SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 17, 1997
PEACHES ENTERTAINMENT CORPORATION
(Exact Name of Registrant as specified in its charter)
Florida 0-12375 59-2166041
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File No.) Identification No.)
1180 East Hallandale Beach Blvd., Hallandale, Florida 33009
(Address of principal executive offices) (Zip Code)
Registrant's Telephone number, including area code: (954) 454-5554
Not Applicable
(Former name or former address, if changed since last report)
<PAGE>
Item 3
On or about January 17, 1997, the United States Bankruptcy Court for the
Southern District of Florida (the "Bankruptcy Court") issued an order dated on
such date confirming the registrant's Amended Plan of Reorganization dated on or
about October 23, 1996 (the "Amended Plan"), as modified by such order. Among
the provisions of the Amended Plan which was so confirmed by the Bankruptcy
Court are the following:
(a) All unsecured creditors, including all of the registrant's
inventory suppliers, but excluding landlords under leases rejected by the
registrant, are entitled to 100% of their allowed claims (the total of
which is approximately $4,922,000). The registrant's seven principal
suppliers (whose allowed claims total approximately $4,372,000 out of such
$4,922,000) are entitled to payment and inventory returns equal to
approximately 70% of their allowed claims (80% in the case of one such
supplier) within approximately 60 days after the effective date of the
Amended Plan (the "Effective Date"). The balance of the payments to such
seven principal suppliers (approximately $1,284,000) is payable with
interest over a period of 24 months commencing in March, 1997. The amounts
due to such suppliers is secured by a perfected first lien and security
interest in the inventory originally distributed by the secured party which
is normally sold or is otherwise in the possession and owned by the
registrant. The remaining unsecured creditors (whose allowed claims total
approximately $550,000) were entitled to and received the full amount of
their allowed claims on the Effective Date.
(b) Landlords under the leases which were rejected by the registrant
in connection with the bankruptcy filing were entitled to approximately
$311,000 (30% of the approximately $1,000,000 in allowed claims with
respect to such leases), all of which was paid on the Effective Date.
(c) The registrant's sole secured creditor, the holder of the first
mortgage with respect to the store property owned by the registrant in
Mobile, Alabama, whose allowed claim was approximately $466,000, will
receive 100% of such amount, with interest, in accordance with the
amortization schedule previously in effect, except that the balloon payment
on such mortgage which would otherwise have been due in September, 1997 was
extended to September, 2002.
(d) The priority tax claim in the approximate amount of $118,000 which
is owed to the Florida Department of Revenue will be payable with interest
over a period of two years commencing 30 days from the Effective Date.
(e) The priority administrative claims, including professional fees in
the approximate amount of $200,000 which were incurred in connection with
the reorganization, were paid on the Effective Date.
(f) The registrant's parent, URT Industries, Inc. ("URT"), in exchange
for the agreement to issue to it 20,000,000 shares of the registrant's
authorized common stock, agreed that, subject to the terms of the Amended
Plan, it would contribute $350,000 to the capital of the registrant, waive
an aggregate of $75,000 of dividends payable by the registrant to URT,
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guarantee the approximately $1,284,000 which is due to the registrant's
principal suppliers after the Effective Date pursuant to the arrangements
described in subparagraph (a) above, and lend $700,000 to the registrant on
the Effective Date. The loan by URT to the registrant will be subject to
repayment by the registrant with interest over a period of four years
beginning on the third anniversary of the Effective Date.
Among the additional action taken by the Bankruptcy Court during the course
of the above-described proceeding is the following:
(a) The Court issued orders authorizing the registrant to reject the
unexpired portion of the leases covering the registrant's former corporate
headquarters in Miramar, Florida, as well as the six stores closed by the
registrant during the 1996 fiscal year.
(b) The Court issued an order authorizing the registrant to reject the
unexpired portion of the lease covering a store in Charlotte, North
Carolina which had been closed by the registrant during the 1991 fiscal
year and as to which the registrant remained responsible for the shortfall
between the amount payable under the registrant's lease for such store and
the amount being paid by a subtenant of such store.
(c) The Court issued an order authorizing the registrant to assume the
unexpired portion of the leases covering the registrant's new corporate
headquarters and the twelve leased stores to be kept in operation.
(d) The Court issued an order authorizing a settlement agreement
containing a reduction of the amounts payable by the registrant to its
former Executive Vice-President under a consulting arrangement with him.
As of February 12, 1997, the registrant had issued and outstanding
19,781,270 common shares, 2,500 shares of Series A Convertible Preferred Stock
and 2,500 shares of Series B Convertible Preferred Stock. An additional
20,000,000 shares of common stock are expected to be issued in connection with
arrangements made as a result of the above-described reorganization.
Information as to the assets and liabilities of the registrant as of the
date of confirmation is to be filed upon compilation of such information by the
registrant.
Because of arrangements relating to the above-described reorganization, the
registrant did not file the 10-Q for the quarter ended December 28, 1996 by the
date it was scheduled to be filed. Such 10-Q is to be filed upon compilation of
the relevant information by the registrant.
<PAGE>
Item 7
The following exhibits are filed as part of this report:
1. Amended Plan of Reorganization, dated October 23, 1996.
2. Order Confirming Amended Plan of Reorganization, as Modified, dated
January 17, 1997.
<PAGE>
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 hereunto duly authorized.
PEACHES ENTERTAINMENT CORPORATION
Registrant
By:/s/ Allan Wolk
------------------------------
(Chairman and President)
Date: April 7, 1997
Exhibit 1
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO.: 96-20153-BKC-RBR
Chapter 11 Proceeding
In re:
PEACHES ENTERTAINMENT CORP.,
d/b/a PEACHES,
Debtor.
/
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DEBTOR'S AMENDED PLAN OF REORGANIZATION
(Amended as of October 23, 1996)
SCHANTZ, SCHATZMAN & AARONSON, P.A.
Attorneys for Debtor
Suite 1050, First Union Financial Center
200 South Biscayne Boulevard
Miami, Florida 33131-2394
(305) 371-3100
ALAN J. PERLMAN, Esquire
Florida Bar No.: 0826006
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TABLE OF CONTENTS
PAGE NO.:
INTRODUCTION .............................................................. 1
ARTICLE I.
DEFINITIONS ...................................................... 1
ARTICLE II.
CLASSIFICATION OF CLAIMS AND INTERESTS ................................... 6
1. Group 1: ..................................................... 6
2. Group 2: ..................................................... 6
3. Class 1: ..................................................... 6
4. Class 2: ..................................................... 6
5. Class 3: ..................................................... 6
6. Class 4: ..................................................... 6
7. Class 5: ..................................................... 6
8. Class 6: ..................................................... 6
9. Class 7: ..................................................... 6
10.Class 8: ..................................................... 6
ARTICLE III.
DESIGNATION AND TREATMENT OF ALL UNIMPAIRED CLAIMS,
INTERESTS AND CLASSES WHOSE VOTES ARE NOT REQUIRED ...................... 7
Group 1. Allowed Administrative Expenses ................................ 7
Group 2. Priority Tax Claims under Section 507(a)(8) .................... 7
Class 7: Allowed Non-Priority Unsecured and Convenience Claims .......... 7
Class 8. Equity Security Interests ...................................... 8
ARTICLE IV.
TREATMENT OF IMPAIRED CLAIMS
AND CLASSES WHOSE VOTES ARE REQUIRED ................................... 8
Class 1: Allowed Secured Claim of Barnett Bank ......................... 8
Class 2: Allowed Claims of Capital Bank ................................ 9
Class 3: Allowed Claims of the Majors .................................. 9
Class 4: Allowed Claim of Alliance ..................................... 11
Class 5: Allowed Claim of Jackowitz .................................... 12
Class 6: Allowed Claims Regarding Leases ............................... 12
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TABLE OF CONTENTS
PAGE NO.:
ARTICLE V.
TAXES ............................................................ 13
ARTICLE VI.
EFFECTUATION AND IMPLEMENTATION OF PLAN .......................... 13
ARTICLE VII.
OBJECTIONS TO CLAIMS AND AVOIDANCE ACTIONS ....................... 15
ARTICLE VIII.
EXECUTORY CONTRACTS AND LEASES ................................... 15
ARTICLE IX.
ADMINISTRATION OF PLAN AND POST-CONFIRMATION MANAGEMENT .......... 16
ARTICLE X.
TRANSMITTAL OF DISTRIBUTIONS ..................................... 16
ARTICLE XI.
CONDITIONS PRECEDENT TO CONFIRMATION OF THE PLAN ................. 17
ARTICLE XII.
PROVISIONS TO INVOKE CRAM-DOWN PROCEEDINGS IF NECESSARY .......... 17
ARTICLE XIII.
DISCHARGE ........................................................ 17
ARTICLE XIV.
AMENDMENT AND MODIFICATION ....................................... 18
ARTICLE XV.
REVOCATION ....................................................... 18
ARTICLE XVI.
VESTING OF PROPERTY IN REORGANIZED DEBTOR ........................ 18
ARTICLE XVII.
MISCELLANEOUS PROVISIONS ......................................... 18
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TABLE OF CONTENTS
PAGE NO.:
A. Substantial Consummation of Plan .............................. 18
B. Governing Law ................................................. 19
C. Headings ...................................................... 19
D. Successors and Assigns ........................................ 19
E. Notices ....................................................... 19
ARTICLE XVIII.
RETENTION OF JURISDICTION ........................................ 20
ARTICLE XIX.
SEVERABILITY ..................................................... 21
ARTICLE XX.
ENTIRE PLAN ...................................................... 21
ARTICLE XXI.
CONCLUSION ....................................................... 21
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<PAGE>
INTRODUCTION
PEACHES ENTERTAINMENT CORP., d/b/a PEACHES (the "Company", "Debtor" or
"PEACHES"), hereby proposes the following Plan of Reorganization (the "Plan")
with its creditors under Chapter 11 of the United States Bankruptcy Code, 11
U.S.C. ss. 101, et. seq.:
ARTICLE I.
DEFINITIONS
When used herein, the words set forth below shall have the following
meanings:
"Administrative Claimant" means any person who has a priority
administrative claim under Section 503(b) of the Bankruptcy Code.
"Alliance" means Alliance Entertainment Corp., an unsecured Claimant.
"Administrative Expenses" means all allowed administrative expenses having
priority under Section 503(b) of the Bankruptcy Code. This Class includes those
fees payable pursuant to 28 U.S.C. ss. 1930 and outstanding Court costs.
"Allowed Claim" means a Claim
(I) which has been scheduled by Debtor and is not scheduled as
disputed, contingent or unliquidated and as to which no Proof of Claim has
been filed;
(ii) which is the subject of a timely filed Proof of Claim unless it
is the subject of an objection, in which case the claim shall be allowed
only pursuant to Court order; or
(iii) which is the subject of an agreed order or order approving a
settlement arising in any context, so long as such claim is designated in
the order or settlement as an allowed claim.
"Allowed Claim Notes" means term notes to be issued by the Debtor to the
"Majors" evidencing the balance due on the original principal amount of their
Allowed Claims, less the Initial Payment, calculated as of the Effective Date.
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"Allowed Secured Claim" means that portion of an Allowed Claim which is
subject to a perfected security interest or mortgage in and upon the property of
the Debtor to the extent of the value of such creditor's interest in the
Debtor's property, in accordance with ss. 506 of the Code.
"Allowed Unsecured Claim" means any Allowed Claim which is not an Allowed
Administrative Expense, Priority Tax Claim Under Section 507(a)(8), or an
Allowed Secured Claim or Equity Claim.
"Barnett Bank" means Barnett Bank of South Florida, N.A.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, 11 U.S.C. ss.
101, et. seq.
"Bankruptcy Court" means the United States Bankruptcy Court for the
Southern District of Florida.
"Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure,
governing procedure in cases under Title 11 of the United States Code.
"Chapter 11 Case" means this reorganization proceedings instituted by the
Debtor in the Bankruptcy Court by the filing of a Voluntary Petition seeking
reorganization on January 16, 1996.
"Claim" means any claim, as that term is defined in ss. 101(5) and shall
include, without limitation, any claim of right to payment, liquidated,
unliquidated, contingent, matured, unmatured, disputed or undisputed, legal,
equitable, secured or unsecured.
"Claims Bar Date" means June 3, 1996.
"Class" means a group of claims or interests consisting of claims or
interests which are substantially similar to each other, as set forth in the
Plan.
"Code" means the Bankruptcy Code as enacted by the Bankruptcy Reform Act of
1978, 11 U.S.C. ss. 101, et. seq., as presently effective.
"Confirmation" means the entry of an order by the Bankruptcy Court
confirming the Plan.
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"Confirmation Date" means the date on which the Bankruptcy Court enters an
order confirming the Plan.
"Confirmation Hearing" means the Court hearing under ss. 1128 of the Code
wherein the Court shall consider Confirmation of this Plan. If the hearing is
continued, Confirmation hearing shall refer to the date of the initial hearing
set by Court Order.
"Confirmation Order" means the order of the Bankruptcy Court confirming
this Plan of Reorganization pursuant to ss. 1129 of the Bankruptcy Code.
"Contested Claim" means any Claim to which Debtor, or any other party in
interest has or shall have interposed an objection to the allowance thereof and
which objection has not been withdrawn or determined in a final court order.
"Costs of Administration" mean those expenses provided for by ss. 503(b) of
the Code, including without limitation, the fees and expenses as allowed of the
professionals retained by orders of the Bankruptcy Court, any actual and
necessary expense of preserving the Debtor's estate, and any actual and
necessary expense of operating the business of the Debtor.
"Court" means the United States Bankruptcy Court for the Southern District
of Florida, or such other court as may hereafter have primary jurisdiction for
this proceeding.
"Creditor" means any entity that is a holder of a Claim against the Debtor,
that arose before the Petition Date.
"Debtor and Debtor-in-Possession" means Peaches Entertainment Corp., d/b/a
Peaches.
"Debtor's Advisors" means the attorneys, accountants and financial advisors
retained by the Debtor in connection with the Chapter 11 proceedings.
"Disclosure Statement" means the Disclosure Statement prepared pursuant
to ss. 1125 which has been approved by the Court and which is distributed to
holders of Claims and interests with this Plan.
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"Disputed Claims" means a Claim as to which an objection is interposed, as
to amount, priority, security or otherwise.
"Effective Date" means the first business day thirty (30) days after entry
of the Final Order of Confirmation or if the Order of Confirmation is stayed or
a motion for stay is pending in a court of competent jurisdiction, eleven (11)
days following the denial or dissolution of such stay; provided, however, that
the Debtor, in its sole discretion may elect to declare the Effective Date
earlier notwithstanding the pendency of any such motion for stay.
"Equity Holders" means the persons or entities owning stock in the Debtor.
"Filing Date" means January 16, 1996, the date on which the Debtor filed
its Petition for Relief under Chapter 11 of the Code commencing this Chapter 11
case.
"Final Order" means an order or judgment of the Bankruptcy Court which has
not been reversed, stayed, modified or amended and as to which the time to
appeal or to seek certiorari or review has expired and as to which no appeal or
petition for certiorari or review is pending or as to which any right to appeal
or to seek certiorari or review has been waived.
"Impairment" means treatment under the Plan in a manner such that the Plan
alters the legal, equitable or contractual rights of the Claimant. Impairment
has the same meaning as set forth in ss. 1124 of the Code.
"Initial Payment" means the cash to be paid to the "Majors" on
the"Effective Date."
"Inventory Lien" means the lien to be granted to the Debtor's Majors
securing the Major Loan Documents, including the "Allowed Claim Notes" and
"Post-Confirmation Credit Notes."
"Jackowitz Order" means an Order entered by the Bankruptcy Court on March
19, 1996 approving a Settlement Agreement regarding Debtor's rejection of
Employment Agreement.
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<PAGE>
"Major Loan Documents" means the "Allowed Claim Notes," the
"Post-Confirmation Credit Agreements," "Post-Confirmation Credit Notes,"
"Security Agreements," and any other agreement relating to the extension of
credit post-petition by the "Majors."
"Majors" means the six major music distributors consisting of (i) BMG
Distribution; (ii) Sony Music Entertainment, Inc.; (iii) UNI Distribution
Corporation; (iv) Polygram Group Distribution; (v) Warner/Elektra/Atlantic
Corp.; and (vi) EMI Music Distribution.
"Notes" means the "Allowed Claim Notes" and "Post-Confirmation Credit
Notes."
"Official Committee" means a seven-member committee of unsecured creditors
appointed by the United States Trustee on January 18, 1996.
"Official Committee Advisors" means the attorneys retained by the
Committee.
"Plan of Reorganization" or "Plan" means this Plan of Reorganization,
together with any modification thereto as may hereafter be filed by the Debtor.
"Petition Date" means January 16, 1996, the date on which Debtor filed its
Petition for Relief under Chapter 11 of the Code commencing this Chapter 11
case.
"Post-Confirmation Credit" means credit extended to the Debtor by the
Majors, inclusive of the post-petition secured financing.
"Post-Confirmation Credit Agreements" means the agreement between the
Debtor and each Major setting forth the maximum amount and terms of
Post-Confirmation Credit each Major is willing to extend, which shall include
the post-petition secured financing previously approved by Court Order.
"Post-Confirmation Credit Notes" means promissory notes to be executed by
the Debtor on the Effective Date in favor of the Majors to evidence the maximum
amount of "Post-Confirmation Credit" each Major is willing to extend to the
Debtor.
"Pre-Petition Loan Documents" means all documents relating to loans made to
the Debtor by secured and unsecured creditors.
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"Priority Claims" means a Claim having priority over all other Claims,
except Allowed Administrative Expenses.
"Reorganized Debtor" means the Debtor upon confirmation of the Plan.
"Shareholders" means URT and holders of publicly traded stock of the
Debtor/Reorganized Debtor.
"URT" means URT Industries, Inc., the majority shareholder of the Debtor.
As used in the Plan, masculine pronouns shall be deemed to include the feminine
and neuter, and all terms used in the singular shall be deemed to include the
plural and vice versa.
All references to statutory sections are to the Bankruptcy Code unless
otherwise specified.
All terms defined herein shall have the same meaning when used in the
Disclosure Statement.
ARTICLE II.
CLASSIFICATION OF CLAIMS AND INTERESTS
The Claims of all creditors and shareholders against the Debtor shall be
classified as follows:
1. Group 1: Allowed Administrative Expenses.
2. Group 2: Priority Tax Claims Under Section 507(a)(8).
3. Class 1: Allowed Secured Claim of Barnett Bank.
4. Class 2: Allowed Claims of Capital Bank.
5. Class 3: Allowed Claims of the Majors.
6. Class 4: Allowed Claims of Alliance.
7. Class 5: Allowed Claim of Jackowitz.
8. Class 6: Allowed Claim of Landlords.
9. Class 7: Allowed Non-Priority Unsecured and Convenience Claims.
10.Class 8: Equity Security Interests.
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<PAGE>
ARTICLE III.
DESIGNATION AND TREATMENT OF ALL UNIMPAIRED CLAIMS,
INTERESTS AND CLASSES WHOSE VOTES ARE NOT REQUIRED
Group 1. Allowed Administrative Expenses. Administrative Claims are
entitled to priority in payment pursuant to Section 503 and 507(a)(1) of the
Bankruptcy Code. Certain Allowed Administrative Claims are not related to the
administration of the Debtor's Chapter 11 case (such as trade and vendor
claims), are incurred by the Debtor in the ordinary course of business and on
ordinary business terms, and may be paid at such Debtor's option in accordance
with such terms. As of the Effective Date, the Debtor estimates that Allowed
Group 1 Claims for Court Appointed professionals and other Administrative
Claimants should not exceed $255,000, net of any retainers previously paid.
These Group 1 Claims will be paid in full, in cash, on the Effective Date, or
upon such other terms as are agreeable to the parties. This category shall not
include any payments relative to post-petition financing, secured or otherwise,
or other trade/vendor obligations incurred in the ordinary course of business.
Group 2. Priority Tax Claims under Section 507(a)(8). This Group consists
of the Allowed Claim of the Florida Department of Revenue. The Claim will be
paid after the Effective Date over a period not to exceed two (2) years from the
Effective Date, in consecutive quarterly payments, with the first payment to be
made thirty (30) days from the Effective Date, with eight percent (8%) simple
interest per annum. Said Claim is estimated at $118,000 inclusive of the
payments to be made on the Effective Date.
Class 7: Allowed Non-Priority Unsecured and Convenience Claims. Class 7
Allowed Non-Priority Unsecured and Convenience Claims (exclusive of Claims in
Classes 2, 3, 4, 5 or 6) shall receive the full amount1 of their Allowed Claims
on the later of (i) the Effective Date, or (ii) the date
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1 The distribution will be paid from the following sources: 27% from the
Debtor and 73% from a portion of the Effective Date Deficiency Advance from
URT.
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on which its Claim is allowed. The Debtor estimates claims in this Class of
approximately $800,000. This Class does not include any insider claims.
Class 8. Equity Security Interests. Existing equity security holders shall
retain their interests in the Debtor/Reorganized Debtor.
ARTICLE IV.
TREATMENT OF IMPAIRED CLAIMS
AND CLASSES WHOSE VOTES ARE REQUIRED
Class 1: Allowed Secured Claim of Barnett Bank. The Debtor executed a
Mortgage in favor of Barnett Bank on September 13, 1990, encumbering property
located in Mobile, Alabama, securing a Promissory Note in the original principal
sum of $715,500.00. The Promissory Note provided for interest at the Prime Rate
announced from time to time by Barnett Bank, Inc., plus one-half percent (1/2%),
not to exceed at any time a rate greater than twelve and one-half percent (12
1/2%) per annum. The Promissory Note provides for monthly payments of principal
and interest through August 13, 1997, with a final balloon payment being due and
payable in full on September 13, 1997. All payments made by the Debtor
Post-Petition were applied in accordance with the terms of the Promissory Note.
As of the Petition Date, the balance due under the Promissory Note and Mortgage
amounted to $487,181. As of the Effective Date, the Promissory Note and Mortgage
will be modified to provide for equal monthly payments of the principal balance
in the same amount provided by the Note, together with interest at the rate
provided in the Note, at the existing amortization schedule, on the existing
monthly payment dates, through September 13, 2002. A balloon payment is due on
September 13, 2002. In connection with the foregoing treatment, the Debtor shall
pay Barnett Bank a one percent (1%) initiation fee on the then outstanding
principal balance on the Effective Date, and shall also pay the reasonable legal
fees and expenses incurred by Barnett Bank's counsel, pursuant to
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11 U.S.C. ss. 506, upon application and court award to the extent necessary.
Barnett Bank will retain its first priority mortgage on said real property until
paid in full in accordance herewith.
Class 2: Allowed Claims of Capital Bank. Capital Bank shall retain all of
its rights, contingent claims and liens to the extent applicable, including, but
not limited to, rights in and to that certain Certificate of Deposit No.
3401014, as such existed prior to the commencement of this Chapter 11 case, with
respect to the following Letters of Credit: (i) Letter of Credit No. 4027 in the
amount of $64,800.00 in favor of Mayhue's Super Liquor Stores, Inc.; and (ii)
Letter of Credit No. 6075 in the amount of $150,000.00 in favor of Ticketmaster
Florida, Inc. Capital Bank has agreed to accept the foregoing treatment and
receive no distribution under the Plan, on the condition that both Letters of
Credit remain undrawn as of the date of the hearing on confirmation. In the
event, however, that a draw is presented against either or both of the Letters
of Credit prior to the confirmation hearing, then unless relief from the
automatic stay has previously been granted, Capital Bank shall be entitled at
confirmation to relief from the stay in order to exercise its right of setoff
against the aforementioned Certificate of Deposit in respect of the Letter(s) of
Credit against which such draw(s) may be presented. In the event that any
deficiency may remain following application of the Certificate of Deposit
proceeds as aforesaid, Capital Bank shall receive on the Effective Date a
distribution in the amount of 100% of such deficiency, plus accrued interest on
its claim at the rate of two percent (2%) above the Prime Rate established by
Capital Bank from the date(s) of the draw(s) through the Effective Date.
Class 3: Allowed Claims of the Majors. The Class 3 Allowed Claim represents
amounts owed by the Debtor to the Majors. The Debtor and each Major will
determine the amount of such Major's pre-petition gross claims as of the
Petition Date ("Allowed Claim") including any reclamation claims. Each Major
will receive approximately seventy-four percent (74%)2 of its Allowed Claim
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2 This distribution will be paid from the following sources: 27% of the
Initial Payment from the Debtor, and 73% of the Initial Payment from a
portion of the Effective Date Deficiency Advance from URT (and Allowed
Claim Notes Guarantee, to the extent applicable).
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(inclusive of payments as to any reclamation claims and distributions in the
form of Section 546(g) returns) in cash on the Effective Date (the "Initial
Payment"). Each Major will receive on the Effective Date a term note (the
"Allowed Claim Notes") in the original principal amount of its Allowed Claim
less the Initial Payment evidencing the obligation to pay the balance of its
Allowed Claim calculated as of the Effective Date.
The Allowed Claim Notes will bear interest at the Prime Rate as announced
from time to time by Chase Manhattan Bank, N.A., computed on the basis of the
actual days elapsed in a 360-day year. Principal will be payable in equal
monthly installments of 1/24 of the annual principal payment for the first
eleven (11) months of each year, and one installment of 13/24 of the annual
principal payment on the twelfth (12th) month of each year, with the first
payment being due and payable thirty (30) days after the Effective Date, and the
final payment being due and payable twenty-four (24) months after the Effective
Date. Accrued, but unpaid interest shall be payable annually in arrears and upon
and to the extent attributable to any principal payments. Interest shall
increase by two percent (2%) per annum upon the occurrence and during the
continuance of an Event of Default under the Major Loan Documents.
In addition, each Major will receive on the Effective Date a revolving
Post-Confirmation Credit Note in the principal amount of the maximum amount of
Post-Confirmation Credit such Major is willing to extend to Debtor under such
Major's Post-Confirmation Credit Agreement, which shall include the
post-petition secured financing (which shall regardless be extended beyond the
Effective Date) previously approved by court order. The Major Loan Documents,
including the Allowed Claim Notes and Post-Confirmation Credit Notes, will be
secured by a perfected first lien upon and security interest in (the "Inventory
Lien") all Inventory originally distributed by the respective Major to the
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Debtor which is sold to the Debtor (the "Inventory"); i.e., each Major shall
have an Inventory Lien on the Inventory originally distributed by such Major.
URT agrees that it will guarantee the payments under the Allowed Claim
Notes as and when they come due (the "Allowed Claim Notes Guarantee"). URT
agrees solely to guarantee the payments due under the Allowed Claim Notes, and
not the Initial Payment to be made to the Majors or to Alliance, or any payments
on the Post-Confirmation Credit Notes. URT's obligation and liability under its
guarantee shall result solely from a payment default under the Allowed Claim
Notes (whether due to failure to make a scheduled payment or failure to pay in
full upon acceleration), and URT shall have no obligation or liability to any
creditor, interest holder or other person as a result of any payment default
relating to any obligation other than the Allowed Claim Notes. The Allowed Claim
Notes shall provide that the Debtor may cure a default within fifteen (15) days
of receipt of written notice of such default. If the Debtor defaults under any
of the Allowed Claim Notes due to the breach of a payment provision, URT may
cure such default by making such payment within fifteen (15) days of receipt of
written notice of such default.
The Debtor and Majors have entered into a certain Term Sheet dated July 30,
1996 (the "Term Sheet"), which references the conditions precedent, as to the
Major Loan Documents and advances of credit under the Post-Confirmation Credit
Notes, Representations and Warranties, Covenants and Events of Default, etc.,
which is incorporated herein and made a part hereof relative to the Majors (and
Alliance) as if set forth in its entirety. A true and correct copy of the Term
Sheet is attached hereto, and upon Confirmation controls to the extent of any
ambiguities between the Plan and the Term Sheet.
Class 4: Allowed Claim of Alliance. As its Initial Payment, Alliance will
receive approximately 80%3 (inclusive of the payments with regard to any
reclamation claims and distributions
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3 This distribution will be paid from the following sources: 27% of the
Initial Payment from the Debtor, and 73% of the Initial Payment from a
portion of the Effective Date Deficiency Advance from URT (and Allowed
Claim Notes Guarantee, to the extent applicable).
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in the form of ss. 546(g) returns) of its pre-petition gross claim (as of the
Petition Date) (i.e., Alliance's Allowed Claim) in cash on the Effective Date.
The inventory to secure Alliance's Major Loan Documents shall be inventory sold
to the Debtor (which is originally distributed by Alliance) that is not
otherwise sold or distributed by any of the Majors (the "Alliance Inventory").
Alliance shall receive an Allowed Claim Note in the original principal
amount of its Allowed Claim less its Initial Payment evidencing the obligation
to pay the balance of its Allowed Claim. calculated as of the Effective Date. In
all other respects including its Allowed Claim Notes and Post-Confirmation Claim
Note, Alliance shall be treated like the Majors under the Plan.
Class 5: Allowed Claim of Jackowitz. By Order entered on March 18, 1996,
the Bankruptcy Court granted Debtor's Motion to Reject the Amended and Restated
Employment Agreement dated December 14, 1994 with David Jackowitz, and approved
Debtor's Settlement Agreement with Mr. Jackowitz. The Settlement provides that
Jackowitz' potential $900,000.00 claim would be reduced to $273,550.00, as full
and final satisfaction, to be paid over a four-year period, commencing February
1996; and also granted Jackowitz an Administrative Claim of $9,000.00 payable in
cash on the Confirmation Date. Jackowitz will receive distributions from the
Debtor in accordance with the terms of said Order, and shall not receive any
other distribution under the Plan.
Class 6: Allowed Claims Regarding Leases. All Allowed Claims relating to
leases will be paid thirty percent (30%) of their Allowed Claims in cash on the
later of (i) the Effective Date, or (ii) the date on which its Claim is allowed,
as full and final satisfaction of any and all obligations. This thirty percent
(30%) dividend is in excess of the pro-rata distribution of the net funds of the
Debtor available at Confirmation and resulting from available net profits
generated from the first two (2) post-confirmation years of operations,
exclusive of the earmarked URT Advances. The Debtor
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<PAGE>
intends on contesting certain of the Claims filed in this Class, which when
resolved, will ultimately equal the aggregate of approximately $1,000,000.
ARTICLE V.
TAXES
With regard to all of the foregoing Groups and Claims, the
Debtor/Reorganized Debtor may not be taxed under any law imposing a stamp tax or
similar tax, with respect to the issuance, transfer or exchange of any security
pursuant to this Plan, or the making or delivery of an instrument of transfer
under this Plan, pursuant to 11 U.S.C. ss. 1146(c).
ARTICLE VI.
EFFECTUATION AND IMPLEMENTATION OF PLAN
URT, which owns eighty-seven percent (87%) of the Debtor's issued and
outstanding Common Stock, has agreed to pay to the Debtor, on demand, up to
$700,000.00 in cash on the Effective Date to fund certain payments due to
creditors on the Effective Date. In addition, URT has agreed to guarantee
payment in full of the "Allowed Claim Notes" in the event the Reorganized Debtor
is unable to make such payments for any reason. As a result of the foregoing,
and based on the Debtor's estimated cash position on the Effective Date and
projections contained in the Disclosure Statement, the Debtor will be able to
make all distributions under the Plan due on the Effective Date4, and otherwise,
as set forth herein.
If the Debtor is unable to fund fully the payments that are due and owing
to creditors on the Effective Date of the Plan, and the amount of the deficiency
(the "Deficiency") is not greater than
- --------
4 Indeed, a portion of these proceeds are specifically earmarked and
designated for certain distributions to be made under the Plan relative to
Classes 3, 4 and 7, and Administrative Claims to the extent necessary.
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<PAGE>
$700,000, then URT agrees that it shall advance to the Debtor cash equal to (but
not in excess of) the Deficiency (the "Effective Date Deficiency Advance").
Interest shall accrue on each and every advance made by URT on behalf of
the Debtor (the "URT Advances") pursuant to the Allowed Claim Notes Guarantee
and the Effective Date Deficiency Advance from the date that each URT Advance is
made and at the same interest rate payable to the Majors under the Allowed Claim
Notes.
On each of the third, fourth, fifth and sixth anniversaries of the
Effective Date of the Plan, the Debtor shall pay to URT, in cash, a sum equal
to: (a) 25% of the principal amount of the total URT Advances, plus (b) all
interest on the URT Advances that is accrued and unpaid as of such payment date,
it being the intention of the Debtor and URT that the principal amount of all
URT Advances, together with interest on the URT Advances at the rate set forth
above, shall be paid in four equal, annual installments, with the final payment
being made on the sixth anniversary of the Effective Date of the Plan. The URT
Advances will be subordinated to all payments under the Post-Confirmation Credit
Notes upon the Debtor's default on any Post-Confirmation Credit Note which
remains uncured.
Repayment of the URT Advances, as set forth above, shall be secured by: (a)
a second lien on the Inventory and Alliance Inventory, (b) a first lien on all
other assets and Inventory of the Debtor, and (c) a second mortgage on the real
and personal property that is owned by the Debtor and that is presently the
subject of a mortgage and security interest in favor of Barnett Bank.
URT's agreement to make the Effective Date Deficiency Advance and to
execute and deliver the Allowed Claim Notes Guarantee does not constitute, is
not intended as, shall not be deemed, and shall not be asserted to be, an
acknowledgment that URT has any obligation of any kind (except as specifically
set forth in the Plan) to any holder of a claim against or interest in the
Debtor. Notwithstanding the foregoing, URT's agreement to make the Effective
Date Deficiency Advance and URT's Allowed Claim Notes Guarantee shall be valid
and enforceable obligations of URT in accordance with, and following the
occurrence of: (i) all conditions precedent under the Term Sheet,
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<PAGE>
including Confirmation of the Debtor's Plan, and (ii) the full execution of all
documents to be executed pursuant to the Term Sheet.
ARTICLE VII.
OBJECTIONS TO CLAIMS AND AVOIDANCE ACTIONS
The Debtor shall file objections to claims no later than as required by the
Local Rules, except as otherwise ordered by the Court. To the extent that an
objection to a Claim is filed and remains unresolved as of the Effective Date,
distribution to such contested Claimant shall await Final Order on said
objection. The Reorganized Debtor shall escrow the contested claim distribution
until the allowed amount is finally disposed of. It is the Debtor's belief that
any unresolved contested claims will not materially effect the Debtor's ability
to confirm the Plan. Furthermore, the Debtor shall have forty-five (45) days
after Confirmation Hearing to commence any avoidance actions pursuant to 11
U.S.C. ss.ss. 544, 547 and 548. The Debtor is not aware of any avoidance
actions, including fraudulent transfers or preferential transfers and does not
anticipate filing any such actions.
ARTICLE VIII.
EXECUTORY CONTRACTS AND LEASES
Pursuant to ss.ss. 365 and 1123 of the Bankruptcy Code, and subject to all
existing Court Orders that may have been entered regarding particular executory
contracts or leases, no later than Confirmation Hearing date the Debtor shall be
deemed to have assumed all executory contracts and unexpired leases except to
the extent that, prior to Confirmation Hearing date, the Debtor has moved to
reject a particular executory contract or unexpired lease. If the Debtor is
assuming a particular executory contract or unexpired lease which is in default,
said default shall be cured by paying 1/12 of the outstanding amount due over a
period of twelve (12) months, with the initial payment commencing thirty (30)
days from the Effective Date.
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<PAGE>
ARTICLE IX.
ADMINISTRATION OF PLAN AND POST-CONFIRMATION MANAGEMENT
The management of the Reorganized Debtor will administer this Plan as part
of its administration and management of the Reorganized Debtor. No fees or costs
will be taxed to any distributions. All fees, costs and administrative expenses
involved in implementing this Plan shall be paid by the Reorganized Debtor in
connection with its continuing ownership and operation of its Business.
The following persons serve as officers and directors of the Company and
will continue to serve in the capacities indicated of the Reorganized Debtor:
Allan Wolk: Chairman of the Board and President/Director
Brian Wolk: Executive Vice President/Director
Jason Wolk: Executive Vice President/Director
During the term of the Plan, the Reorganized Debtor's officers will receive
compensation in the same amount that existed pre and post-petition with annual
increases for the Vice-Presidents only, which shall not exceed eight percent
(8%) per annum. That is, the President will receive compensation of $500,000 per
annum, and the two Execute Vice-Presidents will receive compensation of $85,000
each, per annum.
ARTICLE X.
TRANSMITTAL OF DISTRIBUTIONS
Except as otherwise agreed to by the Reorganized Debtor and a particular
Claimant, the holder of a particular Claim shall receive distributions by
regular United States mail, postage pre-paid in an envelope addressed to such
Claimant at the address shown in the Debtor's Schedules or if a different
address is stated at the Claimant's Proof of Claim form duly filed, to such
address. Property delivered in accordance with this paragraph will be deemed
delivered to the Claimant regardless of whether such property is actually
received by such Claimant.
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<PAGE>
ARTICLE XI.
CONDITIONS PRECEDENT TO CONFIRMATION OF THE PLAN
Confirmation is conditioned upon meeting the statutory criteria of the Code
regarding classification, voting, cram-down provisions, feasibility analysis and
other matters as set forth more specifically in the Disclosure Statement
submitted herewith and the Code, including the availability of funds on the
Effective Date. The Debtor has no reason to believe that such statutory criteria
or funding will not be met.
ARTICLE XII.
PROVISIONS TO INVOKE CRAM-DOWN PROCEEDINGS IF NECESSARY
If all of the applicable requirements of ss. 1129(a) of the Code are met
other than Paragraph 8 of said such section which requires that all impaired
Classes accept the Plan, the Debtor will then seek confirmation pursuant to
ss. 1129(b) of the Code. For the purposes of seeking Confirmation under the cram
down provision of the Code, should that alternative means of Confirmation prove
to be necessary, the Debtor reserves the right to modify or vary the terms of
the Plan with regard to the Allowed Claims of any rejecting classes, so as to
comply with the requirements of ss. 1129(b).
ARTICLE XIII.
DISCHARGE
Except as otherwise provided in the Confirmation Order or in this Plan,
upon the consummation of the Plan, the Debtor and the Reorganized Debtor shall
be discharged, pursuant to ss. 1141 of the Code, from all Claims as well as all
debts that arose before the Confirmation Date whether or not a Proof of Claim
was filed or was deemed to have been filed under ss. 502 of the Code or the
holder of such Claim has accepted the Plan. However, the Debtor's discharge does
not, in any manner, adversely affect the fact that the Debtor, the Reorganized
Debtor and all creditors are bound to comply with the payment terms of this Plan
and the treatments set forth in Articles III. and IV.
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<PAGE>
ARTICLE XIV.
AMENDMENT AND MODIFICATION
This Plan may be altered, amended or modified before or after Confirmation
as provided by ss. 1127 of the Code. However, creditors and interested parties'
rights shall not be adversely affected without appropriate notice.
ARTICLE XV.
REVOCATION
The Debtor reserves the right to revoke and withdraw this Plan prior to
Confirmation Hearing. If the Debtor does revoke or withdraw this Plan, then the
Plan shall be deemed null and void and shall not prejudice the Debtor or any
other person in any further proceedings herein.
ARTICLE XVI.
VESTING OF PROPERTY IN REORGANIZED DEBTOR
On the Effective Date of the Plan, title to all of the Debtor's assets and
property shall pass to the Reorganized Debtor free and clear of all liens,
claims and encumbrances subject only to the liens, claims and encumbrances as
set forth by the terms of this Plan, and the Order confirming this Plan shall be
a judicial determination of discharge of the Debtor's liabilities to the extent
permitted by ss. 1141 of the Code.
ARTICLE XVII.
MISCELLANEOUS PROVISIONS
A. Substantial Consummation of Plan. For purposes of any future analysis
regarding, inter alia appellate issues, modification of Plan, administration of
the Plan and jurisdiction of the Court, this Plan shall be deemed substantially
consummated upon the completion of payments required under the Plan to be made
on the Effective Date.
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<PAGE>
B. Governing Law. Except to the extent that the Code or Bankruptcy Rules
are applicable, the rights and obligations arising under this Plan shall be
governed by, construed and enforced in accordance with the laws of the United
States of America and the State of Florida.
C. Headings. The headings of the Articles, paragraphs and subparagraphs
herein are inserted for convenience only and shall not affect the interpretation
of the Plan.
D. Successors and Assigns. This Plan and all of the provisions thereof
shall be binding upon and inure to the benefit of the Debtor, the Reorganized
Debtor all creditors and interested parties and their respective successors and
assigns.
E. Notices. Any notice, demand, claim or other communication under and
pursuant to this Plan shall be in writing and shall be deemed to have been given
upon personal delivery thereof or upon the fifth day following mail thereof if
sent by regular United States mail as follows:
If to the Reorganized Debtor: PEACHES ENTERTAINMENT CORP.,
d/b/a PEACHES
1180 East Hallandale Beach Boulevard
Hallandale, Florida 33009
Attention: Mr. Jason Wolk
Executive Vice President
with a copy to: PEACHES ENTERTAINMENT CORP.,
d/b/a PEACHES
1180 East Hallandale Beach Boulevard
Hallandale, Florida 33009
Attention: Mr. Brian Wolk
Executive Vice President
and
ALAN J. PERLMAN, Esquire
Schantz, Schatzman & Aaronson, P.A.
Suite 1050, First Union Financial Center
200 South Biscayne Boulevard
Miami, Florida 33131-2394
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<PAGE>
ARTICLE XVIII.
RETENTION OF JURISDICTION
The Bankruptcy Court shall retain jurisdiction of these proceedings
pursuant to and for the purposes of ss. 105(a), ss. 1127 and any other pertinent
sections of the Code for the following purposes, including, but not limited to:
A. To consider any modification of the Plan under ss. 1127 of the
Code;
B. To determine any and all applications for allowance of compensation
and/or reimbursement of expenses for periods prior to or after the
Confirmation Date;
C. To determine all controversies and disputes arising under or in
connection with the Plan and all agreements referred to in the Plan;
D. To determine all applications, adversary proceedings and litigated
matters after the Effective Date of the Plan, specifically including, but
not limited to matters in connection with, ss.ss. 365, 502, 506 and 1141 of
the Code involving assumption and rejection of executory contracts,
rejection Claims, objections to Claims and determinations relative to the
secured and unsecured status of various creditors;
E. To determine such other matters as may be provided for in the
Confirmation Order or as may, from time to time, be authorized under the
provisions of the Code or any applicable law;
F. To determine any and all objections to the allowance of Claims;
G. To determine any and all applications for approval of a settlement
or settlements;
H. To determine any and all applications for approval, modification
and/or enforcement of prior Orders in connection herewith;
I. To enforce any administrative provision of this Plan to the extent
appropriate and the agreements in connection therewith;
J. To correct any defect, cure any omission or reconcile any
inconsistency in the Plan or Confirmation Orders as may be necessary to
carry out the purposes of the Plan; and
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<PAGE>
K. To handle any other matter related to this case which the Court
deems appropriate.
ARTICLE XIX.
SEVERABILITY
If any provision in the Plan is determined to be unenforceable following
the Confirmation Date, such determination shall in no way limit or affect the
enforceability and operative effect of any and all other provisions of this
Plan.
ARTICLE XX.
ENTIRE PLAN
This document, and any and all attachments and any modifications thereto,
shall constitute the entire Plan subject to Confirmation by the Court pursuant
to ss. 1128 of the Code. Any further documentation which is not specifically
designated as an amendment or modification other than an Order of the Court
which, by its terms, modifies the terms hereof, and other than an agreement
specifically permitted by this Plan, shall not be deemed a part of this Plan and
neither the Debtor nor the Reorganized Debtor or any other parties in interest
shall be bound by the provisions of same.
ARTICLE XXI.
CONCLUSION
The aforesaid provisions shall constitute the Plan of Reorganization of
PEACHES ENTERTAINMENT CORP, d/b/a PEACHES. This Plan, when approved and
confirmed by the Court shall be deemed binding on the Debtor, the Reorganized
Debtor and all creditors and all parties in interest and their successors and
assigns in accordance with ss. 1141 of the Code.
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<PAGE>
Respectfully submitted this 22 day of October, 1996.
PEACHES ENTERTAINMENT CORP.,
d/b/a PEACHES
By: s/Jason Wolk
-----------------------------------------
JASON WOLK, Executive Vice President
By: s/Brian Wolk
-----------------------------------------
BRIAN WOLK, Executive Vice President
SCHANTZ, SCHATZMAN &, AARONSON, P.A.
Attorneys for Debtor, PEACHES ENTERTAINMENT CORP.,
d/b/a PEACHES
Suite 1050, First Union Financial Center
200 South Biscayne Boulevard
Miami, Florida 33131-2394
(305) 371-3100
By: s/Alan J. Perlman
---------------------------------------------
ALAN J. PERLMAN, Esquire
Florida Bar No.: 0826006
<PAGE>
PEACHES ENTERTAINMENT CORP.
PLAN OF REORGANIZATION
TERM SHEET
This Term Sheet describes a consensual Plan of Reorganization (the "Plan") of
Peaches Entertainment Corporation, Case No. 96-20153.
DEBTOR: Peaches Entertainment Corp. ("Debtor").
LIMITED
GUARANTOR: URT Industries, Inc., majority shareholder of the Debtor
("URT").
SECURED LENDER: Barnett Bank of Broward County, N.A. (the "Bank"), which is
secured by a mortgage upon certain real property and a
perfected security interest in certain personal property.
COMMITTEE: The Official Committee of Unsecured Creditors (the
"Committee") which consists of (i) BMG Distribution;
(ii) Sony Music Entertainment, Inc.; (iii) UNI Distribution
Corporation; (iv) Polygram Group Distribution;
(v) Warner/Elektra/Atlantic Corp.; (v) EMI Music
Distribution; and (vii) Alliance Entertainment Corp.
TREATMENT OF The Debtor, in its sole discretion, either shall:
SECURED LENDER: (i) continue to make its mortgage payments to the Bank in a
timely manner pursuant to the loan documents in effect on
the petition date (the "Prepetition Loan Documents"); or
(ii) negotiate or obtain an amended note and mortgage with
the Bank, and the Bank shall retain its first priority lien
on the property known as 3821 Airport Blvd., Mobile, AL.
TREATMENT OF Unless otherwise agreed to by an individual Administrative
ADMINISTRATIVE Claimant, including all priority unsecured creditors, all
CLAIMANTS AND Administrative Expenses shall be paid in full on the later
OTHER PRIORITY of (i) the Effective Date (as such term will be defined in
UNSECURED the Plan), (ii) the date such expenses are allowed by the
CREDITORS Bankruptcy Court or (iii) the date otherwise agreed to by
(EXCEPT PRIORITY such Administrative Claimant and the Debtor.
TAX CLAIMS):
TREATMENT OF Priority tax claims may be paid out over a six year period,
PRIORITY TAX or as otherwise structured by the Debtor
<PAGE>
CLAIMS:
Amount of The Debtor and each Major will determine the amount of such
Allowed Claim: Major's prepetition gross claim as of the Petition Date
("Allowed Claim"), including reclamation claims.
InitialPayment: Each Major will receive approximately 74%(1)(inclusive of
the payments with regard to any reclamation claims and
distributions in the form of ss. 546(g)* returns) of its
Allowed Claim in cash on the Effective Date (the "Initial
Payment"). No provision of the Plan shall relieve the Detor
or any creditor of its respective obligations to honor any
ss. 546(g)* agreement to which it is a party and which the
Bankruptcy Court has approved.)
Amount of Notes: Each Major will receive on the Effective Date a term note
(the "Allowed Claim Notes") in the original principal amount
of its Allowed Claim less the Initial Payment evidencing the
obligation to pay the balance of its Allowed Claim
calculated as to the Effective Date.
After negotiation with the Debtor on an individual basis,
each Major will receive on the Effective Date a revolving
credit note (the "Postconfirmation Credit Notes") in the
principal amount of the maximum amount of Postconfirmation
Credit such Major is willing to extend pursuant to such
Major's Postconfirmation Credit Agreement, inclusive of the
postpetition secured financing (which shall regardless be
extended beyond the Effective Date). Other than as provided
herein, the terms of the Postconfirmation Credit Notes shall
be provided in each Major's Postconfirmation Credit
Agreement. (The Allowed Claim Notes and the Postconfirmation
Credit Notes are referred to herein collectively as the
"Notes." The Notes, the security agreement by and among the
Majors and the Debtor and any other loan document to which
the Majors and the Debtor are parties are referred to herein
as the "Major Loan Documents").
Security: The obligations of the Debtor under the Major Loan Documents
will be secured by a perfected first lien upon and security
interest in (the
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(1)The distribution will be paid from the following sources: 27% of the
Initial Payment from the Debtor and 73% of the Initial Payment from a portion of
the Effective Date Deficiency Advance from URT (and Allowed Claim Notes
Guarantee, to the extent applicable).
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<PAGE>
"Inventory Lien") all inventory originally distributed by
the respective Majors which is sold to the Debtor (the
"Inventory"), i.e., each Major shall have an inventory Lien
on the Inventory originally distributed by such Major.
Other Terms of
the Allowed
Claim Notes:
Maturity: The Allowed Claim Notes will mature twenty-four months from
the Effective Date.
Interest on the
Notes:
Rate: Prime rate computed based upon the actual days elapsed in a
360 day year as set by Chemical Bank, N.A.
Default Rate: Interest shall increase by 2% per annum upon the occurrence
and during the continuance of an Event of Default under the
Major Loan Documents.
Payments:
o Accrued but unpaid interest shall be payable annually
in arrears and upon and to the extent attributable to
any principal payment.
o Principal shall be payable in equal monthly installment
of 1/24 of the annual principal payment for the first
eleven months of each year and in one installment of
13/24 of the annual principal payment on the twelfth
month of each year, with the first payment due and
payable 30 days after the Effective date and the final
payment due and payable twenty-four months after the
Effective Date.
Conditions Execution of the Major Loan Documents Precedent to will
Major Loan be subject to satisfaction of conditions precedent
Documents: deemed appropriate by the Majors and Debtor, including,
without limitation, the following:
(i) Entry of a Final Order confirming the Plan.
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<PAGE>
(ii) All documentation relating to the transactions
contemplated hereby shall have been completed to
the satisfaction of the Majors, Debtor, URT and
their counsel;
(iii) All filings, deliveries and other actions
necessary to perfect the lien of the Majors shall
have occurred;
(iv) All governmental, shareholder and third party
consents and approvals necessary or desirable in
connection with the transactions contemplated
hereby shall have been obtained and remain in full
force and effect;
(v) No material adverse change shall have occurred in
the financial condition, cash flows or operations
of the Debtor since the Petition Date;
(vi) The Majors, Debtor and URT shall have received all
other certificates, agreements and documents which
they may reasonably request in connection with
consummation of the transactions contemplated
hereby;
(vii) URT shall have provided all additional funding
required for distributions on the Effective Date,
if any, to consummate the Plan;
(viii) No default by the Debtor or by URT under any
existing material agreements shall occur as a
result of consummation of the transactions
contemplated hereby, unless otherwise permitted
under the Plan.
Conditions to (i) Absence of continuing event of default or event
Subsequent that, with the giving of notice to or by any party
Advances of or the lapse of time, would become an event of
Credit under the default;
Postconfirmation
Credit Notes: (ii) Accuracy of representations and warranties;
(iii) No material adverse change shall have occurred in
the financial condition, cash flows or operations
of the Debtor since March 30, 1996 (in process);
(iv) No default by the Debtor (exclusive of the Chapter
11 proceeding) under any existing material
agreements shall exist or occur as a result of
such subsequent advance.
-4-
<PAGE>
Representations Those representations and warranties customarily found in
And Warranties: credit agreements for similar financings and such additional
representations and warranties determined by the Majors to
be appropriate in the context of the proposed Major Loan
Documents, all of which shall be agreed upon by the parties.
Covenants: Those covenants customarily found in credit agreements for
similar financings and such additional covenants determined
by the Majors and agreed to by the Debtor to be appropriate
in the context of the proposed Major Loan Documents.
Events of
Default: Those events of default customarily found in credit
agreements for additional events of default determined by
the Majors and the Debtor to be appropriate in the context
of the proposed Major Loan Documents, including, without
limitation, non-payment of debt service, all of which shall
be agreed upon by the parties; failure to comply with such
Major's Postconfirmation Credit Agreement; and other events
as may be agreed upon.
TREATMENT OF As its Initial Payment, Alliance will receive approximately
ALLIANCE 80% (inclusive of the payments with regard to any
ENTERTAINMENT reclamation claims and distributions in the form of
ss.546(g)* returns) of its prepetition gross claim (as of
the Petition Date) (i.e., Alliance's Allowed Claim) in cash
on the Effective Date. The inventory to secure Alliance's
Major Loan Document shall be inventory sold to the Debtor
(which is originally distributed by Alliance) that is not
otherwise sold or distributed by any of the Majors (the
"Alliance Inventory").
Alliance shall receive an Allowed Claim Note in the original
principal amount of its Allowed Claim less its Initial
Payment evidencing the obligation to pay the balance of its
Allowed Claim calculated as of the Effective Date. In all
other respects, including its Allowed Claim Note and
Postconfirmation Claim Note, Alliance shall be treated like
the Majors under the Plan.
TREATMENT OF Mr. Jackowitz' Allowed Claim shall be satisfied pursuant to
DAVID JACKOWITZ: the Order Approving Settlement Regarding Debtor's Rejection
of Employment Agreement and Creditor's Motion to Compel
Payment Regarding Same, entered by the Bankruptcy Court on
or about March 19, 1996 (the "Jackowitz Order").
-5-
<PAGE>
TREATMENT OF Each claim related to a lease shall receive under the Plan
LEASE CLAIMS: 27% of its Allowed Claim in three equal annual installments
over a period of two consecutive years, with the initial
distribution commencing on the later of (i) the Effective
date or (ii) the date on which its claim is allowed.
TREATMENT OF ALL All other unsecured non-priority creditors shall each
OTHER UNSECURED, receive the full amount(2) of their Allowed Claims on the
NON-PRIORITY later of (i) the Effective Date or (ii) the date on which
CREDITORS: its Claim is Allowed.
TREATMENT OF The Equity Holders shall retain their Interests in the
EQUITY HOLDERS: Debtor/Reorganized Debtor.
LIMITED
GUARANTOR'S
CONTRIBUTION:
Allowed Claim URT agrees that it will guarantee payment under the Allowed
Notes Guarantee Claim Notes as and when they come due (the "Allowed Claim
Notes Guarantee").
URT agrees solely to guarantee the payment due under the
Allowed Claim Notes, and not the Initial Payment to be made
to the Majors or to Alliance, or any payments on the
Postconfirmation Credit Notes. URT's obligation and
liability under its guarantee shall result solely from a
payment default under the Allowed Claim Notes (whether due
to failure to make a scheduled payment or failure to pay in
full upon acceleration), and URT shall have no obligation or
liability to any creditor, interest holder or other person
as a result of any payment default relating to any
obligation other than the Allowed Claim Notes. The Allowed
Claim Notes shall provide that the Debtor may cure a default
within 15 days of receipt of written notice of such default.
If the Debtor defaults under any of the Allowed Claim Notes
due to the breach of a payment provision, URT may cure such
default by making such payment within 15 days of receipt of
written notice of such default.
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(2) The distribution will be paid from the following sources: 27% from the
Debtor and 73% from a portion of the Effective Date Deficiency Advance from URT.
-6-
<PAGE>
Effective Date If the Debtor is unable to fund fully the payments that are
Deficiency due and owing to creditors on the Effective Date of the
Advance: Plan, and the amount of the deficiency (the "Deficiency") is
not greater than $700,000, then URT agrees that it shall
advance to the Debtor cash equal to (but not in excess of)
the Deficiency (the "Effective Date Deficiency Advance").
Interest shall accrue on each and every advance made by URT
on behalf of the Debtor (the "URT Advances") pursuant to the
Allowed Claim Notes Guarantee and the Effective Date
Deficiency Advance from the date that each URT Advance is
made and at the same interest rate payable to the Majors
under the Allowed Claim Notes.
Repayment of On each of the third, fourth, fifth and sixth anniversaries
Advances Made of the Effective Date of the Plan, the Debtor shall pay to
by URT Pursuant URT, in cash, a sum equal to: (a) 25% of the principal
to the Allowed amount of the total URT Advances, plus (b) all interest on
Claim Notes the URT Advances that is accrued and unpaid as of such
Guarantee and payment date, it being the intention of the Debtor and URT
the Effective that the principal amount of all URT Advances, together with
Date Deficiency interest on the URT Advances at the rate set forth above,
Advance: shall be paid in four equal, annual installments, with the
final payment being made on the sixth anniversary of the
Effective Date of the Plan. The URT Advances will be
subordinated to all payments under the Postconfirmation
Credit Notes upon the Debtor's default on any
Postconfirmation Credit Note which remains uncured.
Repayment of the URT Advances, as set forth above, shall be
secured by: (a) a second lien on the Inventory and the
Alliance Inventory, (b) a first lien on all other assets and
inventory of the Debtor, and (c) a second mortgage on the
real and personal property that is owned by the Debtor and
that is presently the subject of a mortgage and security
interest in favor of Barnett Bank.
URT takes the position that (i) it has no obligation to
satisfy the Debtor's prepetition creditors' claims and
(ii) it has entered into the Term Sheet voluntarily to
assist the Debtor in its reorganization efforts. URT's
agreement to make the Effective Date Deficiency Advances
and to execute and deliver the Allowed Claim Notes
Guarantee does not constitute, is not intended as,
shall not be deemed, and shall not be asserted to be,
an acknowledgment that URT has any obligation of any kind
(except as specifically set forth in this Term Sheet) to
any holder of a claim against or interest in the Debtor.
Notwithstanding the foregoing, URT's agreement to make the
Effective Date Deficiency Advance and URT's Allowed Claim
Notes
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<PAGE>
Guarantee shall be valid and enforceable obligations of URT
in accordance with, and following the occurrence of: (i) all
conditions precedent under this Term Sheet and (ii) the full
execution of all documents to be executed pursuant to this
Term Sheet.
TREATMENT OF Any leases which are the subject of a pending motion to
LEASES: assume with the consent of the Committee which consent is
hereby given.
MANAGEMENT: The Committee consents to the continuation of the current
management at current levels of compensation.
GOVERNING LAW: State of Florida.
COUNTERPARTS: This Term Sheet may be signed in any number of counterparts,
each of which shall be an original, with the same effect as
if the signature hereto were upon the same instrument.
DEFINITIONS: The following terms shall be defined in the Plan:
Administrative Claimant
Administrative Expense
Alliance Entertainment Corp.
Allowed Claim
Allowed Claim Notes
Bank
Bankruptcy Code
Bankruptcy Court
Bankruptcy Rules
Chapter 11 Case
Claims Bar Date
Confirmation Date
Confirmation Hearing
Confirmation Order
Debtor in Possession
Debtors' Advisors
Effective Date
Equity Holders
Final Order
Initial Payment
Inventory Lien
Jackowitz Order
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<PAGE>
Major Loan Documents (the Allowed Claim Notes, the
Postconfirmation Credit Agreements and any other
document related to the Majors' extension of credit
postpetition)
Majors
Notes (the Allowed Claim Notes and the Postconfirmation
Credit Notes)
Official Committee
Official Committee Advisors
Petition Date
Priority Claims
Postconfirmation Credit
Postconfirmation Credit Agreements
Postconfirmation Credit Notes
Prepetition Loan Documents
URT
DEBTOR'S Nothing herein, including the execution hereof, shall waive,
EXCLUSIVE PERIOD: alter or in any manner prejudice the Debtor's exclusive
right to file a Plan of Reorganization and to solicit
acceptance in connection therewith.
Accepted and agreed to by
Peaches Entertainment Corp.
By: /s/Brian Wolk By: /s/Jason Wolk
--------------------- ------------------
Name: Brian Wolk Name: Jason Wolk
Title: Vice President Title: Vice President
Dated: July 30, 1996 Dated: July 31, 1996
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<PAGE>
Accepted and agreed to by URT Industries, Inc.
By: /s/Allan Wolk
---------------------
Name: Allan Wolk
Title: President
Dated: July 30, 1996
Accepted and agreed to by the
Official Committee of Unsecured Creditors
By: /s/ Carl A. Schoock
---------------------
Name: Carl A. Schoock
Title: Chairman
Dated: July 30, 1996
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Exhibit 2
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO.: 96-20153-BKC-RBR
Chapter 11 Proceeding
In re:
PEACHES ENTERTAINMENT CORP.,
d/b/a PEACHES,
Debtor.
/
- ------------------------------------------
ORDER CONFIRMING AMENDED PLAN OF
REORGANIZATION, AS MODIFIED
THIS CAUSE came before the Court for hearing on January 17, 1997, to
consider the Confirmation of the Debtor's Amended Plan of Reorganization, dated
October 23, 1996, as Modified herein (the "Plan"), filed by PEACHES
ENTERTAINMENT CORP., d/b/a PEACHES ("Debtor"), under Chapter 11 of the
Bankruptcy Code.
The Plan, having been transmitted to creditors and equity security holders;
and It having been determined after hearing on proper notice, and having
heard the arguments of counsel and testimony and demeanor of the witnesses,
the Court hereby finds and determines, that:
FINDINGS OF FACT
1. The Plan has been accepted in writing by the creditors and equity
holders whose acceptance is required by law; and
2. The provisions of Chapter 11 of the Code have been complied with and
that the Plan has been proposed in good faith and not by any means forbidden by
law; and
3. With respect to each impaired class of claims or interests, each holder
of a claim or interest has accepted the Plan, or will receive or retain under
the Plan on account of such claim or interest property of a value, as of the
Effective Date of the Plan, that is not less than the amount that
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<PAGE>
such holder would receive or retain if the Debtor were liquidated under Chapter
7 of the Bankruptcy Code on such date; and
4. All payments made or promised by the Debtor or by a person issuing
securities or acquiring property under the Plan or by any other person for
services or for costs and expenses in, or in connection with, the Plan and
incident to the case, have been fully disclosed to the Court and are reasonable
or, if to be fixed after confirmation of the Plan, will be subject to approval
of the Court; and
5. The identity, qualifications, and affiliations of the persons who are to
be directors or officers, or voting trustees, if any, of the Debtor, after
confirmation of the Plan, have been fully disclosed, and the appointment of such
persons to such offices, or their continuance therein, is equitable and
consistent with the interests of the creditors and equity security holders and
with public policy; and
6. The identity of any insider that will be employed or retained by the
Debtor and compensation to such insider has been fully disclosed; and
7. The confirmation of the Plan is not likely to be followed by the
liquidation, or the need for further financial reorganization of the Debtor or
any successor to the Debtor under the Plan, unless such liquidation or further
reorganization is proposed in the Plan; and
IT IS THEREFORE:
ORDERED that the Plan, as Modified, is CONFIRMED, and it is further
ORDERED that the Plan be and hereby is MODIFIED, as follows:
(a) That the Effective Date shall mean February 3, 1997;
(b) That the Term Sheet and Article IV of the Amended Plan be and
hereby are
MODIFIED to provide:
(i) that the distributions to be provided to the Majors and Alliance on the
Effective Date shall be adjusted, including the cash payment, so as to conform
to the amounts reflected in Schedule "1" to the Certificate of Proponent of
Plan, which, along with the returns referenced in Schedule "1," shall constitute
the "Initial Payment";
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<PAGE>
(ii) that as part of the distributions to be provided by the Debtor to the
"Majors" and Alliance under the Term Sheet, the Debtor be and hereby is
AUTHORIZED to provide, and the respective creditor shall accept, subject to and
conditioned upon the usual and customary return policies and procedures of said
creditor, additional returns of pre- and post-petition inventory, which shall be
credited against the outstanding pre-petition claim, in the amounts set forth in
Schedule "1" of the Certificate of Proponent of Plan, pursuant to ss.ss. 105 or
546(g)* of the Bankruptcy Code, as may be applicable, with said returns to be
made subsequent to the Confirmation of the Amended Plan; and
(iii) that, in order to preserve the value of Peaches and its business and
assets and to preserve the value of URT's stock, URT shall infuse the sum of
$350,000 as capital to the Debtor, so as to make a portion of the cash
distributions to the Majors and Alliance under Schedule "1" to the Certificate
of Proponent of Plan; and it is further
ORDERED that the documents attached to the Debtor's Notice of Filing
Confirmation Documents (filed, or to be filed, with the Bankruptcy Clerk), be
and hereby are APPROVED, the originals of which shall be executed by the
respective parties prior to and as a condition precedent to: (i) the Effective
Date; and (ii) the obligations of the Debtor and URT under the Amended Plan and
the loan and related agreements to be executed and delivered between and among
the Debtor, URT, the Majors and Alliance, including the obligation for the
Debtor and URT to fund their respective monetary obligations; and it is further
ORDERED that the Court shall retain jurisdiction as provided in the Plan
until there is substantial consummation of the Plan, and to adjudicate final
award of fees for professionals to the extent necessary; and it is further
ORDERED that the Debtor shall pay the United States Trustee the appropriate
sum required pursuant to 28 U.S.C. ss. 1930(a)(6) within ten (10) days of the
entry of this Order and simultaneously provide to the United States Trustee an
appropriate affidavit indicating the cash disbursements for the relevant period;
and it is further
ORDERED that Jason Wolk, Executive Vice President of the Debtor, is named
as disbursing agent without additional compensation; bond is waived; upon the
occurrence of all conditions
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<PAGE>
precedent under the Amended Plan and this Order, the disbursing agent is
directed to make all first installment payments on the Effective Date of the
Plan. The disbursing agent or Debtor's counsel, shall within sixty (60) days of
the Effective Date of the Plan, file a Final Report of Estate and Motion for
Final Decree Closing Case. Failure to timely file the Final Report of Estate and
Motion for Final Decree Closing Case may result in the imposition of sanctions,
which may include the return of attorney's fees; and it is further
ORDERED that there shall be no tax, including, but not limited to, any
stamp and/or intangible tax incurred in accordance with the transfer of assets,
or making or delivery of an instrument of transfer, or with the recording or
filing of any documents regarding same, as contemplated under the Plan, pursuant
to Section 1146 of the Bankruptcy Code, 11 U.S.C. ss. 1146.
DONE AND ORDERED in the Southern District of Florida, this 17 day of
January, 1997.
Raymond B. Ray
RAYMOND B. RAY
United States Bankruptcy Judge
Copies Furnished to:
Alan J. Perlman, Esquire
[Attorney Perlman is hereby directed to serve
a conformed copy of this Order to all
interested parties.]
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