnson Company
Attn: Bob Ramm
221 West 74`^ Terrace
Kansas City, MO 64114
7300 W 135th Bldg
35
Overland Park, KS
Shopping Center Leased dated July 21, 2006
$15,572.10
Entered:09/28/10 15:26:45 Page64 of 67
EXECUTORY CONTRACTS
TBD
Entered:09/28/10 15:26:45 Page65 of 67
Schedule 7.4
Executory Contracts and Unexpired Leases to be Rejected as of Effective Date
TBD
Entered:09/28/10 15:26:45 Page66 of 67
Exhibit 1
Class 5 Note Documents
TBD
Entered:09/28/10 15:26:45 Page67 of 67
Exhibit 2
Corundum Exit Loan Documents
TBD

united states bankruptcy court for the district of

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