<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): August 23, 1995
Dynamic International, Ltd.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Nevada 93-1215401
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
58 Second Avenue, Brooklyn NY 11215
- ----------------------------- -----
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (718) 369-4160
Dynamic Classics, Ltd., 230 Fifth Avenue, New York, NY 10001
(FORMER NAME OR FORMER ADDRESS IF CHANGED SINCE LAST REPORT)
<PAGE> 2
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Pursuant to the Plan (as defined under item 3 of this Report)
Registrant (as defined under item 5 of this Report) will issue an aggregate of
14,880,000 shares of Common Stock (the "Common Stock") to a family trust (the
"Trust") controlled by family members of Mr. Marton Grossman, which will be
holding the Common Stock for the benefit of certain of Mr. Grossman's relatives.
Mr. Grossman is the sole shareholder of MG Holding Corp. ("MGH Corp."). The
Common Stock was issued in satisfaction of a claim by MGH Corp in the amount of
$6,822,529 under the Bankruptcy Code and under the terms of the Plan. As a
result of this transaction, the Trust is the beneficial owner of approximately
93% of the issued and outstanding Common Stock. Mr. Grossman will assume the
position of Chairman and President of Registrant.
See Item 3 for additional disclosures.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
(a) On August 23, 1995 Registrant filed a petition under Chapter 11 of
the Bankruptcy Code in the United States Bankruptcy Court for the Southern
District of New York (the "Court") and an order for relief was simultaneously
entered therewith.
(b) On May 23, 1996, the Court entered an order confirming Registrant's
Second Amended and Modified Plan of Reorganization which was filed with the
Court on February 22, 1996 (as subsequently modified, the "Plan"). Under the
Plan, claims against Registrant were divided into seven classes. Registrant's
largest creditor, MGH Corp., which is wholly-owned by Mr. Marton Grossman, was
the holder of a secured claim in the amount of $6,822,529. MGH Corp.'s claim was
secured by a first lien and security interest on substantially all of
Registrant's assets.
Under the terms of the Plan and at the direction of MGH Corp.,
Registrant will issue to the Trust an aggregate of 14,880,000 shares of Common
Stock in full satisfaction of the secured claim. Certain unsecured creditors
will be issued an aggregate of 800,000 shares of Common Stock on a pro rata
basis (in addition to a cash payment equal to 5% of each such person's allowed
claim). In addition, the prior shareholders of Registrant will be issued an
aggregate of 320,000 shares of Common Stock on a pro rata basis, representing
approximately 18 shares for each 100 shares of Common Stock owned by them. All
previously issued and outstanding shares have been cancelled. As a result of the
consummation of the Plan, the Trust is the beneficial owner of approximately 93%
of the outstanding Common Stock with the balance owned by the Registrant's prior
shareholders and certain previous creditors.
Registrant has also issued to MGH Corp. a promissory note in
the principal amount of $1,205,109 in repayment of certain debtor-
in-possession financing provided by MGH Corp. pursuant to court
order. The note accrues interest at the rate of prime plus one
<PAGE> 3
percent and is payable in 24 equal monthly installments of
principal and interest. The note is secured by all of Registrant's
assets.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANTS.
(a) On June 26, 1996, Registrant terminated its relationship with
Hoberman, Miller & Co., P.C. as its independent accountants ("Hoberman"). During
the period of their engagement from June 30, 1973 until June 26, 1996, there
were no disagreements between Registrant and Hoberman on any matter of
accounting principles or practices, financial statement disclosure, or audit
scope and procedure, which disagreement if not resolved to the satisfaction of
Hoberman would have caused them to make reference to the subject matter of the
disagreement in connection with any report that was to have been, or will be,
prepared for Registrant.
(b) On July 11, 1996 the Board of Directors of Registrant
appointed Moore Stephens, P.C. as its independent accountants,
subject to ratification by Registrant's shareholders.
ITEM 5. OTHER EVENTS.
Effective August 8, 1996, Dynamic Classics, Ltd. ("DCL"), a Delaware
corporation registered under the Securities Exchange Act of 1934, as amended,
merged with and into Dynamic International, Ltd., a newly formed Nevada
corporation ("DIL"), for the sole purpose of changing DCL's state of
incorporation from Delaware to Nevada (the "Merger"). The capital structure and
the balance sheet of the combined entity immediately after the Merger were
substantially the same as those of DCL immediately prior to the Merger. The
Merger had been contemplated under the Plan and therefore, in accordance with
Section 303 of the Delaware General Corporation Law, was consummated without
further stockholders action.
DCL and DIL, which pursuant to the terms of the Merger emerged as the
surviving entity, are collectively referred to in this Report as the Registrant.
<PAGE> 4
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) Financial Statements
Financial Statements will be filed by amendment to this Form 8-K.
(c) Exhibits
1. Registrant's Second Amended and Modified Plan of
Reorganization dated February 22, 1996 (the "Plan")
2. Errata Sheet and Correction Statement with respect to the
Plan dated May 7, 1996
3. Order Confirming the Plan dated May 23, 1996
4. Letter by independent accountants in connection with the
disclosure under item 4 of this Report.
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereto duly authorized.
Date: September 27, 1996
DYNAMIC INTERNATIONAL, LTD.
By: /s/ Marton Grossman
----------------------------
Marton B. Grossman, President
<PAGE> 1
Exhibit 1
ANGEL & FRANKEL, P.C.
Attorneys for Dynamic Classics, Ltd.,
Debtor and Debtor-in-Possession
460 Park Avenue
New York, New York 10022-1906
(212) 752-8000
Joshua J. Angel, Esq. (JA-3288)
Laurence May, Esq. (LM-9714)
Sonya F. Lorge, Esq. (SFL-1529)
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - -x
In re: Chapter 11
DYNAMIC CLASSICS, LTD.,
Case No. 95 B 43690 (PBA)
Debtor.
- - - - - - - - - - - - - - - - - -x
DEBTOR'S SECOND AMENDED AND MODIFIED PLAN OF REORGANIZATION
February 22, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I....................................................................................................... 2
DEFINITIONS AND RULES OF CONSTRUCTION.................................................................. 2
ARTICLE II...................................................................................................... 15
CLASSIFICATION OF CLAIMS AND STOCK INTERESTS........................................................... 15
2.01. Division of Classified Claims............................................... 15
2.02. Allowed Claims and Equity Interests......................................... 16
2.03. Classification.............................................................. 16
2.03.01 Class 1.................................................... 16
2.03.03 Class 3.................................................... 16
2.03.04 Class 4.................................................... 16
2.03.05 Class 5.................................................... 16
2.03.06 Class 6.................................................... 16
2.03.07 Class 7.................................................... 16
ARTICLE III..................................................................................................... 17
IDENTIFICATION OF CLASSES OF CLAIMANTS AND
EQUITY INTERESTS IMPAIRED AND UNIMPAIRED UNDER THE PLAN......................................................... 17
ARTICLE IV...................................................................................................... 18
PROVISIONS FOR TREATMENT OF CLAIMS AND INTERESTS UNDER
THE PLAN...................................................................................... 18
ARTICLE V....................................................................................................... 24
ACCEPTANCE OR REJECTION OF PLAN; EFFECT OF REJECTION BY
CLASS 1 CLAIMANT AND CLASS 5 UNSECURED CREDITORS
AND
CLASS 7 EQUITY INTEREST HOLDERS................................................................................. 24
ARTICLE VI...................................................................................................... 25
MEANS FOR EXECUTION OF THIS PLAN....................................................................... 25
6.01. Plan Implementation......................................................... 25
6.02. Plan Funding................................................................ 25
6.03. Issuance of New Common Stock and
Execution of Related Documents.............................................. 25
6.04. Cancellation of Existing Securities
Instruments and Agreements.................................................. 26
6.05. Setoffs..................................................................... 26
6.06. Releases.................................................................... 26
6.07. Corporate Action............................................................ 27
ARTICLE VII..................................................................................................... 28
PROVISIONS CONCERNING DISTRIBUTIONS.................................................................... 28
7.01. Time and Manner of Distributions Under
the Plan.................................................................... 28
7.02. Fractional Cents............................................................ 30
7.03. Calculation of Distribution Amounts of
New Common Stock............................................................ 30
7.04. Unclaimed Property.......................................................... 30
</TABLE>
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<TABLE>
<S> <C>
7.05. Payment Dates............................................................... 31
7.06. De Minimus Distributions.................................................... 31
ARTICLE VIII.................................................................................................... 32
PROVISIONS CONCERNING DISCHARGE AND PROPERTY........................................................... 32
8.01. Discharge of Claims and Interests........................................... 32
8.02. Vesting of Property in the Reorganized
Debtor...................................................................... 32
ARTICLE IX...................................................................................................... 33
EFFECT OF THE PLAN ON CLAIMS AND EXISTING INTERESTS.................................................... 33
ARTICLE X....................................................................................................... 34
REJECTION AND ASSUMPTION OF EXECUTORY CONTRACTS........................................................ 34
10.01. Assumption of Executory
Contracts/Leases............................................................ 34
10.02. Disputes Regarding License/Lease Cure
Amounts..................................................................... 34
10.03. Rejection of Lease.......................................................... 35
ARTICLE XI...................................................................................................... 36
PROCEDURES FOR RESOLVING DISPUTED CLAIMS............................................................... 36
11.01. Time Limit for Objections to Claims......................................... 36
11.02. Resolution of Disputed Claims............................................... 37
11.03. Payments.................................................................... 37
ARTICLE XII..................................................................................................... 38
CONFIRMATION AND CONSUMMATION.......................................................................... 38
12.01. Conditions to Confirmation.................................................. 38
12.02. Conditions to The Effective Date............................................ 38
ARTICLE XIII.................................................................................................... 39
MISCELLANEOUS.......................................................................................... 39
13.01. Modification Of This Plan................................................... 39
13.02. Revocation and Withdrawal of Plan........................................... 39
13.03. Nonconsensual Confirmation.................................................. 39
13.04. Notices..................................................................... 40
13.05. Notice And Entry Of Confirmation Order...................................... 40
13.06. Post Confirmation Date Service List -
Persons Entitled To Notice.................................................. 41
13.07. Headings.................................................................... 41
13.08. Severability................................................................ 41
13.09. Governing Law............................................................... 41
13.10. Successors and Assigns...................................................... 42
13.11. Reservation of Rights....................................................... 42
13.12. Disbursing Agent............................................................ 42
13.13. Fees and Expenses Post-Effective Date....................................... 42
ARTICLE XIV..................................................................................................... 42
RETENTION OF JURISDICTION.............................................................................. 42
Retention of Jurisdiction............................................................ 42
</TABLE>
<PAGE> 4
ANGEL & FRANKEL, P.C.
Attorneys for Dynamic Classics, Ltd.,
Debtor and Debtor-in-Possession
460 Park Avenue
New York, New York 10022-1906
(212) 752-8000
Joshua J. Angel, Esq. (JA-3288)
Laurence May, Esq. (LM-9714)
Sonya F. Lorge, Esq. (SFL-1529)
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - -x
In re: Chapter 11
DYNAMIC CLASSICS, LTD.,
Case No. 95 B 43690 (PBA)
Debtor.
- - - - - - - - - - - - - - - - - -x
DEBTOR'S SECOND AMENDED AND MODIFIED PLAN OF REORGANIZATION
Dynamic Classics, Ltd., debtor and debtor-in-possession ("Debtor"),
proposes the following second amended and modified plan of reorganization
amending the plan of reorganization previously filed by the Debtor with the
Court on October 30, 1995, the amended plan of reorganization previously filed
by the Debtor with the Court on December 6, 1995, and modifying the second
amended plan of reorganization filed by the Debtor on February 6, 1996 pursuant
to Chapter 11 of Title 11, United States Code, Section 1121(a) (the "Bankruptcy
Code"). (This second amended and modified plan of reorganization is referred to
as the "Plan").
<PAGE> 5
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
For the purposes of this Plan, the following terms shall have the
respective meanings as hereinafter set forth (such meanings to be equally
applicable to the singular and plural forms of the terms defined, unless the
context otherwise requires). Capitalized terms used in this Plan shall at all
times refer to the terms as defined in this Article I. A term used in this Plan
which is not defined herein but is defined in the Bankruptcy Code or the
Bankruptcy Rules shall have the meaning assigned to such term in the Bankruptcy
Code or Rules. Accounting terms, if any, not otherwise defined in this Plan
shall have the meanings assigned to them in accordance with generally accepted
accounting principles currently in effect. The words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Plan as a whole,
including all exhibits and schedules, if any, annexed hereto, as the same may
from time to time be amended or supplemented, and not to any particular article,
section or subdivision contained in this Plan.
1.01. "Administrative Claim" means a claim for any cost or expense
of administration in connection with this Bankruptcy Case of a
kind specified in Sections 503(b) and 502(f) of the Bankruptcy
Code and referred to in Sections 507(a)(1) of the Bankruptcy
Code, including,
<PAGE> 6
without limitation, any actual and necessary costs and
expenses incurred after the Petition Date and up to the
Effective Date of preserving the Estate of the Debtor, any
indebtedness or obligation incurred or assumed by the Debtor,
as debtor-in-possession, in connection with the conduct of its
business or businesses, allowances of compensation for legal
or other services and reimbursement of costs and expenses
under Section 330(a) or 331 of the Bankruptcy Code or
otherwise allowed by the Court, all costs of making
distributions and providing notices and ballots with respect
to the Plan and all fees and charges assessed against the
Estate under Chapter 123, Title 28, United States Code.
1.02. "Affiliate" means an affiliate, as such term is defined
in Section 101(2) of the Bankruptcy Code. MG Holding
Corp. is not an Affiliate nor are any of its affiliates
an Affiliate.
1.03. "Allowed" means a Claim or Equity Interest or portion
thereof: (i) which is scheduled by the Debtor pursuant
to Sections 521(1) and 1106(a)(2) of the Bankruptcy
Code, other than a Claim or Equity Interest which is
scheduled by the Debtor as disputed, contingent,
unliquidated or unknown; or (ii) proof of which has
been filed, pursuant to Section 501(a) of the
Bankruptcy Code, on or before the date designated by
the Court as the last date for the timely filing of
proofs of claim or proofs of interest, and with respect
<PAGE> 7
to which Claim or Interest no objection to the allowance
thereof has been interposed prior to the final date for filing
such objections set forth in an order of the Court; or (iii)
which, after objection thereto, has been allowed, in whole or
in part, by a Final Order; or (iv) which has been allowed
pursuant to a Final Order. Unless otherwise specified in this
Plan, "Allowed Claim" or "Allowed Interest" shall not,
include, for any purpose, interest on the amount of such Claim
or Equity Interest from and after the Filing Date.
1.04. "Allowed Administrative Claim" means all or that portion of
any Administrative Claim that either has been allowed by a
Final Order or has not been objected to within any time period
which might be established by this Plan or by an order of the
Bankruptcy Court.
1.05. "Allowed Priority Claim" means a Priority Claim to the
extent it is or has become an Allowed Claim.
1.06. "Allowed Secured Claim" means a Secured Claim to the
extent it is or has become an Allowed Claim.
1.07. "Allowed Unsecured Claim" means an Unsecured Claim to
the extent it is or has become an Allowed Claim.
Interest accrued after the Petition Date shall not be
part of any Allowed Unsecured Claim.
1.08. "Assets" means all Assets of the Debtor, of any nature
whatsoever, including claims of right and property,
real and personal, tangible and intangible, including
<PAGE> 8
without limitation, all property of the estate provided for
under 11 U.S.C. Section 541 and all property acquired by the
Debtor subsequent to the Petition Date.
1.09. "Bankruptcy Case" means this Chapter 11 reorganization
case commenced by the filing of a voluntary petition by
the Debtor on August 23, 1995.
1.10. "Bankruptcy Code" means Title I of the Bankruptcy
Reform Act of 1978, (11 U.S.C. Sections 101, et. seq.)
as amended.
1.11. "Bankruptcy Court" or "Court" means the United States
District Court for the Southern District of New York,
having jurisdiction over this Bankruptcy Case and to
the extent of any references made pursuant to 28 U.S.C.
Section 157, the United States Bankruptcy Court for the
Southern District of New York.
1.12. "Bankruptcy Rules" means the Federal Rules of
Bankruptcy Procedure and the Local Bankruptcy Rules of the
Bankruptcy Court, together with all amendments and
modifications from time to time made thereto as prescribed
under 28 U.S.C. Section 2075 (1978).
1.13. "Bar Date" means the deadline for filing Claims as fixed by
the Court; provided, however, that if the Court extends the
time for filing any given Claim, the date so set shall be the
Bar Date only with respect to such given Claim.
<PAGE> 9
1.14. "Business Day" means any day other than a Saturday,
Sunday or legal holiday (as such term is defined in
Bankruptcy Rule 9006).
1.15. "Cash" means cash and cash equivalents, including but
not limited to, bank deposits, checks and other similar
items.
1.16. "Chapter 11" means Chapter 11 of the Bankruptcy Code.
1.17. "Claim" means a claim against the Debtor, whether or
not asserted, contingent, or unliquidated, as defined in
Section 101(5) of the Bankruptcy Code, and shall include, but
is not limited to, any Claim against the Debtor for
pre-petition interest, post-petition interest or contingent
interest, any contingent Claim, any Claim against the Debtor
arising out of the rejection of any Executory Contract, any
Claim arising from the recovery of property under Section 550
or 553 of the Bankruptcy Code, and any Claim for a tax whether
or not the Claim is entitled to priority under Section 507(a)
of the Bankruptcy Code.
1.18. "Claimant" means the holder of a Claim.
1.19. "Class" means a category of holders of Allowed Claims
or Allowed Equity Interests as provided for in Article
II of this Plan.
1.20. "Confirmation" means entry of an order by the Court
confirming this Plan in accordance with Chapter 11.
1.21. "Confirmation Date" means the date upon which the Court
enters the Confirmation Order.
<PAGE> 10
1.22. "Confirmation Hearing" means the Court hearing held
with respect to the Confirmation of this Plan.
1.23. "Confirmation Order" means the order to be entered by
the Court confirming this Plan in accordance with
Chapter 11.
1.24. "Consummation" or "Consummation Date" means the date upon
which all distributions proposed by the Plan shall have been
made, provided that substantial consummation of the Plan shall
be deemed to have occurred on the Effective Date.
1.25. "Convenience Claim" means any Allowed Unsecured Claim
of any Claimant which when aggregated with all such
other Claims of such Claimant either (a) total $25 or
less or (b) are reduced by election of such Claimant to
$25 in the aggregate. An election to have a Claim
treated as a Convenience Claim shall be made by
execution of a ballot in the space provided for such
election.
1.26. "Creditor" means any Entity that has a Claim against
the Debtor.
1.27. "Debtor" means Dynamic Classics Ltd. which filed a
voluntary petition for reorganization under Chapter 11
of the Bankruptcy Code on August 23, 1995.
1.28. "Deficiency Amount" shall mean that portion of a Claim
against the Debtor equal to the amount by which the
Claim exceeds the sum of (a) any setoff rights of the
holder of such Claim against the Debtor under Sections
<PAGE> 11
506 and 553 of the Bankruptcy Code; plus (b) the net proceeds
realized from the disposition of any collateral securing such
Claim or, if such collateral is not liquidated to Cash, the
value of the interest of the holder of the Claim in the
Debtor's interest in the collateral securing such Claim, as
determined under Section 506 of the Bankruptcy Code; provided,
however, that if the holder of such Claim makes the election
provided in Section 1111(b) of the Bankruptcy Code, there
shall be no Deficiency Amount in respect of such Claim.
1.29. "Disallowed Claim" means any Claim or portion thereof
that has been disallowed by the Court pursuant to a
Final Order.
1.30. "Disallowed Equity Interest" means any Equity Interest
or portion thereof that has been disallowed by the
Court pursuant to a Final Order.
1.31. "Disbursing Agent" shall mean the Debtor in connection
with its obligation to make the distributions
contemplated under this Plan.
1.32. "Disclosure Statement" means the Disclosure Statement,
as modified or amended, that (i) relates to this Plan
and (ii) is approved by the Bankruptcy Court under
Section 1125 of the Bankruptcy Code.
1.33. "Disputed Claim" means (i) a Claim or portion of a
Claim (other than an Allowed Claim) which is scheduled
by the Debtor as disputed, contingent, unliquidated or
<PAGE> 12
unknown, or (ii) a Claim which has been filed pursuant to
Section 501(a) of the Bankruptcy Code as unliquidated,
contingent or unknown, or (iii) a Claim which has been filed
pursuant to Section 501(a) of the Bankruptcy Code and as to
which an objection to the allowance thereof has been
interposed within the time limitation fixed by the Bankruptcy
Code, by an order of the Court, or by this Plan, which
objection has not been determined, in whole or in part, by a
Final Order.
1.34. "Distribution" shall mean a payment of cash, notes,
stock or other considerations to be made under this
Plan.
1.35. "Distribution Date" means the Effective Date except with
respect to Disputed Claims, in which case, Distribution Date
shall be a date which is thirty (30) days after the date a
Final Order has been entered with respect to the disposition
of the particular Disputed Claim.
1.36. "Effective Date" means the fifteenth Business Day after the
day the Confirmation Order becomes a Final Order or such later
date as is chosen by the Debtor, but in no event more than 45
business days after the date the Confirmation Order becomes a
Final Order.
1.37. "Entity" shall have the meaning set forth in Section
101(15) of the Bankruptcy Code.
1.38. "Equity Interest" means any interest in the Debtor
represented by Existing Common Stock of the Debtor.
<PAGE> 13
1.39. "Equity Interest Holder" means the beneficial holder of
an Equity Interest.
1.40. "Estate" means the estate created in this Bankruptcy
Case pursuant to Section 541 of the Bankruptcy Code.
1.41. "Executory Contracts" means unexpired leases and
executory contracts within the meaning of Section 365
of the Bankruptcy Code.
1.42. "Existing Common Stock" means the issued and
outstanding common stock of the Debtor and all
warrants, options or contract rights to purchase or
receive such shares at any time.
1.43. "Final Order" means an order or judgment of a court,
the implementation or operation or effect of which has
not been reversed, stayed, modified or amended and as
to which order or judgment (or any revision,
modification or amendment thereof) the time to appeal
or seek a writ of certiorari has expired and as to
which no appeal or petition for certiorari has been
taken or is pending.
1.44. "Insider" means any person who is an insider within the
meaning of Section 101(31) of the Bankruptcy Code and
shall not include MG Holding Corp. or any of its
Affiliates.
1.45. "Insured Personal Injury Claims" means those Claims,
whether Allowed or not, for personal injury and
property damage arising in tort, including but not
<PAGE> 14
limited to, Claims based upon legal theories of negligence,
product liability, strict liability, etc., for which the
Debtor is insured under applicable insurance policies but does
not include Settled Personal Injury Claims.
1.46. "Lancer" means Lancer Products, Inc., a wholly owned
subsidiary of the Debtor.
1.47. "License Agreements" mean those executory contracts pursuant
to which the Debtor has been granted a license to sell,
distribute and/or manufacture merchandise by the holder of a
trademark, tradename, service mark, patent or copyright.
1.48. "License/Lease Cure Amounts" mean the amounts set forth
on Exhibit 1 to this Plan to be paid in full
satisfaction and cure of all arrearages with regard to
the respective License Agreement or unexpired Lease of
nonresidential real property to be assumed pursuant to
this Plan, or such other amount as may otherwise be
agreed to between the Debtor and a respective licensor
or lessor or as may be determined by the Court in the
event of a dispute which has been timely raised as
provided for under Article X of this Plan.
1.49. " MG Claim" means the Allowed Claim held by MG Holding
Corp. assigned to it by Citibank N.A., on August 22,
1995, in the approximate amount of $6,822,529.00 as of
August 11, 1995 and secured by a duly perfected first
<PAGE> 15
lien and security interest substantially of the
Debtor's property.
1.50. "New Common Stock" means the common stock of Dynamic
which shall be authorized and issued in connection with
this Plan.
1.51. "Person" means a person as defined in Section 101(41)
of the Bankruptcy Code.
1.52. "Petition Date" means August 23, 1995, the date on
which a voluntary petition was filed by the Debtor for
reorganization under Chapter 11.
1.53. "Plan" means this Chapter 11 Plan of Reorganization as
modified, amended or restated from time to time.
1.54. "Priority Claims" means Claims entitled to priority
under Section 507 of the Bankruptcy Code other than an
Administrative Claim or a Tax Claim.
1.55. "Professional Person" shall have the meaning set forth
in Section 327(a) of the Bankruptcy Code.
1.56. "Pro-Rata" or "Pro-Rata Share" means proportionately,
so that the ratio of the amount of the Distribution
made on account of a particular Allowed Claim to the
Distributions made on account of all Allowed Claims of
the Class in which the particular Allowed Claim is
included is the same as the ratio of the amount of such
particular Allowed Claim to the total amount of Allowed
Claims of the Class in which such Allowed Claim is
included.
<PAGE> 16
1.57. "Record Date" means the last date fixed pursuant to a Final
Order of the Bankruptcy Court with respect to Equity Interest
Holders for the purpose of voting with respect to this Plan.
By Order dated December 19, 1995 the Court fixed January 8,
1996 as the Record Date.
1.58. "Reorganized Dynamic" shall mean Dynamic Classics Ltd.
as it is constituted following the Effective Date of
this Plan.
1.59. "Secured Claim" means all or that portion of any Claim,
together with such interest (including, where
permitted by law interest accrued on and after the
Petition Date), fees, costs and charges as may be
allowed by such agreement or by the Court under Section
506(b) of the Bankruptcy Code, that is secured by a
valid, perfected lien to the extent of the value of the
interest of the holder of such Claim in such property
of the Debtor, as determined by agreement between the
Debtor and the holder of such Secured Claim or by the
Court by a Final Order pursuant to Section 506(a) of
the Bankruptcy Code.
1.60. "Settled Personal Injury Claims" means any Claim against the
Debtor which arises out of the Debtor's failure to pay its
portion of any monies due under a written settlement
agreement, executed prior to the Filing Date, settling what
would otherwise be an
<PAGE> 17
Insured Personal Injury Claim. Settled Personal Injury
Claims shall be Class 5 Unsecured Claims.
1.61. "SIR Claim" means any Claim arising out of any
deductible or "self-insured retention" provisions of
the following pre-petition contracts of insurance
issued by the National Union Fire Insurance Co:
GLA4291764; R/GLA4291764; R/GLA5903074; GL5905300RA;
GL5905373RA; and R/GL5907016RA. The SIR Claim shall be
classified as a Class 5 Claim in an amount as may be
determined by the Court pursuant to an application to
estimate the Claim or as may be otherwise agreed to by
the holder of the Claim, the Debtor and the Creditors'
Committee.
1.62. "Tax Claim" means a Claim that is entitled to priority
under section 507(a)(8) of the Bankruptcy Code but
excluding all other Priority Claims.
1.63. "Unclaimed Property" means any New Common Stock, Cash or other
consideration to be distributed under the Plan (together with
any interest earned thereon) that is unclaimed within three
(3) months after such is distributed, and shall include:
(i) property distributed (and the funds
represented thereby) that has been returned as
undeliverable;
(ii) funds for checks that have not been
paid or negotiated; and
<PAGE> 18
(iii) property that was not mailed or delivered because
of the absence of a proper address to which to mail or deliver
the same.
1.64. "Unsecured Claim" means any Claim, other than the MG Claim, a
Priority Claim, a Tax Claim, a Secured Claim, a Convenience Claim
and Insured Personal Injury Claim or an Administrative Claim.
ARTICLE II
CLASSIFICATION OF CLAIMS AND STOCK INTERESTS
2.01. Division of Classified Claims. An Allowed Claim is in a particular
Class only to the extent such Claim qualifies within the description
of that Class and is in a different Class to the extent that the
remainder of the Claim qualifies within the description of the
different Class.
2.02. Allowed Claims and Equity Interests. A Claim or Equity Interest is
in a particular Class only to the extent the Claim or Equity
Interest is an Allowed Claim or Allowed Equity Interest as defined
herein and has not been paid or otherwise satisfied prior to the
Effective Date.
2.03. Classification. Claims against and Equity Interests in the Debtor,
excluding Administrative Claims and Tax Claims, are divided into the
following Classes:
2.03.01 Class 1 shall consist of:
The MG Claim.
<PAGE> 19
2.03.02 Class 2 shall consist of:
All Allowed Secured Claims, except the MG Claim.
2.03.03 Class 3 shall consist of:
All Priority Claims.
2.03.04 Class 4 shall consist of:
All Allowed Convenience Claims.
2.03.05 Class 5 shall consist of:
All Allowed Unsecured Claims.
2.03.06 Class 6 shall consist of:
All Insured Personal Injury Claims.
2.03.07 Class 7 shall consist of:
All Allowed Equity Interests.
ARTICLE III
IDENTIFICATION OF CLASSES OF CLAIMANTS AND
EQUITY INTERESTS IMPAIRED AND UNIMPAIRED UNDER THE PLAN
3.01. Allowed Secured Claims (Class 2), Allowed Priority Claims (Class 3),
Allowed Convenience Claims (Class 4), and Insured Personal Injury
Claims (Class 6) are not impaired under this Plan and therefore will
not be voting on this Plan.
3.02. The MG Claim (Class 1), Allowed Unsecured Claims (Class 5) and
Allowed Equity Interests (Class 7) are impaired under this Plan.
3.03. In the event of a controversy as to whether any Claimant or Class of
Claimants or holder of an Equity Interest is
<PAGE> 20
impaired under this Plan, the Court shall, after notice and a
hearing, determine such controversy.
3.04. The Debtor shall provide the Class 1 Claimant, all Class 5 Claimants
and Class 7 Holders of Equity Interests with a form of ballot
approved by the Court to be used in casting a vote on this Plan. The
ballot shall designate that such ballot is for a Class 1 or Class 5
Claimant or for a holder of an Equity Interest.
ARTICLE IV
PROVISIONS FOR TREATMENT OF CLAIMS AND INTERESTS UNDER THE PLAN
4.01. Allowed Administrative Claims and Allowed Tax Claims, are not
classified under this Plan pursuant to Section 1123(a) of the
Bankruptcy Code.
4.01.01 All Administrative Claims shall be paid by the Debtor in full
on the Effective Date, or as soon as practicable thereafter,
in cash, or on such other terms as may be agreed upon by the
holder of such Allowed Administrative Claim except that
Administrative Claims incurred by the Debtor in the ordinary
course of business shall be paid in accordance with ordinary
business terms.
4.01.02 All Allowed Tax Claims, other than such Allowed Tax Claim or
portion thereof which, by its express terms, is not due or
payable by the Effective Date, shall be paid in deferred cash
payments of a value
<PAGE> 21
as of the Effective Date equal to the amount of such Allowed
Tax Claim payable annually over a period not exceeding six (6)
years from the date of assessment of such claim if an
assessment has been made prior to the Filing Date (and within
six (6) years of the Effective Date if no assessment has been
made prior to the Filing Date), or as such Claimant and the
Debtor may otherwise agree, and, in such event, interest shall
be paid on the unpaid portion of such Allowed Tax Claim at the
rate set forth in the applicable statute upon which such Claim
is based or such rate as may be determined by the Court upon a
motion filed by the Debtor. All Allowed Tax Claims that by
their terms become due and payable after the Effective Date
shall be paid when due. All payments on Allowed Tax Claims
shall and must be applied under any and all circumstances by
such Claimants: (a) first, in full, to and against the
"penalty" portion of such Claim which may properly and legally
be deemed and construed to be or constitute a personal
fiduciary liability of any and/or all of the Debtor's officers
or principals, and (b) next, only after such actual and/or
potential fiduciary liability has been paid in full, as
desired by such Claimants and/or as is otherwise directed
under any applicable law.
<PAGE> 22
4.02.01 Allowed MG Claim (Class 1). (a) The Allowed MG Claim shall be deemed
Allowed in the amount set forth in the proof of claim filed by the
holder thereof or if no proof of claim is filed, then in the amount
of $6,822,529.00. In consideration for the indebtedness owed with
respect to this Claim, the present holder of the MG Claim, MG
Holding Corp. ("MG"), shall receive 95%, equal to 15,200,000, of the
shares of New Common Stock to be issued in Reorganized Dynamic on
the Effective Date. Of this amount, MG has agreed to permit the
Debtor to allocate 2%, or 320,000 shares for distribution to Class 7
Equity Interest Holders, on a pro rate basis. After such allocation,
MG shall receive 14,880,000 shares or 93% of the New Common Stock.
(b) MG's Administrative Claim. In consideration of all sums owed to
MG for any advances, loans and/or other obligations incurred by the
Debtor and made pursuant to Court approved debtor-in-possession
financing, (except for sums owed for the purchase of New Inventory,
as defined in the Ratification and Amendment Agreement, a copy of
which is Exhibit F to the Disclosure Statement), the Debtor will
execute a secured promissory note substantially in the form of the
note attached as Exhibit B to the Disclosure Statement (the "New
Note") which shall bear interest at the Citibank Prime Rate plus one
(1%) percent. The New Note shall be payable in 24 equal monthly
installments of principal and interest. The
<PAGE> 23
principal amount owed shall be determined as of the Effective Date.
The New Note shall be secured by a first priority lien on all of
Reorganized Dynamic's Assets, pursuant to the terms of a Security
Agreement to be executed, on the Effective Date, substantially in
the form annexed as Exhibit C to the Disclosure Statement. All
amounts owed to MG which, pursuant to section 6.3 of the
Ratification and Amendment Agreement, first remain due on the
Effective Date and which are owed for purchases of New Inventory
shall be paid in accordance with the terms of that section of said
agreement or on such other terms more favorable to the Debtor as MG
may, in its sole and exclusive discretion, permit.
4.02.02 Allowed Secured Claims (Class 2). On the Effective Date, or as soon
as practicable thereafter, at the Debtor's option, each Allowed
Secured Claim shall either : (1) be paid in full; or (2) receive the
collateral securing the Claim which collateral shall be abandoned to
a Claimant in full and complete satisfaction of its Secured Claim.
In the event the Court shall, by a Final Order, determine that there
is a Deficiency Amount on account of the Debtor's surrender of the
Claimant's collateral, the Deficiency Amount shall be treated as a
Class 5 Unsecured Claim.
4.02.03 Allowed Priority Claims (Class 3). Each holder of an Allowed
Priority Claim shall be paid in full in cash on the Effective Date,
or as soon as practicable
<PAGE> 24
thereafter, unless such holder shall agree to a different treatment.
4.02.04 Allowed Convenience Claims (Class 4). Each holder of an Allowed
Convenience Claim shall be paid in Cash in the amount of its Allowed
Class 4 Claim on the Effective Date, or as soon as practicable
thereafter.
4.02.05 Allowed Unsecured Claims (Class 5). (a) Each holder of an Allowed
Class 5 Claim shall receive Cash equal to 5% of its Allowed Claim
except as might otherwise be reduced as explained below. In
addition, each holder of an Allowed Unsecured Claim shall receive
its pro rata share of 5% of the New Common Stock. Alternatively, the
holder of an Allowed Unsecured Claim may elect to be treated as a
Class 4 Claimant. Cash distributions to Class 5 Claimants shall
equal 5% of the Allowed amount of the Class 5 Claim, except that the
aggregate amount of Cash, to be distributed to Class 5 Claimants
shall not, exceed $450,000 (the "Aggregate Limit"). In the event
that Allowed Unsecured Claims entitled to receive distributions
under the Plan exceed $9,000,000 the Cash to be distributed to each
claimant shall be reduced Pro Rata.
Each holder of an Allowed Class 5 Claim shall also receive its Pro
Rata share of 960,000 shares of New Common Stock in satisfaction of
its Allowed Claim.
4.02.06 Insured Personal Injury Claims (Class 6). Holders of Insured
Personal Injury Claims shall retain unaltered,
<PAGE> 25
the legal, equitable and contractual rights, if any, they have or
might have to assert their Claims as against the Debtor's insurance
policies, but shall have no recourse as against the Debtor,
Reorganized Dynamic or the Assets.
4.02.07 Equity Interests Holders (Class 7). (a) On the Effective Date or as
soon thereafter as is practical, Equity Interest Holders shall
receive, Pro Rata, 2%, representing 320,000 shares, of New Common
Stock to be issued under the Plan, or approximately 18 shares of New
Common Stock for each 100 shares of Existing Common Stock.
Fractional shares of New Common Stock shall not be issued, and in
such case, the amount of New Common Stock to be received by a holder
shall be rounded up to the nearest whole share. As of the Effective
Date, Existing Common Stock shall be canceled automatically in
accordance with the terms of this Plan and appropriate instructions
shall be given to any transfer agent for the Debtor and/or
appropriate depository institutions. If required by any transfer
agent or depository institution, a holder of Existing Common Stock
may be required to tender certificates for Existing Common Stock
prior to receiving a certificate for New Common Stock.
<PAGE> 26
ARTICLE V
ACCEPTANCE OR REJECTION OF PLAN; EFFECT OF REJECTION BY CLASS 1
CLAIMANT AND CLASS 5 UNSECURED CREDITORS AND
CLASS 7 EQUITY INTEREST HOLDERS.
5.01. Classes 1, 5 and 7 shall be entitled to vote to accept or reject
this Plan.
5.02. Class 1 shall have accepted the Plan if the Class 1 Claimant votes
to accept the Plan on or before date set by the Court as the last
day to vote on the Plan.
5.03. Class 5 shall have accepted the Plan if the Plan is accepted by the
holders of (a) at least two-thirds in dollar amount and (b) more
than one-half in number of the Allowed Unsecured Claims that have
voted on the Plan on or before the date set by the Court as the last
day to vote on the Plan.
5.04. Class 7 shall have accepted the Plan if the Plan is accepted by
holders of at least two-thirds in amount of Allowed Equity Interests
of such Class that have voted on the Plan on or before the date set
by the Court as the last date to vote on the Plan.
5.05. In the event that any Class entitled to vote fails to accept the
Plan in accordance with Section 1129(a) of the Bankruptcy Code, the
Debtor reserves the rights to amend the Plan or seek to confirm the
Plan pursuant to section 1129(b) of the Bankruptcy Code.
<PAGE> 27
ARTICLE VI
MEANS FOR EXECUTION OF THIS PLAN
6.01. Plan Implementation. This Plan is to be implemented in a manner
consistent with Section 1123 of the Bankruptcy Code.
6.02. Plan Funding. On the Confirmation Date or such other date as maybe
provided in any order approving the Disclosure Statement or other
order of the Court, the Debtor shall create a Confirmation Fund,
which shall be the source of the Cash Payments to be made under this
Plan on the Effective Date to Administrative Claimants, Tax
Claimants, Secured Claimants, Priority Claimants, Unsecured
Claimants and Convenience Claimants. The Debtor as Disbursing Agent
shall be responsible for distribution of the proceeds of the
Confirmation Fund in accordance with the terms of the Plan. Monies
for the Confirmation Fund shall be provided either from the Debtor's
operations or from loans by MG.
6.03. Issuance of New Common Stock and Execution of Related Documents. On
the Effective Date, or as soon thereafter as is practicable,
Reorganized Dynamic shall (1) issue for distribution in accordance
with the provision of Article IV hereof the New Common Stock; and
(2) execute all documents required, contemplated or necessary for
implementation of the provisions of the Plan. On the Effective Date
each of such documents, agreements and
<PAGE> 28
instruments shall be deemed to become effective simultaneously.
6.04. Cancellation of Existing Securities Instruments and Agreements. On
the Effective Date except as otherwise provided herein, all
securities, all instruments and agreements governing any Claims or
instruments and agreements governing any Claim or Interests impaired
hereby shall be deemed canceled and terminated.
6.05. Setoffs. The Debtor may, but shall not be required to, set off
against any Claim and the payments to be made pursuant to the Plan
in respect of such Claim, any Claims of any nature whatsoever which
the Debtor may have against the holder of such Claim, but neither
the failure to do so nor the allowance of any Claim hereunder shall
constitute a waiver or release of any such claim the Debtor may have
against such holder.
6.06. Releases. On the Effective Date, the Debtor shall be deemed to have
released all holders of Claims and Equity Interests impaired under
the Plan of all claims for preferences and/or fraudulent transfers.
Nothing contained herein, however, shall be construed as releasing
any insurance company of its obligations under any policy of
insurance executed with the Debtor or issued for the Debtor.
6.07. Corporate Action. Upon entry of the Confirmation Order by the Clerk
of the Bankruptcy Court, all actions
<PAGE> 29
contemplated by the Plan shall be authorized and approved in all
respects (subject to the provisions of the Plan), including without
limitation the following: (i) the adoption and filing of any
amendments to the Debtor's Certificate of Incorporation, (ii) the
issuance by Reorganized Dynamic of New Common Stock as provided
herein, and (iii) the execution, delivery, and performance of all
agreements required, contemplated or necessary to implement the
Plan. The issuance of securities pursuant to the Plan, the election
and/or appointment of directors and officers pursuant to the Plan,
and the other matters provided for under the Plan involving the
corporate structure of Reorganized Dynamic (including any corporate
action required in connection with the Plan) shall be deemed to have
occurred and shall be in effect pursuant to Section 303 of the
Delaware General Corporation Law and the Bankruptcy Code, without
any requirement of further action by the shareholders or directors
of the Debtor or Reorganized Dynamic. On the Effective Date, the
appropriate officers and directors of Reorganized Dynamic are
authorized and directed to execute and deliver the agreements,
documents and instruments contemplated by the Plan in the name of
and on behalf of Reorganized Dynamic. Pursuant to Section 303 of the
Delaware General Corporation Law, actions taken pursuant to a
confirmed plan of reorganization of a Delaware Corporation have the
same effect as if taken
<PAGE> 30
by unanimous action of the directors and shareholders of such
corporation.
ARTICLE VII
PROVISIONS CONCERNING DISTRIBUTIONS
7.01. Time and Manner of Distributions Under the Plan.
7.01.01 On the Effective Date, or as soon as is practicable
thereafter, the Disbursing Agent or any transfer or other
agent appointed by the Disbursing Agent to make distribution
under the Plan, shall distribute the New Common Stock to the
holders of Allowed Class 1 and Class 5 Claims and to holders
of Class 7 interest holders.
7.01.02 On the Effective Date, or as soon as is practicable
thereafter, the Disbursing Agent shall pay Allowed Priority
Claims, Allowed Convenience Claims, Allowed Unsecured Claims
and the first payment, if any, on Allowed Tax Claims from the
Confirmation Fund.
7.01.03 Except as otherwise provided in Article IV, on the Effective
Date, or as soon as is practicable thereafter, the Debtor
shall pay Allowed Administrative Claims.
7.01.04 To the extent a Claim or Interest is a Disputed Claim or a
Disputed Interest, distributions allocable thereto shall not
be made to the holder
<PAGE> 31
of such Claim or Interest but shall be held in a Disputed
Claim Account, if the distribution would have been Cash, or in
treasury stock, if the distribution would have been New Common
Stock. When a Disputed Claim or Interest, or any portion
thereof, becomes an Allowed Claim, the Disbursing Agent shall
cause a distribution to be made to the holder of such Allowed
Claim or Interest in accordance with the Plan but not earlier
than the Distribution Date.
7.01.05 Termination of Fund. The Confirmation Fund shall terminate on
the Effective Date. If a Priority Claim, Tax Claim,
Administrative Claim, or a Convenience Claim is a Disputed
Claim, then a distribution allowable thereto shall be
transferred from the Confirmation Fund to a Disputed Claim
Account. All Allowed Tax Claim payments after the first
payment, (which shall be made from the Confirmation Fund),
shall be made by Reorganized Dynamic and shall be a liability
of Reorganized Dynamic.
7.02. Fractional Cents. Any other provision of this Plan to the contrary
notwithstanding, no payments of fractions of cents will be made.
Whenever any payment of a fraction of a cent would otherwise be
called for, the actual payment shall reflect a rounding of such
fraction to the nearest whole cent (up or down).
<PAGE> 32
7.03. Calculation of Distribution Amounts of New Common Stock. Any other
provision of this Plan to the contrary notwithstanding (i) no
fractional shares of New Common Stock shall be issued or
distributed, and (ii) no cash will be paid nor other Distribution
made in lieu of whole or fractional shares not issued or distributed
because of the provisions of this Section 7.03.
7.04. Unclaimed Property. Except as otherwise provided herein, in the
event and at such time as any distribution under this Plan becomes
Unclaimed Property, then the Entity to which such distribution was
to have been made shall forfeit all rights thereto, and thereafter
the Claim or Interest in respect of which such distribution was to
have been made shall be treated as a Disallowed Claim or Interest
not subject to Section 502(j) of the Bankruptcy Code. In this
regard, distributions to Claimants or holders of interests entitled
thereto shall be sent to their last known addresses set forth on a
proof of claim or Interest filed with the Court or, if no proof of
claim or Interest is filed, on the schedules filed by the Debtor, or
as set forth in the most recently available records of the Debtor's
transfer agent or to such other address as may be requested in
writing on or before the Effective Date by a Claimant or holder of
an interest. Any distributions of stock to holders in Class 5 or 7
which are returned under this Article shall be held by Reorganized
Dynamic as treasury stock.
<PAGE> 33
7.05. Payment Dates. Whenever any Distribution to be made under this Plan
shall be due on a day other than a Business Day, such payment or
distribution shall instead be made, without interest, on the next
Business Day.
7.06. De Minimus Distributions. No cash payment of less than $2 shall be
made to any holder of a Claim unless a request therefor is made in
writing by such holder to the Debtor.
ARTICLE VIII
PROVISIONS CONCERNING DISCHARGE AND PROPERTY
8.01. Discharge of Claims and Interests. The distributions and rights
afforded in this Plan shall be in exchange for, and in complete
satisfaction, discharge and release of, all Claims and Interests of
any nature whatsoever, incurred prior to the Effective Date,
including any interest accrued thereon from and after the Petition
Date, against the Debtor, its Estate and any of its assets. Except
as otherwise provided in this Plan, upon the Effective Date, all
such Claims shall be discharged in accordance with Sections 105, 524
and 1141 of the Bankruptcy Code.
8.02. Vesting of Property in the Reorganized Debtor. Except as may
otherwise be provided by this Plan, upon the Effective Date, and
subject to the occurrence of the Effective Date, title to all Assets
dealt with by this
<PAGE> 34
Plan shall pass to Reorganized Dynamic free and clear of all Claims
and Equity Interests, in accordance with Section 1141 of the
Bankruptcy Code.
ARTICLE IX
EFFECT OF THE PLAN ON CLAIMS AND EXISTING INTERESTS
9.01. Injunction. In implementing the discharge provided in Section 8.01
hereof, except as otherwise expressly provided in this Plan, the
Confirmation Order shall provide, among other things, that all
Entities who have held, hold or may hold Claims against the Debtor
are permanently enjoined on and after the Effective Date: (i) from
commencing or continuing in any manner, directly or indirectly, any
action or other proceeding of any kind with respect to any such
Claim against the Debtor or the property of the Debtor with respect
to any such Claim, (ii) from the enforcement, attachment, collection
or recovery by any manner or means, directly or indirectly, of any
judgment, award, decree, or order against the Debtor or the property
of the Debtor with respect to any such Claim, (iii) from creating,
perfecting or enforcing, directly or indirectly, any encumbrance of
any kind against the Debtor, or against the property of the Debtor,
with respect to any such Claim, (iv) from asserting, directly or
indirectly, any set-off, right of subrogation, or recoupment of any
kind against any
<PAGE> 35
obligation due the Debtor, or against the property of the Debtor,
with respect to any such Claim, and (v) from any act, in any manner,
in any place whatsoever, that does not conform to or comply with the
provisions of this Plan relating to any Claim. Nothing contained in
this Plan including this Section 9.01 shall (a) prohibit the holder
of a timely filed Claim to which the Debtor has timely filed an
objection from litigating its right to seek to have such Claim
declared an Allowed Claim, or (b) enjoin or prohibit the enforcement
by any Claimant of any of the obligations of the Debtor under this
Plan.
ARTICLE X
REJECTION AND ASSUMPTION OF EXECUTORY CONTRACTS
10.01. Assumption of Executory Contracts/Leases. Effective on
the Effective Date, the Debtor hereby assumes the executory
contracts and unexpired leases listed on Exhibit "1" to this Plan;
provided, however, that the Debtor reserves the right to file an
application(s) to reject any executory contract or unexpired lease
appearing on Exhibit "1" to this Plan at any time up to and
including the Confirmation Date. In the event that a licensor or the
holder of a trademark has been granted options or warrants with
regard to the Debtor's stock and the Debtor seeks to assume that
license or trademark agreement, the Debtor will move to assume that
license or trademark in a separate motion to the
<PAGE> 36
Court in which the Debtor will specify that outstanding warrants and
options to purchase stock are being cancelled pursuant to this Plan.
10.02. Disputes Regarding License/Lease Cure Amounts. Within thirty (30)
days after the Confirmation Date, the Debtor shall pay the first of
24 equally monthly installments for the License/Lease Cure Amounts
to the licensors or Lessors under the executory contracts/unexpired
leases listed on Exhibit "1" to this Plan to be assumed pursuant to
this Plan, unless a lessor or licensor under an executory contract/
unexpired lease to be assumed pursuant to this Plan, which disputes
its respective License/Lease Cure Amount, has filed with the Court
and has served counsel to the Debtor (at the address set forth
below) with an objection entitled "Notice of License/Lease Cure
Claim" setting forth in reasonable detail the amount and basis for
its dispute of the Debtor's proposed License/Lease Cure Amount;
provided, however, that the Notice of License/Lease Cure Claim must
be filed with the Court and received by counsel for the Debtor at
the address set forth below, not later than twenty (20) days
following the Confirmation Date. Failure to timely file and serve
its objection shall be an absolute bar and injunction against any
entity's right to object to the License/Lease Cure Amount or to seek
payment of any sums greater than the License/Lease Cure Amount. If
<PAGE> 37
the Debtor and the lessor/licensor disputing the proposed
License/Lease Cure Amount are unable to reach a resolution of such
dispute, such dispute shall be submitted to the Court for
resolution.
10.03. Rejection of Lease. All executory contracts and unexpired leases
that are not expressly assumed pursuant to section 10.01 above, or
which were subsequently rejected, shall be rejected effective on the
Confirmation Date. Entry of the Confirmation Order by the Clerk of
the Bankruptcy Court shall constitute approval of such rejections
pursuant to Section 365 of the Bankruptcy Code.
10.04. Until fixed by order of the Court, the Claims resulting from the
rejections described above in this section shall be treated under
this Plan as Disputed Claims purporting to be Class 5 Claims. Any
Claims arising out of rejection of executory contracts or unexpired
leases pursuant to this section must be filed with the Clerk of the
Court within thirty (30) days after the entry of the Confirmation
Order with a copy served upon counsel for the Debtor or be forever
barred and the holders of such Claims shall not be treated as
creditors with respect to such Claims for the purposes
<PAGE> 38
of distribution hereunder or under Section 365 of the Bankruptcy
Code.
ARTICLE XI
PROCEDURES FOR RESOLVING DISPUTED CLAIMS
11.01. Time Limit for Objections to Claims. Objections to Claims shall be
filed by Reorganized Dynamic with the Court and served upon each
holder of each of the Claims to which objections are made not later
than sixty (60) days subsequent to the Effective Date or by such
other later date as may be fixed by the Court.
11.02. Resolution of Disputed Claims. Unless otherwise ordered by the
Court, Reorganized Dynamic, at its own expense, shall litigate to
judgment, settle or withdraw objections to Disputed Claims, in its
sole discretion, without notice to any party in interest.
11.03. Payments. Payments and distributions to each holder of a Disputed
Claim or Interest that ultimately becomes an Allowed Claim or
Interest shall be made in accordance with the provisions of this
Plan. Such payments and distributions shall be made as soon as
practicable after the date on which the order allowing such Claim or
Interest becomes a Final Order. Distributions made in accordance
with this Article shall not include interest on the amount of any
payment from the date on which the holder of the Allowed Claim would
have been entitled to
<PAGE> 39
receive payment or distribution if its Claim had not been a Disputed
Claim. Reorganized Dynamic shall reserve a sufficient amount of the
Confirmation Fund and issue sufficient stock to be deposited into
the Disputed Claim Account or treasury stock in the event a Disputed
Claim becomes Allowed.
ARTICLE XII
CONFIRMATION AND CONSUMMATION
12.01. Conditions to Confirmation. The following shall be conditions to
Confirmation of the Plan:
(i) the Bankruptcy Court shall have entered the Confirmation
Order confirming the Plan without material change or
modification;
(ii) the MG Claim shall not be subject to legal proceedings
challenging the validity or secured status of the Claim.
12.02. Conditions to The Effective Date. It shall be a condition precedent
to the Effective Date that (1) unless waived by the Debtor in a
writing filed with the Bankruptcy Court, the Confirmation Order
shall have become a Final Order; (2) the Confirmation Fund shall
have been adequately funded; and (3) no order or judgment enjoining
the Debtor from effectuating the terms and
<PAGE> 40
conditions of the Plan shall have been entered by any court,
administrative body or other tribunal.
ARTICLE XIII
MISCELLANEOUS
13.01. Modification Of This Plan. The Debtor reserves the right, in
accordance with the Bankruptcy Code, to amend or modify this Plan
prior to the Confirmation Date. After the Confirmation Date, the
Debtor may, upon order of the Court, amend or modify this Plan in
accordance with Section 1127(b) of the Code, or remedy any defect or
omission or reconcile any inconsistency in this Plan in such manner
as may be necessary to carry out the purposes and intent of this
Plan.
13.02. Revocation and Withdrawal of Plan.
(a) Right to Revoke. The Debtor reserves the right to revoke
or withdraw the Plan prior to the Confirmation Date.
(b) Effect of Withdrawal or Revocation. If the Debtor revokes
or withdraws the Plan prior to the Confirmation Date, then the Plan
shall be deemed null and void. In such event, nothing contained
herein shall be deemed to constitute a waiver or release of any
claims 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
proceeding involving the Debtor.
<PAGE> 41
13.03. Nonconsensual Confirmation. In the event that any impaired Class of
Claims or Interests shall fail to accept the Plan in accordance with
subsection 1129(a)(8) of the Bankruptcy Code, the Debtor reserves
the right to (a) request that the Bankruptcy Court confirm the Plan
in accordance with section 1129(b) of the Bankruptcy Code or (b)
modify the Plan in accordance with 13.01 hereof.
13.04. Notices. Any and all motions, notices, requests, elections or
demands in connection with the Plan including but not limited to any
change of address of any Claimant or holder of an Equity Interest
for the purposes of receiving distributions under the Plan and
forfeiting same pursuant to Section 7.04 hereof shall be in writing
and shall be deemed to have been given when received or, if mailed,
five days after the date of mailing to:
Dynamic Classics, Ltd.
c/o Angel & Frankel, P.C.
Attention: Laurence May, Esq. or Sonya Lorge, Esq.
460 Park Avenue
New York, New York 10022-1906
MG Holding Corp.
c/o Achim Importing Co,Inc.
58 Second Avenue
Brooklyn, New York 11215
With a copy to:
Herzfeld & Rubin
Attn: Nancy H. Lord, Esq.
40 Wall Street
New York, New York 10005
<PAGE> 42
13.05. Notice And Entry Of Confirmation Order. Notice of the entry of the
Confirmation Order shall be sufficient if a copy of the notice
indicating that said order has been entered by the Court, without
attaching said order, is mailed to all known holders of Claims and
Interests, whether or not Allowed, to their last known addresses.
13.06. Post Confirmation Date Service List - Persons Entitled To Notice.
From and after the Effective Date, notices of appearance and demands
for service of process filed with the Court prior to such date shall
no longer be effective. No further notices, other than notice of
entry of the Confirmation Order shall be required to be sent to such
Entities.
13.07. Headings. The headings used in this Plan are inserted for
convenience only and neither constitute a portion of this Plan nor
in any manner affect the provisions of this Plan.
13.08. Severability. Should any provision in this Plan be determined to be
unenforceable, such determination shall in no way limit or affect
the enforceability and operative effect of any and all other
provisions of this Plan.
13.09. Governing Law. Except to the extent that the Bankruptcy Code is
applicable, the rights and obligations arising under this Plan shall
be governed by, and construed and enforced in accordance with, the
laws of the State of New York.
<PAGE> 43
13.10. Successors and Assigns. The rights and obligations of any Person
named or referred to in this Plan shall be binding upon, and shall
inure to the benefit of, the successors and assigns of such Person.
13.11. Reservation of Rights. Nothing contained herein shall prohibit the
Debtor from prosecuting or defending any of its rights as may exist
on its own behalf except as provided herein.
13.12. Disbursing Agent. The Reorganized Debtor shall act as Disbursing
Agent under this Plan and shall establish such accounts or funds as
may be required to effectuate payments as provided for in this Plan.
13.13. Fees and Expenses Post-Effective Date. Any professional fees or
expenses incurred by the Debtor in respect of any services rendered
to the Debtor in the ordinary course of business shall be paid by
the Debtor in full in cash in accordance with the terms of the
particular transaction without application to, or obtaining an order
from, the Bankruptcy Court.
ARTICLE XIV
RETENTION OF JURISDICTION
14.01. Retention of Jurisdiction. Following the Confirmation Date, the
Court shall retain jurisdiction of this Bankruptcy Case and of all
matters arising under or out
<PAGE> 44
of the Bankruptcy Case, including, without limitation, for the
following purposes:
14.01.01 to hear and determine any objections to the allowance of
Claims brought by the Debtor;
14.01.02 to determine any and all applications for compensation
for Professional Persons;
14.01.03 to determine any and all applications, adversary
proceedings, and contested or litigated matters properly
before the Court and pending on the Confirmation Date
that may be brought by the Debtor;
14.01.04 to modify this Plan pursuant to Section 1127 of the
Bankruptcy Code or to remedy any defect or omission or
reconcile any inconsistency in the Confirmation Order to
the extent authorized by the Bankruptcy Code;
14.01.05 to hear and determine all controversies, suits and
disputes, if any, as may arise in connection with the
interpretation or enforcement of this Plan, the
Confirmation Order and any other documents executed and
delivered in connection with this Plan;
14.01.06 to hear and determine all controversies, suits
and disputes, if any, as may arise with regard
to orders of this Court in the Bankruptcy
Case;
<PAGE> 45
14.01.07 to hear and determine any and all controversies and
disputes arising under, or in connection with, this Plan
or the Confirmation Order;
14.01.08 to adjudicate all controversies concerning the
classification of any Claim;
14.01.09 to liquidate damages in connection with any disputed,
contingent or unliquidated Claims;
14.01.10 to recover any assets and property of the Debtor
wherever located, including the prosecution and
adjudication of all causes of action available to the
Debtor as of the Confirmation Date;
14.01.11 to determine all questions and disputes regarding
recovery of and entitlement to the Debtor's assets and
determine all claims and disputes between the Debtor,
and any other Entity, whether or not subject to an
action pending as of the Confirmation Date;
14.01.12 to enter any order, including injunctions, necessary to
enforce the title, rights and powers of the Debtor and
to impose such limitations, restrictions, terms and
conditions on such title, rights and powers as the Court
may deem necessary or appropriate;
14.01.13 to enter an order or final decree closing and
terminating the Bankruptcy Case; and
<PAGE> 46
14.01.14 to make such orders as are necessary or appropriate to
carry out the provisions of this Plan, including but not
limited to orders interpreting, clarifying or enforcing
the provisions thereof and/or the Confirmation
Order.
Dated: New York, New York
February , 1996
DYNAMIC CLASSICS, LTD.
By:___________________________
Marvin Cooper
President
<PAGE> 1
Exhibit 2
ANGEL & FRANKEL, P.C.
Attorneys for Dynamic Classics, Ltd.,
Debtor and Debtor-in-Possession
460 Park Avenue
New York, New York 10022-1906
(212) 752-8000
Joshua J. Angel, Esq. (JA-3288)
Laurence May, Esq.(LM-9714)
Sonya F. Lorge, Esq. (SL-1529)
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - -x
In re: Chapter 11
DYNAMIC CLASSICS, LTD.,
Case No. 95 B 43690 (PBA)
Debtor.
- - - - - - - - - - - - - - - - - -x
NOTICE OF FILING OF DEBTOR'S ERRATA SHEET AND CORRECTION
STATEMENT TO SECOND AMENDED AND MODIFIED PLAN OF REORGANIZATION
PLEASE TAKE NOTICE that Dynamic Classics Ltd., debtor and debtor in
possession (the "Debtor") has filed an errata sheet and correction statement to
its Second Amended and Modified Plan of Reorganization dated February 22, 1996
(the "Plan") a copy of which is annexed hereto and will seek to have the Plan
conformed to the errata sheet and correction statement at the confirmation
<PAGE> 2
hearing.
Dated: New York, New York ANGEL & FRANKEL P.C.
May 8,1996 Attorneys for Dynamic
Classics Ltd., debtor
and debtor in possession
By:
------------------------
Laurence May (LM-9714)
A Member of
the Firm
460 Park Avenue
New York, New York 10022
(212) 752-8000
<PAGE> 3
ANGEL & FRANKEL, P.C.
Attorneys for Dynamic Classics, Ltd.,
Debtor and Debtor-in-Possession
460 Park Avenue
New York, New York 10022-1906
(212) 752-8000
Joshua J. Angel, Esq. (JA-3288)
Laurence May, Esq.(LM-9714)
Sonya F. Lorge, Esq. (SL-1529)
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - -x
In re: Chapter 11
DYNAMIC CLASSICS, LTD.,
Case No. 95 B 43690 (PBA)
Debtor.
- - - - - - - - - - - - - - - - - -x
DEBTOR'S APPLICATION WITH RESPECT TO CONFORMING ITS
SECOND AMENDED AND MODIFIED PLAN OF REORGANIZATION TO
THE ERRATA SHEET AND CORRECTION STATEMENT
TO THE HONORABLE PRUDENCE B. ABRAM,
UNITED STATES BANKRUPTCY JUDGE:
Dynamic Classics Ltd, debtor and debtor-in-possession (the "Debtor"), by
its counsel, Angel & Frankel P.C., as and for its application to conform the
Debtor's Second Amended and Modified Plan of Reorganization (the "Plan") to the
errata sheet and correction statement, respectfully represents:
15. The Debtor filed its Plan on February 22, 1996. The order approving
the Second Amended Disclosure Statement(the "Disclosure Statement"), which
accompanied the Plan was signed on February 28, 1996.
<PAGE> 4
16. In preparing for the confirmation hearing scheduled for May 13, 1996,
the Debtor reviewed the Plan and found an arithmetic error on page 22. The Plan
states in paragraph 4.02.05 on page 22 that the Allowed Unsecured Class 5
Claimants are to receive a pro rata share of 960,000 shares of New Common Stock
in satisfaction of their allowed claims. However, the number of shares should
actually be 800,000 shares rather than 960,000 shares. This error will not
change the percentage of shares that the Class 5 Claimants will receive.
Moreover, this is consistent with the other provisions of Article IV of the Plan
which provide that MG Holding Corp.("MG") will receive 15,200,000 shares
representing 95% of the New Common Stock and will permit 320,000 shares
representing 2% to be distributed to the Class 7 Equity Security Holders.
Accordingly, 1% of the New Common Stock would be 160,000 shares and 5% would be
800,000 shares.
17. The Debtor has also reviewed Exhibit "1" to the Plan regarding the
Cure Payments the Debtor proposes to make in connection with the Debtor's
assumption of the license agreements and executory contracts as part of the
confirmation of the Plan. Since this Exhibit was prepared there have been
certain changes. The most important being that the Debtor has, by motion, sought
authority to reject the contract with Apparel Connections. Accordingly, this
contract should no longer appear on Exhibit "1".
18. In addition, the Debtor has brought current its obligations to Durward
Industries, Chrysler Corp. and Spalding with respect to the "handheld"
equipment. Therefore, there are no
<PAGE> 5
arrearages and no monthly cure amounts to be paid to these
licensors/contractors.
19. Finally, the Debtor has reviewed its books and records with respect to
the pre-petition obligations owed to Decision Data and Finova Capital Corp. The
pre-petition debt owed to Decision Data is $1,908.44, which is to be paid in 24
monthly cure payments of $79.52. The pre-petition debt owed to Finova Capital
Corp. is $419.68, which is to be paid in 24 monthly cure payments of $17.48.
20. The Debtor has prepared the annexed errata sheet and correction
statement to reflect these changes and will send notice of these changes to
counsel for the Unsecured Creditors Committee, counsel for MG, the Office of the
United States Trustee and the licensors/contractors affected by the changes. The
Debtor respectfully submits that the corrections set forth on the errata sheet
are not substantive changes but merely a correction of an arithmetic error and
an update of the Debtor's obligations with the licensors and contractors whose
contracts and licenses the Debtor intends to assume.
<PAGE> 6
WHEREFORE, the Debtor seeks to have the Plan conform to the errata sheet
and correction statement and for such other and further relief as is just and
proper.
Dated: New York, New York ANGEL & FRANKEL P.C.
May 7, 1996 Attorneys for Dynamic
Classics Ltd.
Debtor and Debtor in
Possession
By:____________________
Laurence May (LM-9714)
A Member of the Firm
460 Park Avenue
New York, New York 10022
(212) 752-8000
<PAGE> 7
ERRATA SHEET AND CORRECTION STATEMENT
1. Page 22 of the Debtor's Second Amended and Modified Plan of Reorganization
(the "Plan") states that "Each holder of an Allowed Class 5 Claim shall also
receive its pro rata share of 960,000 shares of New Common Stock in satisfaction
of its Allowed Claim". This statement should be amended to read 800,000 shares
in stead and in place of 960,000 shares.
2. Exhibit "1" to the Plan provides that the Debtor will pay cure amounts for
the pre-petition debt owed to Apparel Connections. The Debtor has subsequently
moved for authority to reject the contract with Apparel Connections and
therefore Apparel Connections should be deleted from Exhibit "1".
3. Exhibit "1" to the Plan provides that the Debtor will pay cure amounts to
Durward Industries, Chrysler Corp. and Spalding with respect to the handheld
equipment. The Debtor has brought current its obligations to these
licensors/contractors in anticipation of assuming the licenses and executory
contracts with these licensors/contractors. Accordingly, the amounts listed for
cure amounts for each of these licensors/contractors should be listed at $0.
4. Exhibit "1" to the Plan provides that the Debtor will make monthly payments
of $101.54 to Decision Data for 24 months which amount should be corrected to
$79.52 per month.
5. Exhibit "1" to the Plan provides that the Debtor will make monthly payments
of $34.98 to Finova Capital Corp. for 24 months, which amount should be
corrected to $17.48 per month.
<PAGE> 8
ANGEL & FRANKEL, P.C.
Attorneys for Dynamic Classics, Ltd.,
Debtor and Debtor-in-Possession
460 Park Avenue
New York, New York 10022-1906
(212) 752-8000
Joshua J. Angel, Esq. (JA-3288)
Laurence May, Esq.(LM-9714)
Sonya F. Lorge, Esq. (SL-1529)
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - -x
In re: Chapter 11
DYNAMIC CLASSICS, LTD.,
Case No. 95 B 43690 (PBA)
Debtor.
- - - - - - - - - - - - - - - - - -x
AFFIDAVIT OF SERVICE BY FIRST CLASS MAIL
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
JOSE A. SANTIAGO, being duly sworn, deposes and says:
Deponent is not a party to this proceeding, is over 18 years of age
and resides in New York County, New York.
On May 8, 1996, Deponent served the within NOTICE OF FILING OF
DEBTOR'S ERRATA SHEET AND CORRECTION STATEMENT TO SECOND AMENDED AND MODIFIED
PLAN OF REORGANIZATION upon the parties on the annexed list, by first class
mail, by depositing a true copy of same in a post-paid, properly addressed
wrapper in an official
<PAGE> 9
depository under the exclusive care and custody of the United States Postal
Service within the State of New York.
______________________________
JOSE A. SANTIAGO
Sworn to before me this
day of May, 1996
____________________________
Notary Public
<PAGE> 1
Exhibit 3
ANGEL & FRANKEL, P.C.
Attorneys for Dynamic Classics, Ltd.,
Debtor and Debtor-in-Possession
460 Park Avenue
New York, New York 10022-1906
(212) 752-8000
Joshua J. Angel, Esq. (JA-3288)
Laurence May, Esq. (LM-9714)
Sonya F. Lorge, Esq. (SL-1529)
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - -x
In re: Chapter 11
DYNAMIC CLASSICS, LTD.,
Case No. 95 B 43690 (PBA)
Debtor.
- - - - - - - - - - - - - - - - - -x
ORDER CONFIRMING SECOND AMENDED AND MODIFIED PLAN OF
REORGANIZATION OF DYNAMIC CLASSICS, LTD.
(A&F# 51)
Dynamic Classics, Ltd. (the "Debtor"), having filed its Second
Amended and Modified Plan of Reorganization, dated February 22, 1996 ("Plan")
and an Amended Disclosure Statement pursuant to Section 1125 of the Bankruptcy
Code with respect to the Plan (the "Disclosure Statement") (hereinafter, all
terms in this Order not otherwise defined herein shall have the respective
meanings ascribed to such terms in the Plan or the Disclosure Statement); and a
hearing having been held before this Court on notice to all Creditors and other
parties-in-interest to consider the adequacy of the information contained in the
Disclosure Statement; and the Court having approved the Disclosure Statement
pursuant to an Order
<PAGE> 2
dated February 28, 1996, (the "Disclosure Statement Order"), and a copy of the
Plan, the Disclosure Statement, the Disclosure Statement Order and various
related materials including Ballots (as defined in the Disclosure Statement
Order) for soliciting acceptances or rejections of the Plan having been
transmitted to all known holders of Claims, certain federal, state and local
authorities and certain other designated parties-in-interest; and the
solicitation of acceptances and rejections from holders of impaired Claims
having been made in the manner required by this Court pursuant to the Disclosure
Statement Order; and the Debtor having filed an "Errata Sheet" correcting
certain errors in the Plan as filed ("the Corrections"); and hearings to
consider Confirmation of the Plan and other matters relating to Confirmation
having been held before this Court on May 13, 1996 and May 22, 1996 (the
"Confirmation Hearing") upon notice as heretofore directed under the Disclosure
Statement Order and upon the affidavits of service filed herein evidencing
compliance with such noticing directions; and upon the entire record of the
Bankruptcy Case and the record of the Confirmation Hearing; and the
certification of Angel & Frankel, P.C. of acceptances or rejections of the Plan
and the originals of the Ballots received having been filed with the Court; and
upon all the proceedings heretofore had herein; and after due deliberation and
sufficient cause appearing therefor;
IT IS HEREBY FOUND AND DETERMINED that:
(i) The Corrections comply with all provisions of
Section 1127 and meet the requirements of Sections 1122 and
1123
<PAGE> 3
of the Bankruptcy Code and do not require further disclosure and
solicitation pursuant to Section 1125 of the Bankruptcy Code.
(ii) All Creditors, Persons, Entities and holders of
Existing Common Stock entitled or required to receive notice of the
Plan, the Disclosure Statement, the hearing on the adequacy of the
Disclosure Statement and the Confirmation have received due, proper
and adequate notice thereof and the Plan has been duly accepted in
accordance with Section 1126 of the Bankruptcy Code by all Classes
of Claims impaired under the Plan. At least one Class of impaired
Claims has accepted the Plan (determined without including any
acceptances by an insider of the Debtor).
(iii) The Plan complies with the applicable provisions
of Chapter 11 of the Bankruptcy Code.
(iv) The Debtor, as proponent of the Plan, has complied
with all applicable provisions of the Bankruptcy Code regarding both
the Plan and the Disclosure Statement.
(v) The Plan has been proposed in good faith and not by
any means forbidden by law.
(vi) The Plan specifies the Classes of Claims not
impaired under the Plan. Classes 2, 3, 4 and 6 as designated under
the Plan are not impaired under the Plan.
<PAGE> 4
(vii) The Plan identifies the Classes of Claims impaired
under the Plan and specifies the treatment of Allowed Claims in such
Classes. Classes 1, 5, and 7 are designated under the Plan as
impaired under the Plan.
(viii) The Plan provides the same treatment for each
Allowed Claim and Allowed Equity Interest in a particular Class.
(ix) The classification of Claims and Equity Interests
under the Plan complies with Section 1122 of the Bankruptcy Code.
(x) The Plan provides adequate means for the execution
and implementation of the Plan.
(xi) The treatment of Claims of the type specified in
Sections 507(a)(1), 507(a)(3), 507(a)(4) and 507(a)(7) of the
Bankruptcy Code under the Plan complies with the provisions of
Section 1129(a)(9) of the Bankruptcy Code.
(xii) The solicitation of acceptances and rejections of
the Plan was in good faith.
(xiii) All payments made or promised by the Debtor for
services of Professional Persons or for costs and expenses
associated therewith in connection with the Plan and incident to the
Bankruptcy Case have been disclosed to this Court, and all such
payments made before Confirmation are reasonable or, if such
payments are to be fixed after Confirmation of the Plan, such
<PAGE> 5
payments are subject to approval of this Court as reasonable.
(xiv) The Debtor has disclosed the identity of any
officer, director or insider that will be employed or retained by it
and the nature of any compensation for such Person.
(xv) The procedures by which the Ballots were
distributed and tabulated were fair, properly conducted and complied
with the Disclosure Statement Order.
(xvi) The Ballots accepting or rejecting the Plan have
been timely received from the respective holders of the Class 1
Claims, Class 5 Claims and Class 7 Allowed Equity Interests.
(xvii) With respect to each Class, each holder of a
Claim in such Class has accepted the Plan or will receive or retain
under the Plan on account of such Claim property of a value, as of
the Effective Date, that is not less than the amount that such
holder would receive or retain if the Debtor were liquidated under
chapter 7 of the Bankruptcy Code on the same date.
(xviii) The Plan is feasible. The Debtor has
demonstrated that there is a reasonable prospect of (i) its being
able to meet the financial obligations imposed under the Plan
without the need for liquidation or further financial arrangements;
(ii) its being able to execute and deliver, or cause to be executed
and delivered, all documents, agreements and/or instruments
<PAGE> 6
provided for or required under the Plan and/or by applicable law to
consummate the transactions and conveyances contemplated by the
Plan; and (iii) the Debtor being able to make all payments required
of it as prescribed in the Plan.
(xix) All fees payable under 28 U.S.C. Section 1930
have been paid, or the Plan provides for the payment of
all such fees on, or prior to, the Effective Date.
(xx) The Plan is fair and equitable to all parties in
interest, including, without limitation, all holders of Claims
against and Equity Interests in the Debtor.
(xxi) The Plan does not discriminate unfairly with
respect to each Class of Claims or Equity Interests.
IT IS THEREFORE,
NOW, on motion of ANGEL & FRANKEL, P.C. counsel to the
Debtor,
ORDERED, ADJUDGED AND DECREED THAT:
i. The findings set forth above are incorporated
herein and are hereby "SO ORDERED" by this Court.
ii. The Plan is hereby approved and confirmed in all respects except
to the extent that the Plan is hereby modified, in accordance with Section
1127(a) of the Bankruptcy Code, to increase the Aggregate Limit, as that term is
defined in section 4.02.05 of the Plan, by an amount equal to 5% of the amount
that the aggregate of Allowed Claims in Class 5 (excluding the claims of China
<PAGE> 7
National Metals I/E Corporation Xiamen Development Co. Ltd.)
exceeds $10,000.00.
iii. Without limiting the generality of Paragraph 2 above, all
agreements, documents and other undertakings as defined and described in the
Plan and exhibited to the Disclosure Statement (the "Plan Documents") are hereby
approved. The final form and substance of the Plan Documents shall be
substantially in the form attached to the Disclosure Statement or described
therein, and may be changed only by mutual consent of the parties thereto,
except that no change shall be permitted except by Court order, obtained after
notice and a hearing, if the change would have a material adverse effect upon a
Creditor not a party to the Plan Document.
iv. The Debtor is hereby authorized and directed to execute,
deliver, implement and perform each of the Plan Documents and to take such other
steps and perform such other acts as may be necessary to implement and
effectuate the Plan, and is further hereby authorized and directed to execute
and deliver any instrument and perform any other act that is necessary for the
consummation of the Plan and the implementation of the Plan Documents, in
accordance with Section 1142(b) of the Bankruptcy Code.
v. Distributions required to be made to the holders of Allowed
Claims against the Debtor shall be made as provided in the Plan.
vi. The Plan and its provisions shall be binding upon the Debtor,
any entity acquiring property under the Plan, any holder of a Claim against or
Equity Interest in the Debtor, any federal, state or local authority, and any
other party in interest,
<PAGE> 8
whether or not the Claim or Equity Interest of such holder or right or
obligation of any party in interest is impaired under the Plan, and whether or
not such holder or party in interest has accepted the Plan.
vii. Pursuant to Section 1146(c) of the Bankruptcy Code, all of the
transactions contemplated under the Plan are hereby fully exempt from any and
all real property transfer tax and all other stamp or similar tax within the
meaning of Section 1146(c) of the Bankruptcy Code. Pursuant to Section 1146(c)
of the Bankruptcy Code, all filing officers are directed to accept for recording
or filing and to record or file those Plan Documents which are intended under
the Plan, or otherwise are required so as to effectuate the terms and conditions
of the Plan, to be recorded or filed and which are presented to them for
recording or filing immediately upon presentation thereof without payment of
such taxes and without the presentation of any affidavits, instruments or
returns otherwise required for recording, and the recording officer is directed
to comply with the provisions of this Order.
viii. Except as otherwise provided in the Plan, this Order, or the
Plan Documents, from and after the Effective Date, the Debtor, its Estate and
all of the Assets and property of the Debtor shall be discharged and released
from any and all Claims and Equity Interests of any nature whatsoever, including
any interest accrued thereon from and after the Relief Date. Except as otherwise
provided in the Plan, this Order or the Plan Documents, from and after the
Effective Date, in accordance with Section 8.1 of the Plan and to the extent
provided by Section 1141 of the Bankruptcy
<PAGE> 9
Code, all Claims shall be discharged in accordance with Sections 524 and
1141 of the Bankruptcy Code. Except as otherwise provided in the Plan, this
Order or the Plan Documents, from and after the Effective Date, all Entities
shall, in accordance with Section 9.01 of the Plan, be precluded and enjoined
from asserting against the Debtor and its property and Assets, any other or
further Claim based on any act or omission, transaction or other activity of any
kind or nature that occurred prior to the Effective Date.
ix. Upon the Effective Date, all Existing Common Stock shall be
canceled and, except as specifically prescribed in the Plan, the rights of the
holders thereof shall simultaneously therewith be terminated and any and all
certificates, indentures or other instruments evidencing such securities shall
be canceled and of no further force or effect.
x. Except as otherwise expressly provided in the Plan and this
Order, in implementation of the discharge provided for in Paragraph 8 above, and
in accordance with Articles VIII and IX of the Plan, (a) all Entities who have
held, hold or may hold Claims against, or Equity Interests in, the Debtor are
jointly and severally restrained and enjoined from and after the Effective Date:
(i) from commencing or continuing in any manner, directly or indirectly, any
action or other proceeding of any kind with respect to any such Claim against,
or Equity Interests in, the Debtor, and the property of the Debtor, with respect
to any such Claim or Equity Interest; (ii) from the enforcement, attachment,
collection or recovery by any manner or means of any judgment, award, decree, or
order against the Debtor, the property of the Debtor with
<PAGE> 10
respect to any such Claim or Equity Interest; (iii) from creating, perfecting or
enforcing any encumbrance of any kind against the Debtor or against the property
of the Debtor with respect to any such Claim or Equity Interest; (iv) from
asserting any setoff, right of subrogation, or recoupment of any kind against
any obligation due the Debtor or against the property of the Debtor with respect
to any such Claim or Equity Interest; and (v) from any act, in any manner, in
any place whatsoever, that does not conform to or comply with the provisions of
the Plan or this Order relating to any Claim or Equity Interest; (b) from and
after the Effective Date, all state and local governmental agencies, entities or
authorities are hereby jointly and severally restrained and enjoined from
commencing or continuing any action to collect, from the Debtor, or out of its
property, any transfer, stamp or similar tax within the meaning of Section
1146(c) of the Bankruptcy Code.
xi. Except as otherwise provided in the Plan, this Order or the Plan
Documents, from and after the Effective Date all Claims based upon guarantees of
collection, payment or performance, indemnity bonds or obligations, performance
bonds, contingent liabilities arising out of the assignment of leases or
contract obligations, or other similar undertakings, made or given by the Debtor
prior to the Petition Date as to the obligations or performance of another or of
any other Person shall be discharged, released and of no further force and
effect.
xii. From and after the Effective Date, the property and Assets of
the Debtor shall be deemed to be free and clear of all liens, claims, security
interests, assignments, encumbrances
<PAGE> 11
and other adverse interests of any nature and kind existing as of the Effective
Date, except as may otherwise be provided for in the Plan, this Order or the
Plan Documents.
xiii. The Debtor is required to bring any objection to a Claim, not
previously commenced, within sixty (60) days after the Effective Date, or with
respect to Claims for damages resulting from rejection of Executory Contracts
pursuant to Article X of the Plan in accordance with said Article. The Debtor
shall litigate to judgment, settle or withdraw objections to Disputed Claims, in
the sole discretion of the Debtor, without notice to any party in interest.
xiv. From and after the Effective Date, in accordance with Article
XI of the Plan, payments and distributions to each holder of a Disputed Claim
that ultimately becomes an Allowed Claim shall be made in accordance with the
provisions of the Plan with respect to the Class of Creditors to which the
respective holder of such an Allowed Claim belongs. Such payments and
distributions shall be made as soon as practicable after the date that the Court
enters a Final Order allowing such Claim. Payments made in accordance with
Article XI of the Plan shall not include interest on the amount of such payment
from the date on which the holder of the Allowed Claim would have been entitled
to receive payment if its Claim had not been a Disputed Claim. Payments shall be
made as and when a Disputed Claim has become, in whole or in part, an Allowed
Claim pursuant to a Final Order or agreement between the Debtor and such
Claimant. The Debtor shall, and hereby is authorized and directed to, reserve a
sufficient
<PAGE> 12
amount of the consideration allocated to the holders of Allowed Claims (as
reasonably determined by the Debtor) so as to provide for payment of Disputed
Claims as if such Claims were Allowed Claims on the Effective Date.
xv. The commencement or continuation by or on behalf of any holder
of a Claim or Equity Interest, or any Entity acting or purporting to act by,
through, under or on behalf of any of the foregoing, of any action, the
employment of process, or any act to assert a claim for relief against the
Debtor in respect of any actions taken during the course of the Bankruptcy Case
is hereby enjoined.
xvi. Any Executory Contract not previously assumed or rejected by
the Effective Date, or subject to a motion to assume or reject pending on the
Effective Date, shall be deemed assumed or rejected in accordance with the
Schedule to the Disclosure Statement.
xvii. The amounts, if any, set forth in the Schedule to the
Disclosure Statement with respect to each Executory Contract assumed pursuant to
this Order are deemed to be the full amount of any arrearage or default under
such Executory Contract on the part of the Debtor and any party to such
Executory Contract is forever barred from asserting any other Claim against the
Debtor with respect to any pre-Confirmation Date arrearage or default under said
Executory Contract.
xviii. The restraining provisions of Section 362(a) of the
Bankruptcy Code shall continue in effect until the Effective Date, excepting,
however, any act necessary or appropriate to effectuate
<PAGE> 13
any term or condition of the Plan required to be completed prior to the
Effective Date, or as otherwise provided in the Plan, in this Order, or any
prior order of the Court.
xix. Pursuant to Article XIV of the Plan, the Court hereby retains
jurisdiction of the Bankruptcy Case and all matters arising out of, or relating
to, the Bankruptcy Case. The Court hereby further retains jurisdiction of these
proceedings pursuant to and for the purposes of Sections 105(a), 1127 and
1142 of the Bankruptcy Code and for such purposes as may be necessary or useful
to aid the Confirmation and consummation of the Plan and implementation of the
Plan's provisions.
xx. Except as may otherwise be provided in the Plan, as to all
distributions and payments to be made pursuant to the Plan, the Debtor shall act
as the disbursing agent and shall establish such accounts as it deems necessary
or appropriate to effectuate payments and distributions as provided for in the
Plan.
xxi. Upon the Effective Date the Creditors' Committee shall be
dissolved and its members discharged and said committee shall have no further
authority or function regarding implementation of the Plan, administration of
the Assets, or otherwise.
xxii. As of the Effective Date, all notices of appearance filed by
any Entity in the Bankruptcy Case shall be deemed withdrawn and such Entity
shall not be entitled to any post-Effective Date notification of post-Effective
Date matters, hearings, pleadings or other proceedings filed or commenced by, or
<PAGE> 14
with respect to, the Debtor or regarding any aspect of the Plan, the Assets or
otherwise, except as may be ordered by the Court.
xxiii. Any Entity desiring to receive post-Effective Date notice as
may be given by the Debtor or as directed by the Bankruptcy Court shall serve
upon the parties designated in Section 13.04 of the Plan and file with the Clerk
of the Court, a post-Effective Date notice of appearance.
xxiv. From and after the Effective Date, in accordance with Section
7.04 of the Plan, with respect to any Entity which fails to claim any Cash or
distribution under the Plan within the time provided in the Plan, such
distribution shall be deemed Unclaimed Property and such Entity shall forfeit
all rights thereto, and to any and all future payments, and thereafter the Claim
shall be treated as a Disallowed Claim.
xxv. On the Effective Date, Reorganized Dynamic, on its own behalf
and as representative of the Debtor's Estate, shall release unconditionally, and
shall be deemed to release unconditionally, MG Holding Corp. and its officers
and directors from any and all claims, obligations, suits, judgments, damages,
rights, causes of action and liabilities whatsoever (including, without
limitation, those arising under the Bankruptcy Code), whether known or unknown,
foreseen or unforeseen, existing or hereafter arising, in law, equity or
otherwise, based in whole or in part on any act, omission, transaction, event or
other occurrence taking place before, on or after the Petition Date and to the
Effective Date in any way relating to the Debtor (before, on or after the
Petition Date), the Chapter 11 Case, or the Modified
<PAGE> 15
Plan; provided, however, that the foregoing release shall not apply to any
action or omission that constitutes actual fraud or criminal behavior.
xxvi. Notwithstanding anything to the contrary
contained in this Order, in no event shall the Effective Date occur
or be deemed to have occurred until all of the conditions precedent
in the Plan have been satisfied, unless specifically waived by the
Entity having the right to so waive.
Dated: New York, New York
May , 1996
______________________________
United States Bankruptcy Judge
<PAGE> 1
Exhibit 4
October 2, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Dynamic International, Ltd.
Ladies/Gentlemen:
We agree with the Statement (a) under Item 4 in the Form 8-K report of
Dynamic International, Ltd. executed on behalf of the Company on September 27,
1996. We are unable to agree or disagree with Statement (b).
Very truly yours,
/s/ Hoberman, Miller & Co., P.C.
