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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): August 13, 1999
STUART ENTERTAINMENT, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
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0-10737 84-0402207
(Commission File Number) (I.R.S. Employer Identification No.)
3211 Nebraska Avenue, Council Bluffs, Iowa 51501
(Address of Principal Executive Offices) (Zip Code)
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(712) 323-1488
(Registrant's Telephone Number, Including Area Code)
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ITEM 3. BANKRUPTCY or RECEIVERSHIP
On August 13, 1999, Stuart Entertainment, Inc. (the "Company") filed a
petition for reorganization under Chapter 11 in the United States Bankruptcy
Court for the District of Delaware.
Prior to the August 13 Chapter 11 filing, the Company had reached an
agreement-in-principle (the "Agreement") with certain of the holders (the
"Noteholders") of its $100 million 12-1/2% Senior Subordinated Notes due 2004
(the "Notes"), with respect to a consensual restructuring of the Company's debt
and equity.
Under the Agreement, attached as Exhibit 10.1 to the Form 8-K dated as
of May 21, 1999, which is incorporated herein by reference, upon effectiveness
(the "Effective Date") of the Plan of Reorganization (the "Plan") the Notes,
including principal, interest, fees and other charges with respect thereto, will
be cancelled and in exchange therefor, the Noteholders will receive, pro-rata,
one hundred percent (100%) of the Common Stock, $0.001 par value per share, to
be authorized under the Company's amended and restated certificate of
incorporation to be filed with the Delaware Secretary of State after Bankruptcy
Court approval of the Plan ("New Common Stock"), subject to dilution of
approximately 10% on a fully diluted basis by shares reserved for issuance under
options to be issued to the Company's executive management. The existing common
stock, $0.01 par value, of the Company ("Existing Common Stock") will be
cancelled and, in exchange therefor, the holders thereof will receive, subject
to approval by the Bankruptcy Court, a pro-rata portion of $150,000 in cash.
Under the Plan, all persons who hold, together with all affiliates of
such persons, $500,000 or less in principal amount of Notes, or who elect to
reduce their holdings to $500,000, will receive a cash payment equal to 25% of
such Noteholder's allowed claim in lieu of New Common Stock, unless such
Noteholder elects to receive New Common Stock. The Company may fund up to an
aggregate of $3 million of such cash payments (the "Company Funding"), with the
remainder to be funded by the largest holder of the Notes pursuant to a Standby
Funding Commitment (the "Standby Commitment"). Under the Standby Commitment, the
largest holder of the Notes will receive in exchange for any such funding
provided an allowed claim as a Noteholder, thereby entitling such holder to an
additional pro rata distribution of New Common Stock under the Plan.
The Agreement provides for certain key executive officers of the
Company to receive vested options to purchase four percent (4%) of the
outstanding New Common Stock, and performance based options to purchase six
percent (6%) of the outstanding New Common Stock as of the Effective Date of the
Plan on a fully diluted basis. These percentages are subject to increase based
on the amount of the Company Funding, and the accretive effect thereof, in
accordance with a formula set forth in the Plan. The Noteholders
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have agreed to support the payment of all trade claims in the ordinary course of
the Company's business. As a result, the Company's trade creditors will not be
impaired or negatively impacted by the consensual restructuring.
The Plan filed with the Bankruptcy Court is subject to numerous
conditions, including that the Plan be confirmed by the Bankruptcy Court, that
Stuart have sufficient cash on the effective date to make all cash payments
required to be made pursuant to the Plan, that Stuart receive all required
regulatory approvals, and that there is no order, decree or ruling by any court
or governmental body having jurisdiction, restraining or enjoining the
consummation of the Plan. There is no assurance that the consensual
restructuring provided for in the Agreement and the Plan will be finalized or
that any restructuring which is contemplated will not be on terms materially
different from those contained in the Agreement and the Plan.
The statements appearing above, which are not historical facts, are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, and are subject to numerous risks and uncertainties that could cause
actual results to differ materially from those set forth in the forward-looking
statements, including, but not limited to, delays in or inability to conclude
transactions, adverse actions which may be taken by the Company's creditors, the
outcome of various Bankruptcy Court proceedings, the establishment of competing
facilities and services, cancellation of leases or contracts, adverse regulatory
actions, changes in applicable laws and regulations, general market acceptance
of the Company's facilities and services, fluctuations in margins, demand
fluctuations, access to debt or equity financing in light of recent losses, cash
flow short falls, and the Company's Chapter 11 filings, and adverse uninsured
determinations in existing or future litigation or regulatory proceedings.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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EXHIBIT NO. DESCRIPTION OF EXHIBIT
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2 Plan of Reorganization
99.1 Stuart Entertainment, Inc. press release announcing the
Chapter 11 filing in the United States Bankruptcy Court
for the District of Delaware, Wilmington, Delaware.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
STUART ENTERTAINMENT, INC.
By:
-----------------------------------------
Joseph M. Valandra
Chairman and Chief Executive Officer
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION OF EXHIBIT
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2 Plan of Reorganization
99.1 Stuart Entertainment, Inc. press release announcing the
Chapter 11 filing in the United States Bankruptcy Court
for the District of Delaware, Wilmington, Delaware.
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Exhibit 2
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re:
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STUART ENTERTAINMENT, INC., In Proceedings Under Chapter 11
a Delaware corporation,
Case No.
Debtor.
PLAN OF REORGANIZATION
SQUIRE, SANDERS & DEMPSEY L.L.P. SAUL, EWING, REMICK & SAUL
40 North Central Avenue P.O. Box 1266
Suite 2700 222 Delaware Avenue, Suite 1200
Phoenix, Arizona 85004 Wilmington, Delaware 19899
(602) 528-4000 (302) 421-6800
Attorneys: Craig D. Hansen Attorneys: Norman L. Pernick
Thomas J. Salerno J. Kate Stickles
Jordan A. Kroop
Counsel to Stuart Entertainment, Inc., Counsel to Stuart Entertainment, Inc.,
Debtor and Debtor-In-Possession Debtor and Debtor-In-Possession
Dated: Wilmington, Delaware
August 13, 1999
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TABLE OF CONTENTS
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ARTICLE 1. DEFINITIONS AND RULES OF INTERPRETATION................................................................2
1.1 Actual Company Funding Amount............................................................................2
1.2 Accretion Calculation....................................................................................2
1.3 Adjusted Management Percentage...........................................................................2
1.4 Adjusted Management Shares...............................................................................2
1.5 Administrative Claim.....................................................................................2
1.6 Administrative Claim Bar Date............................................................................2
1.7 Affiliate................................................................................................2
1.8 Allowed..................................................................................................3
1.9 Amortization.............................................................................................3
1.10 Avoidance Actions.....................................................................................3
1.11 Ballot................................................................................................3
1.12 Bankruptcy Code.......................................................................................3
1.13 Bankruptcy Court......................................................................................3
1.14 Bankruptcy Rules......................................................................................3
1.15 Bar Date..............................................................................................3
1.16 Bingo Systems.........................................................................................4
1.17 Bingo Systems Sale Agreement..........................................................................4
1.18 Business Day..........................................................................................4
1.19 Cash..................................................................................................4
1.20 Cash Payment Option...................................................................................4
1.21 Chapter 11 Case.......................................................................................4
1.22 Claim.................................................................................................4
1.23 Class.................................................................................................4
1.24 Class 4A Allowed Claim Limit..........................................................................4
1.25 Collateral............................................................................................4
1.26 Committee.............................................................................................4
1.27 Company Funding Commitment............................................................................5
1.28 Confirmation Date.....................................................................................5
1.29 Confirmation Hearing..................................................................................5
1.30 Confirmation Order....................................................................................5
1.31 Contingent Claim......................................................................................5
1.32 Contrarian............................................................................................5
1.33 Contrarian Standby Funding Commitment.................................................................5
1.34 Creditor..............................................................................................5
1.35 Cure..................................................................................................5
1.36 D&O Policy............................................................................................5
1.37 Debtor................................................................................................5
1.38 Depreciation Expense..................................................................................6
1.39 DIP Facility..........................................................................................6
1.40 DIP Financing Order...................................................................................6
1.41 DIP Lender............................................................................................6
1.42 DIP Loan Documents....................................................................................6
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1.43 Disbursing Agent......................................................................................6
1.44 Disclosure Statement..................................................................................6
1.45 Disputed..............................................................................................6
1.46 Distribution Date.....................................................................................6
1.47 Distribution Record Date..............................................................................6
1.48 EBITDA................................................................................................6
1.49 Effective Date........................................................................................7
1.50 Elliott Trust.........................................................................................7
1.51 Elliott Trust L/C.....................................................................................7
1.52 Elliott Trust Promissory Note.........................................................................7
1.53 Elliott Trust Secured Claim...........................................................................7
1.54 Employment Contracts..................................................................................7
1.55 Equity Incentive Options..............................................................................7
1.56 Equity Interest.......................................................................................7
1.57 Equity Related Claim..................................................................................7
1.58 Estate................................................................................................8
1.59 Exchange Act..........................................................................................8
1.60 Executive Management Group............................................................................8
1.61 Executive Options.....................................................................................8
1.62 Exit Financing Facility...............................................................................8
1.63 Exit Financing Documents..............................................................................8
1.64 Final Order...........................................................................................8
1.65 Fully Diluted Basis...................................................................................8
1.66 GAAP..................................................................................................8
1.67 Gaming Authorities....................................................................................9
1.68 Gaming Requirements...................................................................................9
1.69 General Unsecured Claim...............................................................................9
1.70 Income Tax............................................................................................9
1.71 Indemnification Claims................................................................................9
1.72 Indenture.............................................................................................9
1.73 Indenture Trustee.....................................................................................9
1.74 Initial Management Percentage.........................................................................9
1.75 Interest Expense.....................................................................................10
1.76 IRS..................................................................................................10
1.77 Lien.................................................................................................10
1.78 Litigation Claims....................................................................................10
1.79 Net Income...........................................................................................10
1.80 New Common Stock.....................................................................................10
1.81 New Incentive Stock Option Plan......................................................................10
1.82 Notes................................................................................................10
1.83 Notes Claim..........................................................................................10
1.84 Notes Securities Claims..............................................................................11
1.85 Old Common Stock.....................................................................................11
1.86 Person...............................................................................................11
1.87 Petition Date........................................................................................11
1.88 Plan.................................................................................................11
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1.89 Plan Documents.......................................................................................11
1.90 Plan Supplement......................................................................................11
1.91 Preserved Ordinary Course Administrative Claim.......................................................11
1.92 Priority Claim.......................................................................................11
1.93 Priority Tax Claim...................................................................................11
1.94 Professionals........................................................................................11
1.95 Professional Fee Bar Date............................................................................12
1.96 Professional Fees....................................................................................12
1.97 Pro Rata.............................................................................................12
1.98 Reclamation Claims...................................................................................12
1.99 Reduced Notes Percentage.............................................................................12
1.100 Reorganized Stuart...................................................................................12
1.101 Reorganized Stuart By-Laws...........................................................................12
1.102 Reorganized Stuart Certificate.......................................................................12
1.103 Restructuring Agreement..............................................................................12
1.104 Retiree Benefits.....................................................................................12
1.105 Schedules............................................................................................13
1.106 SEC..................................................................................................13
1.107 Secured Claim........................................................................................13
1.108 Secured Tax Claim....................................................................................13
1.109 Securities Act.......................................................................................13
1.110 Severance Agreements.................................................................................13
1.111 Shareholder Agreement................................................................................13
1.112 Small Noteholder Election............................................................................13
1.113 Subsidiary...........................................................................................13
1.114 Subsidiary Claims....................................................................................13
1.115 Voting Record Date...................................................................................13
ARTICLE 2. TREATMENT OF UNCLASSIFIED CLAIMS......................................................................14
2.1 Unclassified Claims.....................................................................................14
2.2 Administrative Expense Claims...........................................................................14
2.3 Preserved Ordinary Course Administrative Claims.........................................................14
2.4 Allowed Priority Tax Claims.............................................................................14
2.5 Allowed Reclamation Claims..............................................................................15
2.6 Claims for Professional Fees............................................................................15
2.7 Claims of DIP Lender....................................................................................15
ARTICLE 3. CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS.........................................................15
3.1 Summary of Classification...............................................................................15
3.2 Specific Classification.................................................................................16
ARTICLE 4. TREATMENT OF CLAIMS AND EQUITY INTERESTS..............................................................17
4.1 Class 1 - Priority Claims...............................................................................17
4.2 Class 2 - Secured Tax Claims............................................................................17
4.3 Class 3 - Miscellaneous Secured Claims..................................................................17
4.4 Class 3A - Elliott Trust Secured Claim..................................................................17
4.5 Class 4 - Notes Claims..................................................................................18
4.6 Class 4A - Small Noteholders Claims.....................................................................20
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4.7 Class 5 - General Unsecured Claims......................................................................21
4.8 Class 6 - Subsidiary Claims.............................................................................21
4.9 Class 7 - Equity Interests and Equity Related Claims....................................................21
ARTICLE 5. IMPLEMENTATION OF THE PLAN............................................................................23
5.1 Plan Funding............................................................................................23
5.2 Exit Financing Facility.................................................................................23
5.3 Issuance of New Common Stock............................................................................23
5.4 Contrarian Standby Funding Commitment...................................................................24
5.5 Certificate of Incorporation and By-Laws................................................................24
5.6 Private Company Status..................................................................................24
5.7 Stock Transfer Restriction..............................................................................24
5.8 No Corporate Action Required............................................................................25
5.9 Directors and Officers..................................................................................25
5.10 Executive Options....................................................................................25
5.11 Equity Incentive Options.............................................................................26
5.12 Retention Bonuses....................................................................................26
5.13 Management Compensation Review.......................................................................26
5.14 Termination of Subordination Rights and Settlement of Related Claims.................................27
5.15 Administration Pending Effective Date................................................................27
5.16 Post-Confirmation Fees; Final Decree.................................................................27
5.17 Transfer of Certain Assets to Subsidiaries...........................................................27
5.18 Name Change..........................................................................................27
ARTICLE 6. EXECUTORY CONTRACTS AND UNEXPIRED LEASES..............................................................28
6.1 Assumption or Rejection of Executory Contracts and Unexpired Leases.....................................28
6.2 Retiree Benefits........................................................................................29
ARTICLE 7. CONFIRMATION WITHOUT ACCEPTANCE BY ALL IMPAIRED CLASSES...............................................29
ARTICLE 8. PRESERVATION OF LITIGATION CLAIMS.....................................................................29
8.1 Preservation Of Litigation Claims.......................................................................29
8.2 Prosecution Of Litigation Claims........................................................................29
8.3 Distribution Of Litigation Claims Proceeds..............................................................30
8.4 Preservation Of Insurance...............................................................................30
ARTICLE 9. SECURITIES TO BE ISSUED IN CONNECTION WITH THE PLAN...................................................30
9.1 New Common Stock........................................................................................30
9.2 Section 1145 Exemption..................................................................................30
ARTICLE 10. CONDITIONS PRECEDENT.................................................................................31
10.1 Conditions To Confirmation...........................................................................31
10.2 Conditions To Effectiveness..........................................................................32
10.3 Waiver Of Conditions.................................................................................32
ARTICLE 11. NON-ALLOWANCE OF PENALTIES AND FINES.................................................................32
ARTICLE 12. TITLE TO PROPERTY; DISCHARGE; INJUNCTION.............................................................33
12.1 Revesting of Assets..................................................................................33
12.2 Discharge............................................................................................33
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12.3 Injunction...........................................................................................33
12.4 Exculpation..........................................................................................34
ARTICLE 13. RETENTION OF JURISDICTION............................................................................34
13.1 Jurisdiction.........................................................................................34
ARTICLE 14. AMENDMENT AND WITHDRAWAL OF PLAN.....................................................................35
14.1 Amendment of the Plan................................................................................35
14.2 Revocation or Withdrawal of the Plan.................................................................36
ARTICLE 15. MISCELLANEOUS........................................................................................36
15.1 Filing of Objections to Claims.......................................................................36
15.2 Settlement of Objections After Effective Date........................................................36
15.3 Fees and Expenses of Indenture Trustee and Contrarian................................................36
15.4 Distributions........................................................................................36
15.5 Effectuating Documents; Further Transactions; Timing.................................................37
15.6 Exemption From Transfer Taxes........................................................................37
15.7 Binding Effect.......................................................................................37
15.8 Governing Law........................................................................................38
15.9 Modification of Payment Terms........................................................................38
15.10 Setoffs..............................................................................................38
15.11 Notices..............................................................................................38
15.12 Delivery Of Notices..................................................................................39
15.13 Termination of Statutory Committees..................................................................39
15.14 Severability.........................................................................................40
15.15 Plan Supplement......................................................................................40
15.16 Withholding And Reporting Requirements...............................................................40
15.17 Quarterly Fees To The United States Trustee..........................................................40
15.18 Fractional Shares; Odd Lots; De Minimis Distributions................................................40
15.19 Method Of Payment....................................................................................40
15.20 Restructuring Agreement..............................................................................41
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EXHIBITS TO PLAN SUPPLEMENT:
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Exhibit A Reorganized Stuart Certificate
Exhibit B Reorganized Stuart By-Laws
Exhibit C Shareholder Agreement
Exhibit D New Incentive Stock Option Plan
Exhibit E Contrarian Standby Funding Commitment
Exhibit F Employment Agreements
Exhibit G Severance Agreements
Exhibit H Retention Bonus Recipients
Exhibit I List of Rejected Executory Contracts
Exhibit J List of Assume Executory Contracts
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Stuart Entertainment, Inc., debtor and debtor-in-possession in the
above-captioned Chapter 11 reorganization case ("Stuart" or the "Debtor"),
proposes the following plan of reorganization (the "Plan") for the resolution of
Stuart's outstanding claims and equity interests. All creditors and other
parties-in-interest should refer to the Disclosure Statement (as defined below)
for a discussion of the Debtor's history, business, properties, results of
operations, events leading up to the contemplated restructuring, financial
projections for future operations, and for a summary and analysis of the Plan
and certain related matters.
All holders of claims against, and equity interests in, the Debtor are
encouraged to read the Plan, the Disclosure Statement and the related
solicitation materials in their entirety before voting to accept or reject the
Plan.
Subject to the restrictions on modifications set forth in Section 1127
of the Bankruptcy Code and Bankruptcy Rule 3019, and those restrictions on
modifications set forth in Section 14.1 of this Plan, the Debtor expressly
reserves the right to alter, amend, or modify the Plan one or more times before
its substantial consummation.
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ARTICLE 1. DEFINITIONS AND RULES OF INTERPRETATION
For purposes of this Plan of Reorganization (the "Plan"), except as
expressly provided or unless the context otherwise requires, all capitalized
terms not otherwise defined have the meanings ascribed to them in Article 1 of
the Plan. Any term used in the Plan that is not defined in the Plan but is
defined in the Bankruptcy Code or the Bankruptcy Rules retains the meaning
ascribed to such term in the Bankruptcy Code or the Bankruptcy Rules. Whenever
the context requires, such terms include the plural as well as the singular, the
masculine gender includes the feminine gender, and the feminine gender includes
the masculine gender.
As used in this Plan, the following terms have the meanings specified
below:
1.1 ACTUAL COMPANY FUNDING AMOUNT. The aggregate amount of Cash that
Reorganized Stuart actually pays under the Company Funding Commitment for
purposes of the distributions to Allowed Claims in Class 4A pursuant to the Cash
Payment Option.
1.2 ACCRETION CALCULATION. The calculation to determine the actual
number of shares of New Common Stock to be issued to members of the Executive
Management Group upon exercise of the Equity Incentive Options and the Executive
Options, after giving effect to the Company Funding Commitment, as determined in
accordance with Section 5.3.1 of the Plan.
1.3 ADJUSTED MANAGEMENT PERCENTAGE. The percent of the outstanding
shares of New Common Stock issued to members of the Executive Management Group,
on a Fully Diluted Basis, upon exercise of the Equity Incentive Options and the
Executive Management Options, after taking into account the effect of the
Accretion Calculation.
1.4 ADJUSTED MANAGEMENT SHARES. The aggregate number of shares of New
Common Stock issued to members of the Executive Management Group upon exercise
of the Executive Options and the Equity Incentive Options, after taking into
account the effect of the Accretion Calculation.
1.5 ADMINISTRATIVE CLAIM. A Claim for any cost or expense of
administration of the Chapter 11 Case allowed under Sections 503(b), 507(b) or
546(c)(2) of the Bankruptcy Code and entitled to priority under Section
507(a)(1) of the Bankruptcy Code, including, without limitation: (a) fees
payable under 28 U.S.C. Section 1930; (b) actual and necessary costs and
expenses incurred in the ordinary course of the Debtor's business; (c) actual
and necessary costs and expenses of preserving the Debtor's Estate or
administering the Chapter 11 Case; and (d) all Professional Fees to the extent
Allowed by Final Order under Sections 330, 331, or 503 of the Bankruptcy Code.
1.6 ADMINISTRATIVE CLAIM BAR DATE. The date or dates established by the
Bankruptcy Court for the filing of Administrative Claims, except Claims for
Professional Fees and Preserved Ordinary Course Administrative Claims.
1.7 AFFILIATE. With respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person and, with respect to any specified natural
Person, any other Person having a relationship by blood, marriage, or adoption
not more remote than first cousins with such natural Person. For purposes
2
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of this definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with regards to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement, or otherwise.
1.8 ALLOWED. With respect to any Claim against, or Equity Interest in,
the Debtor: (a) proof of which, requests for payment of which, or application
for allowance of which, was filed or deemed filed on or before the Bar Date,
Administrative Claim Bar Date, or the Professional Fee Bar Date, as applicable,
for filing proofs of claim or equity interest or requests for payment for Claims
of such type against the Debtor; (b) if no proof of claim or equity interest is
filed, which has been or is ever listed by the Debtor in the Schedules as
liquidated in amount and not disputed or contingent; or (c) a Claim or Equity
Interest that is allowed in any contract, instrument, indenture, or other
agreement entered into in connection with the Plan and, in any case, a Claim as
to which no objection to its allowance has been interposed within the applicable
period of limitation fixed by the Plan, the Bankruptcy Code, the Bankruptcy
Rules, or the Bankruptcy Court. The term "Allowed," when used to modify a
reference in the Plan to any Claim, Equity Interest, Class of Claims, or Class
of Equity Interests, means a Claim or Equity Interest (or any Claim or Equity
Interest in any such Class) that is so allowed, e.g., an "Allowed Secured Claim"
is a Claim that has been allowed to the extent of the value, as determined by
the Bankruptcy Court under Section 506(a) of the Bankruptcy Code, of any
interest in property of the Estate securing such Claim.
1.9 AMORTIZATION. During each applicable fiscal year, for Stuart and
its Subsidiaries on a consolidated basis, the amount of the amortization that is
reflected on the financial statements for such period in accordance with GAAP
consistently applied.
1.10 AVOIDANCE ACTIONS. All statutory causes of actions preserved for
the Estate under Sections 510, 542, 543, 544, 545, 547, 548, 549 and 550 of the
Bankruptcy Code.
1.11 BALLOT. The form of ballot or ballots distributed with the
Disclosure Statement to holders of Claims and Equity Interests entitled to vote
on the Plan on which an acceptance or rejection of the Plan is to be indicated
and on which a Small Noteholder Election is to be made.
1.12 BANKRUPTCY CODE. Title 11 of the United States Code, 11 U.S.C.
Sections 101-1330, as amended from time to time and as applicable to the Chapter
11 Case.
1.13 BANKRUPTCY COURT. The United States District Court for the
District of Delaware having jurisdiction over the Chapter 11 Case and, to the
extent of any reference under 28 U.S.C. Section 157, the unit of such District
Court under 28 U.S.C. Section 151.
1.14 BANKRUPTCY RULES. Collectively, the Federal Rules of Bankruptcy
Procedure as promulgated under 28 U.S.C. Section 2075 and any Local Rules of the
Bankruptcy Court, as applicable to the Chapter 11 Case.
1.15 BAR DATE. The date or dates fixed by the Bankruptcy Court by which
Persons asserting a Claim against the Debtor (except Administrative Claims,
Preserved Ordinary Course Administrative Claims, and Claims for Professional
Fees) must file a proof of claim or be forever barred from asserting a Claim
against the Debtor or its property, from voting on the Plan, and sharing in
distributions under the Plan.
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1.16 BINGO SYSTEMS. Bingo Systems & Supply, Inc., a Missouri
corporation, a Subsidiary of Stuart.
1.17 BINGO SYSTEMS SALE AGREEMENT. The Stock Purchase Agreement by and
among the Elliott Trust, Stuart, and Bingo Systems, dated August 12, 1998, under
which Stuart acquired all outstanding shares of Bingo Systems from the Elliott
Trust.
1.18 BUSINESS DAY. Any day other than a Saturday, Sunday, or legal
holiday (as defined in Bankruptcy Rule 9006).
1.19 CASH. Currency, checks drawn on a bank insured by the Federal
Deposit Insurance Corporation, certified checks, money orders, negotiable
instruments, and wire transfers of immediately available funds.
1.20 CASH PAYMENT OPTION. The distributions to the holders of Notes in
Class 4A of the Plan.
1.21 CHAPTER 11 CASE. The case under Chapter 11 of the Bankruptcy Code
in which Stuart is the debtor and debtor-in-possession, pending before the
Bankruptcy Court.
1.22 CLAIM. A claim against a Person or its property as defined in
Section 101(5) of the Bankruptcy Code, including, without limitation: (a) any
right to payment, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, mature, unmatured, disputed, undisputed, legal,
equitable, secured, or unsecured arising at any time before the Effective Date;
or (b) any right to an equitable remedy for breach of performance if such breach
gives rise to a right to payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured, or unsecured.
1.23 CLASS. A category of holders of Claims or Equity Interests which
are substantially similar in nature to the Claims or Equity Interests of other
holders placed in such category, as designated in ARTICLE 3 of this Plan.
1.24 CLASS 4A ALLOWED CLAIM LIMIT. For purposes of inclusion in Class
4A, $500,000 in principal amount in Notes. Ownership by any Person, together
with any Affiliate of any Person, of any amount of Notes in the aggregate
principal amount up to and including $500,000 is within the Class 4A Allowed
Claim Limit, as is ownership by any Person, together with any Affiliate of any
Person, of any amount of Notes who elects to reduce its Allowed Claim on account
of such Notes to a principal amount of $500,000.
1.25 COLLATERAL. Any property or interest in property of the Estate
subject to a Lien to secure the payment or performance of a Claim, the Lien not
being subject to avoidance under the Bankruptcy Code or otherwise invalid under
the Bankruptcy Code or applicable state law.
1.26 COMMITTEE. Any official committee of creditors, noteholders, or
equity interest holders appointed by the United States Trustee in the Chapter 11
Case in accordance with Section 1102(a)(1) of the Bankruptcy Code.
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1.27 COMPANY FUNDING COMMITMENT. The obligation of Reorganized Stuart
to provide funding of up to $3,000,000 for Cash payments to Allowed Claims in
Class 4A under the Cash Payment Option.
1.28 CONFIRMATION DATE. The date on which the Bankruptcy Court enters
the Confirmation Order.
1.29 CONFIRMATION HEARING. The hearing held by the Bankruptcy Court to
consider confirmation of the Plan under Section 1129 of the Bankruptcy Code, as
such hearing may be adjourned from time to time.
1.30 CONFIRMATION ORDER. The order of the Bankruptcy Court confirming
the Plan in accordance with the Bankruptcy Code.
1.31 CONTINGENT CLAIM. Any Claim for which a proof of claim has been
filed with the Bankruptcy Court: (a) which was not filed in a sum certain, or
which has not accrued and is dependent on a future event that has not occurred
and may never occur, and (b) which has not been Allowed on or before the
Confirmation Date.
1.32 CONTRARIAN. Contrarian Capital Management, L.L.C., or its designee
or designees, a holder of Notes.
1.33 CONTRARIAN STANDBY FUNDING COMMITMENT. The agreement between
Stuart and Contrarian substantially in the form included as Exhibit E to the
Plan Supplement pursuant to which Contrarian shall provide funding for the Cash
Payment Option upon satisfaction of the Company Funding Commitment.
1.34 CREDITOR. Any holder of a Claim, whether or not such Claim is an
Allowed Claim, encompassed within the statutory definition set forth in Section
101(10) of the Bankruptcy Code.
1.35 CURE. The distribution on the Effective Date (or as soon
thereafter the Effective Date as practicable) of Cash, or such other property as
may be agreed on by the parties or ordered by the Bankruptcy Court, with respect
to the assumption of an executory contract or unexpired lease of nonresidential
real property, in accordance with Section 365(b) of the Bankruptcy Code, in an
amount equal to all unpaid monetary obligations, without interest, or such other
amount as may be agreed on by the parties, under such executory contract or
unexpired lease, to the extent such obligations are enforceable under the
Bankruptcy Code and applicable state law.
1.36 D&O POLICY. Any directors and officers liability insurance policy
or any applicable errors and omissions policy applicable to directors and
officers of Stuart, Reorganized Stuart, or any of their respective Subsidiaries.
1.37 DEBTOR. Stuart Entertainment, Inc., as debtor and
debtor-in-possession in the Chapter 11 Case, in accordance with Section 1107 and
1108 of the Bankruptcy Code.
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1.38 DEPRECIATION EXPENSE. During each applicable fiscal year, for
Stuart and its Subsidiaries on a consolidated basis, that amount of the
depreciation expense that is reflected on the financial statements for such
period in accordance with GAAP consistently applied.
1.39 DIP FACILITY. The debtor-in-possession financing facility between
the DIP Lender and Stuart and certain of its Subsidiaries, as approved by the
Bankruptcy Court in accordance with the DIP Financing Order.
1.40 DIP FINANCING ORDER. The order or orders of the Bankruptcy Court
approving and authorizing the terms of debtor-in-possession financing
arrangements in the Chapter 11 Case in accordance with the DIP Loan Documents.
1.41 DIP LENDER. The lender or lenders under the DIP Loan Documents.
1.42 DIP LOAN DOCUMENTS. All documents and instruments evidencing,
setting forth the terms, and implementing the terms of the DIP Facility executed
in the Chapter 11 Case and as approved by the DIP Financing Order.
1.43 DISBURSING AGENT. Reorganized Stuart in its capacity as the agent
of the Bankruptcy Court, or such other Person as may be retained by Reorganized
Stuart and approved by the Bankruptcy Court, to hold and distribute certain
consideration to the holders of Allowed Claims.
1.44 DISCLOSURE STATEMENT. The written disclosure statement relating to
the Plan including, without limitation, all exhibits and schedules to such
disclosure statement, in the form approved by the Bankruptcy Court under Section
1125 of the Bankruptcy Code and Bankruptcy Rule 3017.
1.45 DISPUTED. With respect to Claims or Equity Interests, any Claim or
Equity Interest: (a) that is listed in the Schedules as unliquidated, disputed,
or contingent; or (b) as to which the Debtor or any other party-in-interest has
interposed a timely objection or request for estimation, or has sought to
equitably subordinate or otherwise limit recovery in accordance with the
Bankruptcy Code and the Bankruptcy Rules, or which is otherwise disputed by the
Debtor in accordance with applicable law, such objection, request for
estimation, action to limit recovery or dispute has not been withdrawn or
determined by a Final Order; or (c) that is a Contingent Claim.
1.46 DISTRIBUTION DATE. The date, occurring as soon as practicable
after the Effective Date, on which distributions are made to holders of Allowed
Claims under the Plan.
1.47 DISTRIBUTION RECORD DATE. The date or dates established by the
Bankruptcy Court by which holders of Claims and Equity Interests are determined
for purposes of such holders' entitlement to receive distributions under the
Plan.
1.48 EBITDA. During each applicable fiscal year, for Reorganized Stuart
and its Subsidiaries on a consolidated basis, determined in accordance with GAAP
consistently applied, the Net Income for such period, plus, to the extent
reflected in the statement of Net Income for such period, the sum of (a) Income
Tax, (b) Interest Expense, (c) Depreciation Expense, and (d) Amortization.
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1.49 EFFECTIVE DATE. The later of: (a) the first Business Day that is
at least eleven days after the Confirmation Date and on which no stay of the
Confirmation Order is in effect; and (b) the Business Day on which all of the
conditions set forth in Section 10.2 of the Plan have been satisfied or waived.
1.50 ELLIOTT TRUST. The Robert and Jeannette Elliott Trust U/T/A dated
August 13, 1997, with Robert Elliott and Jeannette Elliott as trustees.
1.51 ELLIOTT TRUST L/C. The $600,000 irrevocable letter of credit
granted to the Elliott Trust by Stuart to secure payment of all amounts due
under certain promissory notes made by Stuart payable to the Elliott Trust,
including the Elliott Trust Promissory Note, pursuant to the Bingo Systems Sale
Agreement.
1.52 ELLIOTT TRUST PROMISSORY NOTE. That certain promissory note in the
principal amount of $1,200,000 made by Stuart payable to the Elliott Trust in
accordance with the Bingo Systems Sale Agreement under which the Elliott Trust
Secured Claim arises.
1.53 ELLIOTT TRUST SECURED CLAIM. The Claim in the principal amount of
$800,000, as of the Petition Date, arising under the Elliott Trust Promissory
Note, which provides for Stuart's payment to the Elliott Trust the consideration
for the Elliott Trust's sale of all the outstanding stock of Bingo Systems to
Stuart under the Bingo Systems Sale Agreement. The Elliott Trust Secured Claim
is Secured by, among other things, the Elliott Trust L/C and a second mortgage
on certain real property owned by Bingo Systems.
1.54 EMPLOYMENT CONTRACTS. The employment contracts, entered into
before the Petition Date and approved by Order of the Bankruptcy Court, between
Stuart and members of the Executive Management Group, included in Exhibit F to
the Plan Supplement.
1.55 EQUITY INCENTIVE OPTIONS. The performance-based options entitling
holders to acquire shares of New Common Stock aggregating approximately six
percent (6%) of the outstanding shares of New Common Stock on a Fully Diluted
Basis, subject to the Adjusted Management Percentage, granted to members of the
Executive Management Group in accordance with the New Incentive Stock Option
Plan and described in Section 5.11 of the Plan.
1.56 EQUITY INTEREST. Any interest in Stuart, including Old Common
Stock, represented by any class or series of common or preferred stock issued by
Stuart before the Effective Date, and any warrants, options, or rights to
purchase any such common or preferred stock.
1.57 EQUITY RELATED CLAIM. Any Claim arising from the rescission of a
purchase or sale of an Equity Interest, or for damages arising from the purchase
or sale of an Equity Interest, or any Claim by any Person that asserts equitable
or contractual rights of reimbursement, contribution, or indemnification arising
from such Claim, including any Claim that has been or may be asserted against
Stuart and its officers and/or directors asserting violations of federal
securities laws including, without limitation, actions under Sections 11 and 15
of the Securities Act and Sections 10(b) and 20 of the Exchange Act, and Rule
10b-5 promulgated under the Exchange Act by the SEC, and any applicable
non-federal law.
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1.58 ESTATE. The estate for the Debtor created in the Chapter 11 Case
in accordance with Section 541 of the Bankruptcy Code.
1.59 EXCHANGE ACT. The Securities Exchange Act of 1934, as amended, and
the regulations promulgated under that act.
1.60 EXECUTIVE MANAGEMENT GROUP. Collectively, Joseph M. Valandra
(Chief Executive Officer), Lawrence X. Taylor, III (Chief Financial Officer),
Ernest Marchand (Chief Operating Officer), Jimmy D. Helton (Senior Vice
President - Strategic Planning and Analysis), and Clement Chantiam (Senior Vice
President).
1.61 EXECUTIVE OPTIONS. The options entitling holders to acquire shares
of New Common Stock aggregating approximately four percent (4%) of the
outstanding shares of New Common Stock on a Fully Diluted Basis, subject to the
Adjusted Management Percentage, granted to members of the Executive Management
Group in accordance with the New Incentive Stock Option Plan and described in
Section 5.10 of the Plan.
1.62 EXIT FINANCING FACILITY. A post-Effective Date working capital
revolving credit financing and term facility between Reorganized Stuart and a
lender selected by Reorganized Stuart containing terms and conditions in form
and substance reasonably acceptable to Reorganized Stuart.
1.63 EXIT FINANCING DOCUMENTS. The documents or term sheets setting
forth the terms and conditions of the Exit Financing Facility, substantially in
the form included in the Plan Supplement.
1.64 FINAL ORDER. An order or judgment of the Bankruptcy Court: (a) as
to which the time to appeal, petition for certiorari, or move for reargument or
rehearing has expired; or (b) as to which no appeal, petition for certiorari, or
other proceedings for reargument or rehearing is pending; or (c) as to which any
right to appeal, petition for certiorari, reargue, or rehear has been waived in
writing in form and substance satisfactory to the Debtor and Reorganized Stuart;
or (d) if an appeal, writ of certiorari, or reargument or rehearing has been
sought, as to which the highest court to which such order was appealed, or
certiorari, reargument or rehearing has determined such appeal, writ of
certiorari, reargument, or rehearing, or has denied such appeal, write of
certiorari, reargument, or rehearing, and the time to take any further appeal,
petition for certiorari, or move for reargument or rehearing has expired;
provided, however, that the possibility that a motion under Rule 59 or Rule 60
of the Federal Rules of Civil Procedure, or any analogous rule under the
Bankruptcy Rules, may be filed with respect to such order does not prevent such
order from being a Final Order.
1.65 FULLY DILUTED BASIS. With respect to Stuart's capital stock
outstanding or reserved for issuance on the Effective Date: (a) all New Common
Stock to be issued in exchange for the Notes; (b) all New Common Stock reserved
for issuance upon exercise of the Executive Options; and (c) all New Common
Stock reserved for issuance upon exercise of the Equity Incentive Options.
1.66 GAAP. The generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board
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or in such other statements by such other entity as have been approved by a
significant segment of the accounting profession.
1.67 GAMING AUTHORITIES. Any individual, board, committee, council, or
other body having authority over Stuart, Reorganized Stuart, or any of their
respective Subsidiaries to enforce any statute, rule, regulation, or other
legislation or enactment (including, without limitation, Gaming Requirements)
relating to gaming in any jurisdiction, including states, provinces, localities,
and Indian tribal jurisdictions.
1.68 GAMING REQUIREMENTS. All statutes and regulations, applicable to
holders of gaming licenses in any jurisdiction, including states, provinces,
localities, and Indian tribal jurisdictions, in which Reorganized Stuart or any
of its subsidiaries is to maintain gaming licenses that require licensees to
identify any person or entity that owns a specified percentage of the licensee's
equity or that require all equity owners (and/or the principals of such equity
owners) holding over such specified percentage of the licensee's equity to
provide certain background information to a governmental regulatory body.
1.69 GENERAL UNSECURED CLAIM. Any Claim against the Debtor as of the
Petition Date not secured by a charge against or interest in property of the
Estate, excluding: (a) Secured Claims; (b) Administrative Expense Claims; (c)
Preserved Ordinary Course Administrative Claims; (d) Priority Tax Claims; (e)
Priority Claims; (f) Claims for Professional Fees; and (g) any Claims evidenced
by or arising under the Notes, including any Notes Securities Claims.
1.70 INCOME TAX. During each applicable fiscal year, for Stuart and its
Subsidiaries on a consolidated basis, the provision or benefit for federal,
state, local, and foreign income taxes of Stuart and its Subsidiaries for such
period as determined in accordance with GAAP consistently applied.
1.71 INDEMNIFICATION CLAIMS. Any Claim of any Person arising from or
related to obligations for contribution, indemnification, and exculpation by the
Debtor arising under applicable laws or agreement or as provided in any of
Stuart's certificate of incorporation, by-laws, or policies in effect before or
as of the Confirmation Date.
1.72 INDENTURE. The Indenture, dated as of November 13, 1996, pursuant
to which Stuart issued the Notes and under which HSBC Bank USA is the successor
Indenture Trustee.
1.73 INDENTURE TRUSTEE. HSBC Bank USA, successor to Marine Midland
Bank, or any successor trustee under the Indenture.
1.74 INITIAL MANAGEMENT PERCENTAGE. Ten percent (10%), which is the
aggregate percentage, on a Fully Diluted Basis, of the total outstanding shares
of New Common Stock to be issued to members of the Executive Management Group
upon exercise of the Executive Options (entitling holders to acquire four
percent (4%) of the outstanding shares of New Common Stock on a Fully Diluted
Basis) and the Equity Incentive Options (entitling holders to acquire six
percent (6%) of the outstanding shares of New Common Stock on a Fully Diluted
Basis) before giving effect to the issuance of the Adjusted Management Shares.
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1.75 INTEREST EXPENSE. During each such applicable fiscal year, as
applied to Stuart and its Subsidiaries, the interest expense of Stuart and its
Subsidiaries on a consolidated basis for such period as determined in accordance
with GAAP consistently applied.
1.76 IRS. The Internal Revenue Service.
1.77 LIEN. A lien as defined in Section 101(37) of the Bankruptcy Code,
except a lien that has been avoided in accordance with Sections 544, 545, 546,
547, 548, or 549 of the Bankruptcy Code.
1.78 LITIGATION CLAIMS. All rights, claims, torts, liens, liabilities,
obligations, actions, causes of action, Avoidance Actions, avoiding powers,
proceedings, debts, contracts, judgments, offsets, damages and demands
whatsoever in law or in equity, whether known or unknown, contingent or
otherwise, that the Debtor or the Estate may have against any Person including,
without limitation, those listed in the Plan Supplement. Failure to list a
Litigation Claim in the Plan Supplement does not constitute a waiver or release
by the Debtor or Reorganized Stuart of such Litigation Claim.
1.79 NET INCOME. During each applicable fiscal year, for Stuart and its
Subsidiaries on a consolidated basis, the net income (or loss) of Stuart and its
Subsidiaries for such period as determined in accordance with GAAP consistently
applied (except as provided in this definition), excluding: (a) any gain or
loss, net of taxes, realized upon any sale, transfer, or other disposition
(including by way of merger or consolidation) by Stuart and its Subsidiaries of
any property or other assets of Stuart and its Subsidiaries outside the ordinary
course of business; (b) any gain or loss, net of taxes, realized upon the
termination of any employee benefit plan; and (c) any extraordinary gain or
loss, including any extraordinary costs not associated with the normal
operations of the business of Stuart and its Subsidiaries net of taxes; in each
case (a) through (c), as determined in accordance with GAAP consistently
applied. "Net Income" means, for any period, with respect to any property or
asset acquired by Stuart and its Subsidiaries, the historical net income (or
loss) of such property or asset during such period, adjusted to give effect to
the effective tax rate of Stuart and its Subsidiaries for such period.
1.80 NEW COMMON STOCK. The common stock, $0.01 par value per share, to
be authorized under the Reorganized Stuart Certificate to be filed with the
Delaware Secretary of State as of the Effective Date, as further described in
Section 9.1 of the Plan.
1.81 NEW INCENTIVE STOCK OPTION PLAN. The option plan, substantially in
the form contained in Exhibit D to the Plan Supplement, providing for the
vesting, terms, and conditions of the Equity Incentive Options and the Executive
Options granted to members of the Executive Management Group, entitling such
members, if such options were exercised, to receive an aggregate number of
shares of New Common Stock equivalent to the Adjusted Management Percentage of
the outstanding New Common Stock on a Fully Diluted Basis.
1.82 NOTES. The 12-1/2% Senior Subordinated Notes due 2004, in the
original principal amount of $100,000,000, issued by Stuart under the Indenture.
1.83 NOTES CLAIM. Any Claim on account of unpaid obligations under the
Notes including accrued and unpaid interest up to but not including the Petition
Date, except those Claims that are Notes Securities Claims.
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1.84 NOTES SECURITIES CLAIMS. All Claims, if any, whether asserted
before or after the Petition Date based on alleged violations of applicable
federal or state securities laws: (a) arising from the rescission of a purchase
or sale, or offer to purchase or sell, any Notes; and (b) for damages arising
from the purchase or sale of Notes.
1.85 OLD COMMON STOCK. The equity interests represented by duly
authorized, validly issued, and outstanding shares of common stock of Stuart,
par value $0.01 per share, together with all accrued and unpaid dividends on
such shares, and all options, warrants, or rights to acquire such common stock
existing at any time before the Effective Date.
1.86 PERSON. Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated association or
organization, governmental agency or associated political subdivision.
1.87 PETITION DATE. The date on which the Debtor filed its voluntary
petition commencing the Chapter 11 Case.
1.88 PLAN. This Plan of Reorganization, either in its present form or
as it may be amended, supplemented or modified from time to time, including all
its annexed exhibits and schedules, the Plan Supplement, and the Plan Documents.
1.89 PLAN DOCUMENTS. Collectively, the Reorganized Stuart Certificate,
the Reorganized Stuart By-Laws, the New Incentive Option Plan, the Shareholder
Agreement, the Employment Contracts, the Severance Agreements, the Contrarian
Standby Funding Commitment, and the Exit Financing Documents, as they may be
amended at any time before the conclusion of the Confirmation Hearing, or after
the Confirmation Date in accordance with Section 14.1 of the Plan.
1.90 PLAN SUPPLEMENT. The supplement, containing copies of the Plan
Documents, that is to be filed with the Bankruptcy Court as early as is
practicable (but in no event later than seven Business Days) before the deadline
fixed for filing objections to Confirmation of the Plan, or on such other date
as the Bankruptcy Court may determine. The Plan supplement is incorporated into
the Plan as if fully set forth in the Plan, and all references to the Plan refer
also to the Plan Documents contained in the Plan Supplement.
1.91 PRESERVED ORDINARY COURSE ADMINISTRATIVE CLAIM. Administrative
Claims that are based on liabilities incurred by the Debtor in the purchase,
lease, or use of goods and services in the ordinary course of its business
including, without limitation, Administrative Claims on account of services
provided to the Debtor after the Petition Date by its employees.
1.92 PRIORITY CLAIM. Any Claim (or portions of such Claim) entitled to
priority under Section 507(a) of the Bankruptcy Code other than Priority Tax
Claims, Administrative Expense Claims, Preserved Ordinary Course Administrative
Claims, and Claims for Professional Fees.
1.93 PRIORITY TAX CLAIM. Any Claim of a governmental unit entitled to
priority under Section 507(a)(8) of the Bankruptcy Code.
1.94 PROFESSIONALS. Those Persons (a) employed in accordance with an
order of the Bankruptcy Court under Sections 327 or 1103 of the Bankruptcy Code
and to be compensated
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for services under Sections 327, 328, 329, 330, and 331 of the Bankruptcy Code,
or (b) for which compensation and reimbursement has been Allowed by the
Bankruptcy Court under Section 503(b)(4) of the Bankruptcy Code.
1.95 PROFESSIONAL FEE BAR DATE. The date, as set by order of the
Bankruptcy Court, by which all applications for compensation or expense
reimbursement, including Professional Fees, must be filed with the Bankruptcy
Court.
1.96 PROFESSIONAL FEES. The Administrative Claims for compensation and
reimbursement of expenses submitted in accordance with Sections 330, 331, or
503(b) of the Bankruptcy Code of Professionals and the Indenture Trustee not
otherwise satisfied in accordance with other provisions of the Plan.
1.97 PRO RATA. A proportionate share, such that the ratio of the
consideration distributed on account of an Allowed Claim or Equity Interest in a
Class to the amount of such Allowed Claim or Equity Interest is the same as the
ratio of the amount of the consideration distributed on account of all Allowed
Claims or Equity Interests in such Class to the amount of all Allowed Claims or
Equity Interests in such Class.
1.98 RECLAMATION CLAIMS. Any Claim against the Debtor by any Person
arising out of the sale of goods to the Debtor in the ordinary course of such
Person's business, provided that such Person has otherwise satisfied the
requirements of Section 546(c) of the Bankruptcy Code and the Uniform Commercial
Code, as applicable.
1.99 REDUCED NOTES PERCENTAGE. The percentage reduction in the
aggregate amount of Allowed Notes Claims in Class 4, due to Small Noteholder
Elections made by holders of Allowed Notes Claims.
1.100 REORGANIZED STUART. Stuart, or any successor to Stuart by merger,
consolidation, acquisition or otherwise, on and after the Effective Date.
1.101 REORGANIZED STUART BY-LAWS. The By-Laws of Reorganized Stuart,
substantially in the form included as Exhibit B to the Plan Supplement.
1.102 REORGANIZED STUART CERTIFICATE. The Certificate of Incorporation
of Reorganized Stuart, substantially in the form included as Exhibit A to the
Plan Supplement.
1.103 RESTRUCTURING AGREEMENT. The Restructuring Agreement Regarding
Pre-Negotiated Plan of Reorganization, dated as of May 21, 1999, as may be
amended or modified from time to time, between Stuart and certain holders of the
Notes.
1.104 RETIREE BENEFITS. Payments to any Person for the purpose of
providing or reimbursing payments for retired employees of the Debtor and of any
other entities as to which the Debtor is obligated to provide retiree benefits
and the eligible spouses and eligible dependents of such retired employees, for
medical, surgical, or hospital care benefits, or in the event of death of a
retiree under any plan, fund, or program (through the purchase of insurance or
otherwise) maintained or established by the Debtor before the Petition Date, as
such plan, fund, or program was then in effect or as later amended.
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1.105 SCHEDULES. The schedules of assets and liabilities, the list of
holders of interests, and the statements of financial affairs filed by the
Debtor under Section 521 of the Bankruptcy Code and Bankruptcy rule 1007, as
such schedules, lists, and statements may have been or may be supplemented or
amended from time to time.
1.106 SEC. The United States Securities and Exchange Commission.
1.107 SECURED CLAIM. Any Claim, to the extent reflected in the
Schedules or a proof of claim as a Secured Claim, which is secured by a Lien on
Collateral to the extent of the value of such Collateral, as determined in
accordance with Section 506(a) of the Bankruptcy Code, or, if such Claim is
subject to setoff under Section 553 of the Bankruptcy Code, to the extent of
such setoff.
1.108 SECURED TAX CLAIM. Any Claim of any state or local governmental
unit or associated political subdivision that is secured by a Lien on property
of the Estate by operation of applicable law including, without limitation,
every Claim for unpaid real, personal property, or ad valorem taxes.
1.109 SECURITIES ACT. The Securities Act of 1933, as amended, and its
applicable regulations.
1.110 SEVERANCE AGREEMENTS. The severance agreements, entered into
before the Petition Date and approved by Order of the Bankruptcy Court, between
Stuart and certain employees of Stuart, substantially in the forms contained in
Exhibit G to the Plan Supplement.
1.111 SHAREHOLDER AGREEMENT. That certain agreement by and between
Contrarian and the Executive Management Group, substantially in the form
included as Exhibit C to the Plan Supplement.
1.112 SMALL NOTEHOLDER ELECTION. An election, made by so indicating on
the Ballot: (a) by a holder of an Allowed Notes Claim in Class 4 to reduce its
Claim to a principal amount of $500,000 and have its reduced Claim reclassified
and treated as an Allowed Class 4A Claim; or (b) by a holder of an Allowed Notes
Claim classified in Class 4A, by virtue of such Claim being within the Class 4A
Allowed Claim Limit, to decline the Cash Payment Option and have its Claim be
reclassified and treated as an Allowed Class 4 Claim.
1.113 SUBSIDIARY. Any entity of which the outstanding capital stock
entitled to vote for the election of directors is owned or controlled, directly
or indirectly, by the Debtor, by one or more Subsidiaries of the Debtor, or by a
Debtor and one or more of its other Subsidiaries.
1.114 SUBSIDIARY CLAIMS. Any Claim of a Subsidiary on account of any
debt owed by the Debtor to any Subsidiary arising at any time before the
Confirmation Date including, without limitation, contingent claims of a
Subsidiary against the Debtor arising from such Subsidiary's obligations as
guarantor under the DIP Facility.
1.115 VOTING RECORD DATE. The date established by the Bankruptcy Court
by which holders of Allowed Claims and Equity Interests are determined for
purposes of such holders' right to submit Ballots.
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ARTICLE 2. TREATMENT OF UNCLASSIFIED CLAIMS
2.1 UNCLASSIFIED CLAIMS. As provided in Section 1123(a)(1) of the
Bankruptcy Code, Administrative Expense Claims, Preserved Ordinary Course
Administrative Claims, Priority Tax Claims, and Reclamation Claims against the
Debtor are not classified for purposes of voting on, or receiving distributions
under, the Plan. Holders of such Claims are not entitled to vote on the Plan.
All such Claims are instead treated separately in accordance with this ARTICLE 2
and in accordance with the requirements set forth in Section 1129(a)(9)(A) of
the Bankruptcy Code.
2.2 ADMINISTRATIVE EXPENSE CLAIMS.
2.2.1 GENERALLY. Each Allowed Administrative Expense Claim,
other than Preserved Ordinary Course Administrative Claims and Reclamation
Claims, is to be paid in full in Cash (or otherwise satisfied in accordance with
its terms) on the latest of: (a) the Effective Date, or as soon thereafter as
practicable; (b)such date as may be fixed by the Bankruptcy Court, or as soon
thereafter as practicable; (c) the tenth Business Day after such Claim is
Allowed, or as soon thereafter as practicable; and (d) such date as the holder
of such Claim and Reorganized Stuart agree.
2.2.2 INCLUDED EXPENSES. Administrative Expense Claims include
obligations to the DIP Lender, costs incurred in the operation of the Debtor's
business after the Petition Date, fees and expenses of Professionals retained by
the Debtor, any Committee appointed under Section 1102 of the Bankruptcy Code,
the Indenture Trustee, any other statutory committee appointed to serve in the
Chapter 11 Case, and the fees due to the United States Trustee under 28 U.S.C.
Section 1930.
2.3 PRESERVED ORDINARY COURSE ADMINISTRATIVE CLAIMS. Each Allowed
Preserved Ordinary Course Administrative Claim is to be paid by Reorganized
Stuart in accordance with either: (a) the terms and conditions under which such
Claim arose; or (b) in the ordinary course of Reorganized Stuart's business.
Such payments are to be made by Reorganized Stuart without further action by the
holder of such Claim.
2.4 ALLOWED PRIORITY TAX CLAIMS. Any Allowed Priority Tax Claim is to
be paid in full in Cash on the Effective Date; provided, however, that
Reorganized Stuart may elect to pay such Claims through deferred Cash payments
over a period not exceeding six years after the date of assessment of such
Claim, of a value as of the Effective Date, equal to the Allowed amount of such
Claim. In that event, such payments are to be made in equal annual installments
of principal, plus interest accruing from the Effective Date at the rate on the
unpaid portion of Allowed Priority Tax Claim set froth in Internal Revenue Code
Sections 6621 and 6622. The first such payment is to be made payable on the
latest of: (a) the Effective Date, or as soon thereafter as practicable; (b) the
tenth Business Day after the date on which an order allowing such Claim becomes
a Final Order, or as soon thereafter as practicable; and (c) such other time as
is agreed upon by the holder of such Claim and Reorganized Stuart; provided,
however, that Reorganized Stuart retains the right to prepay any such Allowed
Priority Tax Claim, or any remaining balance of such Claim, in full or in part,
at any time on or after the Effective Date without premium or penalty.
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2.5 ALLOWED RECLAMATION CLAIMS. All requests for payment of Reclamation
Claims must be filed by the Bar Date or the holders of such Claims are forever
barred from asserting such Reclamation Claims against the Debtor and Reorganized
Stuart. Each Allowed Reclamation Claim is to be satisfied, at Reorganized
Stuart's sole option, by either: (a) the return of the goods subject to the
Reclamation Claim; or (b) payment in full in Cash upon the latest of: (i) the
Effective Date, or as soon thereafter as practicable; (ii) such date as may be
fixed by the Bankruptcy Court, or as soon thereafter as practicable; (iii) the
tenth Business Day after the date on which an order allowing such Claim becomes
a Final Order, or as soon thereafter as practicable; and (iv) such other time as
is agreed upon by the holder of such Claim and Reorganized Stuart.
2.6 CLAIMS FOR PROFESSIONAL FEES. Each Person seeking an award by the
Bankruptcy Court of Professional Fees: (a) must file its final application for
allowance of compensation for services rendered and reimbursement of expenses
incurred through the Confirmation Date within thirty days after the Confirmation
Date; and (b) if the Bankruptcy Court grants such an award, each such Person
must be paid in full in Cash in such amounts as are allowed by the Bankruptcy
Court (i) on the later of the Effective Date or the date such Claim becomes an
Allowed Administrative Expense Claim, or as soon thereafter as practicable, (ii)
upon such other terms as may be mutually agreed upon between the holder of such
Allowed Administrative Expense Claim and the Debtor or Reorganized Stuart, or
(iii) in accordance with the terms of any applicable administrative procedures
order entered by the Bankruptcy Court. All Professional Fees for services
rendered in connection with the Chapter 11 Case and the Plan after the
Confirmation Date including, without limitation, those relating to the
occurrence of the Effective Date, the prosecution of Causes of Action preserved
under the Plan, and the resolution of Disputed Claims, are to be paid by
Reorganized Stuart upon receipt of an invoice for such services, or on such
other terms as Reorganized Stuart may agree to, without the need for further
Bankruptcy Court authorization or entry of a Final Order. If Reorganized Stuart
and any Professional cannot agree on the amount of post-Confirmation Date fees
and expenses to be paid to such Professional, such amount is to be determined by
the Bankruptcy Court.
2.7 CLAIMS OF DIP LENDER. Simultaneously with the closing of the Exit
Financing Facility, all the Debtor's obligations to the DIP Lender under the DIP
Facility and the DIP Loan Documents shall be fully and finally satisfied in
accordance with their terms using proceeds derived from, among other things, the
Exit Financing Facility and/or Cash held by Reorganized Stuart.
ARTICLE 3. CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS
3.1 SUMMARY OF CLASSIFICATION. In accordance with Section 1123(a)(1) of
the Bankruptcy Code, all Claims of Creditors and holders of Equity Interests
(except those Claims receiving treatment as set forth in ARTICLE 2) are placed
in the Classes described below for all purposes, including voting on,
confirmation of, and distribution under, the Plan:
<TABLE>
<CAPTION>
<S> <C> <C>
Class 1 Priority Claims Unimpaired
No solicitation required
Class 2 Secured Tax Claims Unimpaired
No solicitation required
</TABLE>
15
<PAGE> 22
<TABLE>
<CAPTION>
<S> <C> <C>
Class 3 Miscellaneous Secured Claims Unimpaired
No solicitation required
Class 3A Elliott Trust Secured Claim Impaired
Entitled to vote
Class 4 Notes Claims Impaired
Entitled to vote
Class 4A Small Noteholder Claims Impaired
Entitled to vote
Class 5 General Unsecured Claims Impaired
Entitled to vote
Class 6 Subsidiary Claims Impaired
Entitled to vote
Class 7 Equity Interests Impaired
Entitled to vote
</TABLE>
3.2 SPECIFIC CLASSIFICATION.
3.2.1 CLASS 1 - PRIORITY CLAIMS. Class 1 consists of all
Claims entitled to priority under Section 507(a) of the Bankruptcy Code.
3.2.2 CLASS 2 - SECURED TAX CLAIMS. Class 2 consists of all
Secured Tax Claims. Each holder of a Secured Tax Claim is considered to be in
its own separate subclass within Class 2, and each such subclass is deemed to be
a separate Class for purposes of the Plan.
3.2.3 CLASS 3 - MISCELLANEOUS SECURED CLAIMS. Class 3 consists
of all Secured Claims, other than the Secured Tax Claims in Class 2. Each holder
of a Miscellaneous Secured Claim is considered to be in its own separate
subclass within Class 3, and each such subclass is deemed to be a separate Class
for purposes of the Plan.
3.2.4 CLASS 3A - ELLIOTT TRUST SECURED CLAIM. Class 3A
consists of the Elliott Trust Secured Claim as defined in Section 1.53 of the
Plan.
3.2.5 CLASS 4 - NOTES CLAIMS. Class 4 consists of all Claims
evidenced by, or arising under, the Notes, including all Notes Securities
Claims, except those Claims classified in Class 4A.
3.2.6 CLASS 4A - SMALL NOTEHOLDER CLAIMS. Class 4A consists of
all Claims evidenced by, or arising under, the Notes where the holder of such
Claim makes a Small Noteholder Election to have its Claim treated as an Allowed
Class 4A Claim.
3.2.7 CLASS 5 - GENERAL UNSECURED CLAIMS. Class 5 consists of
all General Unsecured Claims, except the Subsidiary Claims contained in Class 6.
3.2.8 CLASS 6 - SUBSIDIARY CLAIMS. Class 6 consists of all
Subsidiary Claims.
3.2.9 CLASS 7 - EQUITY INTERESTS AND EQUITY RELATED CLAIMS.
Class 7 consists of Equity Interests, including interests based on Old Common
Stock, and Equity Related Claims.
16
<PAGE> 23
ARTICLE 4. TREATMENT OF CLAIMS AND EQUITY INTERESTS
4.1 CLASS 1 - PRIORITY CLAIMS
4.1.1 IMPAIRMENT AND VOTING. Class 1 is unimpaired by the
Plan; consequently, all holders of Allowed Claims in Class 1 are deemed to have
accepted the Plan and are not entitled to vote on the Plan.
4.1.2 DISTRIBUTIONS. Each holder of an Allowed Priority Claim
shall receive Cash in an amount equal to such Allowed Priority Claim on the
later of: (a) the Effective Date, or as soon thereafter as practicable; and (b)
ten Business Days after the date such Priority Claim becomes an Allowed Priority
Claim, or as soon thereafter as practicable, unless the holder of such Allowed
Priority Claim and Reorganized Stuart agree otherwise.
4.2 CLASS 2 - SECURED TAX CLAIMS.
4.2.1 IMPAIRMENT AND VOTING. Class 2 is unimpaired by the
Plan; consequently, all holders of Allowed Claims in Class 2 are deemed to have
accepted the Plan and are not entitled to vote on the Plan.
4.2.2 DISTRIBUTIONS. Each Allowed Secured Tax Claim shall be
paid in full in Cash upon the latest of: (a) the Effective Date, or as soon
thereafter as practicable; (b) such date as may be fixed by the Bankruptcy
Court, or as soon thereafter as practicable; (c) the tenth Business Day after
such Claim is Allowed, or as soon thereafter as practicable; (d) the date on
which such Secured Tax Claim is scheduled to be paid in the ordinary course of
business under applicable law or regulation; and (e) such date as the holder of
such Claim and Reorganized Stuart agree.
4.3 CLASS 3 - MISCELLANEOUS SECURED CLAIMS.
4.3.1 IMPAIRMENT AND VOTING. Class 3 is unimpaired by the
Plan; consequently, all holders of Allowed Claims in Class 3 are deemed to have
accepted the Plan and are not entitled to vote on the Plan.
4.3.2 DISTRIBUTIONS. Each Allowed Miscellaneous Secured Claim
shall be paid in full in Cash upon the latest of: (a) the Effective Date, or as
soon thereafter as practicable; (b) such date as may be fixed by the Bankruptcy
Court, or as soon thereafter as practicable; (c) the tenth Business Day after
such Claim is Allowed, or as soon thereafter as practicable; (d) the date on
which such Miscellaneous Secured Claim is scheduled to be paid in the ordinary
course of business under applicable law or regulation; and (e) such date as the
holder of such Claim and Reorganized Stuart agree.
4.4 CLASS 3A - ELLIOTT TRUST SECURED CLAIM.
4.4.1 IMPAIRMENT AND VOTING. Class 3A is impaired by the Plan;
consequently the holder of the Allowed Claim in Class 3A is entitled to vote on
the Plan.
4.4.2 ALLOWANCE OF CLAIM. On the Confirmation Date, the
Elliott Trust Secured Claim is deemed Allowed in the amount of $893,892.24,
including interest at the non-default rate, under the Elliott Trust Promissory
Note.
17
<PAGE> 24
4.4.3 DISTRIBUTIONS. In full and final satisfaction of the
Elliott Trust Secured Claim, the Elliott Trust shall be paid in full in Cash as
follows: (a) eight (8) equal quarterly payments of $111,736.53, commencing on
October 1, 1999 and continuing on each subsequent January 1, April 1, July 1,
and October 1, with the last installment to be paid, rather than July 1, 2001,
no later than August 1, 2001; (b) except with respect to the foregoing payment
schedule, Reorganized Stuart shall meet all its obligations to the Elliott Trust
under the Elliot Trust Promissory Note, which, except to the extent altered by
the foregoing payment schedule, shall remain in full force an affect in
accordance with its own terms from and after the Effective Date.
4.5 CLASS 4 - NOTES CLAIMS.
4.5.1 IMPAIRMENT AND VOTING. Class 4 is impaired by the Plan;
consequently, all holders of Allowed Notes Claims and Allowed Notes Securities
Claims are entitled to vote on the Plan.
4.5.2 ALLOWANCE OF NOTES CLAIMS. On the Confirmation Date, all
Notes Claims are deemed Allowed in the aggregate principal amount of
$100,000,000, plus accrued and unpaid interest at the non-default rate up to but
not including the Petition Date.
4.5.3 SATISFACTION OF NOTES SECURITIES CLAIMS. In full and
final satisfaction of all Notes Securities Claims, and in consideration of the
distributions to the holders of Allowed Notes Claims, each holder of an Allowed
Notes Securities Claim shall retain any proceeds derived from or relating to any
litigation instituted or judgment obtained by any such holder or on his behalf
payable by either: (a) any entity other than the Debtor, Reorganized Stuart, or
any of their respective Subsidiaries; or (b) proceeds of insurance policies
maintained by the Debtor. Except as provided in this Section 4.5.3, the holders
of Notes Securities Claims shall receive no distributions under this Plan.
4.5.4 CLASSIFICATION OF NOTES SECURITIES CLAIMS. To the extent
that the Bankruptcy Court finds that classification of the Notes Securities
Claims in Class 4 violates or otherwise contravenes one or more provisions of
the Bankruptcy Code or the Bankruptcy Rules, all Notes Securities Claims shall
be automatically reclassified in a separate Class below all other Classes under
the Plan containing Claims and, upon such reclassification, the Notes Securities
Claims shall receive the treatment as set forth in Section 4.5.3 of the Plan.
4.5.5 DISTRIBUTIONS. On the Effective Date, or as soon
thereafter as practicable, each holder of an Allowed Notes Claim not otherwise
classified in Class 4A shall receive, in full and final satisfaction of such
Allowed Notes Claim, a Pro Rata portion of a number of shares of New Common
Stock equivalent to one-hundred percent (100%) of the New Common Stock, subject
to dilution by the Adjusted Management Shares of New Common Stock issued upon
the exercise of the Equity Incentive Options and the Executive Options.
4.5.6 GAMING REQUIREMENTS. Any holder of an Allowed Notes
Claim who receives more than five percent (5%) of the shares of New Common Stock
issued to holders of Class 4 Claims shall comply at all times with the Gaming
Requirements. If at any time (the "Disqualification Date") any holder of New
Common Stock refuses to comply with the Gaming Requirements, or if the Gaming
Authorities of any jurisdiction in which Reorganized Stuart maintains a gaming
license find that any holder of New Common Stock is not qualified or
18
<PAGE> 25
otherwise suitable to hold such New Common Stock in Reorganized Stuart, such
holder shall either: (a) divest itself of its New Common Stock within 60 days
after the Disqualification Date or such shorter period as directed by any Gaming
Authorities; or (b) accept, within 60 days after the Disqualification Date or
such shorter period as directed by any Gaming Authorities, the redemption of its
New Common Stock by Reorganized Stuart for an amount in Cash equal to the lesser
of the current market value of such New Common Stock and such holder's original
cost basis in such New Common Stock determined as of the Effective Date. If such
holder has not divested itself of its New Common Stock or accepted redemption of
its New Common Stock within such period or periods, Reorganized Stuart shall
have the option, but not the obligation, to cancel such New Common Stock.
4.5.7 DISBURSING AGENT. With respect to each holder of an
Allowed Notes Claim, as of the Distribution Record Date, Reorganized Stuart
shall distribute such holder's Pro Rata portion of New Common Stock to the
Disbursing Agent on the Distribution Date. As soon as practicable after the
Disbursing Agent receives the Debt Instruments of a Notes Claim holder in
accordance with Section 4.5.8, the Disbursing Agent shall issue and distribute
that holder's Pro Rata portion of the New Common Stock.
4.5.8 SURRENDER OF SECURITIES OR DEBT INSTRUMENTS. On or
before the Distribution Date, or as soon thereafter as practicable, each holder
of a Debt Instrument evidencing an Allowed Notes Claim shall surrender or cause
to be surrendered such Debt Instrument to the Disbursing Agent. No distribution
of property under the Plan shall be made to or on behalf of any such holder
unless and until such Debt Instrument is received by the Disbursing Agent, or
the unavailability of such Debt Instrument is reasonably established to the
Disbursing Agent's satisfaction. If any holder of an Allowed Notes Claim seeks
to establish the unavailability of the Debt Instrument evidencing such Claim,
the Disbursing Agent shall, within the first Business Day thirty days after
receipt of the holder's evidence of unavailability and statement of indemnity of
Reorganized Stuart and the Disbursing Agent: (a) provide the holder, in writing,
with a detailed description regarding the unacceptability of such evidence and
statement of indemnity, if any; or (b) deliver to the Indenture Trustee and
Reorganized Stuart a notice of compliance and distribute to such holder its Pro
Rata portion of the New Common Stock. Any such holder who fails to surrender or
cause to be surrendered such Debt Instrument or fails to execute and deliver an
affidavit of loss and indemnity reasonably satisfactory to the Disbursing Agent
and Reorganized Stuart before the first anniversary of the Effective Date shall
be deemed to have forfeited all rights and Claims in respect of such Debt
Instrument and shall not participate in any distribution under the Plan, and all
property in respect of such forfeited distribution, including interest accrued
on such distribution, shall revert to Reorganized Stuart notwithstanding any
federal or state escheat laws to the contrary.
4.5.9 CANCELLATION OF NOTES. As of the Effective Date, all
Notes, and all agreements, instruments, and other documents evidencing the Notes
and the rights of the holders of Notes, shall be automatically canceled,
extinguished, and deemed void (all without further action by any Person), and
all obligations of any Person under such instruments and agreements shall be
deemed fully and finally satisfied and released.
4.5.10 DISTRIBUTION RECORD DATE. At the close of business on
the Distribution Record Date, the transfer ledgers of the Indenture Trustee
shall be closed, and no further changes in the record holders of the Notes shall
be permitted. Reorganized Stuart, the Disbursing Agent, and
19
<PAGE> 26
the Indenture Trustee shall have no obligation to recognize any transfer of
Notes occurring after the Distribution Record Date. Reorganized Stuart, the
Indenture Trustee, and the Disbursing Agent shall be entitled to recognize and
deal for all purposes under the Plan with only those record holders stated on
the transfer ledgers of the Indenture Trustee as of the close of business on the
Distribution Record Date.
4.5.11 DELIVERY OF DISTRIBUTIONS TO HOLDERS OF NOTES.
Distributions of New Common Stock shall be made by the Disbursing Agent to
holders of Notes in accordance with the Plan at the addresses contained in the
official records of the Indenture Trustee. If any holder's distribution is
returned as undeliverable, no further distributions to such holder shall be made
unless and until Reorganized Stuart, the Disbursing Agent, and the Indenture
Trustee are notified of such holder's then current address, at which time all
missed distributions shall be made to such holder without interest.
Undeliverable distributions shall be returned to Reorganized Stuart, until such
distributions are claimed. All claims for undeliverable distributions shall be
made on or before the first anniversary of the Effective Date. After such date,
all unclaimed property shall revert to Reorganized Stuart and the Claim of any
holder or successor to such holder with respect to such property shall be
discharged and forever barred notwithstanding any federal or state escheat laws
to the contrary.
4.6 CLASS 4A - SMALL NOTEHOLDERS CLAIMS.
4.6.1 IMPAIRMENT AND VOTING. Class 4A is impaired by the Plan;
consequently, all holders of Allowed Convenience Claims are entitled to vote on
the Plan.
4.6.2 DISTRIBUTIONS. On the latest of: (a) the Effective Date,
or as soon thereafter as practicable; (b) such date as may be fixed by the
Bankruptcy Court, or as soon thereafter as practicable; (c) the tenth Business
Day after such Claim is Allowed, or as soon thereafter as practicable; and (d)
such date as the holder of such Claim and Reorganized Stuart agree, each Allowed
Claim in Class 4A shall receive in full and final satisfaction of such Claim
twenty-five percent (25%) of the Allowed Notes Claim in Cash, subject to such
holder's surrender of its Debt Instrument(s) evidencing its Allowed Notes Claim
in accordance with Section 4.5.8. Distributions to holders of Allowed Class 4A
Claims shall be funded in accordance with the Company Funding Commitment and the
Contrarian Standby Funding Commitment.
4.6.2.1 Any Allowed Notes Claim based on ownership of
not more than the Class 4A Allowed Claim Limit in principal amount shall be
classified as an Allowed Claim in Class 4A unless the holder of such Claim makes
a Small Noteholder Election, by so indicating on its Ballot, to reclassify its
Allowed Notes Claim as a Class 4 Claim and receive its Pro Rata portion of New
Common Stock as set forth in Section 4.5.5 of the Plan;
4.6.2.2 For purposes of measuring Allowed Notes
Claims with respect to the Class 4A Allowed Claim Limit, all Allowed Notes
Claims held by any Person and any of such Person's Affiliates as of the
Distribution Record Date shall be aggregated;
4.6.2.3. Any holder of an Allowed Claim in Class 4A
who either does not submit a Ballot or does not indicate its Small Noteholder
Election on its Ballot shall be deemed
20
<PAGE> 27
to have elected the Cash Payment Option and declined to have its Allowed Notes
Claim reclassified and treated as an Allowed Claim in Class 4.
4.6.2.4. Any holder of an Allowed Claim above the
Class 4A Allowed Claim Limit may make a Small Noteholder Election, by so
indicating on its Ballot, to reduce its Allowed Claim in Class 4 to the Class 4A
Allowed Claim Limit and receive, in full and final satisfaction of its Allowed
Claim, the treatment given to an Allowed Claim in Class 4A in a principal amount
of $500,000. By making such an election, such holder shall be deemed
automatically to have accepted the Plan, irrespective of any other designation
on such holder's Ballot.
4.7 CLASS 5 - GENERAL UNSECURED CLAIMS.
4.7.1 IMPAIRMENT AND VOTING. Class 5 is impaired by the Plan;
consequently, all holders of Allowed General Unsecured Claims are entitled to
vote on the Plan.
4.7.2 DISTRIBUTIONS. On the latest of: (a) the Effective Date,
or as soon thereafter as practicable; (b) such date as may be fixed by the
Bankruptcy Court, or as soon thereafter as practicable; (c) the tenth Business
Day after such Claim is Allowed, or as soon thereafter as practicable; and (d)
such date as the holder of such Claim and Reorganized Stuart agree, each Allowed
General Unsecured Claim, in full and final satisfaction of such Allowed General
Unsecured Claim, shall be paid an amount in Cash equivalent to twenty-five
percent (25%) of the amount of such Allowed General Unsecured Claim.
4.8 CLASS 6 - SUBSIDIARY CLAIMS.
4.8.1 IMPAIRMENT AND VOTING. Class 6 is impaired by the Plan;
consequently, all holders of Allowed Claims in Class 6 are entitled to vote on
the Plan.
4.8.2 DISTRIBUTIONS. The holders of Subsidiary Claims shall
receive no distributions under the Plan, and all such Claims shall be discharged
under the Plan in accordance with Section 12.2 of the Plan.
4.9 CLASS 7 - EQUITY INTERESTS AND EQUITY RELATED CLAIMS.
4.9.1 IMPAIRMENT AND VOTING. Class 7 is impaired by the Plan;
consequently, all holders of Allowed Equity Interests and Equity Related Claims
are entitled to vote on the Plan.
4.9.2 DISTRIBUTIONS. In full and final satisfaction of all
Allowed Equity Interests and Allowed Equity Related Claims, subject to the
provisions of Section 4.9.6, on the Effective Date, or as soon thereafter as
practicable, each holder of an Allowed Equity Interest and Allowed Equity
Related Claim shall receive its Pro Rata portion of $150,000 in Cash. Only those
holders of Equity Related Claims whose Claims are Allowed as of the Effective
Date shall be entitled to receive a distribution on account of such Claims. No
distribution shall be made on account of any Equity Related Claims not Allowed
as of the Effective Date.
4.9.3 DISTRIBUTION RECORD DATE. At the close of business on
the Distribution Record Date, the stock transfer ledgers of Stuart shall be
closed, and there shall be no further
<PAGE> 28
changes in the record holders of Equity Interests. Reorganized Stuart and the
Disbursing Agent shall have no obligation to recognize any transfer of such
Equity Interests occurring after the Distribution Record Date. Reorganized
Stuart and the Disbursing Agent shall be entitled to recognize and deal for all
purposes under the Plan with only those record holders stated on the stock
transfer ledgers as of the close of business on the Distribution Record Date.
4.9.4 SURRENDER OF SECURITIES. On or before the Distribution
Date, or as soon thereafter as practicable, each holder of a security evidencing
an Allowed Equity Interest shall surrender such security to the Disbursing
Agent. No distribution of property under the Plan shall be made to or on behalf
of any such holder unless and until such security is received by the Disbursing
Agent or the unavailability of such security is reasonably established to the
satisfaction of the Disbursing Agent and Reorganized Stuart. If any holder of
Allowed Equity Interests seeks to establish the unavailability of such security
evidencing such Equity Interests, the Disbursing Agent shall, within the first
Business Day thirty days after receipt of the holders' evidence of
unavailability and statement of indemnity of the Disbursing Agent and
Reorganized Stuart: (a) provide the holder, in writing, with a detailed
description regarding the unacceptability of such evidence and statement of
indemnity; or (b) deliver to Reorganized Stuart a notice of compliance and
distribute to such holder its Pro Rata portion of the distribution to Class 7.
Any such holder who fails to surrender or cause to be surrendered such security
or fails to execute and deliver an affidavit of loss and indemnity reasonably
satisfactory to the Disbursing Agent and Reorganized Stuart before the first
anniversary of the Effective Date shall be deemed to have forfeited all rights
in respect of such security and shall not participate in any distribution under
the Plan, and all property in respect of such forfeited distribution, including
dividends accrued on that distribution, shall revert to Reorganized Stuart
notwithstanding any federal or state escheat laws to the contrary.
4.9.5 DELIVERY OF DISTRIBUTIONS. Distributions shall be made
by the Disbursing Agent to holders of Allowed Equity Interests in accordance
with the Plan at the addresses contained in the official stock transfer records
of Reorganized Stuart. If any holder's distribution is returned as
undeliverable, no further distributions to such holder shall be made unless and
until the Disbursing Agent is notified of such holder's then current address, at
which time all required distributions shall be made to such holder.
Undeliverable distributions shall be returned to Reorganized Stuart until such
distributions are claimed. All claims for undeliverable distributions shall be
made on or before the first anniversary of the Effective Date. After such date,
all unclaimed distributions shall revert to Reorganized Stuart and the Claim of
any holder of an Allowed Equity Interest or successor to such holder with
respect to such distribution shall be discharged and forever barred
notwithstanding any federal or state escheat laws to the contrary.
4.9.6 ALTERNATIVE TREATMENT. If: (a) the Bankruptcy Court
determines that the treatment of, and distributions to, Class 7 under the Plan
violates the provisions of Section 1129(b) of the Bankruptcy Code (to the extent
such provisions apply); or (b) Class 7 does not vote to accept the Plan; then
all Equity Interests and Equity Related Claims shall be canceled and
extinguished on the Confirmation Date without further action under any
applicable agreement, law, regulation, order, or rule, and the holders of Equity
Interests and Equity Related Claims shall not receive or retain any rights,
property, or distributions on account of their Equity Interests or Equity
Related Claims.
22
<PAGE> 29
ARTICLE 5. IMPLEMENTATION OF THE PLAN
5.1 PLAN FUNDING. Funds to be used to make Cash payments under the Plan
have been or shall be generated from, among other things, the operation of the
Debtor's business, asset dispositions, borrowing under the Exit Financing
Facility, and funds received in accordance with the Contrarian Standby Funding
Commitment.
5.2 EXIT FINANCING FACILITY. On or before the Effective Date, the
Debtor or Reorganized Stuart, as the case may be, shall execute the Exit
Financing Documents, which shall have been approved by separate, prior Final
Order of the Bankruptcy Court. The Exit Financing Facility, among other things,
shall (a) be effective on the Effective Date, (b) be a senior secured facility,
and (c) contain terms and conditions in form and substance acceptable to the
Debtor and/or Reorganized Stuart.
5.3 ISSUANCE OF NEW COMMON STOCK. The Plan shall satisfy all Allowed
Notes Claims by the issuance of 1,000,000 shares of New Common Stock, with a
number of shares equal to the Adjusted Management Shares reserved for issuance
in accordance with the exercise of the Executive Options and the Equity
Incentive Options.
5.3.1 ACCRETION CALCULATION. The number of Adjusted Management Shares
is calculated using the following Accretion Calculation:
<TABLE>
<CAPTION>
<S> <C>
Actual Company Funding Amount x 4
= Reduced Notes Percentage (RNP)
- ---------------------------------------
Allowed Notes Claims as of Petition Date
Initial Management Percentage (IMP) + (IMP x RNP) = ADJUSTED MANAGEMENT PERCENTAGE (AMP)
(1,000,000 / (100% - AMP)) - 1,000,000 = ADJUSTED MANAGEMENT SHARES
</TABLE>
5.3.2 DIVESTITURE. If at any time (the "Disqualification
Date") any holder of New Common Stock refuses to comply with the Gaming
Requirements, or if Gaming Authorities of any jurisdiction in which Reorganized
Stuart maintains a gaming license find that any holder of New Common Stock is
not qualified or otherwise suitable to hold such New Common Stock in Reorganized
Stuart, such holder shall be required either: (a) to divest itself of its New
Common Stock within 60 days after the Disqualification Date or such shorter
period as directed by any Gaming Authorities; or (b) to accept, within 60 days
after the Disqualification Date or such other period as directed by any Gaming
Authorities, the redemption of its New Common Stock by Reorganized Stuart for an
amount in Cash equal to the lesser of: (i) the current market value of such New
Common Stock; and (ii) such holder's original per-share cost basis in such New
Common Stock, which shall be determined by dividing the number of shares of New
Common Stock issued as of the Effective Date by the aggregate reorganized equity
value of Reorganized Stuart as determined by the Bankruptcy Court. If such
holder has not divested itself of its New Common Stock or accepted redemption of
its New Common Stock within such period or periods, Reorganized Stuart shall
have the option, but not the obligation, to cancel such New Common Stock.
23
<PAGE> 30
5.3.3 GAMING COMPLIANCE PERSON. Reorganized Stuart shall, at
its own expense, provide holders of New Common Stock with access to an
individual experienced in gaming license matters to assist such holders as
reasonably necessary with gaming license matters and related reporting
obligations, including compliance with the Gaming Requirements, if any,
associated with such holders' ownership of New Common Stock. This compliance
person shall assist holders of New Common Stock with respect to interpreting
regulations, preparing forms, and interfacing with Gaming Authorities, and shall
be accessible by telephone or e-mail to such holders during regular business
hours.
5.4 CONTRARIAN STANDBY FUNDING COMMITMENT. Upon satisfaction by
Reorganized Stuart of its obligations under the Company Funding Commitment,
Contrarian shall provide any additional funding of distributions to Allowed
Claims in Class 4A in accordance with the terms of the Contrarian Standby
Funding Commitment. Pursuant to the Contrarian Standby Funding Commitment and
this Plan, Contrarian shall receive, in exchange for any such funding provided
to satisfy Allowed Claims in Class 4A, an Allowed Claim in Class 4 in an amount
equivalent to the Allowed Notes Claims satisfied pursuant to the Contrarian
Standby Funding Commitment, and shall receive distributions of New Common Stock
in accordance with Section 4.5.5 of the Plan on account of such Allowed Class 4
Claim.
5.5 CERTIFICATE OF INCORPORATION AND BY-LAWS. As of the Effective Date
and without any further action by the stockholders or directors of the Debtor or
Reorganized Stuart, the Debtor's certificate of incorporation and by-laws shall
be amended and restated substantially in the forms of the Reorganized Stuart
Certificate and Reorganized Stuart By-Laws contained in the Plan Supplement,
which shall provide for, among other things, the authorization of all acts
necessary to implement the Plan including, without limitation, the issuance of
the New Common Stock. Such restated certificates of incorporation and by-laws
shall also prohibit (to the extent required by Section 1123(a) and (b) of the
Bankruptcy Code) the issuance of non-voting equity securities. After the
Effective Date, Reorganized Stuart may amend and restate its certificate of
incorporation and by-laws as permitted by applicable law.
5.6 PRIVATE COMPANY STATUS. Stuart is currently a public company,
registered under Section 12 of the Exchange Act, and its Old Common Stock is
presently traded on the OTC Bulletin Board under the symbol "STUA." Following
the Effective Date of the Plan, Reorganized Stuart shall terminate its
registration under the Exchange Act and Reorganized Stuart shall no longer file
reports with the SEC or otherwise be subject to the reporting requirements under
the Exchange Act and the New Common Stock shall not be traded on any recognized
stock exchange or over-the-counter securities market.
5.7 STOCK TRANSFER RESTRICTION. Following the Effective Date, no Person
holding shares of New Common Stock shall transfer, and Reorganized Stuart shall
not register the transfer of, such shares of New Common Stock, whether by sale,
assignment, gift, bequest, appointment or otherwise (collectively, a
"Transfer"), if such Transfer would cause the aggregate number of outstanding
shares of New Common Stock to be held of record by five hundred (500) or more
Persons. Any purported Transfer of shares of New Common Stock in violation of
this Section 5.7 shall be null and void, and the purported transferee, with
respect to the shares transferred, shall have no rights as a stockholder of
Reorganized Stuart and no other rights against or with respect to Reorganized
Stuart.
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<PAGE> 31
5.8 NO CORPORATE ACTION REQUIRED. As of the Effective Date: (a) the
adoption of the Reorganized Stuart Certificate and Reorganized Stuart By-laws or
similar constituent documents for Reorganized Stuart; (b) the initial selection
of directors and officers for Reorganized Stuart; (c) the adoption, execution,
delivery, and implementation of all contracts, leases, instruments, releases,
and other agreements related to or contemplated by the Plan including, without
limitation, the Shareholder Agreement and the New Incentive Stock Option Plan;
and (d) the other matters provided for under, or in furtherance of, the Plan
involving corporate action required of the Debtor or Reorganized Stuart shall be
deemed to have occurred and become effective as provided in the Plan, and shall
be deemed authorized and approved in all respects without further order of the
Bankruptcy Court or any further action by the stockholders or directors of the
Debtor or Reorganized Stuart. As of the Effective Date, the term of each of the
officers and directors of the Debtor not continuing in office, if any, shall
terminate in accordance with the Confirmation Order without any further action
by the stockholders or directors of the Debtor or Reorganized Stuart.
Notwithstanding anything in this Section 5.8 to the contrary, Contrarian shall
be obligated to vote all its shares of New Common Stock in favor of the New
Incentive Stock Option Plan, to the extent that such a vote is required for
authorization and implementation of such New Incentive Stock Option Plan under
applicable law.
5.9 DIRECTORS AND OFFICERS.
5.9.1 INITIAL BOARD OF DIRECTORS. The initial board of
directors of Reorganized Stuart following the Confirmation Date shall be
comprised of five directors as follows: (i) Joseph M. Valandra, as director and
Chairman of the Board; (ii) Jock Patton; and (iii) three members appointed by
Contrarian.
5.9.2 INDEMNIFICATION AND INSURANCE. Reorganized Stuart shall
provide all directors with indemnification rights and officers and directors
liability insurance and shall compensate its directors in accordance with
practices customary for public entities of its type. Those directors and
officers serving the Debtor immediately before the Effective Date and not
continuing in office after the Effective Date, if any, shall be terminated
without cause as of the Effective Date and shall be indemnified by Reorganized
Stuart for all actions taken while acting as directors and officers for the
Debtor in accordance with the Debtor's certificate of incorporation, by-laws, or
contracts, or applicable state law on account of services provided by such
officers and directors to the Debtor from the Petition Date through and
including the Effective Date.
5.9.3 INITIAL OFFICERS. The Debtor's officers immediately
before the Effective Date shall serve as the initial officers of Reorganized
Stuart on and after the Effective Date.
5.10 EXECUTIVE OPTIONS. As of the Effective Date, Reorganized Stuart
shall issue to the Executive Management Group the Executive Options, entitling
such members to acquire an aggregate number of shares of New Common Stock
equivalent to four percent (4%) of the outstanding New Common Stock as of the
Effective Date on a Fully Diluted Basis, subject to the Adjusted Management
Percentage. Such shares, when issued, shall dilute all shares of New Common
Stock issued and outstanding at the time of issuance on a Pro Rata basis. The
Executive Options shall be exercisable and shall be governed by the terms and
conditions set forth in the New Incentive Stock Option Plan and shall be
allocated among the Executive Management Group in a manner and in an amount as
determined by Mr. Valandra on or before
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the Effective Date. The number of shares of New Common Stock subject to the
Executive Options shall be adjusted in the event of stock splits, stock
dividends, mergers, and similar events.
5.11 EQUITY INCENTIVE OPTIONS. As of the Effective Date, members of the
Executive Management Group shall receive the Equity Incentive Options, entitling
the holders of such options to acquire an aggregate number of shares of New
Common Stock equivalent to six percent (6%) of the New Common Stock as of the
Effective Date on a Fully Diluted Basis, subject to the Adjusted Management
Percentage.
5.11.1 EXERCISE PRICE. The Equity Incentive Options shall have
an exercise price per share equal to the fair market value per share of New
Common Stock determined as of the Confirmation Date.
5.11.2 VESTING. The Equity Incentive Options shall vest and
become exercisable if Reorganized Stuart meets the following EBITDA targets
during the first three full fiscal years following the Effective Date in
accordance with the vesting schedule set forth below:
<TABLE>
<CAPTION>
FISCAL YEAR EBITDA ($ IN MILLIONS) VESTING
<S> <C> <C>
1 $12 1/3
2 $14 1/3
3 $16 1/3
</TABLE>
Notwithstanding the foregoing, the EBITDA targets set forth above are cumulative
and the Equity Incentive Options may vest earlier than as set forth in the
vesting Schedule. For example, if Reorganized Stuart fails to meet the total
EBITDA target for the first two fiscal years, but meets the EBITDA target in the
third fiscal year, and the aggregate EBITDA for all three fiscal years exceeds
$42 million, the Equity Incentive Options shall vest in full. Further, if
Reorganized Stuart meets the EBITDA target established for any fiscal year
during an earlier fiscal year, the Equity Incentive Options that would have
vested based on achieving such EBITDA target in the later fiscal year shall vest
in full. The Equity Incentive Options shall be allocated among the Executive
Management Group in a manner and in an amount as determined by Mr. Valandra
before the Effective Date. The number of shares and exercise price of the Equity
Incentive Options shall be adjusted in the event of stock splits, stock
dividends, mergers, and similar events.
5.12 RETENTION BONUSES. On December 31, 1999, each employee listed on
Exhibit H to the Plan Supplement shall be entitled to receive a Retention Bonus
consisting of Cash in an amount equal to ten percent (10%) of that employee's
annual base salary in effect on the Petition Date, provided that such employee
remains an employee of Reorganized Stuart through December 31, 1999, unless such
requirement is waived by Reorganized Stuart in its sole discretion.
5.13 MANAGEMENT COMPENSATION REVIEW. The initial board of directors of
Reorganized Stuart shall, within three months of the Effective Date, review
compensation levels of the Executive Management Group and make any appropriate
adjustments in good faith to fairly compensate the members of the Executive
Management Group.
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5.14 TERMINATION OF SUBORDINATION RIGHTS AND SETTLEMENT OF RELATED
CLAIMS. The classification and manner of satisfying all Claims and Equity
Interests under the Plan take into consideration all contractual, legal, and
equitable subordination rights, whether arising under general principles of
equitable subordination, Sections 510(b) and (c) of the Bankruptcy Code or
otherwise, that a holder of a Claim or Equity Interest may have against other
Claim or Equity Interest holders with respect to any distribution made in
accordance with the Plan. As of the Effective Date, all contractual, legal, or
equitable subordination rights that a holder of a Claim or Equity Interest may
have with respect to any distribution to be made in accordance with the Plan
shall be discharged and terminated, and all actions related to the enforcement
of such subordination rights shall be permanently enjoined and distributions
under the Plan shall not be subject to payment to any beneficiaries of such
terminated subordination rights, or to levy, garnishment, attachment, or other
legal process by any beneficiary of such terminated subordination rights.
Pursuant to Bankruptcy Rule 9019 and in consideration of the distributions and
other benefits provided under the Plan, the provisions of this Section 5.14
constitute a good faith compromise and settlement of all claims or controversies
relating to the termination of all contractual, legal, and equitable
subordination rights that a holder of a Claim or Equity Interest may have with
respect to any Allowed Claim or allowed Equity Interest, or any distribution to
be made on account of an Allowed Claim or an Allowed Equity Interest. The entry
of the Confirmation Order constitutes the Bankruptcy Court's approval of the
compromise and settlement of all such claims and controversies, and the
Bankruptcy Court's finding that such compromise or settlement is in the best
interests of the Debtor, Reorganized Stuart, and their respective property and
holders of Claims and Equity Interests and is fair, equitable, and reasonable.
5.15 ADMINISTRATION PENDING EFFECTIVE DATE. Before the Effective Date,
the Debtor shall continue to operate its businesses, subject to all applicable
requirement of the Bankruptcy Code and the Bankruptcy Rules. After the Effective
Date, Reorganized Stuart may operate its businesses, and may use, acquire, and
dispose of property free of any restrictions of the Bankruptcy Code or the
Bankruptcy Rules, but subject to the continuing jurisdiction of the Bankruptcy
Court as set forth in ARTICLE 13.
5.16 POST-CONFIRMATION FEES; FINAL DECREE. Reorganized Stuart shall be
responsible for paying any post-confirmation fees under 28 U.S.C. Section
1930(a)(6) and the filing of post-confirmation reports, until a final decree is
entered. A final decree shall be entered as soon as practicable after
distributions have commenced under the Plan.
5.17 TRANSFER OF CERTAIN ASSETS TO SUBSIDIARIES. On or before December
31, 1999, Stuart or Reorganized Stuart, as the case may be, shall transfer all
or substantially all of its business operating assets, including but not limited
to property, plant, and equipment, inventory, accounts receivable, and goodwill
associated therewith, to one or more of its Subsidiaries as a capital
contribution to such Subsidiaries. It is anticipated that the employees of
Stuart associated with the transferred businesses shall also be transferred to
the applicable Subsidiary.
5.18 NAME CHANGE. On or before the Effective Date, Stuart shall
effectuate a corporate name change to "------------------------------"
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ARTICLE 6. EXECUTORY CONTRACTS AND UNEXPIRED LEASES
6.1 ASSUMPTION OR REJECTION OF EXECUTORY CONTRACTS AND UNEXPIRED
LEASES. The executory contracts and unexpired leases between the Debtor and any
Person are dealt with as follows:
6.1.1 ASSUMPTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES.
All executory contracts and unexpired leases, including without limitation the
Employment Contracts and the Severance Agreements, set forth on the schedule of
assumed executory contracts filed with the Bankruptcy Court as part of the Plan
Supplement that exist between the Debtor and any Person shall be assumed by
Reorganized Stuart as of the Effective Date, except for any executory contract
or unexpired lease: (a) that has been rejected in accordance with an order of
the Bankruptcy Court entered before the Confirmation Date; or (b) as to which a
motion for approval or rejection of such executory contract or unexpired lease,
if applicable, has been filed with the Bankruptcy Court before the Confirmation
Date.
6.1.2 REJECTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES.
All executory contracts and unexpired leases that exist between the Debtors and
any Person and are either set forth on the schedule of rejected executory
contracts and unexpired leases filed with the Bankruptcy Court as part of the
Plan Supplement, or which do not appear in the Plan Supplement shall be deemed
rejected as of the Effective Date, except for any executory contract or
unexpired lease that has been assumed or rejected in accordance with an order of
the Bankruptcy Court entered before the Confirmation Date.
6.1.3 APPROVAL OF ASSUMPTION OR REJECTION. Entry of the
Confirmation Order constitutes: (a) the approval under Section 365(a) of the
Bankruptcy Code of the assumption of the executory contracts and unexpired
leases assumed under the Plan or otherwise during the Chapter 11 Case; and (b)
the approval under Section 365(a) of the Bankruptcy Code of the rejection of the
executory contracts and unexpired leases rejected under the Plan or otherwise
during the Chapter 11 Cases. Notwithstanding anything contained in this Section
6.1.3 to the contrary, as part of the Plan Supplement, the Debtor retains the
right to add to, or delete from, the list of rejected executory contracts and
unexpired leases any executory contract or unexpired lease that is initially an
assumed executory contract or an assumed unexpired lease on the Schedules on in
the Plan Supplement.
6.1.4 CURE OF DEFAULTS. On the Effective Date or as soon
thereafter as practicable, Reorganized Stuart shall Cure any defaults under any
executory contract or unexpired lease assumed under this Plan in accordance with
Section 365(b)(1) of the Bankruptcy Code.
6.1.5 POST-PETITION DATE CONTRACTS AND LEASES. Executory
contracts and unexpired leases entered into, and other obligations incurred,
after the Petition Date by the Debtor, shall be performed by the Debtor or
Reorganized Stuart, as applicable, in the ordinary course of business.
6.1.6 BAR DATE. All proofs of claims relating to Claims
arising from the rejection of any executory contract or unexpired lease under
the Plan shall be filed with the Bankruptcy Court no later than thirty days
after the Confirmation Date. Any such Claim not filed
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within that time shall be forever barred. With respect to any executory contract
or unexpired lease rejected by the Debtor before the Confirmation Date, the
deadline for filing such Claims shall be as set forth in the Bar Date Order.
6.1.7 INDEMNIFICATION OBLIGATIONS. Any obligations of the
Debtor to indemnify any Person serving as a fiduciary of any employee benefit
plan or employee benefit program of the Debtor, under charter, by-laws,
contract, or applicable state law shall be deemed to be, and shall be treated
as, an executory contract and assumed by Reorganized Stuart on the Confirmation
Date. Any obligation of the Debtor to indemnify, reimburse, or limit the
liability of any Person, including but not limited to any officer or director of
the Debtor or any of its Subsidiaries, or any agent, professional, financial
advisor, or underwriter of any securities issued by the Debtor related to any
acts or omissions occurring before the Petition Date: (a) are rejected,
canceled, and discharged under the Plan as of the Confirmation Date; and (b) any
and all Claims resulting from such obligations are disallowed under Section
502(e) of the Bankruptcy Code. Notwithstanding any of the foregoing, nothing
contained in the Plan impacts, impairs or prejudices the rights of any Person
covered by any applicable D&O Policy with respect to such policy or policies.
Moreover, Reorganized Stuart shall maintain in force for a period of three years
following the Effective Date appropriate D&O Policies covering pre-Effective
Date directors and officers of the Debtor and containing substantially the same
provisions and limits of coverage as the policies that were in force on the
Petition Date, and Reorganized Stuart shall also be responsible for paying the
deductible or retention amounts under such policies for such three-year period.
6.2 RETIREE BENEFITS. Payment of any Retiree Benefits shall be
continued solely to the extent, and for the duration of the period, the Debtor
is contractually or legally obligated to provide such benefits, subject to any
rights of the Debtor under applicable law.
ARTICLE 7. CONFIRMATION WITHOUT ACCEPTANCE BY ALL IMPAIRED CLASSES
If any impaired Class is determined to have rejected the Plan in
accordance with Section 1126 of the Bankruptcy Code, the Debtor may use the
provisions of Section 1129(b) of the Bankruptcy Code to satisfy the requirements
for Confirmation of the Plan.
ARTICLE 8. PRESERVATION OF LITIGATION CLAIMS
8.1 PRESERVATION OF LITIGATION CLAIMS. In accordance with Section
1123(b)(3) of the Bankruptcy Code, and except as otherwise expressly provided in
the Plan, all Litigation Claims are retained and reserved for the benefit of
Reorganized Stuart. The holders of the Notes and the Indenture Trustee retain
all independent rights of action against any Person except as expressly provided
for otherwise in the Plan.
8.2 PROSECUTION OF LITIGATION CLAIMS. Reorganized Stuart shall
prosecute all preserved Litigation Claims not otherwise expressly compromised in
the Plan, and shall do so in its capacity as a representative of the Estate in
accordance with Section 1123(b)(3)(B) of the Bankruptcy Code. The fees and costs
to litigate such preserved Litigation Claims shall come from Reorganized
Stuart's post-Effective Date operations. Reorganized Stuart shall have sole
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discretion to determine in its business judgment what Litigation Claims to
pursue, which to settle, and the terms and conditions of those settlements.
8.3 DISTRIBUTION OF LITIGATION CLAIMS PROCEEDS. All monetary judgments
and awards resulting from the settlement or prosecution of the preserved
Litigation Claims shall be distributed to the holders of Allowed General
Unsecured Claims after deduction of the reasonable and necessary fees and costs
incurred by Reorganized Stuart in the prosecution and/or settlement of the
preserved Litigation Claims.
8.4 PRESERVATION OF INSURANCE. The Debtor's discharge and release from
Claims as provided in the Plan, except as necessary to be consistent with this
Plan, do not diminish or impair the enforceability of any insurance policy that
may cover Claims against the Debtor or any other Person.
ARTICLE 9. SECURITIES TO BE ISSUED IN CONNECTION WITH THE PLAN
Reorganized Stuart shall issue for distribution, in accordance with the
provisions of the Plan, the New Common Stock.
9.1 NEW COMMON STOCK. In addition to those provisions set forth in
Section 5.3 of the Plan, principal provisions of the New Common Stock are
summarized as follows:
9.1.1 AUTHORIZATION. The Reorganized Stuart Certificate
authorizes the issuance of 10,000,000 shares of New Common Stock and 5,000,000
shares of preferred stock. On the Effective Date, or as soon thereafter as
practicable, Reorganized Stuart shall issue approximately 1,000,000 shares of
such New Common Stock in accordance with Section 4.5 of the Plan, which shall
represent one hundred percent (100%) of the then-outstanding equity in
Reorganized Stuart, subject to dilution by authorized shares of New Common Stock
issued upon the exercise of the Executive Options and the Equity Incentive
Options. All shares of New Common Stock to be issued in accordance with the Plan
(including, without limitation, those shares issuable upon the exercise of the
Executive Options and the Equity Incentive Options) shall, at issuance, be duly
authorized, validly issued, fully paid, and non-assessable. The holders of such
shares shall have no preemptive or other rights to subscribe for additional
shares.
9.1.2 PAR VALUE. The New Common Stock shall have a par value
of $0.001 per share.
9.1.3 RIGHTS. The New Common Stock shall have such rights with
respect to dividends, liquidation, voting, and other matters as are set forth in
Section 5.3 of the Plan, the Reorganized Stuart Certificate, and as provided
under applicable law, including, without limitation, the right to one vote per
share.
9.2 SECTION 1145 EXEMPTION. In accordance with Section 1145 of the
Bankruptcy Code, the issuance of the New Common Stock under this Plan is exempt
from the registration requirements of Section 5 of the Securities Act and any
state or local law requiring registration for offer or sale of a security or
registration or licensing of an issuer of, underwriter of, or broker dealer in
such securities and is deemed to be a public offer of such securities.
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ARTICLE 10. CONDITIONS PRECEDENT
10.1 CONDITIONS TO CONFIRMATION. The following are conditions precedent
to confirmation of this Plan:
10.1.1 APPROVAL OF DISCLOSURE STATEMENT. The Bankruptcy Court
enters a Final Order approving the Disclosure Statement with respect to this
Plan.
10.1.2 FORM OF CONFIRMATION ORDER. The Confirmation Order has
been entered in form and substance reasonably acceptable to the Debtor. If the
Debtor is unable to reach an agreement with any party regarding the form and
substance of the Confirmation Order, the Bankruptcy Court shall resolve all such
disputes between the parties.
10.1.3 SUBSTANCE OF CONFIRMATION ORDER. The Confirmation Order
shall contains the following:
(a) The provisions of the Confirmation Order are
nonseverable and mutually dependent;
(b) All executory contracts or unexpired leases assumed
by Reorganized Stuart during the Chapter 11 Cases or
under this Plan shall remain in full force and effect
for the benefit of Reorganized Stuart notwithstanding
any provision in such contract or lease (including
those described in Sections 365(b)(2) and (f) of the
Bankruptcy Code) that prohibits such assignment or
transfer or that enables, permits or requires
termination of such contract or lease;
(c) Except as expressly provided in this Plan, the Debtor
is discharged as of the Confirmation Date from all
Claims and any "debt" (as that term in defined in
Section 101(12) of the Bankruptcy Code) that arose on
or before the Confirmation Date, and the Debtor's
liability in respect of such Claims and debts is
extinguished completely, whether reduced to judgment
or not, liquidated or unliquidated, contingent or
noncontingent, asserted or unasserted, fixed or
unfixed, matured or unmatured, disputed or
undisputed, legal or equitable, or known or unknown,
or that arose from any agreement of the Debtor that
has either been assumed or rejected in the Chapter 11
Cases or under this Plan, or obligation of the Debtor
incurred before the Confirmation Date, or from the
Debtor's conduct before the Confirmation Date, or
that otherwise arose before the Confirmation Date
including, without limitation, all interest, if any,
on any such debts, whether such interest accrued
before or after the Petition Date;
(d) The Plan does not provide for the liquidation of all
or substantially all of the Debtor's property and
Confirmation is not likely to be followed by the
liquidation of Reorganized Stuart or the need for
further financial reorganizations; and
(e) The Confirmation Order, in accordance with Section
1123(b)(3)(B) of the Bankruptcy Code, specifically
appoints Reorganized Stuart as a representative and
agent of the Debtor to prosecute, compromise, or
abandon the Litigation Claims in accordance with the
Plan.
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10.1.4 APPROVAL OF CONTRARIAN STANDBY FUNDING COMMITMENT. The
Bankruptcy Court enters a Final Order approving the Contrarian Standby Funding
Commitment.
10.2 CONDITIONS TO EFFECTIVENESS. The following are conditions
precedent to the occurrence of the Effective Date:
(a) The Confirmation Date has occurred;
(b) The Confirmation Order is a Final Order, except that
the Debtor reserves the right to cause the Effective
Date to occur notwithstanding the pendency of an
appeal of the Confirmation Order, under circumstances
that would moot such appeal;
(c) No request for revocation of the Confirmation Order
under Section 1144 of the Bankruptcy Code has been
made, or, if made, remains pending;
(d) The Bankruptcy Court in the Confirmation Order has
approved the retention of jurisdiction provisions in
ARTICLE 13 of the Plan;
(e) All documents necessary to implement the transactions
contemplated by this Plan are made in form and
substance reasonably acceptable to the Debtor and the
Committee;
(f) Reorganized Stuart retains sufficient Cash on the
Effective Date to make required distributions to
holders of Allowed Claims on the Distribution Date;
and
(g) Reorganized Stuart receives all regulatory approvals
including, without limitation, all approvals by
applicable gaming authorities, which have become
final and nonappealable or any period of objection by
regulatory authorities has expired, as applicable,
and all other material approvals, permits,
authorization, consents, licenses, and agreements
from other third parties necessary or appropriate to
permit the transactions contemplated by the Plan and
any related agreements and to permit Reorganized
Stuart to carry on its business after the Effective
Date in a manner consistent in all material respects
with the manner in which it was carried on before the
Effective Date (collectively, the "Approvals"). The
Approvals must not contain any condition or
restriction that materially impairs Reorganized
Stuart's ability to carry on its business in a manner
consistent in all respects with the manner as
proposed to be carried on by Reorganized Stuart under
the Plan.
10.3 WAIVER OF CONDITIONS. Subject to the Restructuring Agreement and
Contrarian Standby Funding Commitment, the conditions to Confirmation and the
Effective Date may be waived in whole or in part by the Debtor at any time
without notice, an order of the Bankruptcy Court, or any further action other
than proceeding to Confirmation and consummation of the Plan.
ARTICLE 11. NON-ALLOWANCE OF PENALTIES AND FINES
Except as expressly provided for in the Plan, no distribution shall be
made under this Plan on account of, and no Allowed Claim (whether Secured,
Unsecured, Priority or Administrative) shall include, any fine, penalty, or
exemplary or punitive damages relating to or arising from any
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default or breach by the Debtor, and any Claim on account of such fine, penalty,
or exemplary or punitive damages shall be deemed to be disallowed, whether or
not an objection is filed to such Claim.
ARTICLE 12. TITLE TO PROPERTY; DISCHARGE; INJUNCTION
12.1 REVESTING OF ASSETS. Subject to the provisions of this Plan, the
property of the Estate of the Debtor shall vest in Reorganized Stuart on the
Effective Date. As of the Effective Date, all such property shall be free and
clear of all liens, Claims, and Equity Interests, except as otherwise provided
in this Plan. From and after the Effective Date, Reorganized Stuart may operate
its business, and may use, acquire, and dispose of its property free of any
restrictions of the Bankruptcy Code, including the employment of, and payment
to, Professionals, except as otherwise provided in the Plan or the Confirmation
Order.
12.2 DISCHARGE. Except as provided in the Plan or the Confirmation
Order, the rights afforded under the Plan and the treatment of Claims and Equity
Interests under the Plan are in exchange for and in complete satisfaction,
discharge, and release of, all Claims including any interest accrued on General
Unsecured Claims from the Petition Date and termination of all Equity Interests.
Except as provided in the Plan or the Confirmation Order, Confirmation: (a)
discharges the Debtor and Reorganized Stuart from all Claims or other debts that
arose before the Confirmation Date, and all debts of the kind specified in
Sections 502(g), 502(h) or 502(i) of the Bankruptcy Code, whether or not: (i) a
proof of claim based on such debt is filed or deemed filed under Section 501 of
the Bankruptcy Code; (ii) a Claim based on such debt is Allowed under Section
502 of the Bankruptcy Code; or (iii) the holder of a Claim based on such debt
has accepted the Plan; and (b) terminates all Equity Interests and other rights
of Equity Interests in the Debtor except as expressly provided in the Plan.
Notwithstanding the provisions of this Section 12.2, no Allowed Class 6
Subsidiary Claims are discharged until the later of: (x) the Effective Date; (y)
the closing of the Exit Financing Facility; and (z) the payment and satisfaction
in full of the Claims of the DIP Lender under the DIP Facility and the DIP Loan
Documents in accordance with Section 2.7.
12.3 INJUNCTION. Except as provided in the Plan or the Confirmation
Order, as of the Confirmation Date, all entities that have held, currently hold
or may hold a Claim or other debt or liability that is discharged or an Equity
Interest, Equity Related Claim, or other right of an equity security holder that
is terminated under the Plan are permanently enjoined from taking any of the
following actions on account of any such discharged Claims, debts, liabilities,
or terminated Equity Interests or rights: (a) commencing or continuing in any
manner any action or other proceeding against the Debtor or Reorganized Stuart
(including any officer or director acting as a representative of the Debtor or
Reorganized Stuart); (b) enforcing, attaching, collecting or recovering in any
manner any judgment, award, decree, or order against the Debtor, Reorganized
Stuart, or their respective property; (c) creating, perfecting, or enforcing any
lien or encumbrance against the Debtor, Reorganized Stuart, or their respective
property; (d) asserting a setoff, right of subrogation or recoupment of any kind
against any debt, liability, or obligation due to the Debtor, Reorganized
Stuart, or their respective property; and (e) commencing or continuing any
action, in any manner, in any place, that does not comply with or is
inconsistent with the provisions of the Plan or the Bankruptcy Code.
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12.4 EXCULPATION. None of the Debtor, Reorganized Stuart, or
Contrarian, or any of their respective officers, directors, employees, advisors,
attorneys, or agents, have or may incur any liability to any holder of a Claim
or Equity Interest, including the holder of any Equity Related Claim, or any
other party in interest, or any of their respective members or former members,
agents, employees, representatives, financial advisors, attorneys, or
affiliates, or any of their successors or assigns, for any act or omission in
connection with, relating to, or arising out of, the Chapter 11 Case, the
negotiation and execution of the prepetition Restructuring Agreement, the
negotiation and pursuit of Confirmation of the Plan, or the consummation of the
Plan, or the administration of the Plan except for their acts or omissions
constituting willful misconduct, as finally determined by a court of competent
jurisdiction and in all respects are entitled to reasonably rely upon the advice
of counsel with respect to their duties and responsibilities under the Plan or
in the context of the Chapter 11 Case. No holder of a Claim, Equity Interest, or
Equity Related Claim, or any other party in interest, including their respective
agents, employees, representatives, financial advisors, attorneys, or
affiliates, have any right of action against the Debtor, Reorganized Stuart,
Contrarian, or any of their respective officers, directors, employees, advisors,
attorneys, or agents, for any act or omission in connection with, relating to,
or arising out of, the Chapter 11 Case, the negotiation and execution of the
prepetition Restructuring Agreement, the negotiation and pursuit of Confirmation
of the Plan, the consummation of the Plan, or the administration of the Plan,
except for their acts or omissions constituting willful misconduct as finally
determined by a court of competent jurisdiction. In addition, as of the
Effective Date, the Debtor shall be deemed to have released its current and
prior directors and officers from any claims or causes of action the Debtor may
have against such parties, unless such claims or causes of action arise out of
acts or omissions by such parties constituting willful misconduct.
ARTICLE 13. RETENTION OF JURISDICTION
13.1 JURISDICTION. Notwithstanding the entry of the Confirmation Order
and the occurrence of the Effective Date, the Bankruptcy Court retains such
jurisdiction over the Chapter 11 Case after the Effective Date as is legally
permissible including, without limitation, jurisdiction to:
13.1.1 Allow, disallow, determine, liquidate, classify,
estimate, or establish the priority or secured or unsecured status of any Claim,
including the resolution of any request for payment of any Administrative Claim
and the resolution of any and all objections to the allowance or priority of
Claims;
13.1.2 Grant or deny any applications for allowance of
compensation or reimbursement of expenses authorized under the Bankruptcy Code
or the Plan;
13.1.3 Resolve any matters related to the assumption,
assumption and assignment, or rejection of any executory contract or unexpired
lease to which the Debtor is a party and to hear, determine and, if necessary,
liquidate, any Claims arising from, or cure amounts related to, such assumption
or rejection;
13.1.4 Ensure that distributions to holders of Allowed Claims
are accomplished in accordance with the Plan;
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13.1.5 Decide or resolve any motions, adversary proceedings,
contested or litigated matters, and any other matters and grant or deny any
applications or motions involving the Debtor that may be pending on the
Effective Date;
13.1.6 Enter such orders as may be necessary or appropriate to
implement or consummate the provisions of the Plan and all contracts,
instruments, releases, and other agreements or documents created in connection
with the Plan or the Disclosure Statement, except as otherwise provided in the
Plan;
13.1.7 Resolve any cases, controversies, suits or disputes
that may arise in connection with the consummation, interpretation or
enforcement of the Plan or any Person's obligations incurred in connection with
the Plan;
13.1.8 Modify the Plan before or after the Effective Date
under Section 1127 of the Bankruptcy Code or modify the Disclosure Statement or
any contract, instrument, release, or other agreement or document created in
connection with the Plan or the Disclosure Statement; or remedy any defect or
omission or reconcile any inconsistency in any Bankruptcy Court order, the Plan,
the Disclosure Statement, the Plan Supplement, or any contract, instrument,
release, or other agreement or document created in connection with the Plan, the
Disclosure Statement, or the Plan Supplement, in such manner as may be necessary
or appropriate to consummate the Plan, to the extent authorized by the
Bankruptcy Code;
13.1.9 Issue injunctions, enter and implement other orders, or
take such other actions as may be necessary or appropriate to restrain
interference by any entity with consummation or enforcement of the Plan, except
as otherwise provided in the Plan;
13.1.10 Enter and implement such orders as are necessary or
appropriate if the Confirmation Order is for any reason modified, stayed,
reversed, revoked, or vacated;
13.1.11 Determine any other matters that may arise in
connection with or relate to the Plan, the Disclosure Statement, the
Confirmation Order or any contract, instrument, release, or other agreement or
document created in connection with the Plan, the Disclosure Statement or the
Confirmation Order except as otherwise provided in the Plan;
13.1.12 Enter an order closing the Chapter 11 Case; and
13.1.13 Adjudicate the Avoidance Actions, the Litigation
Claims (including those to be initiated and prosecuted by Reorganized Stuart as
the Estate's representative under Section 1123(b)(3)(B) of the Bankruptcy Code),
and any other cause of action or claims of the Debtor.
ARTICLE 14. AMENDMENT AND WITHDRAWAL OF PLAN
14.1 AMENDMENT OF THE PLAN. Subject to the provisions of the
Restructuring Agreement and the Contrarian Standby Funding Commitment, at any
time before the Confirmation Date, the Debtor may alter, amend, or modify the
Plan or the Plan Supplement under Section 1127(a) of the Bankruptcy Code
provided that such alteration, amendment, or modification does not materially
and adversely affect the treatment and rights of the holders of General
Unsecured Claims (including holders of the Notes) under this Plan. After the
Confirmation Date and before substantial consummation of the Plan as defined in
Section
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1101(2) of the Bankruptcy Code, the Debtor may, under Section 1127(b) of the
Bankruptcy Code, institute proceedings in the Bankruptcy Court to remedy any
defect or omission or reconcile any inconsistencies in the Plan, the Disclosure
Statement, the Plan Supplement, or the Confirmation Order, and such matters as
may be necessary to carry out the purposes and effects of the Plan so long as
such proceedings do not materially and adversely affect the treatment of holders
of Claims or holders of Equity Interests under the Plan; provided, however, that
prior notice of such proceedings shall be served in accordance with the
Bankruptcy Rules or applicable order of the Bankruptcy Court.
14.2 REVOCATION OR WITHDRAWAL OF THE PLAN. Subject to the provisions of
the Restructuring Agreement and the Contrarian Standby Funding Commitment, the
Debtor reserves the right to revoke or withdraw this Plan at any time before the
Confirmation Date. If the Plan is withdrawn or revoked, then the Plan shall be
deemed null and void and nothing contained in the Plan shall be deemed a waiver
of any Claims by or against the Debtor or any other Person in any further
proceedings involving the Debtor or an admission of any sort, and this Plan and
any transaction contemplated by this Plan shall not be admitted into evidence in
any proceeding.
ARTICLE 15. MISCELLANEOUS
15.1 FILING OF OBJECTIONS TO CLAIMS. After the Effective Date,
objections to Administrative Expense Claims and all other Claims may be made and
objections to Administrative Expense Claims and Claims made before the Effective
Date may be pursued by Reorganized Stuart or any other Person properly entitled
to do so after notice to Reorganized Stuart and approval by the Bankruptcy
Court. Any objections to Administrative Expense Claims and Claims made after the
Effective Date shall be filed and served on the holders of such Administrative
Expense Claims and Claims not later than 60 days after the Effective Date or
such later date as may be approved by the Bankruptcy Court.
15.2 SETTLEMENT OF OBJECTIONS AFTER EFFECTIVE DATE. From and after the
Effective Date, Reorganized Stuart may litigate to Final Order, propose
settlements of, or withdraw objections to, all pending or filed Disputed Claims,
Disputed Equity Interests, or Litigation Claims and Reorganized Stuart may
settle or compromise any Disputed Claim, Disputed Equity Interest, or Litigation
Claim without notice and a hearing and without approval of the Bankruptcy Court.
15.3 FEES AND EXPENSES OF INDENTURE TRUSTEE AND CONTRARIAN. All unpaid
reasonable fees, costs, charges, and any other expenses incurred under the
Indenture or by Contrarian from and after the Petition Date, including any
reasonable fees and expenses of Professionals retained by the Indenture Trustee
or Contrarian as of the Effective Date, shall be paid by Reorganized Stuart as
administrative expenses under Bankruptcy Code Section 503(b)(3)(D) upon approval
of the Bankruptcy Court. After the Effective Date, all reasonable fees, costs,
charges and expenses payable to the Indenture Trustee or Contrarian (if any)
including any such items incurred by the Indenture Trustee in its capacity as
Disbursing Agent under the Plan, shall be paid by Reorganized Stuart without
further Bankruptcy Court approval.
15.4 DISTRIBUTIONS. In order to facilitate Pro Rata distributions to
holders of Allowed Claims, and if there are Disputed Claims in any Class, the
Disbursing Agent shall set aside in a separate designated reserve account the
payments or distributions applicable to such Disputed Claims as if such Disputed
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Claims were Allowed Claims, pending the allowance or disallowance of such
Disputed Claims. All amounts applicable to Disputed Claims in Class 5 shall be
segregated in a separate interest bearing account from which the reasonable
costs, expenses, and fees incurred by the (a) Disbursing Agent in administering
distributions and (b) Reorganized Stuart in objecting to, litigating, and
settling Disputed Claims in Class 5 shall be deducted. If Reorganized Stuart
wishes to deposit or hold a lesser amount than required under this section and
is unable to reach an agreement with the holder of the Disputed Claim or the
Disbursing Agent, as the case may be, on the amount to be deposited or held, the
Bankruptcy Court shall fix the amount after notice and hearing. Upon Final Order
with respect to a Disputed Claim, the holder of such Disputed Claim, to the
extent that Claim has been determined to be an Allowed Claim, shall receive from
the Disbursing Agent that payment or distribution to which it would have been
entitled if the portion of the Claim so Allowed had been Allowed as of the
Effective Date. Such payment or distribution shall be made as soon as practical
after the order Allowing the Claim has become a Final Order. The balance of the
amount held by the Disbursing Agent after such payment applicable to a
previously Disputed Claim that has been disallowed in whole or in part, shall be
returned to Reorganized Stuart, except with regard to a previously Disputed
Claim in Class 5, in which event the balance shall be distributed Pro Rata
amongst the holders of Allowed Claims in Class 5 or continue to be held by the
Disbursing Agent with regard to Disputed Claims not yet resolved.
15.5 EFFECTUATING DOCUMENTS; FURTHER TRANSACTIONS; TIMING. The Debtor
shall be authorized and directed to execute, deliver, file, or record such
contracts, instruments, releases, and other agreements or documents, and to take
such actions as may be necessary or appropriate to effectuate and further
evidence the terms and conditions of the Plan, the Plan Supplement, and any
securities issued in accordance with the Plan. All transactions required to
occur on the Effective Date under the terms of the Plan shall be deemed to have
occurred simultaneously.
15.6 EXEMPTION FROM TRANSFER TAXES. In accordance with Section 1146(c)
of the Bankruptcy Code: (a) the issuance, distribution, transfer, or exchange of
the New Common Stock or other Estate property; (b) the creation, modification,
consolidation, or recording of any deed of trust or other security interest, the
securing of additional indebtedness by such means or by other means in
furtherance of, or connection with, this Plan or the Confirmation Order; (c) the
making, assignment, modification, or recording of any lease or sublease; or (d)
the making, delivery, or recording of a deed or other instrument of transfer
under, in furtherance of, or in connection with, this Plan, the Confirmation
Order, or any transaction contemplated above, or any transactions arising out
of, contemplated by, or in any way related to, the foregoing shall not be
subject to any document recording tax, stamp tax, conveyance fee, intangibles or
similar tax, mortgage tax, stamp act or real estate transfer tax, mortgage
recording tax or other similar tax or governmental assessment and the
appropriate state or local government officials or agents shall be directed to
forego the collection of any such tax or assessment and to accept for filing or
recordation any of the foregoing instruments or other documents without the
payment of any such tax or assessment.
15.7 BINDING EFFECT. The Plan shall be binding on, and shall inure to
the benefit of, the Debtor and the holders of all Claims and Equity Interests,
including the holders of Equity Related Claims, and their respective successors
and assigns.
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15.8 GOVERNING LAW. Except to the extent that the Bankruptcy Code or
other federal law is applicable or as provided in any document contained in the
Plan Supplement, the rights, duties and obligations of the Debtor and any other
Person arising under the Plan shall be governed by, and construed and enforced
in accordance with, the internal laws of the State of New York, without giving
effect to New York's choice of law provisions.
15.9 MODIFICATION OF PAYMENT TERMS. Reorganized Stuart reserves the
right to modify the treatment of any Allowed Claim or Equity Interest in any
manner adverse only to the holder of such Claim or Equity Interest at any time
after the Effective Date upon the prior written consent of the holder whose
Allowed Claim or Equity Interest treatment is being adversely affected.
15.10 SETOFFS. The Debtor and Reorganized Stuart may, but are not
required to, set off or recoup against any Claim or Equity Interest and the
payments or other distributions to be made under the Plan in respect of such
Claim, claims of any nature whatsoever that arose before the Petition Date that
the Debtor may have against the holder of such Claim or Equity Interest to the
extent such Claims may be set off or recouped under applicable law, but neither
the failure to do so nor the Allowance of any Claim or Equity Interest under the
Plan shall constitute a waiver or release by the Debtor or Reorganized Stuart of
any such claim that it may have against such holder.
15.11 NOTICES. Any notice required or permitted to be provided under
the Plan shall be in writing and served by either: (a) certified mail, return
receipt requested, postage prepaid; (b) hand delivery; (c) reputable overnight
courier service, freight prepaid; or (d) by fax; addressed as follows:
If to the Debtor: Stuart Entertainment, Inc.
3211 Nebraska Avenue
Council Bluffs, Iowa 51501
Attn: Joseph M. Valandra
Telephone: (712) 323-1488
Fax: (712) 328-7821
Copy to: Squire, Sanders & Dempsey, L.L.P.
40 N. Central Avenue, Suite 2700
Phoenix, Arizona 85004
Attn: Craig D. Hansen, Esq.
Jordan A. Kroop, Esq.
Telephone: (602) 528-4000
Fax: (602) 253-8129
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If to Contrarian: Contrarian Capital Management, L.L.C.
411 West Putnam Avenue, Suite 225
Greenwich, Connecticut 06830
Attn: David E. Jackson
Janice Stanton
Telephone: (203) 862-8204
Fax: (203) 629-5063
Copy to: Milbank, Tweed, Hadley & McCloy
601 South Figueroa Street, 30th Floor
Los Angeles, California 90017
Attn: Paul S. Aronzon, Esq.
Lawrence B. Gill, Esq.
Telephone: (213) 892-4000
Fax: (213) 629-5063
If to the Indenture Trustee: HSBC Bank USA
140 Broadway
New York, New York 10005-1180
Attn:
Telephone: (212) 658-6433
Fax: (212) 658-6425
Copy to: Pryor Cashman Sherman & Flynn LLP
410 Park Avenue, 10th Floor
New York, New York 10022
Attn: Carol Neville, Esq.
Karel Karp, Esq.
Telephone: (212) 421-4100
Fax: (212) 326-0806
15.12 DELIVERY OF NOTICES. If personally delivered, such communication
shall be deemed delivered upon actual receipt; if electronically transmitted in
accordance with this Plan, such communication shall be deemed delivered by the
next noon at point of arrival occurring on a Business Day following
transmission; if sent by overnight courier in accordance with this Plan, such
communication shall be deemed delivered within twenty-four hours of deposit with
such courier or noon of the first Business Day following such deposit, whichever
first occurs; and if sent by U.S. Mail in accordance with this Plan, such
communication shall be deemed delivered as of the date of delivery indicated on
the receipt issued by the relevant postal service; or, if the addressee fails or
refuses to accept delivery, as of the date of such failure or refusal. Any party
to this Plan may change its address for the purposes of this Plan by giving
notice of such change in accordance with this section.
15.13 TERMINATION OF STATUTORY COMMITTEES. Any statutory committee or
committees appointed in the Chapter 11 Case and the Examiner terminate on the
Effective Date and thereafter shall have no further responsibilities in respect
of the Chapter 11 Case, except with respect to preparation of filing of
applications for compensation and reimbursement of expenses.
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15.14 SEVERABILITY. If any provision of this Plan is found by the
Bankruptcy Court to be invalid, illegal or unenforceable, if this Plan is found
by the Bankruptcy Court to be invalid, illegal or unenforceable, or if this Plan
cannot be Confirmed under Section 1129 of the Bankruptcy Code, the Bankruptcy
Court, at the Debtor's request, shall retain the power to alter and interpret
such term to make it valid or enforceable to the maximum extent practicable,
consistent with the original purpose of the term or provision held be invalid,
void or unenforceable, and such term or provision shall then be applicable as
altered or interpreted. The Confirmation Order shall constitute a judicial
determination and shall provide that each term and provision of this Plan, as it
may have been altered or interpreted in accordance with the foregone, is valid
and enforceable in accordance with its terms.
15.15 PLAN SUPPLEMENT. Forms of the Plan Documents are contained in the
Plan Supplement. Upon its filing with the Bankruptcy Court, the Plan Supplement
may be inspected in the office of the Clerk of the Bankruptcy Court during
normal business hours. Holders of Claims or Equity Interests may obtain a copy
of the Plan Supplement upon written request to the Debtor in accordance with
Section 15.11 of the Plan.
15.16 WITHHOLDING AND REPORTING REQUIREMENTS. In connection with this
Plan and all instruments and securities issued in connection with the Plan,
Reorganized Stuart, the Disbursing Agent, and the Indenture Trustee, as the case
may be, shall comply with all withholding and reporting requirements imposed by
any federal, state, local or foreign taxing authority, and all distributions
under the Plan remain subject to any such withholding and reporting
requirements. Reorganized Stuart, the Disbursing Agent, and the Indenture
Trustee, as the case may be, shall be authorized to take all actions necessary
to comply with such withholding and recording requirements. Notwithstanding any
other provision of this Plan, each holder of an Allowed Claim that has received
a distribution of New Common Stock or Cash, shall have sole and exclusive
responsibility for the satisfaction or payment of any tax obligation imposed by
any governmental unit, including income, withholding and other tax obligation on
account of such distribution.
15.17 QUARTERLY FEES TO THE UNITED STATES TRUSTEE. Reorganized Stuart
shall pay all quarterly fees payable to the Office of the United States Trustee
for the Debtor after Confirmation, consistent with applicable provisions of the
Bankruptcy Code, Bankruptcy Rules, and 28 U.S.C. Section 1930(a)(6).
15.18 FRACTIONAL SHARES; ODD LOTS; DE MINIMIS DISTRIBUTIONS. No
fractional shares of New Common Stock shall be issued. The number of shares to
be issued under this Plan to any holder of an Allowed Claim, Equity Interest, or
Equity Related Claim, as the case may be, shall be rounded to the nearest whole
number, with an amount less than one-half a share being rounded down, and
one-half or more being rounded up.
15.19 METHOD OF PAYMENT. Payments of Cash required to be made under the
Plan shall be made by check drawn on a domestic bank or by wire transfer from a
domestic bank at the election of the Person making such payment. Whenever any
payment or distribution to be made under the Plan is due on a day other than a
Business Day, such payment or distribution may instead be made, without
interest, on the immediately following Business Day.
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15.20 RESTRUCTURING AGREEMENT. Nothing set forth in this Plan shall
affect, alter, or modify the terms and conditions of the Restructuring
Agreement; provided, however, that to the extent of any inconsistency between
the Plan and the Plan Documents, on the one hand, and the Restructuring
Agreement, on the other hand, the Plan and the Plan Documents, as applicable,
shall control.
Dated: Wilmington, Delaware Respectfully submitted,
August 13, 1999
STUART ENTERTAINMENT, INC.
By: /s/ Joseph M. Valandra
-----------------------------------------
Joseph M. Valandra
Chairman and Chief
Executive Officer
SQUIRE, SANDERS & DEMPSEY L.L.P.
By: /s/ Craig D. Hansen
-----------------------------------------
Craig D. Hansen
Thomas J. Salerno
Jordan A. Kroop
- and -
SAUL, EWING, REMICK & SAUL
By: /s/ Norman L. Pernick
-----------------------------------------
Norman L. Pernick
J. Kate Stickles
Co-Counsel to the Debtor
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[GRAPHIC OMITTED]
Contact: Lawrence X. Taylor III
(712) 328-7801
STUART ENTERTAINMENT FILES REORGANIZATION PETITION
WILMINGTON, Delaware August 13, 1999 -- Stuart Entertainment, Inc.
d/b/a Bingo King (OTC Bulletin Board: STUA) ("Stuart") filed a petition for
relief under Chapter 11 of the Bankruptcy Code (the "Chapter 11 Case") in the
United States Bankruptcy Court for the District of Delaware in order to effect
the Restructuring Agreement (the "Agreement"), dated May 21, 1999, between the
holders (the "Noteholders") of its $100 million 12 1/2% Senior Subordinated
Notes due 2004 (the "Notes") and Stuart. As previously announced, Stuart did not
make the May 15 interest payment with respect to the Notes. However, pursuant to
the Agreement, the Noteholders have agreed to refrain from taking any action to
enforce the Notes or the obligations of Stuart.
Under the Agreement, upon effectiveness (the "Effective Date") of the
Joint Plan of Reorganization (the "Plan"), the holders of the Notes will
receive, pro-rata, 100% of the common stock to be authorized under Stuart's
amended and restated Certificate of Incorporation to be filed with the Delaware
Secretary of State after the Bankruptcy Court approves the Plan ("New Common
Stock"), subject to dilution of approximately 10% on a fully-diluted basis by
shares reserved for issuance under options to be issued to Stuart's executive
management. The existing equity holders of Stuart will have their shares
cancelled and will receive a pro-rata portion of $150,000 in cash.
Joseph M. Valandra, Chairman and Chief Executive Officer of the
company, said: "The filing of the Plan of Reorganization today is a crucial next
step in the revitalization of the company. We are confident that with the
support of a majority of our Noteholders, we can emerge quickly from Chapter 11.
As reorganized, the company will be a stronger company that will continue to
compete vigorously in all of our markets. This process will protect the
continuing interests of our customers, suppliers and employees in the viability
of the company's business."
Under the Plan, all persons who hold, together with all affiliates of
such persons, $500,000 or less in principal amount of Notes will receive a cash
payment equal to 25% of such Noteholder's allowed claim in lieu of New Common
Stock, unless such Noteholder elects to receive New Common Stock. Stuart will
fund up to $3 million of such cash payments ("Company Funding"), with the
remainder of the funding to be supplied by Contrarian Capital Management, LLC
("Contrarian") pursuant to a Standby Funding Commitment. Under such commitment,
Contrarian will receive, in exchange for any such funding provided, an allowed
claim as a Noteholder, thereby entitling Contrarian to an additional pro rata
distribution of New Common Stock under the Plan.
Stuart press release August 16, 1999 1
<PAGE> 2
The Agreement also provides for certain key executive officers of
Stuart to receive vested options to purchase 4% of the outstanding New Common
Stock, and performance based incentive options to purchase 6% of the outstanding
New Common Stock as of the Effective Date of the Plan on a fully diluted basis.
These percentages are subject to increase based on the amount of Company
Funding, and the accretive effect of such funding, in accordance with a formula
set forth in the Plan.
Additionally, under the Agreement, the Noteholders have agreed to
support the payment of all trade claims in the ordinary course of Stuart's
business. As a result, Stuart's trade creditors will not be impaired or
negatively impacted by the contemplated restructuring.
Mr. Valandra went on the say: "We are pleased that the Noteholders have
agreed with the company to support the full payment of our trade creditors. This
allows the company to continue our business on a normal basis and displays
confidence in the ongoing operational and financial performance of the company."
The Plan is subject to numerous conditions, and no assurance can be
given that the consensual restructuring provided for in the Agreement and the
Plan or any other consensual restructuring will be finalized or that any
restructuring which is completed will not be on terms materially different from
those contained in the Agreement and the Plan.
Stuart is a worldwide leader in the manufacture of bingo paper,
pulltabs and related electronic gaming equipment and supplies, with locations in
the United States, Canada and Mexico. Its subsidiaries include Bazaar & Novelty,
Canada's largest supplier of bingo paper and related supplies, and Video King, a
major supplier of fixed base electronic gaming systems.
Information provided herein by Stuart may contain "forward-looking"
information, as that term is defined by the Private Securities Litigation Reform
Act of 1995 (the "PSLRA"). These cautionary statements are being made pursuant
to the provisions of the PSLRA and with the intention of obtaining the benefits
of the "safe harbor" provisions of the PSLRA. Stuart cautions investors that any
forward-looking statements made by Stuart are not guarantees of future
performance and that actual results may differ materially from those in the
forward-looking statements as a result of various factors, including but not
limited to risks or uncertainties detailed in Stuart's filing with the
Securities and Exchange Commission. Stuart undertakes no obligation to publicly
update or revise any forward-looking statements.
Stuart press release August 16, 1999 2
