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): June 7, 1999
------------
MORO CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-26828 51-0338736
- ------------------------------ ------------ -------------------
(State or other (Commission (IRS Employer
jurisdiction of incorporation) File Number) Identification No.)
Bala Pointe, Suite 240
111 Presidential Boulevard
Bala Cynwyd, PA 19004
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
(610) 667-9050
----------------------------------------------------
(Registrant's telephone number, including area code)
Food Court Entertainment Network, Inc.
220 East 42nd Street, 16th Floor
New York, NY 10017
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 3. Bankruptcy or Receivership.
On May 7, 1999, the United States Bankruptcy Court for the District of
Delaware (the "Court") confirmed the First Modified Chapter 11 Plan of
Reorganization, dated March 9, 1999 (the "Plan") of Food Court Entertainment
Network, Inc. (the "Debtor"). The following summary of the Plan omits certain
information set forth in the Plan. Any statements contained herein concerning
the Plan are not necessarily complete, and in each such instance, reference is
made to the Plan, a copy of which is filed herewith as Exhibit 2.1. Each such
statement is qualified in its entirety by such reference. All capitalized terms
used and not defined herein shall have the respective meanings ascribed to them
in the Plan.
The Plan generally provides for the following: Each Holder of an Allowed
General Administrative Claim, an Allowed Professional Administrative Claim, an
Allowed Tax Claim and, an Allowed Priority Claim will be paid, in cash, an
amount equal to the Allowed amount of each such Claim. Each Holder of an Allowed
General Unsecured Claim will receive a Pro Rata Share of, (i) the Debtor's Cash
remaining after payment in full of all Allowed Administrative, Tax and Priority
Claims, (ii) any net recoveries from Avoidance Claims, (iii) the Promissory Note
of the Reorganized Debtor in the amount of $50,000, bearing interest at the rate
of five percent (5%) per year, payable in full on May 18, 2000, and (iv) shares
aggregating five percent (5%) of the issued and outstanding shares of Common
Stock, par value $.001 per share, of the Reorganized Debtor (the "New Common
Stock").
All equity interests in the Debtor, including all Class A Common Stock,
Class A Warrants, Class B Common Stock, Class B Warrants and rights under any
employee or director stock option plans and any other options or warrants
(collectively defined in the Plan as "Interests") in the Debtor have been
canceled. The Reorganized Debtor will, pursuant to the Plan, issue shares of New
Common Stock, as follows:
David W. and Jacqueline J. Menard 4,250,000
Disbursing Agent for the benefit of
Holders of Allowed Interests 500,000
Disbursing Agent for the benefit of
Holders of Allowed Unsecured Claims 250,000
Total Shares Outstanding after effect of
the Plan 5,000,000
=========
In connection with the Plan and in exchange for 85% of the New Common Stock,
David W. Menard has delivered to the Reorganized Debtor the sum of $50,000.
All of the members of the Board of Directors and executive officers of
Debtor have resigned and David W. Menard will be the Reorganized Debtor's sole
director and officer.
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<PAGE>
The Reorganized Debtor, through a Certificate of Amendment to its Amended
and Restated Certificate of Incorporation filed on June 7, 1999 with the
Secretary of State for the State of Delaware, has changed its (i) capital
structure as outlined above and (ii) name from Food Court Entertainment Network,
Inc. to Moro Corporation.
In connection with the court-approved sale of the assets of the Debtor
prior to confirmation of the Plan, and the allocation of the proceeds from such
sale to the Holders of Claims as described above, the Reorganized Debtor has no
assets and its liabilities consist of the Promissory Note for $50,000 described
above.
Item 4. Change in Registrant's Certifying Accountant.
Effective June 14, 1999, the Company retained Schiffman Hughes Brown, PC,
CPA's, 790 Penllyn Pike, Suite 302, Blue Bell, Pennsylvania, 19422, to audit the
Company's 1998 financial statements. Richard A. Eisner & Company, LLP, 575
Madison Avenue, New York, New York, 10022, audited the previous years' financial
statements. The Company's management determined that an accounting firm located
in close proximity to the Company's new location could perform the audit more
efficiently.
Item 7. Financial Statements, Pro Forma Financial Information Exhibits
(c) Exhibits.
2.1 First Modified Chapter 11 Plan of Reorganization (with attached
Disclosure Statement and Supplemental Disclosure Statement)
3.1 Certificate of Amendment, filed June 7, 1999, to the Amended and
Restated Certificate of Incorporation
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this current report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
MORO CORPORATION
By: /s/ David W. Menard
-------------------------------
Date: June 15, 1999 David W. Menard
President
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<PAGE>
EXHIBIT INDEX
Number Exhibit
- ------ -------
2.1 First Modified Chapter 11 Plan of Reorganization (with attached
Disclosure Statement and Supplemental Disclosure Statement)
3.1 Certificate of Amendment, filed June 7, 1999, to the Amended and
Restated Certificate of Incorporation
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UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
- ------------------------------------
)
In re: ) IN CHAPTER 11
)
FOOD COURT ENTERTAINMENT )
NETWORK, INC., )
)
Debtor. ) CASE NO. 98-1889 (MFW)
- ------------------------------------)
ORDER CONFIRMING
DEBTOR'S FIRST MODIFIED
CHAPTER 11 PLAN OF REORGANIZATION
Food Court Entertainment Network, Inc. (the "Debtor") filed with this Court
under Chapter 11 of the Bankruptcy Code, 11 U.S.C. ss.1101, et seq. (the
"Bankruptcy Code"), its First Modified Chapter 11 Plan of Reorganization dated
March 9, 1999 (the "Plan"), a copy of which is attached hereto as Exhibit
"A."(1) Hearings were held before this Court on notice to all holders of Claims,
Interests and other parties-in-interest in this Chapter 11 Case to consider
Debtor's Disclosure Statement in Support of First Modified Chapter 11 Plan of
Liquidation dated March 9, 1999 (the "Disclosure Statement"). The Disclosure
Statement was approved by Order of this Court dated March 12, 1999 (the
"Disclosure Statement Order"). A copy of the Plan, the Disclosure Statement and
various related voting materials were transmitted to all known holders of Claims
or Interests
- ----------
(1) Unless otherwise defined herein, all capitalized terms in this Order shall
have the meanings as defined in the Plan.
<PAGE>
as provided in the Disclosure Statement Order. The solicitation of acceptances
from holders of Claims and Interests in this Chapter 11 Case was made in the
manner required by this Court and under the Bankruptcy Code and Federal Rules of
Bankruptcy Procedure (the "Bankruptcy Rules"). A full evidentiary hearing to
consider confirmation of the Plan and other matters relating to confirmation was
held before this Court on April 22, 1999 (the "Confirmation Hearing") and due
notice of the Confirmation Hearing, having been provided to holders of Claims,
Interests and other parties in interest in accordance with the Disclosure
Statement Order, the Bankruptcy Code and the Bankruptcy Rules; it appearing that
the objection of the Securities and Exchange Commission (the "SEC") (the only
objection to confirmation of the Plan) having been withdrawn and resolved as set
forth in the record of the Confirmation Hearing; and upon all of the proceedings
had before the Court, the entire record of this Chapter 11 Case and the Court's
oral findings of fact and conclusions of law on the record at the Confirmation
Hearing incorporated herein by reference; and after due deliberation and
consideration and sufficient cause appearing therefor, it is hereby DETERMINED,
FOUND, ADJUDGED, DECREED and ORDERED:
Jurisdiction
1. The Court has jurisdiction to confirm the Plan pursuant to 28 U.S.C.
ss.ss.157 and 1334.
2. Confirmation of the Plan is a core proceeding pursuant to 28.U.S.C.
ss.157(b)(2)(L).
3. Venue of the Chapter 11 Case is proper pursuant to 28 U.S.C. ss.ss.1408
and 1409.
4. The Debtor is an entity eligible for relief under section 109 of the
Bankruptcy Code.
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<PAGE>
Solicitation/Notice; Etc.
5. The procedures used to distribute and tabulate the ballots were fair,
properly conducted and in accordance with the Disclosure Statement Order,
section 1126 of the Bankruptcy Code and all applicable Bankruptcy Rules.
6. The Disclosure Statement, the Plan, the ballots, the Notice of
Confirmation Hearing and the Disclosure Statement Order were transmitted and
served in compliance with the Bankruptcy Rules. Adequate and sufficient notice
of the Confirmation Hearing (including the deadline for filing and serving
objections to confirmation of the Plan) and other requirements and deadlines,
hearings and matters described in the Disclosure Statement Order was provided in
compliance with the Bankruptcy Rules and the Disclosure Statement Order, and no
other or further notice is required.
Supplement to the Plan
7. As set forth on Exhibit "B" annexed hereto, the Debtor has filed a
Supplemental Disclosure Statement For Holders of New Common Stock To Be Issued
Pursuant To Menard Plan (the "Supplement") which was introduced as an exhibit at
the Confirmation Hearing.
8. The Plan, as supplemented by the Supplement, shall constitute the Plan.
9. The Supplement does not adversely affect the treatment of any Claims or
Interests under the Plan; rather at the request of the SEC, it enhances the
treatment of those holders of Claims and Interests who will receive New Common
Stock under the Plan.
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<PAGE>
10. In accordance with Bankruptcy Rule 3019, all holders of Claims and
Interests who voted to accept the Plan are hereby deemed to have accepted the
Plan, as supplemented by the Supplement.
11. No holder of a Claim or Interest who has voted to accept the Plan shall
be permitted to change its acceptance to a rejection as a consequence of the
Supplement.
12. Disclosure of the Supplement, which has been incorporated in the Plan
on the record of the Confirmation Hearing, constitutes due and sufficient notice
thereof.
13. The Supplement, as incorporated in the Plan, complies with section 1127
of the Bankruptcy Code and Bankruptcy Rule 3019.
Confirmation of the Plan
14. The Plan complies with the applicable provisions of the Bankruptcy Code
and, as required by Bankruptcy Rule 3016(a), the Plan is dated and identifies
the Debtor as the proponent.
15. The Plan adequately and properly classifies all Claims and Interests.
16. A reasonable basis exists for the classification of Claims and
Interests in the Plan. Claims and Interests within each particular Class are
substantially similar. The classification of Claims and Interests in the Plan is
reasonable and necessary to implement the Plan.
17. Article IV of the Plan identifies Class 1 as unimpaired and Classes 2
and 3 as impaired.
18. Article IV of the Plan specifies the treatment of each impaired Class
of Claims and Interests.
19. The Plan provides the same treatment for each Claim or Interest in each
Class.
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<PAGE>
20. The Plan provides adequate means for its implementation and execution.
21. The Debtor, as proponent of the Plan, has complied with the applicable
provisions of the Bankruptcy Code. In that regard, the Debtor solicited votes in
respect of the Plan pursuant to the Disclosure Statement, which Disclosure
Statement was approved by the Court, pursuant to the Disclosure Statement Order,
after a hearing and after taking into account objections filed by the SEC and
certain revisions that the Debtor made to the Disclosure Statement in response
to said objection.
22. The Plan has been proposed in good faith and not by any means forbidden
by law.
23. All payments made or to be made by the Debtor, or by a person issuing
securities or acquiring property under the Plan, for services or for costs and
expenses in or in connection with the Chapter 11 Case, or in connection with the
Plan and incident to the Chapter 11 Case, have been approved by, or are subject
to the approval of the Court as reasonable.
24. The identity and affiliations of the persons proposed to serve as
initial directors or officers of the Reorganized Debtor after confirmation of
the Plan have been fully disclosed, and the appointment to, or continuance in,
such offices of such persons is consistent with the interests of holders of
Claims and Interests and with public policy.
25. The identity of any insider that will be employed or retained by the
Reorganized Debtor and the nature of such insider's compensation have been fully
disclosed.
26. After confirmation of the Plan, the Debtor's business will not involve
rates established or approved by, or otherwise subject to, any governmental
regulatory commission.
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<PAGE>
27. With respect to each impaired Class of Claims or Interests, each holder
of an impaired Claim or Interest in such Class has accepted the Plan or will
receive or retain under the Plan property of a value, as of the Effective Date,
that is not less than the amount that such holder would receive or retain if the
Debtor was liquidated under chapter 7 of the Bankruptcy Code on such date.
28. Class 1 of the Plan is not impaired by the Plan and, accordingly, is
deemed to have accepted the Plan.
29. Classes 2 and 3 of the Plan have voted to accept the Plan.
30. Except to the extent that the holder of an Allowed General
Administrative Claim of a kind specified in section 507(a)(1) of the Bankruptcy
Code has agreed to a different treatment of such Claim, the Plan provides that
on the later of the Initial Distribution Date, or as soon thereafter as is
practicable taking into account the Debtor's right under the Plan to file
objections to such Claims after the Effective Date or within such further time
as the Court may grant, and the date such claim becomes an Allowed Claim, the
holder of such Claim will receive on account of such Claim Cash equal to the
full amount of such Allowed General Administrative Claim.
31. The Plan provides that on the Effective Date or as soon thereafter as
is practicable, each holder of an Allowed Priority Claim of a kind specified in
sections 507(a)(3), 507(a)(4), 507(a)(5), 507(a)(6) or 507(a)(7) of the
Bankruptcy Code will receive on account of such Claim Cash in the full amount of
such Allowed Priority Claim.
32. Except to the extent that the holder of a Tax Claim of a kind specified
in section 507(a)(8) of the Bankruptcy Code has agreed to a different treatment
of such Claim, the Plan provides that on the later of the Initial Distribution
Date or as soon as the Tax Claim becomes an Allowed Claim, the holder of such
Claim will receive Cash in an amount equal to the full Allowed amount of such
Tax Claim.
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<PAGE>
33. At least one Class of Claims or Interests that is impaired under the
Plan has accepted the Plan, determined without including any acceptance of the
Plan by any insider.
34. The Reorganized Debtor will engage in business after the consummation
of the Plan (within the meaning of section 1141 (d) (3) (B) of the Bankruptcy
Code) and confirmation of the Plan is not likely to be followed by the
liquidation, or the need for further financial reorganization, of the
Reorganized Debtor.
35. All fees payable under section 1930 of title 28 of the United States
Code have been paid or the Plan provides for the payment of all such fees on the
Effective Date.
36. There are no retiree benefits that have been maintained or established
by the Debtor prior to the Effective Date, for which the Debtor or the
Reorganized Debtor has obligated itself to provide.
37. The Plan has been accepted unanimously by holders of Claims in Class 2
that cast ballots with respect to the Plan.
38. The principal purpose of the Plan is not the avoidance of taxes or the
avoidance of the requirements of section 5 of the Securities Act of 1933, as
amended (the "Securities Act").
39. The Plan provides that the certificate of incorporation of Reorganized
Debtor may be amended and restated as of the Effective Date to provide for the
inclusion of provisions prohibiting the issuance of nonvoting equity securities,
subject to further amendment of such certificate of incorporation and bylaws as
permitted by applicable law, and providing, as to the classes of securities
possessing voting power, an appropriate distribution of power among such
classes.
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<PAGE>
40. Pursuant to section 1129(a) of the Bankruptcy Code, the Plan hereby is
confirmed, and the Debtor shall implement the Menard Plan alternative of the
Plan. To the extent that the Reorganized Debtor or Menard fails to implement the
Menard Plan, the Reorganized Debtor shall implement the Liquidation Plan
alternative and shall distribute all funds contributed by Menard in addition to
the Debtor's Cash. The terms of the Plan are incorporated by reference into, and
are an integral part of, this Order.
41. Except as otherwise provided in the Plan or this Order, in accordance
with section 1141(d)(1) of the Bankruptcy Code (it having been determined that
any limitation on discharge pursuant to section 1141(d)(3) of the Bankruptcy
Code shall not be applicable because the Reorganized Debtor will engage in
business after consummation of the Plan), entry of this Order acts as a full and
final satisfaction, settlement, release and discharge of the Debtor and the
Reorganized Debtor, effective as of the Effective Date, of all debts of, Claims
against, liens on and Interests in the Debtor and its assets or properties,
which debts, Claims, liens and Interests arose at any time before the entry of
this Order. The discharge of the Debtor and the Reorganized Debtor shall be
effective as to each Claim and Interest, regardless of whether (a) a proof of
Claim or Interest therefor was filed or deemed filed under section 501 of the
Bankruptcy Code, (b) the Claim or Interest is an Allowed Claim or Interest under
section 502 of the Bankruptcy Code or (c) the holder of any such Claim or
Interest voted to accept the Plan. On and after the Effective Date, as to every
discharged debt, Claim, lien and Interest, any holder of such debt, Claim, lien
or
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<PAGE>
Interest shall be precluded from asserting against the Debtor or the Reorganized
Debtor or their respective assets or properties, any further debt, Claim, lien
or Interest based upon any document, instrument, act, omission, transaction or
other activity of any kind or nature that occurred before the date of the entry
of this Order.
42. The Debtor's estate shall continue to exist until the Effective Date
and except as otherwise provided in the Plan, on the Effective Date, in
accordance with sections 1141(b) and 1141(c) of the Bankruptcy Code, all
property of the Debtor's estate and all other property dealt with by the Plan
shall be vested in the Reorganized Debtor free and clear of all debts, Claims,
liens, charges, encumbrances and Interests, and the Reorganized Debtor shall
have no successor liability for, or on account of, any such debts, Claims,
liens, charges, encumbrances and Interests.
43. Subject only to the occurrence of the Effective Date, any judgment at
any time obtained, to the extent that such judgment is a determination of
personal liability of the Debtor or the Reorganized Debtor with respect to any
debt, Claim, lien, charge, encumbrance and/or Interest discharged hereunder,
shall be rendered null and void.
44. All injunctions or stays provided for in the Chapter 11 Case pursuant
to section 362 of the Bankruptcy Code or otherwise extant on the date of entry
of this Order shall remain in full force and effect until the Effective Date, at
which time such injunctions or stays shall dissolve and be of no force or
effect.
45. Subject to the occurrence of the Effective Date, except as hereinafter
provided, the commencement or continuation of any action, the employment of
process, or any other act to collect, recover or offset any debt or Claim
discharged hereunder as a liability of the Debtor or the
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<PAGE>
Reorganized Debtor from any assets or properties of the Debtor or the
Reorganized Debtor, shall be permanently enjoined, stayed and restrained. On the
Effective Date, except as otherwise provided in the Plan and this Order, the
holders of all Claims and Interests shall be enjoined, stayed and restrained
from asserting against the Reorganized Debtor, its assets or properties or any
property dealt with under the Plan, any other or further Claim based upon any
act or omission, transaction or other activity of any kind or nature that
occurred prior to the Confirmation Date.
46. Subject only to the occurrence of the Effective Date, pursuant to
Section 8.1 of the Plan, the rejection of all executory contracts and unexpired
leases that exist between a Debtor and any person is hereby approved in all
respects pursuant to sections 365(a), 365(f) and 1123(b) (2) of the Bankruptcy
Code, except for those contracts and leases (a) which have been assumed pursuant
to an order of the Court entered prior to the Confirmation Date, (b) which have
been rejected pursuant to an order of the Court entered prior to the
Confirmation Date, (c) as to which a motion for approval of the rejection of
such contracts or leases has been filed and served prior to the Confirmation
Date. The Court shall retain jurisdiction to determine any dispute as to the
amount of defaults, if any, required to be cured pursuant to section 365(b)(1)
of the Bankruptcy Code with respect to any executory contract or unexpired lease
assumed pursuant to the Plan or pursuant to an order of the Court.
47. The Court shall retain jurisdiction in accordance with (and as limited
by) Article IX of the Plan and section 1142 of the Bankruptcy Code.
48. All distributions of Cash and New Common Stock required to be made by
or for the benefit of the Debtor pursuant to the Plan shall be made within the
time provided by the Plan
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<PAGE>
and shall be deemed timely and proper if mailed by first class mail on or before
the distribution dates set forth in the Plan to the last known address of the
persons entitled thereto or as otherwise specifically provided in the Plan. The
Debtor or Reorganized Debtor shall have no obligation to recognize any transfer
of a Claim or Interest occurring after the Record Date and shall be entitled
instead to recognize and deal for all purposes under the Plan with only those
record holders listed on the (a) Schedules or the claims register maintained by
the clerk of the Bankruptcy Court for Claims and (b) transfer ledgers maintained
by the transfer agent (for Interests) as of the close of business on the Record
Date.
49. All release and exculpation provisions contained in the Plan are fair
and equitable and given for valuable consideration and are in the best interests
of the Debtor and all parties in interest, and such provisions shall be
effective and binding on all persons and entities.
50. Pursuant to sections 1123(a) and 1142(a) of the Bankruptcy Code and the
provisions of this Order, the Plan and all Plan-related documents shall apply
and be enforceable notwithstanding any otherwise applicable non-bankruptcy law.
51. The Debtor, the Reorganized Debtor, and their respective directors,
officers, members, agents and attorneys, are authorized and empowered to issue,
execute, deliver, file or record any agreement, document or security, including,
without limitation, any documents referred to in the Supplement, as may be
modified, amended and supplemented, and to take any action necessary or
appropriate to implement, effectuate and consummate the Plan in accordance with
its terms, or take any or all corporate actions authorized to be taken pursuant
to the Plan, including any merger, release, amendment or restatement of any
bylaws or certificate of incorporation of the
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<PAGE>
Reorganized Debtor, whether or not specifically referred to in the Plan or any
exhibit thereto, without further order of the Court, and any or all such
documents shall be accepted by each of the respective state filing offices and
recorded in accordance with applicable state law and shall become effective in
accordance with their terms and the provisions of state law.
52. Based upon the record of this Chapter 11 Case, the Debtor, the
Creditors' Committee and each of their respective directors, officers,
employees, shareholders, members, representatives, attorneys, accountants and
other advisors have acted in "good faith" within the meaning of section 1125(e)
of the Bankruptcy Code in compliance with the applicable provisions of the
Bankruptcy Code and Bankruptcy Rules in connection with all of their respective
activities relating to the solicitation of acceptances to the Plan and their
participation in the activities described in section 1125(e) of the Bankruptcy
Code.
53. Based upon the record of the Chapter 11 Case, including the Supplement,
the New Common Stock to be issued pursuant to the Plan shall, upon such
issuance, be duly authorized and validly issued and shall be fully paid and
nonassessable. The offer, distribution and sale of the New Common Stock to
holders of Claims and Interests is "in exchange" for such Claims and Interests
within the meaning of section 1145(a)(1)(A) of the Bankruptcy Code or
"principally in such exchange and partly for cash or property" within the
meaning of section 1145(a)(1)(B) of the Bankruptcy Code. The Reorganized Debtor
is the "successor" to the Debtor within the meaning of section 1145(a)(1) of the
Bankruptcy Code.
54. Without need for further order or authorization of the Court, the
Reorganized Debtor is authorized and empowered to make any and all modifications
to any and all documents
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<PAGE>
to be included as part of the Supplement that do not materially modify and are
consistent with the Plan.
55. All actions authorized to be taken pursuant to the Plan, including,
without limitation, the amendment and restatement of the certificate of
incorporation and/or bylaws of the Debtor, shall be effective as of the
Effective Date pursuant to this Order, without further application to, or order
of the Court, or further action by the respective officers, directors, members
or stockholders of the Reorganized Debtor, with the effect that such actions had
been taken by unanimous action of such officers, directors, members or
stockholders.
56. This Order shall constitute all approvals and consents required, if
any, by the laws, rules or regulations of any State or any other governmental
authority with respect to the implementation or consummation of the Plan and any
documents, instruments or agreements, and any amendments or modifications
thereto, and any other acts referred to in or contemplated by the Plan, the
Disclosure Statement, the Supplement and any documents, instruments or
agreements, and any amendments or modifications thereto.
57. By operation of section 1145 of the Bankruptcy Code, the offering,
sale, issuance and distribution of the New Common Stock under the Plan to
holders of Claims and Interests with respect to such claims and Interests shall
be exempt from registration under 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, or broker or dealer in, a security.
By operation of section 4(2) of the Securities Act and analogous state or local
securities laws, the issuance and distribution of New Common Stock to Menard
under the Plan shall be exempt from registration under the
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<PAGE>
Securities Act, and such state or local laws requiring registration for offer or
sale of a security or registration or licensing of an issuer of, or broker or
dealer in, a security.
58. All New Common Stock issued to holders of Claims and Interests shall be
freely transferable by the initial recipients thereof (a) except for any
restrictions set forth in section 1145(b) of the Bankruptcy Code and (b) subject
to any restrictions contained in the terms of such securities themselves, in the
Plan or any documents relating to the Plan or executed in connection with the
effectiveness thereof.
59. Pursuant to section 1146(c) of the Bankruptcy Code, the issuance,
transfer or exchange of notes or equity securities under the Plan, the creation
of any mortgage, deed of trust or other security interest, the making or
assignment of any lease or sublease, or the making or delivery of any deed or
other instrument of transfer under, in furtherance of, or in connection with the
Plan, including, without limitation, any merger agreements or agreements of
consolidation, bills of sale or assignments executed in connection with any of
the transactions contemplated under the Plan, shall not be subject to any stamp
or other similar tax.
60. On the Effective Date, any promissory notes, share certificates and
other instruments evidencing any Claim or Interest shall be deemed cancelled
without further act or action under any applicable agreement, law, regulation,
order or rule and the obligation of the Debtor and the Reorganized Debtor under
the agreements, indentures and certificates of designations governing such Claim
or Interest, as the case may be, shall be discharged.
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<PAGE>
Miscellaneous
61. The Debtor and the Reorganized Debtor may file with the Court and serve
upon the appropriate holders objections to Administrative Claims, Claims and/or
Interests that have not previously been Allowed as soon as practicable, but in
no event later than, the Initial Distribution Date or such later date as may be
approved by the Court; provided, however, that, subject to section 7.5 of the
Plan, the Debtor and/or the Reorganized Debtor shall have the authority to
compromise, settle, otherwise resolve or withdraw any objections without
approval of the Court.
62. All final applications for compensation and reimbursement by
professional persons for services rendered or expenses incurred through and
including the Confirmation Date, to the extent required, shall be filed with the
Court not later than 45 days after the Effective Date, and shall be served in
the manner provided for in the Court's Administrative Order Establishing
Procedures for Interim Compensation and Reimbursement of Expenses of
Professionals, dated ________________, 1998. No applications will be filed for
compensation and reimbursement by professional persons for services rendered or
expenses incurred on or after the Confirmation Date, and such compensation and
reimbursement may be paid by the Debtor in accordance with ordinary business
practices and without order of the Court.
63. The Plan and its provisions shall be binding upon the Debtor, the
Reorganized Debtor, any entity acquiring or receiving property or a distribution
under the Plan and any holder of a Claim or Interest, including all governmental
entities, whether or not the Claim or Interest of such holder is impaired under
the Plan and whether or not such holder or entity has accepted the Plan.
64. Pursuant to Bankruptcy Rule 9014, Bankruptcy Rule 7062 shall not apply
to this Order.
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<PAGE>
65. The determinations, findings, judgments, decrees and orders set forth
herein constitute the Court's findings of fact and conclusions of law pursuant
to Bankruptcy Rule 7052, made applicable to this proceeding pursuant to
Bankruptcy Rule 9014. Each finding of fact set forth herein, to the extent it is
or may be deemed a conclusion of law, shall also constitute a conclusion of law.
Each conclusion of law set forth herein, to the extent it is or may be deemed a
finding of fact, shall also constitute a finding of fact.
66. The failure to reference or discuss any particular provision of the
Plan in this Order shall have no effect on the validity, binding effect and
enforceability of such provision and such provision shall have validity, binding
effect and enforceability as every other provision of the Plan. To the extent of
any inconsistency between the terms of the Plan and this Order, the terms of the
Plan shall govern.
67. Within fourteen (14) days after entry of this Order or within such
other time as the Court may allow, the Debtor shall mail to all holders of
Claims, Interests and other parties in interests notice of this Order and a copy
of the Supplement.
Dated: Wilmington, Delaware
May 7, 1999
/s/
-----------------------------------
United States Bankruptcy Judge
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<PAGE>
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
- -------------------------------------
IN RE: : CHAPTER 11
:
FOOD COURT ENTERTAINMENT :
NETWORK, INC., : CASE NO. 98-1889 (MFW)
:
Debtor :
- -------------------------------------
FIRST MODIFIED CHAPTER 11 PLAN OF REORGANIZATION FOR
FOOD COURT ENTERTAINMENT NETWORK, INC.
Dated: March 9, 1999
<PAGE>
TABLE OF CONTENTS
Article I
Defined Terms . . . . . . . . . . . . . . . . . . . . . 1
1.1 "Administrative Claim" . . . . . . . . . . . . 1
1.2 "Allowed". . . . . . . . . . . . . . . . . . . 1
1.3 "Avoidance Claims" . . . . . . . . . . . . . . 2
1.4 "Ballot" . . . . . . . . . . . . . . . . . . . 2
1.5 "Bankruptcy Code". . . . . . . . . . . . . . . 2
1.6 "Bankruptcy Court" . . . . . . . . . . . . . . 2
1.7 "Bankruptcy Rules" . . . . . . . . . . . . . . 2
1.8 "Business Day" . . . . . . . . . . . . . . . . 2
1.9 "Cash" . . . . . . . . . . . . . . . . . . . . 2
1.10 "Chapter 11 Case". . . . . . . . . . . . . . . 2
1.11 "Claims Bar Date". . . . . . . . . . . . . . . 2
1.12 "Claim". . . . . . . . . . . . . . . . . . . . 3
1.13 "Claimant" . . . . . . . . . . . . . . . . . . 3
1.14 "Class". . . . . . . . . . . . . . . . . . . . 3
1.15 "Confirmation" . . . . . . . . . . . . . . . . 3
1.16 "Confirmation Date". . . . . . . . . . . . . . 3
1.17 "Confirmation Hearing" . . . . . . . . . . . . 3
1.18 "Confirmation Order" . . . . . . . . . . . . . 3
1.19 "Contingent" . . . . . . . . . . . . . . . . . 3
1.20 "Creditors' Committee" . . . . . . . . . . . . 3
1.21 "Debtor" . . . . . . . . . . . . . . . . . . . 3
1.23 "Disbursing Agent" . . . . . . . . . . . . . . 4
1.24 "Disbursing Agent Expenses". . . . . . . . . . 4
1.25 "Disclosure Statement" . . . . . . . . . . . . 4
1.26 "Disputed" . . . . . . . . . . . . . . . . . . 4
1.27 "Distributions". . . . . . . . . . . . . . . . 4
1.28 "Effective Date" . . . . . . . . . . . . . . . 4
1.29 "Estate" . . . . . . . . . . . . . . . . . . . 4
1.30 "Executory Contract" . . . . . . . . . . . . . 4
1.31 "Face Amount". . . . . . . . . . . . . . . . . 5
1.32 "Filed". . . . . . . . . . . . . . . . . . . . 5
1.33 "Filing Date". . . . . . . . . . . . . . . . . 5
1.34 "Final Order". . . . . . . . . . . . . . . . . 5
1.35 "General Administrative Claims". . . . . . . . 5
1.36 "General Unsecured Claims" . . . . . . . . . . 5
1.37 "Holder" . . . . . . . . . . . . . . . . . . . 5
1.38 "Initial Distribution Date". . . . . . . . . . 5
1.39 "Interest" . . . . . . . . . . . . . . . . . . 5
1.40 "Interest Bar Date". . . . . . . . . . . . . . 5
1.41 "Liquidation Plan" . . . . . . . . . . . . . . 6
(i)
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1.42 "Menard" . . . . . . . . . . . . . . . . . . . 6
1.43 "Menard Plan". . . . . . . . . . . . . . . . . 6
1.44 "New Common Stock" . . . . . . . . . . . . . . 6
1.45 "Person" . . . . . . . . . . . . . . . . . . . 6
1.46 "Plan" . . . . . . . . . . . . . . . . . . . . 6
1.47 "Priority Claim" . . . . . . . . . . . . . . . 6
1.48 "Professionals' Administrative Claims" . . . . 6
1.49 "Professional Persons" . . . . . . . . . . . . 6
1.50 "Promissory Note". . . . . . . . . . . . . . . 6
1.51 "Pro Rata" or "Pro Rata Share" . . . . . . . . 6
1.52 "Record Date". . . . . . . . . . . . . . . . . 7
1.53 "Rejection Claim". . . . . . . . . . . . . . . 7
1.54 "Reorganized Debtor"
1.55 "Sale Order" . . . . . . . . . . . . . . . . . 7
1.56 "Sale Proceeds". . . . . . . . . . . . . . . . 7
1.57 "Tax Claim". . . . . . . . . . . . . . . . . . 7
1.58 "Trustee". . . . . . . . . . . . . . . . . . . 7
1.59 "Voting Deadline". . . . . . . . . . . . . . . 7
Article II
Administrative, Insured and Tax Claims. . . . . . . . . 7
2.1 General Administrative Claims. . . . . . . . . 7
2.3 Tax Claims . . . . . . . . . . . . . . . . . . 7
Article III
Classification of Claims and Equity Interests . . . . . 8
3.1 Creation of Classes. . . . . . . . . . . . . . 8
3.2 Elimination of Classes . . . . . . . . . . . . 8
Article IV
Impairment of Claims and Equity Interests . . . . . . . 8
4.1 Unimpaired Classes of Claims and Interests . . 8
4.2 Impaired Classes of Claims and Interests . . . 8
4.3 Impairment Controversies . . . . . . . . . . . 8
Article V
Acceptance or Rejection of Plan;
Effect of Rejection by One or More
Classes of Claims or Interests . . . . . . . . . . . 9
5.1 Classes Entitled to Vote . . . . . . . . . . . 9
5.2 Class Acceptance Requirement . . . . . . . . . 9
5.3 One Vote Per Holder. . . . . . . . . . . . . . 9
(ii)
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Article VI
Alternate Provisions for Treatment of
Classes of Claims and Interests . . . . . . . . . . . . 9
6.1 Satisfaction of Claims . . . . . . . . . . . . 9
6.2 Class 1: Priority Claims . . . . . . . . . . . 9
6.3 Class 2: General Unsecured Claims. . . . . . . 10
6.4 Class 3: Interests . . . . . . . . . . . . . . 10
Article VII
Means for Implementation of the Plan. . . . . . . . . . 10
7.1 Revesting of Title . . . . . . . . . . . . . . 10
7.3 Source of Plan Distributions. . . . . . . . . 11
7.4 Implementation of Plan by Debtor and Post
Effective Date Expenses. . . . . . . . . . . . 11
7.5 Disputed Claims and Interests. . . . . . . . . 12
7.6 Unclaimed Distributions and Excess Funds in
Disputed Claims Reserves . . . . . . . . . . . 12
7.7 Manner of Payments Under the Plan. . . . . . . 12
7.8 Disbursing Agent . . . . . . . . . . . . . . . 13
7.9 Direction to Parties . . . . . . . . . . . . . 13
7.10 Setoffs. . . . . . . . . . . . . . . . . . . . 13
7.11 Issuance of New Common Stock . . . . . . . . . 13
7.12 Corporate Governance . . . . . . . . . . . . . 14
7.13 Management of Reorganized Debtor's Business. . 14
Article VIII
Executory Contracts and Unexpired Leases. . . . . . . . 14
8.1 Rejected If Not Assumed. . . . . . . . . . . . 14
8.2 Expired Contracts. . . . . . . . . . . . . . . 14
8.3 Bar to Rejection Damages . . . . . . . . . . . 14
Article IX
Retention of Jurisdiction . . . . . . . . . . . . . . . 15
Article X
Miscellaneous Provisions. . . . . . . . . . . . . . . . 16
10.1 Payment of Statutory Fees. . . . . . . . . . . 16
10.2 Compliance with Tax Requirements . . . . . . . 16
10.3 Notices. . . . . . . . . . . . . . . . . . . . 16
10.5 Governing Law. . . . . . . . . . . . . . . . . 17
10.6 Headings . . . . . . . . . . . . . . . . . . . 17
10.7 Severability . . . . . . . . . . . . . . . . . 17
10.8 Withdrawal . . . . . . . . . . . . . . . . . . 17
10.9 Construction . . . . . . . . . . . . . . . . . 17
10.10 Cram Down. . . . . . . . . . . . . . . . . . . 17
10.11 Amendments and Modifications . . . . . . . . . 17
(iii)
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10.12 No Interest. . . . . . . . . . . . . . . . . . 18
10.13 Exculpation. . . . . . . . . . . . . . . . . . 18
10.14 Release of Claims and Effect of Confirmation . 18
10.15 Fees and Expenses of Professional Persons. . . 18
10.16 Successors and Assigns . . . . . . . . . . . . 19
10.17 Time . . . . . . . . . . . . . . . . . . . . . 19
10.18 Termination and/or Reduction of Official
Committees . . . . . . . . . . . . . . . . . . 19
10.19 Cooperation of Debtor. . . . . . . . . . . . . 19
(iv)
<PAGE>
Article I
Defined Terms
Unless otherwise provided in the Plan, all terms used herein shall have the
meanings assigned to such terms in the Bankruptcy Code. For the purposes of the
Plan, the following terms (which appear in this Plan as capitalized terms) shall
have the meanings set forth below, and such meanings shall be equally applicable
to the singular and plural forms of the terms defined, unless the context
otherwise requires, and pronouns stated in the masculine, feminine or neuter
gender shall include the masculine, the feminine and the neuter. The words
"herein," "hereof," "hereto" and "hereunder" and others of similar import refer
to the Plan as a whole and not to any particular section, subsection or clause
contained in the Plan. All exhibits to the Plan are incorporated into and are
part of the Plan as if set forth in full herein.
1.1 "Administrative Claim" means any Claim for costs and expenses of
administration of this Chapter 11 Case with priority under Bankruptcy Code
section 507(a)(1), including without limitation, Disbursing Agent Expenses,
Professionals' Administrative Claims, costs and expenses Allowed under
Bankruptcy Code section 503(b) (including claims granted such priority pursuant
to Bankruptcy Code section 546(c)(2)(A)), the actual and necessary costs and
expenses of preserving the Estate of the Debtor and operating the business of
the Debtor and any fees or charges assessed against the Estate of the Debtor
under 28 U.S.C. section 1930.
1.2 "Allowed" means:
(a) as to any Claim, other than an Administrative Claim, or Interest, a
Claim or Interest:
(1) which is deemed Filed pursuant to Bankruptcy Code section 1111(a)
provided no proof of Claim or Interest (as applicable) has been timely
Filed; or
(2) as to which a proof of Claim or Interest (as applicable) has been
timely Filed prior to the Bar Date or was deemed timely Filed pursuant to a
Final Order and either
(A) the Claim or Interest is not a Disputed Claim, or
(B) the allowability of the Claim or Interest has been determined
by a Final Order of the Bankruptcy Court (only to the extent so
determined); or
(C) the Claim or Interest has been allowed hereunder.
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(b) as to any Administrative Claim, an Administrative Claim which (A) is
not a Disputed Claim and (B) represents a liability incurred by the Debtor in
the ordinary course of business in the Chapter 11 Case or which was determined
to be allowable by Final Order of the Bankruptcy Court, but only to the extent
so determined.
For purposes of determining the amount of an "Allowed Claim," there shall
be deducted therefrom (i) an amount equal to the amount of any claim which the
Debtor may hold against the Holder thereof, to the extent such claim may be set
off pursuant to applicable law, and (ii) the amount of any payment received by
the Holder of such Claim on account of such Claim from any party other than the
Debtor. Unless otherwise specified herein or by order of the Bankruptcy Court,
an "Allowed Claim" shall not, for purposes of distribution under the Plan,
include interest on such "Allowed Claim" from the Filing Date.
1.3 "Avoidance Claims" means all preference, fraudulent transfer,
fraudulent conveyance, equitable subordination and other similar claims, whether
arising under the Bankruptcy Code or otherwise, of the Debtor, including, but
not limited to, claims recoverable pursuant to Bankruptcy Code sections 502,
510, 541, 544, 545, 547, 548, 549, 550, 551 and 553.
1.4 "Ballot" means the form distributed to Holders of Claims for acceptance
or rejection of the Plan.
1.5 "Bankruptcy Code" means title 11 of the United States Code, 11 U.S.C.
sections 101 et seq., together with all amendments, modifications and
replacements as the same exist upon any relevant date, to the extent applicable
to the Chapter 11 Case.
1.6 "Bankruptcy Court" means the Bankruptcy Court unit of the United States
District Court for the District of Delaware or such other court or adjunct
thereof having jurisdiction over the Chapter 11 Case.
1.7 "Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure, as
amended, and the local rules of the Bankruptcy Court, as applicable in the
Chapter 11 Case.
1.8 "Business Day" means any day except Saturday, Sunday or any other day
on which commercial banks in Wilmington, Delaware are authorized or required by
law to close.
1.9 "Cash" means the lawful currency of the United States of America.
1.10 "Chapter 11 Case" means the case commenced under Chapter 11 of the
Bankruptcy Code by the Debtor on the Filing Date.
1.11 "Claims Bar Date" means January 31, 1999 which date was established by
the Bankruptcy Court as the date by which Holders of Claims against the Debtor
(excluding Administrative Claims and certain Rejection Claims) must have Filed a
proof of Claim or be forever barred from asserting such Claim for purposes of
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voting and Distribution in any amount in excess of the amount (if any) scheduled
by the Debtor as being other than Contingent, Disputed or unliquidated.
1.12 "Claim" means any right to payment from the Debtor or debtor in
possession, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured, known or unknown; or any right to an
equitable remedy for breach of performance if such breach gives rise to a right
of payment from the Debtor, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
1.13 "Claimant" means the Holder of a Claim.
1.14 "Class" means any group of Holders of Claims or Interests as specified
in Article III of this Plan.
1.15 "Confirmation" shall mean the entry by the Bankruptcy Court of the
Confirmation Order.
1.16 "Confirmation Date" means the date on which the Clerk of the
Bankruptcy Court enters the Confirmation Order on the docket.
1.17 "Confirmation Hearing" means the hearing, in the Bankruptcy Court, to
consider whether the Confirmation Order should be entered.
1.18 "Confirmation Order" means the order of the Bankruptcy Court, as
entered, confirming the Plan pursuant to Bankruptcy Code section 1129.
1.19 "Contingent" when used with respect to a Claim, means a Claim that has
not accrued and which is dependent upon a future event that has not occurred or
may never occur.
1.20 "Creditors' Committee" means the Official Committee of Unsecured
Creditors appointed by the U.S. Trustee in this Chapter 11 Case as such
appointment may be amended from time to time.
1.21 "Debtor" means Food Court Entertainment Network, Inc. in its capacity
as prepetition or postpetition debtor depending upon the context.
1.22 "Debtor's Cash" means (a) if the Liquidation Plan as implemented, all
Cash and Cash equivalents held by the Debtor or, after Confirmation, by the
Disbursing Agent or, (b) if the Menard Plan is implemented, all Cash and Cash
equivalents held by the Reorganized Debtor on the Effective Date, including a
$50,000 cash contribution by Menard.
1.23 "Disbursing Agent" means (a) the Reorganized Debtor, if the
Liquidation Plan is implemented, or (b) the Creditors' Committee if the Menard
Plan is implemented.
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1.24 "Disbursing Agent Expenses" means (a) all expenses, including fees and
expenses of professionals, salaries of employees, compensation to agents and
taxes incurred in implementing this Plan and, (b) if the Liquidation Plan is
implemented, dissolving the Debtor.
1.25 "Disclosure Statement" means the disclosure statement, as it may be
amended and modified, with respect to this Plan Filed by the Debtor pursuant to
Bankruptcy Code section 1125 and approved by the Bankruptcy Court.
1.26 "Disputed", (a) with respect to an Interest, means an Interest for
which a proof of Interest has been filed and as to which an objection has been
timely filed by the Debtor or any party in interest which objection has not been
withdrawn or determined by Final Order and (b) with respect to a Claim, means
either (i) a Claim which is a Contingent Claim and has not become fixed and
absolute or (ii) a Claim for which a proof of Claim has been Filed and as to
which an objection has been timely Filed by the Debtor or any party in interest
which objection has not been withdrawn or determined by a Final Order, provided,
however, that in the event the Bankruptcy Court shall estimate a Disputed Claim
for purposes of Distribution pursuant to section 502(c) of the Bankruptcy Code,
such estimation shall constitute and represent the maximum amount in which such
Claim may ultimately become an Allowed Claim. Prior to the time that an
objection has been or may be timely filed, for the purposes of the Plan, a Claim
shall be considered a Disputed Claim to the extent that the amount of the Claim
specified in the proof of claim exceeds the amount of the Claim scheduled by the
Debtor as other than disputed, contingent or unliquidated.
1.27 "Distributions" means the Cash and other property and, if the Menard
Plan is implemented, New Common Stock, to be distributed under the Plan to
Holders of Allowed Claims and, if the Menard Plan is implemented, Allowed
Interests.
1.28 "Effective Date" means the first Business Day:
(a) that is eleven days after the Confirmation Date; and
(b) on which no stay of the Confirmation Order is in effect.
1.29 "Estate" means the legal entity administering the property of the
Debtor during the pendency of the Chapter 11 Case.
1.30 "Executory Contract" means any executory contract or unexpired lease
within the meaning of section 365 of the Bankruptcy Code, in effect between the
Debtor and any other Person or Persons as of the Filing Date, including, without
limitation, all employee and director stock option plans.
1.31 "Face Amount" means (a) if the Holder of a Claim has not timely Filed
a proof of Claim prior to the Bar Date, the amount of such Claim that is listed
in the Debtor's schedules as not disputed, contingent or unliquidated; or (b) if
the Holder of the Claim has timely Filed a proof of Claim prior to the Bar Date
the amount stated in such proof of Claim.
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1.32 "Filed" means filed with the Clerk of the Bankruptcy Court in the
Chapter 11 Case.
1.33 "Filing Date" means August 13, 1998, the date upon which the Debtor
Filed a petition commencing the Chapter 11 Case.
1.34 "Final Order" means an order or judgment as entered on the docket that
has not been reversed, stayed, modified or amended and as to which the time to
appeal, petition for certiorari, or seek reargument or rehearing has expired and
as to which no timely appeal, petition for certiorari or request for reargument
or rehearing is pending or as to which any right to appeal, reargue, petition
for certiorari or seek rehearing has been waived in writing in a manner
satisfactory to the Debtor or, if an appeal, reargument, petition for
certiorari, or rehearing thereof has been denied, the time to take any further
appeal or to seek certiorari or further reargument or rehearing has expired.
1.35 "General Administrative Claims" means all Administrative Claims other
than the Administrative Claims of Professional Persons.
1.36 "General Unsecured Claims" means all Claims other than (a)
Administrative Claims, (b) Tax Claims, and (c) Priority Claims.
1.37 "Holder" means the beneficial owner of any Claim or Interest, which,
in the case of an investment company, shall be the investment company and not
its shareholders and, in the case of an insurance company, shall be the
insurance company and not the insureds.
1.38 "Initial Distribution Date" means the first Business Day which is at
least sixty (60) days after the Effective Date.
1.39 "Interest" means the legal, equitable and contractual rights resulting
from being a Holder of an equity interest in the Debtor, including without
limitation, all Class A Common Stock, Class B Common Stock, Class A Warrants,
Class B Warrants, any rights under any employee and Director Stock Option Plans
and any other options, warrants or other rights to acquire any such interests.
1.40 "Interest Bar Date" means the bar date which is established by the
Bankruptcy Court as the date by which holders of Interests must have filed a
proof of Interest or be forever barred from asserting such Interest in any
amount in excess of the amount, if any, scheduled by the Debtor as other than
Contingent, Disputed or Unliquidated.
1.41 "Liquidation Plan" means this Plan without any contribution from
Menard if the Debtor does not seek Confirmation of the Menard Plan or the
Bankruptcy Court determines that the Menard Plan is not confirmable.
1.42 "Menard" means David W. and Jacqueline J. Menard.
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1.43 "Menard Plan" means this Plan with the contributions and distributions
contemplated by Menard if, on or before the date first set for the Confirmation
Hearing Menard delivers to counsel for the Debtor the sum of $50,000 and the
Bankruptcy Court determines that the Menard Plan is confirmable.
1.44 "New Common Stock" means the common stock of the Reorganized Debtor to
be issued on the Effective Date and distributed in accordance with this Plan if
the Menard Plan is implemented.
1.45 "Person" means any individual, corporation, general partnership,
association, joint stock company, joint venture, estate, trust, unincorporated
organization, union, government or any political subdivision thereof or other
entity.
1.46 "Plan" means this plan of reorganization under Chapter 11 of the
Bankruptcy Code, proposed by and for the Debtor, as it may be amended, modified
or supplemented by the Debtor from time to time in accordance with the
Bankruptcy Code and the Bankruptcy Rules.
1.47 "Priority Claim" means any Claim that is entitled to priority pursuant
to Bankruptcy Code section 507(a) that is not an Administrative Claim or Tax
Claim, but only to the extent such Claim is entitled to such priority.
1.48 "Professionals' Administrative Claims" means all Administrative Claims
of Professional Persons.
1.49 "Professional Persons" means (a) those professionals retained in the
Chapter 11 Case pursuant to an order of the Bankruptcy Court in accordance with
Bankruptcy Code sections 327 or 1103 and (b) all Persons seeking compensation or
reimbursement of expenses pursuant to Bankruptcy Code section 503(b)(4).
1.50 "Promissory Note" means the Reorganized Debtor's unsecured promissory
note, payable to the Disbursing Agent in the amount of $50,000, bearing interest
at the rate of 5% per annum, payable in full on the first anniversary of the
Effective Date. The Promissory Note will be issued only if the Menard Plan is
implemented.
1.51 "Pro Rata" or "Pro Rata Share" means the proportional share of a
Holder of a Claim or Interest calculated on the basis of the Allowed amount of
such Holder's Claim or Interest relative to the total amount of the Allowed
Claims, Allowed Interests Disputed Claims (valued at the Face Amount), Disputed
Interests and unliquidated Claims (valued as estimated by the Bankruptcy Court),
in the Class of which such Holder is a member.
1.52 "Record Date" means the Effective Date.
1.53 "Rejection Claim" means a Claim arising from the rejection of an
Executory Contract.
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1.54 "Reorganized Debtor" means the Debtor from and after the Effective
Date.
1.55 "Sale Order" means the September 24, 1998 Order approving the sale of
certain of the Debtor's assets to Prime Spot Media USA, Inc. free and clear of
liens, claims and interests.
1.56 "Sale Proceeds" means the proceeds of sale of the assets sold by the
Debtor pursuant to the Sale Order.
1.57 "Tax Claim" means any Claim of the kind specified in Bankruptcy Code
sections 502(i) and 507(a)(8), but only to the extent such Claim is entitled to
such priority.
1.58 "Trustee" means the United States Trustee appointed pursuant to
section 581, title 28, of the United States Code, to serve in the District of
Delaware.
1.59 "Voting Deadline" means the date established by the Bankruptcy Court
as the date by which Ballots must be received in order to be counted in the
official tally of acceptances and rejections of this Plan.
Article II
Administrative, Insured and Tax Claims
2.1 General Administrative Claims. Unless otherwise agreed by any Holder,
each Holder of an Allowed General Administrative Claim, shall receive Cash equal
to the Allowed amount of such Claim. Distribution on account of Allowed General
Administrative Claims shall be made on the later of (a) the Initial Distribution
Date, and (b) ten (10) Business Days after the date on which such Claim becomes
an Allowed General Administrative Claim.
2.2 Professionals' Administrative Claims. Unless otherwise agreed by any
Holder, each Holder of an Allowed Professionals' Administrative Claim, shall
receive Cash equal to the Allowed Amount of such Claim on the later of (a) the
Initial Distribution Date, and (b) ten (10) Business Days after the date on
which such Claim becomes an Allowed Professionals' Administrative Claim.
2.3 Tax Claims. Unless otherwise agreed by any Holder, each Holder of an
Allowed Tax Claim shall receive Cash in the full amount of such Allowed Tax
Claim, on the later of (a) the Initial Distribution Date and (b) ten (10)
Business Days after the date on which such Tax Claim becomes an Allowed Tax
Claim.
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Article III
Classification of Claims and Equity Interests
3.1 Creation of Classes. This classification of Claims and Interests is
made for purposes of voting on and making Distributions under the Plan and for
ease of administration hereof. A Claim or Interest shall be deemed classified in
a particular Class only to the extent that the Claim or Interest is Allowed and
qualifies within the description of that Class and shall be deemed classified in
a different Class to the extent that any remainder of the Claim or Interest
qualifies within the description of such different Class.
(a) Class 1 - Priority Claims. This Class consists of all Allowed Priority
Claims.
(b) Class 2 - General Unsecured Claims. This Class consists of all Allowed
General Unsecured Claims.
(c) Class 3 - Interests. This Class consists of the Allowed Interests in
the Debtor.
3.2 Elimination of Classes. Any Class that does not include, as of the date
of the hearing on Confirmation of this Plan, an Allowed Claim or a Claim
temporarily Allowed pursuant to Bankruptcy Rule 3018(a), shall be deemed deleted
from this Plan for purposes of voting on acceptance or rejection of this Plan
and for the purpose of determining whether this Plan has been accepted by such
Class pursuant to Bankruptcy Code section 1129.
Article IV
Impairment of Claims and Equity Interests
4.1 Unimpaired Classes of Claims and Interests. The Claims in Class 1 are
not impaired under this Plan.
4.2 Impaired Classes of Claims and Interests. The Claims in Class 2 and
Interests in Class 3 are impaired under this Plan.
4.3 Impairment Controversies. If a controversy arises as to whether any
Class of Claims or Class of Interests is impaired or unimpaired under this Plan,
such Class shall be treated as specified in this Plan unless the Bankruptcy
Court shall otherwise determine such controversy upon motion of the party
challenging the characterization of a particular Class under this Plan.
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Article V
Acceptance or Rejection of Plan;
Effect of Rejection by One or More
Classes of Claims or Interests
5.1 Classes Entitled to Vote. Except as set forth below, each Holder of an
Allowed Claim, Allowed Interest or a Claim or Interest allowed for voting
purposes shall be entitled to vote to accept or reject this Plan. Pursuant to
section 1126(f) of the Bankruptcy Code, any Holder of an Allowed Claim or
Allowed Interest in an unimpaired Class shall be deemed to have accepted the
Plan on account of such Allowed Claim or Allowed Interest and shall not be
entitled to vote such Allowed Claim or Allowed Interest. Pursuant to Section
1126(g) of the Bankruptcy Code, any Holder of an Allowed Claim or Allowed
Interest is deemed not to have accepted a plan if such plan provides that the
Claims or Interests in such class will not receive or retain any property on
account of such Claims or Interests.
5.2 Class Acceptance Requirement. An impaired Class of Claims shall have
accepted this Plan if it is accepted by at least two-thirds (2/3) in amount and
more than one-half (1/2) in number of the Allowed Claims of such Class that have
voted on this Plan. Pursuant to Section 1126(g) of the Bankruptcy Code, the
Holders of Allowed Interests in Class 3 are deemed not to have accepted the
Liquidation Plan. However, if the Menard Plan is implemented, the Holders of
Allowed Interests shall be deemed to have accepted this Plan if at least
two-thirds (2/3) in amount of the Allowed Interests in such Class that vote
accept the Plan.
5.3 One Vote Per Holder. If a Holder of a Claim holds more than one Claim
in any one Class relating to transactions between the Debtor and any other
single Person, all Claims of such Holder in such Class relating to transactions
between the Debtor and such other single Person shall be aggregated and deemed
to be one Claim for purposes of determining the number of Claims voting on this
Plan.
Article VI
Alternate Provisions for Treatment of
Classes of Claims and Interests
6.1 Satisfaction of Claims. The treatment of and the consideration received
by Holders of Claims or Interests pursuant to this Plan shall be in full
satisfaction, release and discharge of their respective Claims against or
Interests in the Debtor. Included among the Claims satisfied, released and
discharged hereunder shall be any and all Claims, whether matured or Contingent
and whether arising before or after the Confirmation Date.
6.2 Class 1: Priority Claims. Unless otherwise agreed by any Holder, each
Holder of an Allowed Priority Claim shall receive Cash equal to the Allowed
amount of such Claim on the later of (a) the Initial Distribution Date and (b)
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ten (10) Business Days after the date on which such Claim becomes an Allowed
Priority Claim.
6.3 Class 2: General Unsecured Claims. Each Holder of an Allowed General
Unsecured Claim shall receive a Pro Rata Share of (i) the Debtor's Cash
remaining after payment in full of all Allowed Administrative, Tax and Priority
Claims; and (ii) any net recoveries from Avoidance Claims and, if the Menard
Plan is implemented, (iii) the Promissory Note and (iv) shares aggregating five
percent (5%) of the outstanding New Common Stock. The first Distribution to
Holders of Allowed General Unsecured Claims shall be made on the Initial
Distribution Date after creation of a reserve for all anticipated unpaid Allowed
General Administrative, Tax and Priority Claims. A final Distribution to Holders
of Allowed General Unsecured Claims shall be made after all Disputed Claims have
been determined by a Final Order of the Bankruptcy Court and all Allowed
Administrative, Tax and Priority Claims have been paid or reserved for and, if
the Menard Plan is implemented, after the first anniversary of the Effective
Date.
6.4 Class 3: Interests. All presently issued and outstanding Interests
shall be canceled upon the entry of the Confirmation Order. If the Menard Plan
is implemented, each Holder of an Allowed Interest shall receive a Pro Rata
Share of ten percent (10%) of the issued and outstanding New Common Stock. If
the Liquidation Plan is implemented, Holders of Allowed Interests shall not
receive or retain any property on account of such Allowed Interests and, after
entry of the Confirmation Order, the Debtor shall issue one new share of stock
to James N. Perkins solely for the purpose of dissolving the Debtor corporation.
Article VII
Means for Implementation of the Plan
7.1 Revesting of Title. If the Menard Plan is implemented, on the Effective
Date, except as otherwise provided in this Plan, all of the Debtor's Cash and
the Promissory Note shall vest in the Disbursing Agent and all other property of
the Estate (other than Avoidance Claims) shall vest in the Reorganized Debtor.
If the Liquidation Plan is implemented, except as otherwise provided in this
Plan, all property of the Estate shall vest in the Reorganized Debtor.
7.2 Transfer of New Common Stock and Enforcement of Claims.
(a) The Debtor hereby assigns to the General Unsecured Creditors the
exclusive right to enforce any and all present or future rights or causes of
action against any Person and rights of the Debtor that arose before or after
the Filing Date, including but not limited to the rights and powers of a trustee
and debtor in possession, against any Person whatsoever, including but not
limited to all avoidance powers granted to the Debtor under the Bankruptcy Code
and all causes of action and remedies granted pursuant to sections 502, 510,
541, 545, 547 through 551 and 553 of the Bankruptcy Code, other than those
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<PAGE>
specifically compromised as part of this Plan or pursuant to the Sale Order or
otherwise released. Such claims may be enforced exclusively by the Creditors'
Committee.
(b) All costs of enforcing any claim assigned hereunder shall
constitute administrative claims that will be satisfied only out of the proceeds
of any assets assigned under this section 7.2. All post-confirmation
professional fees and costs incurred by the Creditors' Committee shall be
subject to Bankruptcy Court approval only if the Debtor objects to such fees or
costs, and the Creditors' Committee shall submit detailed bills to the Debtor at
least five (5) business days prior to seeking reimbursement from the proceeds of
any claims assigned hereunder. The balance of funds remaining after payment of
the Creditors' Committee's administrative claim shall be distributed by the
Creditors' Committee to the Holders of Allowed General Unsecured Claims on a Pro
Rata basis.
(c) If the Menard Plan is implemented, on the Effective Date, the
Reorganized Debtor shall transfer to the Disbursing Agent New Common Stock
aggregating 15% on a fully diluted basis, of the total outstanding New Common
Stock. The said New Common Stock shall not be subject to dilution, unless all
shares existing as of the Effective Date are affected by the dilution and there
is no discrimination among shares or classes of shares. The Disbursing Agent
shall distribute the said New Common Stock, as soon as practicable, as follows:
(a) 10% Pro Rata to Holders of Allowed Interests, Stock, and (b) 5% Pro Rata to
Holders of Allowed General Unsecured Claims.
7.3 Source of Plan Distributions. If the Liquidation Plan is implemented,
the source of all Distributions under the Plan shall be the Debtor's Cash and
the net proceeds from Avoidance Claims, if any. If the Menard Plan is
implemented, the source of all Distributions under the Plan shall be (i) the
Debtor's Cash, including the $50,000.00 Cash to be paid by Menard; (ii) the Cash
proceeds of the Promissory Note; (iii) the net Cash proceeds from the Avoidance
Claims; and (iv) the New Common Stock to be issued pursuant to this Plan.
7.4 Implementation of Plan by Debtor and Post Effective Date Expenses. On
and after the Effective Date, the Disbursing shall take all steps necessary to
implement the Plan. If the Liquidating Plan is implemented, all Disbursing Agent
Expenses shall be paid by the Debtor, without the necessity of Bankruptcy Court
approval, provided that the Debtor provides copies of detailed bills for such
expenses to the Creditors' Committee at least five (5) days prior to payment of
such expenses, and no objection is filed by the Creditors' Committee. If the
Creditors' Committee objects to any portion of the fees or expenses incurred,
the Debtor shall be required to obtain Bankruptcy Court approval prior to paying
such fees or expenses. Following the completion of all Distributions required
hereunder, the Disbursing Agent shall take all steps necessary to dissolve the
Debtor.
If the Menard Plan is implemented, all Disbursing Agent Expenses shall be
paid from the funds provided to the Disbursing Agent as Administrative Claims
upon at least five (5) days notice to members of the Creditors' Committee.
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7.5 Disputed Claims and Interests.
(a) All objections to Claims and Interests shall be served and Filed on or
before the Initial Distribution Date.
(b) Notwithstanding any other provision of the Plan, no Cash or other
property shall be distributed under the Plan on account of any Disputed Claim or
Allowed Interest, unless and until such Claim or Interest becomes an Allowed
Claim or Allowed Interest. On the Initial Distribution Date, a Disputed Claims
Reserve shall be created for each Class of Claims that contains one or more
Disputed Claims. An amount equal to the Pro Rata Share of the amount available
for Distribution on account of Class 2 Claims (in the case of Class 2 Disputed
Claims) or the Face Amount of the Claim (in the case of Class 1 Disputed Claims)
of each Disputed Claim shall be deposited into the respective Disputed Claims
Reserve on the Initial Distribution Date.
(c) To the extent a Disputed Claim is subsequently Allowed, the Disbursing
Agent shall pay to the Holder of such Claim from the respective Disputed Claims
Reserve the Pro Rata Share (in the case of Class 2 Disputed Claims) or the
Allowed Claim (in the case of Class 1 Disputed Claims) plus interest (net of any
applicable taxes on such earnings calculated without regard to any losses or tax
attributes of the Debtor), at the rate actually earned by the Debtor on the
amount of such Distribution for the period between the date such Distribution
would have occurred but for the provisions hereof prohibiting Distribution on
account of Disputed Claims and the date of such Distribution.
7.6 Unclaimed Distributions and Excess Funds in Disputed Claims Reserves.
Any Cash, including interest earned thereon, that (a) is unclaimed for more than
six (6) months after Distribution thereof or (b) remains in a Disputed Claims
Reserve after all Disputed Claims have been resolved by a Final Order shall
thereupon revest in the Debtor without the necessity of any further action or
notice. On the final Distribution Date, funds remaining in the Disputed Claims
Reserve and all unclaimed Distributions shall be reallocated to the Allowed
Claims in Class 2 and shall be redistributed on a Pro Rata basis (treating the
Claim related to the unclaimed Distribution or the disallowed portion of any
Disputed Claim as not Allowed).
7.7 Manner of Payments Under the Plan. Except as otherwise provided
hereunder, all Distributions hereunder, shall be made to the Holder of the Claim
or Interest on the Record Date. The Holder of a Claim or Interest on the Record
Date shall be deemed to be the Person who (a) Filed the most recent timely proof
of Claim or Interest relating thereto, provided no evidence of transfer of such
Claim or Interest was Filed on or before the Record Date, or (b) in the event
evidence of transfer of a timely Filed proof of Claim was Filed on or before the
Record Date, (i) the transferee named therein if the transferor named therein
does not file a timely objection pursuant to Federal Rule of Bankruptcy
Procedure 3001(e) or (ii) the Person so designated by the Final Order of the
Bankruptcy Court if a timely objection to the evidence of transfer was Filed, or
(c) is reflected in the schedules Filed by the Debtor in the Chapter 11 Case as
the Holder of such Claim or Interest (other than Claims or Interests which are
12
<PAGE>
"contingent", "disputed" or "unliquidated") if no timely proof of Claim or
Interest related thereto was Filed. At the option of the Disbursing Agent,
except as otherwise required or provided by any applicable agreement, any Cash
payment to be made by the Disbursing Agent pursuant to the Plan may be made by a
check drawn on a United States bank of adequate worth mailed by first class mail
or by wire transfer. All Cash payments disbursed pursuant to the Plan by check
or wire transfer which are not negotiated or cleared within six (6) months of
the date of its issuance shall be stopped and canceled, with such funds
redistributed as provided in Section 7.7 hereof; provided, however, that the
Disbursing Agent shall not be required to stop and cancel any check or wire
transfer where the administrative fee and charge, if any, to do so exceeds the
amount of the check or wire transfer.
7.8 Disbursing Agent.
(a) Disbursing Agent. The Disbursing Agent shall serve without bond. The
Disbursing Agent shall invest the Cash deposited with the Disbursing Agent in
money market funds sponsored by a United States commercial bank or investments
of similar quality with maturities appropriate in light of anticipated payment
dates until a reasonable time prior to the date of any anticipated Distribution
at which time such Cash may be transferred to a non-interest bearing checking
account.
(b) Discharge of Responsibilities. Upon completion of all required
Distributions hereunder, the Disbursing Agent shall be discharged of all further
duties. The Disbursing Agent shall have no duties except as expressly stated
herein. In the event it appears, at any time, that the funds made available to
the Disbursing Agent will be insufficient to satisfy all Distributions required
to be paid hereunder, the Disbursing Agent shall be entitled to pay any
remaining balance into the registry of the Bankruptcy Court or commence an
appropriate interpleader action.
7.9 Direction to Parties. From and after the Effective Date, the Disbursing
Agent may apply to the Bankruptcy Court for an order directing any necessary
party to execute or deliver or to join in the execution or delivery of any
instrument reasonably required to effect a transfer of property dealt with by
this Plan, and to perform any other act, including the satisfaction of any lien,
that is reasonably necessary for the consummation of this Plan, pursuant to
Bankruptcy Code section 1142(b).
7.10 Setoffs. Except as otherwise expressly provided for in the Plan, the
Disbursing Agent may, but shall not be required to, setoff against any Claim,
any claims of any nature whatsoever the Reorganized Debtor may have against the
Claimant, provided, if the Menard Plan is implemented, such right of setoff
shall only apply to claims of the Debtor in existence as of the Effective Date,
Neither the failure to effect any setoff nor the allowance of any Claim under
the Plan shall constitute a waiver or release by the Reorganized Debtor of any
such claim the Reorganized Debtor may have against such Claimant except to the
extent of any actual setoff.
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7.11 Issuance of New Common Stock. If the Menard Plan is implemented, on
the Effective Date, the Reorganized Debtor shall issue an unspecified number of
shares of New Common Stock, which shall constitute all of the then-issued and
outstanding shares of New Common Stock, as follows: 85% to Menard; 10% to the
Disbursing Agent for the benefit of Holders of Allowed Interests as a class; and
5% to the Disbursing Agent for the benefit of Holders of allowed Unsecured
Claims as a class. As of the Effective Date the New Common Stock shall be the
only class of equity securities of the Reorganized Debtor. The Articles of
Incorporation may be amended by Menard as of the Effective Date in order to
satisfy the provisions of this Plan and section 1123(a)(6) of the Bankruptcy
Code. Upon issuance of the New Common Stock pursuant to this Plan, all such
shares will be deemed fully paid and non-assessable.
7.12 Corporate Governance. If the Menard Plan is implemented, on the
Effective Date and, the existing members of the Debtor's Board of Directors
shall be deemed to have resigned as of the Effective Date which a new Board of
Directors of the Reorganized Debtor shall be appointed by Menard shall manage
the Reorganized Debtor's business, and carry out and perform all other
obligations or duties imposed on the Reorganized Debtor under this Plan. If the
Liquidating Plan is implemented, the Debtor's existing Board of Directors shall
continue to serve (subject to each director's right to resign).
7.13 Management of Reorganized Debtor's Business. If the Menard Plan is
implemented, after the Effective Date, the Reorganized Debtor shall manage its
business, in its sole discretion, without any restrictions of the Bankruptcy
Code and without any further supervision of the Bankruptcy Court.
Article VIII
Executory Contracts and Unexpired Leases
8.1 Rejected If Not Assumed. All Executory Contracts of the Debtor shall be
rejected as of the Effective Date in accordance with the provisions of Sections
365 and 1123 of the Bankruptcy Code except for those Executory Contracts that
(a) have been assumed pursuant to order of the Bankruptcy Court, including the
Confirmation Order, entered prior to the Effective Date or (b) are the subject
of a motion to assume that is pending before the Bankruptcy Court on the
Effective Date.
8.2 Expired Contracts. Any contract or lease that expired pursuant to its
terms prior to the Effective Date and that has not been assumed by Final Order
prior to the Effective Date is hereby specifically rejected.
8.3 Bar to Rejection Damages. If the rejection of an Executory Contract
results in damages to the non-Debtor party or parties to such Executory
Contract, a Claim for such damages, if not evidenced by an order of the
Bankruptcy Court determining the Allowed amount of such Claim entered on or
before the Confirmation Date, shall be forever barred and shall not be
enforceable unless a proof of Claim is Filed with the Bankruptcy Court and
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<PAGE>
served upon the Debtor on or before thirty (30) days after the Confirmation
Date. The foregoing applies only to Claims arising from the rejection of an
Executory Contract; any other Claims held by a party to a rejected contract or
lease shall have been deemed filed pursuant to section 1111(a) of the Bankruptcy
Code or evidenced by a proof of claim filed by the Bar Date or shall be barred
and unenforceable.
Article IX
Retention of Jurisdiction
9.1 Notwithstanding Confirmation or the Effective Date having occurred, the
Bankruptcy Court shall retain full jurisdiction as provided in 28 U.S.C. section
1334 to enforce the provisions, purposes, and intent of this Plan including,
without limitation:
(a) Determination of the allowability of Claims and Interests upon
objection to such Claims and Interests;
(b) Approval, pursuant to section 365 of the Bankruptcy Code and Article
VIII of this Plan, of the assumption, assignment, or rejection of any Executory
Contract;
(c) Any determination necessary or appropriate under Bankruptcy Code
section 505 or other determination relating to tax returns filed or to be filed
by the Debtor for all periods through the end of the fiscal year in which the
Effective Date occurs, including the determination of amount of net operating
losses or tax attributes of the Debtor;
(d) Determination of requests for payment of Claims entitled to priority
under Bankruptcy Code section 507(a)(1), including compensation of parties
entitled thereto;
(e) Resolution of controversies and disputes regarding interpretation of
this Plan;
(f) Implementation of the provisions of this Plan and entry of orders in
aid of Confirmation, including, without limitation, appropriate orders to
protect the Debtor from creditor action;
(g) Modification of the Plan pursuant to Bankruptcy Code section 1127;
(h) Adjudication of any causes of action brought or continued by the Debtor
with respect to the Avoidance Claims; and
(i) Entry of a final decree closing the Chapter 11 Case.
15
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Article X
Miscellaneous Provisions
10.1 Payment of Statutory Fees. All pre-Confirmation Date fees payable
pursuant to section 1930 of title 28 of the United States Code, as determined by
the Bankruptcy Court, shall be paid on or before the Effective Date. All
post-Confirmation Date quarterly fees shall be paid in full as General
Administrative Claims.
10.2 Compliance with Tax Requirements. In connection with the Plan, the
Debtor shall comply with all applicable withholding and reporting requirements
imposed by federal, state, local and foreign taxing authorities, and all
Distributions hereunder shall be subject to such withholding and reporting
requirements. Creditors may be required to provide certain tax information as a
condition to receipt of Distributions pursuant to the Plan.
10.3 Notices. All notices, requests, or demands for payments provided for
in the Plan shall be in writing and shall be deemed to have been given when (a)
personally delivered by hand, (b) mailed by certified mail, return receipt
requested, postage prepaid, (c) received by telex or telecopier, or (d) received
by reputable overnight delivery service, freight prepaid. Notices, requests and
demands for payment shall be addressed and sent, postage prepaid, or delivered
as follows:
(1) In the case of notices, requests, or demands for payments to the
Debtor at: Food Court Entertainment Network, Inc., 217 E. 86th St., Suite 196,
New York, New York 10028, Attn: James N. Perkins, President, with copies to (i)
Stevens & Lee, 1818 Market Street, 14th Floor, Philadelphia, PA 19103, Attn:
Robert Lapowsky and (ii) James W. Owen, Suite 103, Weldin Bldg., Concord Plaza,
3411 Silverside Road, Wilmington, DE 19810, unless the Menard Plan is
implemented in which case c/o Colmen Menard Company, Inc., Bala Pointe, Suite
240, 111 Presidential Boulevard, Bala Cynwyd, PA 19004, Attn: David W. Menard,
with copies to White & Williams LLP, 1800 One Liberty Place, Philadelphia, PA
19103, Attn: Leonard P. Goldberger, Esquire.
(2) In case of notices, requests or demands to the Creditors'
Committee at (i) Young Conaway Stargatt & Taylor LLP, 11th Floor, Rodney Square
North, P.O. Box 391, Wilmington, DE 19899-0391, Attn: Edwin J. Harron; and (ii)
Gunster, Yoakley, Valdes-Fauli & Stewart, 1 Biscayne Tower, 2 South Biscayne
Blvd., Suite 3400, Miami, FL 33131, Attn: Philip Hudson.
(3) In the case of notices to Holders of Claims or Interests, the
address set forth in any applicable Proof of Claim or Proof of Interests or,
otherwise, at the address set forth in the Debtor's schedules at the last known
address according to the books and records of the Debtor, or at any other
address designated by a Holder of a Claim or Interest by the provision of notice
to the Debtor; provided, however, that any notice of change of address shall be
effective only upon receipt by the Debtor.
16
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10.4 Distributions All Distributions to Holders of Claims shall be sent to
them at the address set forth in any applicable Proof of Claim or, otherwise, at
the address set forth in the Debtor's Schedules and shall be deemed to have been
made when mailed to such address. Any Person may designate in writing any other
address for purposes of this section 10.4 which designation will be effective
upon actual receipt by the Debtor pursuant to the notice provisions of Section
10.3 hereof.
10.5 Governing Law. Except to the extent (a) that the Bankruptcy Code or
Bankruptcy Rules are applicable, or (b) that documents executed in connection
with this Plan otherwise specify, the rights and obligations under this Plan
shall be governed by, and construed and enforced in accordance with, the laws of
the State of Delaware, without giving effect to the principles of conflicts of
law thereof.
10.6 Headings. The headings of the Articles, paragraphs, and sections of
this Plan are inserted for convenience only and shall not affect the
interpretation hereof.
10.7 Severability. Should the Bankruptcy Court determine, prior to the
Confirmation Date, that any provision in the Plan is either illegal on its face
or illegal as applied to any Claim or Interest, such provision shall be
unenforceable either as to all Holders of Claims or Interests or as to the
Holder of such Claim or Interest as to which the provision is illegal,
respectively. In such event, the Bankruptcy Court shall consider whether the
Plan may be confirmed without such unenforceable provision. In the event the
Plan is confirmed any such determination of unenforceability of any provision
shall in no way limit or affect the enforceability and operative effect of any
other provision of the Plan.
10.8 Withdrawal. The Debtor reserves the right, at any time prior to entry
of the Confirmation Order, to withdraw this Plan. If the Debtor withdraws this
Plan under this section 10.8, or if entry of the Confirmation Order does not
occur, then this Plan shall be deemed null and void. In that event, nothing
contained in this Plan shall be deemed to constitute a waiver or release of any
Claims by or against the Debtor or any other Person or to prejudice in any
manner the rights of the Debtor or any other Person in any further proceedings
involving the Debtor.
10.9 Construction. The rules of Construction set forth in Bankruptcy Code
section 102 shall apply to the construction of the Plan.
10.10 Cram Down. In the event any Class of impaired Claims or Interests,
rejects the Plan or is deemed to reject the Plan, the Debtor requests
Confirmation of the Plan pursuant to Bankruptcy Code section 1129(b).
10.11 Amendments and Modifications. This Plan may be amended, modified or
supplemented by the Debtor before or after the Confirmation Date, in the manner
provided for by Bankruptcy Code section 1127 or as otherwise permitted by law
without additional disclosure pursuant to Bankruptcy Code section 1125, except
as the Bankruptcy Court may otherwise order.
17
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10.12 No Interest. Except as expressly stated in this Plan, or Allowed by
the Bankruptcy Court, no interest, penalty or late charge is to be Allowed on
any Claim subsequent to the Filing Date.
10.13 Exculpation. Neither the Debtor, the Creditors' Committee, the
Disbursing Agent nor any of their respective members, agents, directors,
officers, employees, professionals (including counsel and accountants) shall
have or incur any liability to any Holder for any act, omission, transaction or
other activity of any kind or nature in connection with, or arising out of the
Chapter 11 Case, the Confirmation or consummation of the Plan or the
administration of the Plan or property to be distributed under the Plan, except
for (a) willful misconduct or gross negligence and (b) any such liability
created by the express terms of any agreement or other document executed and
delivered by any of the foregoing persons effective on the Effective Date in
connection with implementation of this Plan. In all respects, each of the
foregoing Persons shall be entitled to rely upon the advice of counsel with
respect to their duties and responsibilities under the Plan and shall be fully
protected in acting or in refraining from action in accordance with such advice.
10.14 Release of Claims and Effect of Confirmation. Except as otherwise
expressly provided for in this Plan, if the Menard Plan is implemented, the
Distributions and rights afforded in this Plan shall be in complete and full
satisfaction, discharge and release, effective as of the Effective Date, of all
Claims against the Debtor or any of its assets or properties of any nature
whatsoever. Commencing on the Effective Date, except as otherwise expressly
provided for in this Plan, if the Menard Plan is implemented, all Holders of
Claims or Interests shall be precluded forever from asserting against the
Reorganized Debtor, the Disbursing Agent, the Creditors' Committee and their
respective directors, officers, agents, representatives, financial advisors,
attorneys, or employees and their respective assets and properties any other or
further liabilities, liens, Claims, encumbrances, obligations, or Interests,
including but not limited to all principal and accrued and unpaid interest on
the debts of the Debtor based on any act or omission, transaction or other
activity or security instrument or other agreement of any kind or nature
occurring, arising or existing prior to the Effective Date, that was or could
have been the subject of any Claim or Interest, whether or not Allowed. If the
Liquidation Plan is implemented and/or the Reorganized Debtor does not engage in
business after consummation of the Plan, the Reorganized Debtor will not receive
a discharge.
10.15 Fees and Expenses of Professional Persons.
(a) Except to the extent the Bankruptcy Court shall have otherwise
ordered, each Professional Person retained or requesting compensation in the
Chapter 11 Case through the Effective Date pursuant to sections 327, 328, 329,
330, 331 or 503(b) of the Bankruptcy Code shall be required to file an
application for allowance of final compensation and reimbursement of expenses in
the Chapter 11 Case before the forty-fifth (45th) day after the Effective Date.
All such applications shall be served upon all parties entitled to notice of
same in the Chapter 11 Case. Objections to each such application must be filed
on or before the twentieth (20th) day following the filing of such application.
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All Allowed Claims for such final compensation and reimbursement of expenses
shall be paid by the Disbursing Agent from Debtor's Cash.
(b) No fees or expenses of any Professional Person will be paid except
as specified herein or as Allowed by a Final Order of the Bankruptcy Court.
10.16 Successors and Assigns. The rights, benefits and obligations of any
Person named or referred to in this Plan will be binding upon, and will inure to
the benefit of, the heir, executor, administrator, successor or assign of such
Person.
10.17 Time. In computing any period of time prescribed or allowed by this
Plan, the day of the act, event, or default from which the designated period of
time begins to run shall not be included. The last day of the period so computed
shall be included, unless it is not a Business Day or, when the act to be done
is the Filing of a paper in court, a day on which weather or other conditions
have made the clerk's office inaccessible, in which event the period runs until
the end of the next day which is not one of the aforementioned days. When the
period of time prescribed or allowed is less than eight days, intermediate days
that are not Business Days shall be excluded in the computation.
10.18 Termination and/or Reduction of Official Committees. The Creditors'
Committee, and each of its legal and financial advisors, shall be relieved of
all responsibilities relating to the Debtor upon the Effective Date.
10.19 Cooperation of Debtor. If the Menard Plan is implemented, on the
Effective Date, the Debtor shall deliver to Menard all corporate books and
records, shareholder lists and other such documents and/or information relating
to the Debtor in its possession.
Dated: __________________ FOOD COURT ENTERTAINMENT
NETWORK, INC.
By:_______________________________
James N. Perkins, President
CO-COUNSEL TO THE DEBTOR:
Robert Lapowsky
Michael J. Cordone
Stevens & Lee
14th Floor
1818 Market Street
Philadelphia, PA 19103
and
James W. Owen
Suite 103, Weldin Building
Concord Plaza
3411 Silverside
Wilmington, DE 19810
19
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Exhibit "B"
None
<PAGE>
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
- -----------------------------------
IN RE: : CHAPTER 11
:
FOOD COURT ENTERTAINMENT :
NETWORK, INC., : CASE NO. 98-1889 (MFW)
:
Debtor :
- -----------------------------------
DISCLOSURE STATEMENT
IN SUPPORT OF FIRST MODIFIED CHAPTER 11 PLAN OF REORGANIZATION
FOR FOOD COURT ENTERTAINMENT NETWORK, INC.
Dated: March 9, 1999
<PAGE>
DISCLAIMERS
THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE HAS
APPROVED THIS DISCLOSURE STATEMENT, WHICH APPROVAL DOES NOT CONSTITUTE A
DETERMINATION ON THE MERITS OF THE FIRST MODIFIED PLAN OF REORGANIZATION (THE
"PLAN") DESCRIBED IN THIS DISCLOSURE STATEMENT. THE APPROVAL OF THIS DISCLOSURE
STATEMENT MEANS THAT THE BANKRUPTCY COURT HAS FOUND THAT THE DISCLOSURE
STATEMENT CONTAINS ADEQUATE INFORMATION TO PERMIT CREDITORS AND INTEREST HOLDERS
OF THE DEBTOR TO MAKE A REASONABLY INFORMED DECISION IN EXERCISING THEIR RIGHT
TO VOTE UPON THE PLAN. THIS DISCLOSURE STATEMENT MAY NOT BE RELIED ON FOR ANY
PURPOSE OTHER THAN TO DETERMINE HOW TO VOTE ON THE PLAN.
THIS DISCLOSURE STATEMENT IS THE ONLY DOCUMENT AUTHORIZED BY THE DEBTOR AND
APPROVED BY THE BANKRUPTCY COURT TO BE USED IN CONNECTION WITH THE SOLICITATION
OF VOTES ACCEPTING OR REJECTING THE PLAN. NO REPRESENTATIONS CONCERNING THE
DEBTOR, ITS BUSINESS OPERATIONS, THE VALUE OF ITS ASSETS OR THE VALUES OF ANY
SECURITIES TO BE ISSUED OR BENEFITS OFFERED PURSUANT TO THE PLAN ARE APPROVED BY
THE BANKRUPTCY COURT OR AUTHORIZED BY THE DEBTOR, EXCEPT AS EXPLICITLY SET FORTH
IN THIS DISCLOSURE STATEMENT OR ANY OTHER DOCUMENT EXPLICITLY AUTHORIZED BY THE
DEBTOR AND APPROVED FOR DISTRIBUTION BY THE BANKRUPTCY COURT.
THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION; NOR HAVE
ANY SUCH COMMISSIONS PASSED UPON THE ACCURACY OR ADEQUACY OF THE STATEMENTS
CONTAINED HEREIN. THERE HAS BEEN NO INDEPENDENT AUDIT OF THE FINANCIAL
INFORMATION CONTAINED IN THE DISCLOSURE STATEMENT. THIS DOCUMENT WAS COMPILED
FROM INFORMATION OBTAINED BY THE DEBTOR FROM NUMEROUS SOURCES BELIEVED TO BE
ACCURATE TO THE BEST OF DEBTOR'S KNOWLEDGE, INFORMATION AND BELIEF.
THE STATEMENTS CONTAINED HEREIN ARE MADE AS OF THE DATE HEREOF, UNLESS
ANOTHER TIME IS SPECIFIED, AND NEITHER THE DELIVERY OF THIS DISCLOSURE STATEMENT
NOR ANY EXCHANGE OF RIGHTS MADE IN CONNECTION WITH THE PLAN SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS
SET FORTH HEREIN SINCE THE DATE HEREOF.
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THE CONTENTS OF THIS DISCLOSURE STATEMENT SHOULD NOT BE CONSTRUED AS
INDIVIDUAL, LEGAL, TAX OR INVESTMENT ADVICE. EACH HOLDER OF A CLAIM OR INTEREST
SHOULD CONSULT ITS OWN COUNSEL, ACCOUNTANT OR BUSINESS ADVISERS AS TO LEGAL, TAX
AND RELATED MATTERS CONCERNING THE MATTERS DESCRIBED HEREIN.
THIS DISCLOSURE STATEMENT CONTAINS ONLY A SUMMARY OF THE PLAN. ALL
CREDITORS, INTEREST HOLDERS AND OTHER INTERESTED PARTIES ARE ENCOURAGED TO
REVIEW THE FULL TEXT OF THE PLAN AND TO READ CAREFULLY THE ENTIRE DISCLOSURE
STATEMENT, INCLUDING ALL EXHIBITS, BEFORE DECIDING TO VOTE EITHER TO ACCEPT OR
REJECT THE PLAN.
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DEBTOR'S PRELIMINARY
STATEMENT AND SOLICITATION
Food Court Entertainment Network, Inc. ("Debtor") submits this Disclosure
Statement pursuant to Section 1125 of the United States Bankruptcy Code, 11
U.S.C. ss.ss.101 et seq. (the "Bankruptcy Code"), in connection with its
solicitation of acceptances of its First Modified Chapter 11 Plan of
Reorganization dated March 9, 1999 (the "Plan"), which has been Filed with the
United States Bankruptcy Court for the District of Delaware. Capitalized terms
not otherwise defined herein shall have the meanings set forth in the Plan.
The Plan was formulated through consultation and negotiation between the
Debtor and the Creditors' Committee, a fiduciary charged with representing the
interests of unsecured creditors.
Pursuant to the Plan, the Debtor believes that all Claimants and Interest
Holders will receive a Distribution which equals or exceeds the Distribution
that would be available in Chapter 7 liquidation. As a result, and given the
lack of any alternative plan that would generate a greater return, the Debtor
believes that Confirmation of the Plan is in the best interest of all Claimants
and Interest Holders and urges each Holder of a Claim or Interest to vote in
favor of Confirmation.
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INTRODUCTION
By Order dated March 12, 1999, the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court"), after notice and hearing,
approved this Disclosure Statement as containing adequate information to permit
Holders of Claims and Interests in impaired Classes to make an informed judgment
in exercising their right to vote to accept or reject the Plan. The Bankruptcy
Court's approval of this Disclosure Statement does not mean that the Bankruptcy
Court recommends either acceptance or rejection of the Plan.
Enclosed together with this Disclosure Statement are:
(a) the Plan;
(b) the Order fixing (i) the time for submitting acceptances or rejections
of the Plan, (ii) the time for filing objections to the Plan and (iii) the date
and time of the Confirmation Hearing;
(c) a Ballot for voting on acceptance or rejection of the Plan, for Holders
of Claims and Interests in Classes which are "Impaired" under the terms and
provisions of the Plan and not deemed to have rejected or accepted the Plan
(i.e., Class 2 Claims and Class 3 Interests); and
(d) a letter from the Creditors' Committee recommending that holders of
unsecured Claims vote to accept the Plan.
No Person has been authorized to give any information or to make any
representation not contained in this Disclosure Statement in connection with the
solicitation of
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acceptances of the Plan. If given or made, such information or representation
must not be relied upon as having been authorized by the Debtor.
The Bankruptcy Court has scheduled the Confirmation Hearing for April 22,
1999, at 2:00 p.m. at the United States Bankruptcy Court,Courtroom 1, 6th Floor,
Marine Midland Plaza, 824 Market Street, Wilmington, Delaware. At the
Confirmation Hearing, the Court will consider issues related to Confirmation of
the Plan, including the Plan's feasibility and whether the Plan is in the best
interest of the Debtor, Claimants and Interest Holders. Any objection to
Confirmation of the Plan must be filed in writing with the Bankruptcy Court and
served so as to be received by the Debtor's co-counsel, at the address set forth
on the last page hereof, Young Conaway Stargatt & Taylor, LLP, Eleventh Floor,
Rodney Square North, P.O. Box 391, Wilmington, Delaware 19899-0391, Attn: Edwin
J. Harron, and Gunster, Yoakley, Valdes-Fauli & Stewart, 1 Biscayne Tower, 2
South Biscayne Boulevard, Suite 3400, Miami FL 33131, Attn: Philip Hudson,
co-counsel for the Creditors' Committee and the U.S. Trustee, Suite 950 West,
601 Walnut Street, Philadelphia, Pennsylvania 19106, Attn: John D. McLaughlin,
by April 16, 1999 at 5:00 p.m. Eastern Standard Time.
The deadline for voting on the Plan is April 16, 1999 at 5:00 p.m. Eastern
Standard Time. IN ORDER FOR YOUR BALLOTS TO BE COUNTED, THEY MUST BE ACTUALLY
RECEIVED BY ROBERT LAPOWSKY, STEVENS & LEE, 1818 MARKET STREET, 14TH FLOOR,
PHILADELPHIA, PA 19103. Your Ballots are enclosed herewith. Please complete and
sign your Ballots and return them in the enclosed addressed envelope.
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This Disclosure Statement does not purport to be a complete description of
the Plan, the financial status of the Debtor, the applicable provisions of the
Bankruptcy Code, or of other matters that may be deemed significant by certain
Claimants or Holder's of Interests This Disclosure Statement is an attempt to
set forth, in sufficient detail, information adequate to enable Claimants and
Interest Holders to make an informed judgment about the Plan pursuant to Section
1125 of the Bankruptcy Code. However, certain material terms of the Plan are not
summarized herein and Claimants and Holders of Interests are strongly urged to
review the Plan in its entirety in addition to this Disclosure Statement before
determining how to vote on the Plan.
Only Impaired Classes Vote. Section 1126(f) of the Bankruptcy Code provides
that only classes of claims or equity interests that are "Impaired" under a plan
of reorganization are entitled to vote on that plan. Under the Plan, the Holders
of Claims in Class 2 and Interests in Class 3 are impaired and will receive
Ballots. Holders of Interests in Class 3 will be deemed to have rejected the
Plan if the Liquidation Plan (as defined below) is to be implemented because
they will not receive or retain any property under the Liquidation Plan.
Voting Instructions. After carefully reviewing these materials, please mark
the enclosed Ballots and return them immediately in the addressed envelope
provided. If you hold a Claim in more than one Class, you must submit a separate
Ballot for each separately classified Claim. For purposes of voting, the amount
and classification of a Claim or Interest that will be used to tabulate
acceptances and rejections of the Plan shall be as follows:
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(a) Any Claim or Interest which is the subject of an order of this
Court entered on or before the commencement of the Confirmation Hearing (an
"Allowance Order") estimating or otherwise allowing such Claim or Interest
or estimating or allowing such Claim or Interest for voting purposes shall
be counted and classified in the manner set forth in such Allowance Order.
(b) Any Claim or Interest which is not the subject of an Allowance
Order shall be Allowed and classified, for voting purposes as follows:
(1) If no proof of claim or interest has been filed respecting
such Claim or Interest prior to the expiration of the time fixed for
filing of such proof of claim or interest, such Claim or Interest
shall be allowed, for voting purposes, in the amount listed, if any,
in respect of such Claim or Interest in the Debtor's Schedules of
Assets and Liabilities, to the extent such Claim or Interest is not
listed as contingent, unliquidated, undetermined or disputed. Such
Claim or Interest shall be placed in the appropriate Class based upon
the Debtor's records.
(2) To the extent such Claim or Interest is not evidenced by a
timely proof of claim or interest and is not listed in the Debtor's
schedules or is listed therein as contingent, unliquidated,
undetermined or disputed, such Claim or Interest shall be disallowed
for voting purposes.
(3) If a proof of claim or interest has been timely filed
evidencing such Claim or Interest which has not been objected to at
least five days before the expiration of the voting period with
respect to the Plan, the amount and classification shall be that
specified in the proof of claim or interest, provided such proof of
claim or interest does not designate such Claim or Interest as wholly
or partially contingent, unliquidated or undetermined.
(4) If a proof of claim or interest has been timely filed
evidencing such Claim or Interest which is the subject of an objection
filed at least five days before the expiration of the voting period
with respect to the Plan, such Claim or Interest shall be disallowed
for voting purposes, except to the extent and with the classification
indicated in the objection to such Claim or Interest.
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(5) If a Claim is evidenced by a timely proof of claim or, if no
timely proof of claim has been filed but is recorded in the Debtor's
Schedules of Assets and Liabilities as wholly or partially
unliquidated, contingent and/or undetermined such Claim shall be
accorded one vote and valued at one dollar plus any amount specified
therein as liquidated and noncontingent for purposes of Section
1126(c) of Bankruptcy Code, unless the Claim is the subject of an
objection as set forth in subparagraph (4) above, in which case such
Claim shall be Allowed and classified, for voting purposes, pursuant
to the provisions of subparagraph (4).
The following rules and standards shall apply to all Ballots:
(a) pursuant to Rule 3018(a) of the Federal Rules of Bankruptcy
Procedure, whenever a Holder of a Claim or Interest submits more than one
Ballot voting the same Claim prior to the deadline for submission of
Ballots, except as otherwise directed by the Court, the last such Ballot
sent and received prior to the voting deadline shall be deemed to reflect
the voter's intent and shall supersede any prior Ballots;
(b) the authority of the signatory of each Ballot to complete and
execute the Ballot shall be presumed;
(c) a Holder of a Claim or Interest must vote all of its Claims or
Interests within a particular Class under the Plan either to accept or
reject the Plan and may not split its vote. Accordingly, a Ballot (or
multiple Ballots of a single Holder with respect to separate Claims or
Interests within a single Class, to the extent permitted) that partially
rejects and partially accepts the Plan, or that indicates both a vote for
and against the Plan, will not be counted;
(d) any Ballot that does not indicate whether the Holder of the
relevant Claim or Interest is voting for or against the Plan shall not be
counted;
(e) any Ballot that is not signed shall not be counted;
(f) if a Holder of a Claim holds more than one Claim in any Class
relating to transactions between the Debtor and any other single person,
all Claims of such Holder in such Class relating to transactions between
the Debtor and such other single person shall be aggregated and deemed to
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be one Claim for purposes of determining the number of Claims voting on
this Plan; and
(g) the Debtor shall serve as the tabulation agent to, among other
things, review and tabulate votes for the acceptance or rejection of the
Plan.
The Debtor reserves the right to object to any Ballot and seek to disallow, or
modify the amount of, any vote.
Acceptance and Confirmation of Plan. Your vote is important. For an
impaired Class of Claims to have voted to accept the Plan, Ballots representing
at least two-thirds (2/3) in amount and more than half (1/2) in number of Claims
in such Class Allowed for voting purposes and actually cast must be submitted in
favor of the Plan. For an impaired Class of Interests to have voted for the
Plan, Ballots representing at least two-thirds (2/3) in the amount of Interests
in such Class Allowed for voting purposes and actually cast must be submitted in
favor of the Plan.
Confirmation Without Acceptance By All Impaired Classes. Section 1129(b) of
the Bankruptcy Code permits a proponent of a plan of reorganization to seek
confirmation in the event that the plan is not accepted by each impaired class,
as long as the plan is accepted by at least one impaired class. This procedure
is known as "cram-down." The Court may confirm a plan under the cram-down
provisions if, in addition to satisfying the usual requirements of Section 1129
of the Code, the Plan (i) "does not discriminate unfairly" and (ii) is "fair and
equitable" with respect to each class of claims or interests that is impaired
under, and has not accepted, the Plan.
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The Debtor believes that the Plan does not "discriminate unfairly" with
respect to any Class of Claims or Interests because the Distributions provided
for in the Plan do not provide treatment to any Class disproportionate to the
treatment afforded other Classes of equal rank unless the Holders of Claims or
Interests in the Class receiving disproportionate treatment have agreed to such
treatment.
Under the Liquidation Plan, the Debtor believes the Plan is "fair and
equitable" with respect to impaired Classes because, as to each impaired Class
of Claims and impaired Class of Interests, there is no junior Class of Claims or
Interests that will receive or retain any Property under the Plan. Confirmation
of the Menard Plan will require the acceptance of Class 2.
I. HISTORY OF THE DEBTOR, ITS OPERATIONS, BACKGROUND OF FILING OF
REORGANIZATION PETITION AND SALE OF ASSETS
The Debtor was organized on February 12, 1992 to establish a national
television network to broadcast high quality television programming, under the
trade name "Cafe USA", to large, enclosed shopping mall food courts throughout
the country. The Debtor's concept of providing advertising through a broadcast
directly into mall food courts was predicated on its belief that shopping and
product decisions by consumers are often made at the point-of-purchase.
The Debtor was initially incorporated in the State of Delaware under the
name "Advanced Media, Inc." In April of 1992, the Debtor changed its name to
"AppleBell
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Communications, Inc.", and in October of 1993, the Debtor changed its name to
"Food Court Entertainment Network, Inc."
On October 16, 1995, the Debtor closed on its initial public offering of
2,800,000 units consisting of one share of Series A Common Stock, one Class A
Warrant and one Class B Warrant (the "IPO Units") to D. H. Blair Investment
Banking Corp. (the "Underwriter"). On November 9, 1995, the Debtor closed the
offering of an additional 420,000 IPO Units to the Underwriter pursuant to the
Underwriter's overallotment option. On November 14, 1996, the Debtor closed a
private offering to accredited investors of 90 Units, each consisting of 31,746
IPO Units.
Ultimately, the Debtor was able to place its network in only twenty (20)
shopping malls and was unable to sell any significant advertising time. In 1997,
having concluded that the Debtor was not viable as a standalone entity, the
Debtor's management began seeking a joint venture partner or strategic investor
to advance the business concept or, alternatively, a purchaser for the Debtor's
assets.
Despite its best efforts, the Debtor was unable to attract a suitable
investor or partner. As a result, on April 23, 1998, the Debtor entered into a
Purchase and Sale Agreement (the "Purchase and Sale Agreement") with Prime Spot
Media USA, Inc. ("Prime Spot"), a wholly-owned subsidiary of Prime Spot Media,
Inc., a British Columbia Company. The Purchase and Sale Agreement with Prime
Spot provided for the sale of substantially all of the assets of the Debtor for
$450,000. Upon signing the Purchase and Sale Agreement,
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Prime Spot deposited the entire purchase price in escrow with its legal counsel.
Simultaneous with the execution of the Purchase and Sale Agreement, Prime Spot
and the Debtor entered into a subcontract (the "Subcontract") which provided
that Prime Spot would, on behalf of the Debtor, operate the Cafe USA network,
maintain all equipment and provide programming pending closing on the Purchase
and Sale Agreement.
In July of 1998, the Debtor and Prime Spot amended the Purchase and Sale
Agreement to reduce from 20 to 12 the number of mall locations as to which the
Debtor's assets would be transferred and operating agreements assigned. In
connection with the amendment, the purchase price was reduced from $450,000 to
$255,000. At the same time, the Debtor and Prime Spot entered into a separate
agreement pursuant to which the Debtor sold to Prime Spot the assets and
assigned the operating agreements related to the other 8 malls for a purchase
price of $167,000.
On August 13, 1998, the Debtor filed a petition for relief under Chapter 11
of the Bankruptcy Code. The Debtor filed this bankruptcy in order to complete
the sale to Prime Spot and reorganize the corporation so that it may continue to
engage in business, or, in the alternative, effect an orderly liquidation and
dissolve the corporation. A Creditors' Committee has been appointed to represent
the unsecured creditors in the Debtor's Chapter 11 Case. The members of the
Creditors' Committee are H. Scott Phillips, Frankfurt Balkind Comm., Inc., Win
Productions, Edward R. Padin and Marc Chalom. The Creditors' Committee has
retained Gunster, Yoakley, Valdes-Fauli & Stewart and Young Conaway Stargatt &
Taylor, LLP as its co-counsel.
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Subsequent to the filing of the Debtor's Bankruptcy Petition, the Debtor
filed a motion requesting Bankruptcy Court approval of the sale of substantially
all of its remaining assets to Prime Spot pursuant to the terms and conditions
of the April 23, 1998 Purchase and Sale Agreement, as amended. On September 24,
1998, the Bankruptcy Court entered an order approving the sale of the Debtor's
assets to Prime Spot pursuant to the terms and conditions of the April 23, 1998
Purchase and Sale Agreement, as amended (the "Approval Order").
Closing under the Purchase and Sale Agreement, as amended, occurred on
October 2, 1998. At the Closing, the Debtor received the sum of $255,000. The
only remaining assets of the Debtor are (a) the balance of the funds in the
Debtor's DIP account (approximately $231,000.00 as of January 25, 1999), (b) any
net operating losses which may exist, and (c) any Avoidance Claims existing
under the United States Bankruptcy Code.
The Plan provides for allocation of the Debtor's Cash pursuant to the
priorities established under the Bankruptcy Code.
II. THE PLAN OF REORGANIZATION
A. Summary Description of Plan
The following represents a summary of certain portions of the Plan
deemed relevant by the Debtor. This summary does not attempt to provide a
complete description of the Plan and is qualified, in its entirety, by the Plan.
Claimants and parties-in-interest are urged to read the Plan before voting.
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B. Treatment of Claims and Interests
The Plan divides Holders of Claims and Interests into three (3) Classes
and provides separate treatment for Holders of Administrative Claims and Tax
Claims. Administrative Claims consist of obligations incurred by the Debtor on
or after the filing of its Chapter 11 Case on August 13, 1998 (the "Filing
Date").
Included as Administrative Claims are the Claims of Professional Persons
retained by the Debtor for services rendered after the Filing Date. The Debtor
estimates that Professionals' Administrative Claims will not exceed $110,000.00.
Also included as Administrative Claims are the unpaid obligations incurred by
the Debtor on or after the Filing Date in the ordinary course of business,
estimated to total $11,000.00 per month as of November 30, 1998, all, or
substantially all, of which will have been paid in the ordinary course of
business by the Confirmation Date. It is also possible that James N. Perkins
and/or Jean Toss may assert administrative claims for severance pay which may be
as high as $225,000.00.(1) All of the foregoing Administrative Claims, to the
extent Allowed, will be paid in full.
The Tax Claims consist, primarily, of Claims of local taxing authorities
for personal property and unemployment taxes. The Debtor has reached a
settlement with the New York State Unemployment Division to resolve its disputed
claim. Pursuant to the agreement, the New York State Unemployment Division has
agreed to accept $6,717.67 plus
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(1) COPY NEEDED FOR FOOTNOTE (cannot find copy)!!!!!!!!!!!!!!!!!!!!!
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accrued interest at 12% from and after September 2, 1998 in full and final
satisfaction of its claim. The Debtor estimates the Claims of the tax
authorities to be $7,500.00 and will pay all Allowed Tax Claims in full.
Class 1 consists of all Allowed Priority Claims. Class 1 Claims are
primarily Claims for wages, salaries and commissions earned within ninety (90)
days prior to the Filing Date and employee benefits earned within one hundred
and eighty (180) days prior to the Filing Date by the Debtor's employees. The
Debtor estimates that Priority Claims total approximately $0. Allowed Class 1
Priority Claims will be paid in full.
Class 2 consists of the Claims of Holders of Allowed General Unsecured
Claims. Included in Class 2 are the Claims of the Debtor's prepetition trade
creditors and parties whose contracts with the Debtor have been rejected. The
Debtor estimates that Allowed Class 2 Claims will total approximately $1
million. Holders of Allowed Class 2 Claims will receive a Pro Rata share of (i)
the Debtor's Cash remaining after payment in full of all Allowed Administrative,
Tax and Priority Claims; and (ii) any net recoveries from Avoidance Claims until
all Allowed Class 2 Claims have been paid in full; and to the extent that the
Menard Plan is implemented (iii) the Cash proceeds of the Promissory Note; and
(iv) shares aggregating five (5%) percent of the issued and outstanding New
Common Stock. The Debtor estimates that Holders of Allowed General Unsecured
Claims will ultimately receive a Distribution of between ten percent (10%) and
fifteen percent (15%) of their Allowed General Unsecured Claims.
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Class 3 consists of the Interests in the Debtor. If the Liquidation Plan
is implemented, Holders of Allowed Class 3 Interests will not receive or retain
any property on account of such Allowed Interests, and each Interest shall be
cancelled. If the Liquidation Plan is implemented, on the Effective Date, the
Debtor shall issue one new share of stock of the Debtor to James N. Perkins
solely for the purpose of dissolving the Debtor corporation.
If the Menard Plan is implemented, all presently issued and outstanding
Interests shall be cancelled. Shares aggregating ten (10%) percent of the issued
and outstanding New Common Stock shall be distributed to Holders of Class 3
Interests as a class, with each Holder of an Allowed Interest receiving a
percentage thereof equal to its same percentage holding of the Allowed
Interests.
C. Executory Contracts
Pursuant to an order of the Bankruptcy Court, certain Executory
Contracts were assumed and assigned to the purchaser of the Debtor's operating
assets, Prime Spot. Pursuant to the Plan, all remaining Executory Contracts of
the Debtor, except those listed on Exhibit B to the Plan, are rejected. Exhibit
B to the Plan may be amended to include or delete Assumed Contracts at any time
until a date that is fourteen (14) days prior to the Confirmation Hearing. In
the event Exhibit B to the Plan is so amended, the affected non-Debtor party
shall receive notice of same. The Debtor does not anticipate that any Executory
Contracts will be Assumed. All Claims arising from the rejection of Executory
Contracts shall be treated as General Unsecured Claims in Class 2.
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D. Retention of Claims
Pursuant to the Plan, the Debtor will assign to the unsecured creditors
in Class 2 all claims that it may have against third parties, except as
specifically released pursuant to the Plan, the Confirmation Order or otherwise.
E. Liquidation and Feasibility Analysis
Notwithstanding acceptance of the Plan by the requisite majority of
Holders of Claims in any Class, the Bankruptcy Court must still independently
determine that the Plan is not likely to be followed by the need for further
financial reorganization of the Debtor (the "Feasibility Test"). For the Plan to
meet the Feasibility Test, the Bankruptcy Court must find that the Debtor will
possess the resources necessary to meet its obligations under the Plan. In
addition, the Bankruptcy Court must determine that each Holder of a Claim in an
Impaired Class either (a) has accepted the Plan, or (b) will receive a
Distribution under the Plan at least equal to the projected present value of
distributions to such Holders in a liquidation under Chapter 7 of the Bankruptcy
Code (the "Best Interest Test").
1. Feasibility
The Debtor has analyzed its ability to meet its obligations under the
Plan. Attached hereto as Exhibit A is an analysis of the projected cash sources
and uses under the Liquidation Plan and the Menard Plan. Based upon the analysis
reflected in Exhibit A, the Debtor believes that the Plan meets the requirements
of the Feasibility Test provided, however, that payments under the Menard Plan
relating to the Promissory Note are contingent upon the Reorganized Debtor
generating sufficient cash flow out of its new business interests.
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In preparing Exhibit A, the Debtor has relied upon its best estimate of assets
and Allowed Claims. The Debtor does not warrant the accuracy of the said
estimates.
2. Best Interest Test
Distributions in Chapter 7 would consist of the proceeds resulting from
the disposition of the assets of the Debtor, augmented by the cash held by the
Debtor at the time of the commencement of the liquidation case. Liquidation
proceeds would be distributed in the following order: first, to the Holders of
Allowed Administrative Claims arising after the date of conversion of the
Debtor's Bankruptcy Case to a case under Chapter 7; second, Pro Rata to the
Holders of all other Allowed Administrative Claims; third, Pro Rata, to Holders
of Priority Claims in the order specified in Section 507 of the Bankruptcy Code;
fourth, Pro Rata to Holders of Allowed Unsecured Claims in the order specified
in Section 726 of the Bankruptcy Code; and fifth, to the Debtor.
The Allowed Administrative Claims under Chapter 7 would include the fees
payable to one or more trustee(s) in bankruptcy as well as attorneys and other
professionals that such trustees would engage to assist in the administration of
the Chapter 7 liquidation case. The Debtor's other Allowed Administrative Claims
would include any unpaid expenses incurred by the Debtor during the Chapter 11
Case, such as compensation for attorneys, financial advisors and accountants and
costs and expenses of members of the Committee as well as Claims which would
arise by reason of breach or rejection of obligations incurred under contracts
entered into or assumed by the Debtor during the pendency of the Chapter 11
Case.
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The Best Interest Test will be satisfied, by definition, as to Holders
of Claims in Class 1, consisting of Priority Claims, since such Claims are paid
in full under the Plan.
The Best Interest Test will be satisfied as to Holders of Claims in
Class 2 since, at a minimum, the Holders of Class 2 Claims will receive a Pro
Rata Share of all of the Debtor's Cash remaining after payment of Allowed
Administrative Claims, Tax Claims and Priority Claims. The Debtor believes that,
in a Chapter 7 liquidation, the Distribution to Holders of Allowed General
Unsecured Claims would likely be less than the Distribution projected under the
Plan since Allowed General Administrative Claims, which reduce the amount
available to Holders of Allowed General Unsecured Claims, would be higher in a
Chapter 7 liquidation than under the Plan. As a result, the Best Interests Test
is met with respect to Holders of Class 2 General Unsecured Claims.
The only remaining impaired Class as to whom the Best Interests Test may
need to be applied are the Holders of Interests in Class 3. Because the Debtor
is insolvent, in a chapter 7 liquidation, the Holders of Interests in Class 3
would receive nothing. Under the Plan, Holders of Allowed Interests will either
receive nothing (under the Liquidation Plan) or ten (10%) percent of the issued
and outstanding New Common Stock,. Thus, the Best Interests Test is satisfied as
to Class 3.
There are a number of estimates and assumptions underlying the foregoing
liquidation analysis that, although developed and considered reasonable by the
Debtor and its advisors, are inherently subject to uncertainties and
contingencies beyond the control of the Debtor. Accordingly, there can be no
assurance that the values reflected in this liquidation
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analysis would be realized. Nevertheless, the Debtor believes that the Best
Interests Test will be satisfied as to all Holders of Claims and Interests in
impaired Classes.
F. Tax Issues
1. Certain Federal Income Tax Consequences Of The Plan
The following discussion summarizes certain of the more significant
federal income tax consequences of the Plan to the Debtor and certain of the
Holders of Claims. The tax consequences to Holders may vary based on the
individual circumstances of each Holder and the possibility of changes in law.
As of the date of this Disclosure Statement, no rulings or opinions have been
requested from the Internal Revenue Service (the "IRS") or from counsel with
respect to any of the tax consequences of the Plan. The conclusions presented
below may be based in part on analyses and evaluations of factors not discussed
herein. Because the tax consequences of the Plan may vary depending upon
individual circumstances, each Holder of a Claim is strongly urged to consult
its own tax advisor as to the federal, state and local tax consequences of the
Plan.
2. Tax Consequences To The Debtor
a. Taxable Sale of Assets
The sale of the Debtor's assets pursuant to the Approval Order
constituted a taxable transaction to the Debtor which will be reported on the
tax return of the Debtor. The consideration paid will be allocated to the assets
purchased in accordance with section 1060 of the Internal Revenue Code of 1986
(the "Tax Code"), which essentially
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requires that the purchase price be allocated in accordance with the relative
values of the assets acquired.
b. Cancellation of Indebtedness Income
Upon implementation of the Plan, the amount of the Debtor's aggregate
outstanding indebtedness will be substantially reduced. In general, under the
Tax Code, a taxpayer must include in gross income the amount of any indebtedness
discharged or canceled during the taxable year, except to the extent that
payment of such indebtedness would have given rise to a deduction for income tax
purposes. However, Section 108(a)(1)(A) of the Tax Code (the "Bankruptcy
Exception") provides that, in a case under Title 11 of the Bankruptcy Code where
the discharge of indebtedness is granted by the court or pursuant to a plan
approved by the court, the amount of discharged indebtedness which would
otherwise have been required to be included in income will instead be applied to
reduce various of the tax attributes of the taxpayer, including net operating
losses ("NOLs"), tax credit and loss carry forwards, and the taxpayer's basis in
its assets. Given the Debtor's substantial NOLs, the Debtor does not anticipate
any tax liability arising out of cancellation of indebtedness.
c. Alternate Minimum Tax
For purposes of computing a corporation's regular federal income tax
liability, all of its income recognized in a taxable year may be offset by its
NOLs; however, for purposes of the federal alternative minimum tax, only 90
percent of a
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corporation's alternative minimum taxable income may be offset by NOLs. The
Debtor estimates an Alternative Minimum Tax Liability for the 1998 tax year of
less than $1,000.00.
3. Tax Consequences To Holders Of Claims
a. In General
The Holders of Claims will, in general, recognize gain or loss on
the satisfaction of their Claims in exchange for cash and/or other property. For
this purpose gain or loss will be measured by the difference between a Holders'
tax basis in its Claim and the sum of any cash and the fair market value of
other property received in satisfaction thereof.
G. Post-Confirmation Management
On and after the Effective Date, if the Liquidation Plan is implemented,
the following individuals will serve as officers and directors of the Debtor:
James N. Perkins - President, CEO, Chairman of Board
On and after the Effective Date, the following insiders will be employed by
the Debtor at the indicated levels of compensation:
James N. Perkins The lesser of (i) $4,000.00 per month or
(ii) $150/hr. x # of hours worked
Jean Toss The lesser of (i) $6,000.00 per month or
(ii) $95/hr. x # of hours worked
On and after the Effective Date, if the Menard Plan is implemented, Menard
will appoint new members for the Debtor's board of directors. Menard has not yet
determined the identity of the persons who will serve as members of the new
board of directors; however, it
22
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is likely that David W. Menard will be one of the members. Depending upon the
availability of the Reorganized Debtor's funds after making provisions for the
payment of the Promissory Note, Menard may receive future compensation from the
Reorganized Debtor.
H. Menard
David W. Menard and Jacqueline J. Menard (collectively, "Menard") have
negotiated with the Debtor and the Creditors' Committee to acquire a majority
equity ownership interest in the Reorganized Debtor. David W. Menard is a
principal in the regional investment banking firm of Colmen Menard Company,
Inc., located in Bala Cynwyd, Pennsylvania. Prior to the filing of the Debtor's
Chapter 11 case, Menard unsuccessfully attempted to acquire control of the
Debtor. Menard desires to reorganize the Debtor as a publicly held, SEC
reporting company, which will continue to engage in business after consummation
of the Plan. After the Effective Date, Menard intends for the Reorganized Debtor
to acquire other operating businesses which have not been identified.
I. Uncertainty Involving Securities Issued Under the Plan
Substantial uncertainties are inherent in securities issued under any
Chapter 11 plan. First, it is uncertain whether or not the New Common Stock
issued under the Menard Plan will need to be registered before they may be
offered for sale. Likewise, it is uncertain whether any market will exist for
the New Common Stock that will be issued under the Plan if the Menard Plan is
implemented, and realization of any return on such equity interests is dependent
upon the Reorganized Debtor's future economic performance. Under the Menard
Plan, the Reorganized Debtor's future economic performance will be based upon
the future
23
<PAGE>
businesses in which the Reorganized Debtor may engage and the ability
of the Reorganized Debtor's post-confirmation management to adequately and
profitably manage such business. There is no assurance that the operation of any
future business which the Reorganized Debtor may acquire will be profitable in
the future.
J. Future Business Plans
If the Menard Plan is implemented, Menard intends that the Reorganized
Debtor shall engage in the business after consummation of the Plan by acquiring
other operating businesses; however, Menard has not yet identified any specific
business to be acquired. Menard intends that the Reorganized Debtor shall remain
as an SEC reporting company with the publicly issued shares of stock registered
under section 12 of the Securities and Exchange Act of 1934. After the Effective
Date, Menard shall fund the expenses necessary for the Reorganized Debtor to
comply with all of its reporting requirements under any applicable federal and
state securities laws.
K. Issuance of New Common Stock
If the Menard Plan is implemented, on the Effective Date, the
Reorganized Debtor shall issue an unspecified number shares of New Common Stock
which shall be distributed as follows: 85% to Menard; 10% to Holders of Allowed
Interests, as a class; and 5% to Holders of Allowed Unsecured Claims, as a
class. Under the Menard Plan, as of the Effective Date, the New Common Stock
will be the only class of equity securities of the Reorganized Debtor issued
under the Plan or authorized under the Articles of Incorporation.
24
<PAGE>
L. Litigation
The Debtor is not a party to any material litigation as of the date
hereof.
M. SEC Opposition
The Securities and Exchange Commission ("SEC") has expressed opposition
to the Menard Plan and questioned whether the Menard Plan is confirmable. The
SEC may oppose confirmation of the Menard Plan alternative of the Debtor's Plan,
and in the face of such SEC opposition, the Debtor may seek confirmation of the
Liquidation Plan.
N. Miscellaneous
The Plan provides for certain limitations on causes of action against
the Debtor, the Creditors' Committee, the Disbursing Agent and their respective
members, directors, officers, employees and professionals.
25
<PAGE>
III. RECOMMENDATION
THE DEBTOR URGES ALL VOTING CREDITORS AND INTEREST HOLDERS TO ACCEPT THE
PLAN AND TO RETURN THEIR BALLOTS SO THAT THEY WILL BE ACTUALLY RECEIVED BEFORE
5:00 P.M., EASTERN STANDARD TIME ON APRIL 16, 1999.
FOOD COURT ENTERTAINMENT
NETWORK, INC.
By:
-------------------------------
James N. Perkins, President
CO-COUNSEL TO THE DEBTOR
STEVENS & LEE
Robert Lapowsky
Michael J. Cordone
1818 Market Street
14th Floor
Philadelphia, Pennsylvania 19103
and
James W. Owen
Suite 103, Weldin Building
Concord Plaza
3411 Silverside Road
Wilmington, Delaware 19810
26
<PAGE>
EXHIBIT A
ESTIMATED CASH SOURCES AND USES (Liquidation Plan)
CASH SOURCES
Postclosing Sale Proceeds $255,000
Cash in DIP Account $ 8,694
TOTAL CASH SOURCES $263,694
CASH USES
Administrative Claims
Professional Claims $120,000
Post-Petition Goods, Wages
and Services (estimated) $ 38,000
--------
Total Administrative Claims $158,000
Disbursing Agent Expenses $ 10,000
Priority Claims $ 7,500
--------
Total Cash Uses Before Distributions General Unsecured Claims ($175,500)
---------
Residual for General Unsecured Claims $ 88,194
(est. of claim $1.0 million) ---------
<PAGE>
ESTIMATED CASH SOURCES AND USES (Menard Plan)
CASH SOURCES
Postclosing Sale Proceeds $255,000
Cash in DIP Account $ 8,694
Menard Initial Payment $ 50,000
Payments under Promissory Note (Present Value) $ 50,000
TOTAL CASH SOURCES $363,694
CASH USES
Administrative Claims
Professional Claims $120,000
Post-Petition Goods, Wages
and Services (estimated) $ 38,000
--------
Total Administrative Claims $158,000
Disbursing Agent Expenses $ 10,000
Priority Claims $ 7,500
Total Cash Uses Before Distributions General Unsecured Claims ($175,500)
---------
Residual for General Unsecured Claims $188,194
(est. of claim $1.0 million) --------
<PAGE>
TABLE OF CONTENTS
Page
----
DISCLAIMERS ............................................................... 1
DEBTOR'S PRELIMINARY STATEMENT AND SOLICITATION ........................... 3
INTRODUCTION .............................................................. 4
I. HISTORY OF THE DEBTOR, ITS OPERATIONS, BACKGROUND OF
FILING OF REORGANIZATION PETITION AND SALE OF ASSETS ................. 10
II. THE PLAN OF REORGANIZATION ........................................... 13
A. Summary Description of Plan ...................................... 13
B. Treatment of Claims and Interests ................................ 14
C. Executory Contracts .............................................. 16
D. Retention of Claims .............................................. 17
E. Liquidation and Feasibility Analysis ............................. 17
1. Feasibility .................................................. 17
2. Best Interest Test ........................................... 18
F. Tax Issues ....................................................... 20
1. Certain Federal Income Tax Consequences Of The Plan ......... 20
2. Tax Consequences To The Debtor ............................... 20
a. Taxable Sale of Assets ................................... 20
b. Cancellation of Indebtedness Income ...................... 21
c. Alternate Minimum Tax .................................... 21
i
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3. Tax Consequences To Holders Of Claims ........................ 22
a. In General ............................................... 22
G. Post-Confirmation Management ..................................... 22
H. Menard ........................................................... 23
I. Uncertainty Involving Securities Issued Under the Plan ........... 23
J. Future Business Plans ............................................ 24
K. Issuance of New Common Stock ..................................... 24
L. Litigation ....................................................... 25
M. SEC Opposition ................................................... 25
N. Miscellaneous..................................................... 25
III. RECOMMENDATION ....................................................... 26
ii
<PAGE>
SUPPLEMENTAL DISCLOSURE STATEMENT
FOR HOLDERS OF NEW COMMON STOCK
TO BE ISSUED PURSUANT TO MENARD PLAN
EXHIBIT "B"
<PAGE>
SUMMARY
This brief summary highlights selected information. It does not contain all of
the information important to the Plan. The Plan, the Disclosure Statement and
this Supplemental Disclosure Statement should be read in their entirety.
The Company
Upon its emergence from bankruptcy, Food Court Entertainment Network, Inc.,
a Delaware corporation ("Food Court") will change its name to Moro Corporation
(the "Company").
The Company will initially have no assets, and its liabilities will consist
of a Promissory Note in the amount of $50,000, bearing interest at the rate of
5% per annum, payable to the Disbursing Agent in full on the first anniversary
of Food Court's emergence from bankruptcy (the "Effective Date").
The Company intends to attempt to acquire one or more operating businesses
(a "Target Company"). The Company has no oral or written agreement nor are any
negotiations under way regarding a possible transaction. The Company will
conduct a search to locate one or more acquisition or merger opportunities (a
"Business Combination").
After the Effective Date, the Principal Stockholder intends, for the
foreseeable future, to advance to the Company such funds as are necessary for
the Company to comply with its reporting requirements under any applicable
federal and state securities laws, and to file all required federal, state and
local tax returns. The Principal Stockholder estimates that these expenses will
aggregate approximately $50,000 during the first year.
Management
Initially, David W. Menard will be the Company's sole director and officer.
In the future, it is possible that additional directors and officers will be
selected. David W. Menard anticipates devoting, for the foreseeable future,
approximately twenty hours per month to locating a Target Company and
administrative matters.
David W. Menard will, for the foreseeable future, provide his services at
no cost to the Company. Finders or brokerage fees are not expected to be paid or
accrued to any director and officer.
Plan of Reorganization/Distribution of New Common Stock
Pursuant to the First Modified Chapter 11 Plan of Reorganization (the
"Plan"), the outstanding shares of the Company's common stock, par value $.001
per share, (the "New Common Stock") will be 85% owned jointly by David W. Menard
and Jacqueline J. Menard (the "Principal Stockholder"), 10% by the existing Food
Court stockholders and 5% by the Food Court unsecured creditors.
2
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RISK FACTORS
Limited Funds for Pursuit of Business Objectives. Upon its emergence from
bankruptcy the Company will have no assets, and will have liabilities consisting
of a Promissory Note in the amount of $50,000 bearing interest at the rate of 5%
per annum payable in full on the first anniversary of the Effective Date of the
Company's emergence from bankruptcy. Initially, the Company's only source of
financing will be funds to be provided by the Principal Stockholder. After the
Effective Date, the Principal Stockholder intends, for the foreseeable future,
to advance to the Company such funds as are necessary for the Company to comply
with its reporting requirements under any applicable federal and state
securities laws, and to file all required federal, state and local tax returns.
There can be no assurance that the Company will be able to raise acquisition
financing if needed to complete a possible transaction or provide capital to an
acquired business.
Unspecified Industry and Target Company; Competition for Business Combinations.
The Company has not selected any particular industry in which to concentrate its
efforts to effect a Business Combination. In relation to any competitors, the
Company is and will continue to be an insignificant participant in the business
of seeking Business Combinations. A large number of established and
well-financed entities, including venture capital firms, have recently increased
their merger and acquisition activities. Nearly all such entities have
significantly greater financial resources, technical expertise and managerial
capabilities than the Company and, consequently, the Company will be at a
competitive disadvantage in identifying suitable merger or acquisition
candidates and successfully consummating a proposed merger or acquisition. Also,
the Company will be competing with a large number of other small, "blind pool"
companies.
Control by Present Stockholders. Upon emergence from bankruptcy, the Principal
Stockholder will own approximately 85% of the issued and outstanding shares of
New Common Stock. Accordingly, the Principal Stockholder will be in a position
to elect all of the Company's directors, approve amendments to the Company's
Certificate of Incorporation, and otherwise direct the affairs of the Company.
Opportunity for Stockholder Evaluation or Approval of Business Combination. The
stockholders of the Company will, in all likelihood, neither receive nor
otherwise have the opportunity to evaluate any financial or other information
which will be made available to the Company in connection with selecting a
potential Target Company until after a Business Combination is consummated. As a
result, stockholders of the Company will be almost entirely dependent on the
judgment of management in connection with the selection of a Target Company and
the terms of any Business Combination.
Corporate Action Possible Without Stockholder Vote; Possible Lack of Dissenters'
Rights. The holders of a majority of the Company's issued and outstanding shares
3
<PAGE>
may, pursuant to Delaware corporate statutes, authorize or take corporate action
without the approval, consent or vote of the other stockholders. The Company's
stockholders may not have the opportunity to approve or otherwise consent to the
Company's involvement in a Business Combination, or to the terms of such
transaction. In addition, it is very likely that the Company's participation in
a Business Combination may involve the issuance of the Company's restricted
securities. The Company's stockholders may not have the opportunity to approve
or consent to such additional issuances of securities. In addition, the form of
Business Combination will have an impact upon the availability of dissenters'
rights (i.e., the right to receive fair payment with respect to the New Common
Stock) to stockholders disapproving of the proposed Business combination. Under
current Delaware law, only a merger or consolidation my give rise to a
stockholder vote and to dissenters' rights.
Conflicts of Interest. The Company's sole officer and director is engaged in
business activities outside of the Company, and the amount of time devoted to
the Company's activities will only be approximately twenty (20) hours each per
month. There exists potential conflicts of interest including, among other
things, time, effort and Business Combinations with such other business
entities. To aid the resolution of such conflicts, the Company will adopt a
procedure whereby a special meeting of the Company's shareholders will be called
to vote upon a Business Combination with any affiliated entity, and shareholders
who also hold securities of such affiliated entity will be required to vote
their shares of the Company's stock in the same proportion as the Company's
publicly held shares are voted. Such procedure shall be in the form of an
informal agreement.
Authorization of Additional Securities. Pursuant to the Plan, the Company's
Certificate of Incorporation will authorize the issuance of 25,000,000 shares of
New Common Stock. Upon emergence from bankruptcy, there will be 20,000,000
authorized but unissued shares of New Common Stock available for issuance. The
Company's Board of Directors has the power to issue any or all of such shares
without stockholder approval. Although the Company has no commitments as of the
date of this prospectus to issue any shares of New Common Stock, the Company
will, in all likelihood, issue a substantial number of additional shares in
connection with a Business Combination. To the extent that additional shares of
New Common Stock are issued, dilution to the interests of the Company's
stockholders will occur. The Company's Certificate of Incorporation also
authorizes the issuance of 5,000,000 shares of preferred stock, par value $.001
per share ("Preferred Stock") with such designations, rights, and preferences as
may be determined from time to time by the Board of Directors. The Board of
Directors is empowered, without stockholder approval, to issue Preferred Stock
with dividend, liquidation, conversion, voting or other rights which could
adversely affect the voting power or other rights of the holders of the
Company's New Common Stock. The Company may issue some or all of such shares in
connection with a Business Combination. In addition, the Preferred Stock could
be utilized, under certain circumstances, as a method of discouraging, delaying
or preventing a change in control of the Company. Although the Company has no
commitments to issue any shares of Preferred Stock, there can be no assurance
that the Company will not do so in the future.
4
<PAGE>
Possible Future Change in Control and Management. Upon the successful completion
of a Business Combination, the Company may have to issue to the shareholders of
the Target Company authorized but unissued New Common Stock in the Company which
when issued may comprise a majority of the then issued and outstanding shares of
New Common Stock of the Company. In such event, there may be a change of control
in the Company which would most likely result in the resignation or removal of
the Company's present officer and director. If there is a change in management,
no assurance can be given as to the experience or qualification of such persons
either in the operation of the Company's activities or in the operation of the
business, assets or property being acquired.
Unforeseeable Risks Associated with Business Combination. The Company may be
dependent upon existing or new management of a Target Company with which it may
engage in a Business Combination, and may thus lack the control necessary to
adjust the direction of the business in the event such operating management is
unable to cope with business problems that may arise. Because the Company may
participate in a Business Combination with newly-organized firms or with firms
which are attempting to expand through new products, markets or methods of
distribution, the Company may face additional special risks associated with
development stage operations or operating management lacking in specific
experience pertinent to the business involved. Regardless of the type of
business with which the Company may become involved through a Business
Combination, it will be subject to all of the risk factors, which are presently
undeterminable, relating to such business and its industry.
Probable Lack of Diversification. It is probable the Company will be financially
able to commit its resources to only one Business Combination. Such lack of
diversification would mean that the failure of the acquired business would have
a disastrous effect on the Company.
Possible Use of Debt Financing; Debt of a Target Company. There currently are no
limitations on the Company's ability to borrow or otherwise raise funds to
increase the amount of capital available to effect a Business Combination.
However, the Company's limited resources and lack of operating history will make
it difficult to borrow funds. The amount and nature of any borrowings will
depend on numerous considerations, including capital requirements, perceived
ability to meet debt service on any such borrowings and the then prevailing
conditions in the financial markets, as well as general economic conditions.
There can be no assurance that debt financing, if required or sought, would be
available on terms deemed to be commercially acceptable by and in the best
interests of the Company. The inability to borrow funds required to effect or
facilitate a Business Combination or to provide funds for an additional infusion
of capital into a Target Company, may have a material adverse effect on the
Company's financial condition, future prospects and ability to complete a
Business Combination. Additionally, to the extent that debt financing ultimately
proves to be available, any borrowings may subject the Company to various risks
traditionally associated with indebtedness, including the risks of interest rate
fluctuations and insufficiency of cash flow to pay principal and interest.
5
<PAGE>
Furthermore, a Target Company may have already incurred borrowings and,
therefore, all the risks inherent thereto.
The Investment Company Act of 1940. The Investment Company Act defines an
"investment company" as an issuer which is or holds itself out as being engaged
primarily in the business of investing, reinvesting or trading of securities.
While the Company does not intend to engage in such activities, the Company
could become subject to regulations under the Investment Company Act in the
event the Company obtains or continues to hold a minority interest in a number
of enterprises. The Company could be expected to incur significant registration
and compliance costs if required to register under the Investment Company Act.
Accordingly, management will continue to review the Company's activities from
time to time with a view toward reducing the likelihood the Company could be
classified as an "investment company."
The Company has not engaged, does not intend to engage, nor does it have the
authority to engage in the business of advising others, either directly or
through publications or writings, as to the value of securities or as to the
advisability of investing in, purchasing or selling securities for compensation.
In addition, the Company does not intend as part of its regular business to
issue or promulgate analyses or reports concerning securities. The Company does
not intend to pursue any course of business which would render it an "investment
advisor" as that term is defined in the Investment Advisor's Act of 1940.
No Dividends Anticipated. In view of the Company's present financial status and
contemplated financial requirements, the payment of dividends in the foreseeable
future is highly unlikely.
Trading of the Shares of New Common Stock. No current public trading market for
the shares of New Common Stock exists. The extent of the market for the shares
and the prices at which the shares may trade cannot be predicted.
Penny Stock Regulation. Broker-dealer practices in connection with transactions
in "penny stocks" are regulated by certain penny stock rules adopted by the
Securities and Exchange Commission. Penny stocks generally are equity securities
with a price of less than $5.00 (other than securities registered on certain
national securities exchanges or quoted on the NASDAQ system, provided that
current price and volume information with respect to transactions in such
securities is provided by the exchange or system). The penny stock rules require
a broker-dealer, prior to a transaction in a penny stock not otherwise exempt
from the rules, to deliver in a standardized risk disclosure document prepared
by the Commission that provides information about penny stocks and the nature
and level of risks in the penny stock market. In addition, the penny stock rules
require that prior to a transaction in a penny stock not otherwise exempt from
such rules the broker-dealer must make a special written determination that the
penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These requirements may have
the effect of reducing the level of trading activity in the secondary market for
a stock that becomes subject to the penny stock rules.
6
<PAGE>
BUSINESS OF THE COMPANY
General
The Company was originally incorporated under the laws of the State of Delaware
on February 12, 1992.
Upon its emergence from bankruptcy, the Company intends to engage in the
identification, evaluation and investigation of prospective business
opportunities, and if believed warranted, to acquire a business. The Principal
Stockholder has commenced limited efforts intended to survey and locate such
possible business opportunity candidates. Management presently has no specific
business in mind for potential acquisition.
The Company does not propose to restrict its search for investment opportunities
to any particular industry and may, therefore, engage in essentially any
business, to the extent of its limited resources. Management has not adopted any
formal business plan or conducted any formal market studies with respect to any
business or industry. The Company's discretion to participate in business
opportunities is unrestricted, subject to the availability of those
opportunities, economic conditions, the availability of financing, if needed,
and other factors.
The Company intends to select a Target Company and complete a Business
Combination as quickly as practicable. However, there can be no assurance that
the Company will be successful in identifying a Target Company and/or completing
a Business Combination in a timely manner, or at all. In the event that, as of
the second anniversary of the Effective Date, the Company has not completed a
Business Combination (or executed an agreement with respect to a Business
Combination, but not yet closed), the Company will promptly call a stockholder
meeting (or otherwise solicit stockholder votes or consents) for the purpose of
determining whether the Company should continue to seek a Target Company and a
Business Combination or cease its efforts and proceed to liquidate and dissolve
the Company. In any such vote or consent, the Principal Stockholder's shares
will be voted in the same proportions as the votes case (or consents given) by
the other stockholders.
Identification of Target Companies and a Business Combination
Upon its emergence from bankruptcy, the Company will actively commence the
identification, evaluation and investigation of one or more Target Companies. As
of the date hereof, the Company has identified no Target Companies for
acquisition and may therefore be characterized as a "blind pool." The Company
may not be capable of acquiring any such Target Company because the capital
available to the Company may be limited.
7
<PAGE>
The Company may seek Target Companies in the form of firms which are about to or
have only recently commenced operations, are developing new products, inventions
or even novel methods of marketing or distribution of existing products. Target
Companies may include privately held corporations, partnerships, sole
proprietorships and even proposed enterprises which have not yet been formed.
Accordingly, the Company may investigate firms which have recently commenced
operations, are developing companies in need of additional funds for expansion
into new products or markets, are seeking to develop a new product or service,
are established businesses either experiencing financial or operating
difficulties and in need of limited additional capital or are merely desirous of
establishing a public trading market for its securities, among others.
It is anticipated that Business Combination opportunities will be available to
the Company from various sources, including but not limited to, its sole officer
and director, professional advisors such as attorneys and accountants,
securities broker-dealers, venture capitalists, members of the financial
community and others who may present proposals.
Selection of Business Combination Opportunities
Prior to considering participation in a Business Combination, the Company may
request that it be provided with written materials regarding the Target Company
containing such information as a description of product, service and company
history; management resumes; financial information; available projections with
related assumptions upon which they are based; an explanation of proprietary
products and services; evidence of existing patents, trademarks or service marks
or rights thereto; present and proposed forms of compensation to management;
description of transactions between the Target Company and its affiliates during
relevant prior periods; a description of present and required facilities; an
analysis of risks and competitive conditions; a financial plan of operation and
estimated capital requirements; audited financial statements; or other
information which is deemed relevant. As part of the Company's "due diligence"
investigation, management may meet personally with the management and key
personnel of such business, visit and inspect material facilities, obtain
independent analysis or verification of certain information provided, check
references of management and key personnel and take other reasonable
investigative measure, to the extent of the Company's limited financial
resources, management expertise and available time of its sole officer and
director.
The analysis of Business Combination opportunities will be undertaken by or
under the supervision of David W. Menard, the Company's sole officer and
director, who has substantial experience in merger and acquisition transactions.
Some of the numerous factors to be considered include the following:
o Potential for growth, indicated by new technology, anticipated
market expansion or new products;
8
<PAGE>
o Competitive position as compared to other firms of similar size and
experience within the industry segment as well as within the industry
as a whole;
o Strength and diversity of management, either in place or scheduled for
recruitment;
o Capital requirements and anticipated availability of required funds,
to be provided by the Company or from operations, through the sale of
additional securities, through joint ventures or similar arrangements
or from other sources;
o The cost of participation by the Company as compared to the perceived
tangible and intangible values and potentials;
o The extent to which the business of the Target Company can be
advanced;
o The accessibility of required management expertise, personnel, raw
materials, services, professional assistance and other required
items; and
o Other relevant factors.
As potentially available Target Companies are expected to be in different
industries and at various stages of development, the task of comparative
investigation and analysis will be extremely difficult and complex. Due to the
Company's limited capital available for investigation, the Company may not
discover or adequately evaluate adverse factors about the Target Company to be
acquired. However, it should be noted that the use of consultants which the
Company may hire could increase the likelihood of finding a Target Company.
There do not presently exist any plans, understandings, agreements or
commitments with any person to act as a consultant for the Company. In addition,
the limited financial resources of the Company may not permit the Company to
retain such consultants, or the Company may need to issue additional securities
to such consultants in lieu of cash compensation.
To a large extent, a decision to participate in a specific Business Combination
may be made upon management's analysis of the quality of the other firm's
management and personnel, the anticipated acceptability of new products or
marketing concepts, the merit of technological changes, and numerous other
factors which are difficult, if not impossible, to analyze through the
application of any objective criteria. In many instances, it is anticipated that
the historical operations of a specific firm may not necessarily be indicative
of the potential for the future because of the requirement to substantially
shift marketing approaches, obtain additional capital, change product emphasis,
change or substantially augment management, or make other changes. Because the
Company may participate in a Business Combination with a newly organized firm or
with a firm which is entering a new phase of growth, it should be emphasized
that the Company may incur further risks in view of the fact that the management
9
<PAGE>
of the Target Company to be acquired, in many instances, will not have proven
its abilities or effectiveness, the eventual market for such firm's products or
services will likely not be established, and the profitability of the firm will
be unproven, uncertain and unpredictable.
In seeking Business Combination opportunities, the Company's decision will not
be controlled by an attempt to time anticipated enthusiasm in the securities
market for a specific industry, management group or product or service industry,
although such factors may influence the Company significantly. The Company will
attempt to base its decisions upon the objective of seeking long-term capital
appreciation in the value of the Company and may consider current income as only
a minor factor in such decision. No assurance can be given as to which factors
will affect the final decision, nor that the Target Company selected will
achieve the desired objective of capital appreciation.
Generally, the Company will analyze all available factors which it deems
relevant and material and make a determination without reliance upon any single
factor as controlling. The Company is unable to predict when it may participate
in a business opportunity. It expects, however, that the analysis of specific
proposals and the selection of a Target Company may take several months or more.
Form of Acquisition
It is impossible to predict the manner in which the Company may participate in a
Business Combination. Specific Business Combination opportunities will be
reviewed as well as the respective needs and desires of both the Company and the
business to be acquired and the legal structure or method which is deemed
suitable. Such structure may include but is not limited to a lease, a purchase
acquisition for shares of New Common Stock or other securities, a merger,
license, joint venture or other contractual arrangement. The Company may act
directly or indirectly through an interest in a partnership, corporation or
other form of organization. Implementing such structure may require the merger,
consolidation or reorganization of the Company with such other corporation or
form of business organization, and there is no assurance that the Company would
be the surviving entity. In addition, management and the holders of New Common
Stock prior to a Business Combination may be expected to not have control of a
majority of the voting shares of the Company following any such transaction. As
part of such a transaction, the Company's officers and directors may be required
to resign and new officers and directors may be expected to be appointed,
without any vote by the holders of New Common Stock prior to such transaction.
The Company may be presented with Business Combination opportunities from firms
interested primarily in the fact that the Company's New Common Stock is publicly
traded. Businesses which seek the Company's participation in attempting to
consolidate their operations through a reorganization, asset acquisition or some
other form such as a joint venture, operating arrangement, securities exchange
10
<PAGE>
or consolidation, may desire to do so to avoid what such firms may deem to be
uncertainties, risks and potential adverse consequences of themselves
undertaking a public offering. Such adverse factors may include time delays
encountered in obtaining clearances pursuant to applicable federal and state
laws for the benefit of purchasers of securities which are believed to be
required prior to the offer and sale of securities, or be acceptable to an
underwriter in a public offering.
The Company may acquire a Target Company by conducting an acquisition, merger,
consolidation or reorganization. It is likely that such a transaction will
involve the issuance of New Common Stock or other securities in the Company.
This would result in substantial additional dilution to the equity of those who
were shareholders of the Company prior to such reorganization. It is anticipated
that any securities issued in any such reorganization would be issued in
reliance upon exemptions from registration under applicable federal and state
securities laws. In some circumstances, however, as a negotiated element of the
transaction, the Company may agree to register such securities either at the
time of the transaction is consummated or under certain conditions or at
specified times thereafter. The issuance of substantial additional securities
and their potential sales into any trading market which may develop in the
Company's securities may have a depressive effect on such market. The Company
has the right to issue such additional shares without shareholder approval.
If structured as an acquisition, the transaction may be accomplished upon the
sole determination of management without any vote or approval by holders of New
Common Stock. If structured as a statutory merger or consolidation, it may be
necessary to call a shareholder's meeting and obtain the approval of the holders
of a majority of the outstanding shares. The necessity to obtain such
shareholder approval may result in delay and additional expense in the
consummation of any proposed transaction, and will also give rise to certain
appraisal rights to dissenting shareholders. Most likely, management will seek
to structure any transaction to avoid requiring shareholder approval.
It is anticipated that the investigation of a specific Target Company and the
negotiation, drafting and execution of relevant agreements, disclosure documents
and other instruments will require substantial management time and attention and
substantial costs for accountants, attorneys and others. If a decision is made
not to participate in a specific Business Combination, the costs theretofore
incurred would not be recoverable. Furthermore, even if an agreement is reached
for the participation in a specific Business Combination, the failure to
consummate that transaction may result in the loss to the Company of the related
costs incurred.
In connection with an acquisition, the Company may incur substantial
indebtedness which will substantially change the capital structure of the
Company and would most likely expose the Company's shareholders to a greater
risk of loss in the event of financial difficulty.
The Company intends to attempt to acquire one or more Target Companies. The
Company has no oral or written agreement nor are any negotiations under way
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regarding a possible Business Combination. The Company will conduct a search to
locate one or more Business Combinations which are expected to take the form of
one of the two following transaction types (and possibly both of the transaction
types):
Reverse Merger Type Transaction
Under a reverse merger type transaction, the Company would issue a
number of its common shares that would result in the Target Company assuming
voting control of the Company after the consummation of a transaction.
Other Possible Forms of a Transaction
Although a reverse merger transaction is the most common form of a
transaction for a public company possessing no assets, the Company also
intends to explore the possibility of acquiring through a merger,
acquisition, or some other type of transaction, a business whereby
shareholders of the Company would retain a larger share of the Company after
the transaction than would be the case under a reverse merger type
transaction. Such a transaction would require the Company to raise equity
and perhaps debt financing which would dilute the equity of the shareholders
of the Company in connection with the consummation of the transaction.
Facilities
The Company will initially be headquartered at the offices of Colmen Menard
Company, Inc. ("Colmen Menard") at 111 Presidential Boulevard, Suite 240, Bala
Cynwyd, Pennsylvania 19004, telephone 610-667-9050, fax 610-667-9915. Colmen
Menard, which is owned by the Principal Stockholder, has agreed to provide, for
the foreseeable future, offices, facilities and secretarial and administrative
services without cost to the Company.
Employees
The Company does not have any paid employees.
MANAGEMENT
David W. Menard will initially be the sole director and officer of the Company.
With his spouse, Mr. Menard will also be the owner of 85% of the outstanding
shares of the Company's New Common Stock. In the future, it is possible that
additional directors and officers will be selected.
David W. Menard is founder, principal shareholder, President and CEO of Colmen
Menard Company, a private investment banking firm founded in 1993, that provides
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merger and acquisition, corporate finance and business advisory services. David
W. Menard was co-founder, President and a fifty percent shareholder of a
predecessor affiliate founded in 1983. During the past fifteen years, David W.
Menard has managed and overseen, in the role of an intermediary, over one
hundred merger and acquisition transactions.
Prior to 1983, David W. Menard was employed, chronologically, in a variety or
primarily accounting, financial and general management positions with Price
Waterhouse (accounting/management consulting), W. R. Grace & Co.
(controllership/planning/acquisitions), First Jersey National Corporation - now
part of Fleet Financial Group (Vice President - Finance and CFO), and IU
International Corporation (Vice President and CFO of Gotaas-Larsen Shipping
Corporation/Corporate Vice President of Audit Services).
David W. Menard obtained a BS in economics from Cornell University and an MBA in
accounting and finance from the Johnson Graduate School of Management at Cornell
University. He completed the Harvard Business School Corporate Financial
Management Program. He is a Certified Public Accountant in New York State. He is
sixty-one years of age.
PRINCIPAL STOCKHOLDERS
Upon its emergence from bankruptcy, the Company will be a public Company whose
shares will be owned by approximately 500 stockholders. However, a portion of
the shares will be held in street name. As a result, the Company is not able to
determine the precise number of actual stockholders.
Pursuant to the Plan, the outstanding shares of New Common Stock of the Company
will be 85% owned jointly by David W. Menard and Jacqueline J. Menard, 10% owned
by the existing Food Court stockholders, and 5% owned by the Food Court
unsecured creditors.
After the Effective Date, the Principal Stockholder intends, for the foreseeable
future, to advance to the Company such funds as are necessary for the Company to
comply with its reporting requirements under any applicable federal and state
securities laws, and to file all required federal, state and local tax returns.
The Principal Stockholder estimates that these expenses will aggregate
approximately $50,000 during the first year. It is anticipated that such
advances will be accrued as a liability of the Company to the Principal
Stockholder to be repaid by the Company upon consummation of a Business
Combination, unless otherwise determined between the Company and the Principal
Stockholder. The Principal Stockholder may, however, discontinue such advances
at any time it its sole discretion.
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DESCRIPTION OF CAPITAL STOCK
Pursuant to the Plan, the authorized capital stock of the Company will consist
of 25,000,000 shares of New Common Stock, par value $.001 per share, and
5,000,000 shares of preferred stock, par value $.001 per share (the "Preferred
Stock"). The following statements relating to the capital stock are summaries
and do not purport to be complete. Reference is made to the more detailed
provisions of, and such statements are qualified in their entirety by reference
to, the Certificate of Incorporation (the "Certificate") and the By-laws, copies
of which are available from the Company upon request.
Common Stock
Holders of New Common Stock will be entitled to one vote per share with respect
to all matters required by law to be submitted to holders of New Common Stock.
The New Common Stock will not have cumulative voting rights. The By-laws provide
that any action required to be taken or that may be taken at an annual or
special meeting of stockholders may be taken by written consent in lieu of a
meeting of stockholders.
Subject to the prior rights of holders of Preferred Stock, if any, holders of
the New Common Stock will be entitled to receive such dividends as may be
lawfully declared by the Board of Directors. Upon any dissolution, liquidation
or winding up, whether voluntary or involuntary, holders of the New Common Stock
are entitled to share ratably in all assets remaining after the liquidation
payments have been made on all outstanding shares of Preferred Stock, if any.
Upon the Effective Date, the shares of the New Common Stock to be issued
pursuant to the Plan will be fully paid and nonassessable. The New Common Stock
will not have any preemptive, subscription or conversion rights. The Board of
Directors has the authority to issue additional shares of New Common Stock. The
Board's ability to issue additional shares of New Common Stock could facilitate
certain financings and acquisitions and provide a means for meeting other
corporate needs that might arise. The authorized but unissued shares of New
Common Stock will be available for issuance without further action by the
stockholders, unless stockholder action is required by applicable law or the
rules of any stock exchange or system on which the New Common Stock may then be
listed. The Board's ability to issue additional shares of New Common Stock
could, under certain circumstances, either impede or facilitate the completion
of a merger, tender offer or other takeover attempt.
Preferred Stock
The Company is authorized to issue up to 5,000,000 shares of Preferred Stock
without further stockholder approval. The shares of Preferred Stock may be
issued in one or more series, with the number of shares of each series and the
rights, preferences and limitations of each series to be determined by the Board
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of Directors. Among the specific matters that may be determined by the Board of
Directors are dividend rights, if any, redemption rights, if any, the terms of a
sinking or purchase fund, if any, the amount payable in the event of any
voluntary liquidation, dissolution or winding up of the affairs of the Company,
conversion rights, if any, and voting powers, if any.
The issuance of shares of Preferred Stock, or the issuance of rights to purchase
such shares, could be used to discourage an unsolicited acquisition proposal.
For instance, the issuance of a series of Preferred Stock might impede a
transaction including class voting rights that would enable the holder to block
such a transaction, or facilitate a transaction by including voting rights that
would provide a required percentage vote of the stockholders. In addition, under
certain circumstances, the issuance of Preferred Stock could adversely affect
the voting power of the holders of the New Common Stock. Although the Board of
Directors is required to make any determination to issue such stock based on its
judgment as to the best interests of the stockholders, the Board of Directors
could act in a manner that would discourage an acquisition attempt or other
transaction that some, or a majority, of the stockholders might believe to be in
their best interests or in which stockholders might receive a premium for their
stock over the then market price of such stock. The Board of Directors does not
at present intend to seek stockholder approval prior to any issuance of
currently authorized stock, unless otherwise required by law or stock exchange
rules. The Company has no present plans to issue any Preferred Stock.
PLAN OF DISTRIBUTION OF NEW COMMON STOCK
General
Pursuant to the Plan, 5,000,000 shares of New Common Stock will be issued as
follows:
Percentage of
Group Number of Shares Outstanding Shares
----- ---------------- ------------------
David W. & Jacqueline J. Menard 4,250,000 85%
Existing Food Court Stockholders 500,000 10%
Food Court Unsecured Creditors 250,000 5%
--------- ---
TOTAL 5,000,000 100%
========= ===
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Amendment of Certificate of Incorporation and/or By-Laws
The Company may, on or prior to the Effective Date, amend its Certificate of
Incorporation and/or By-Laws as necessary to effectuate the terms and provisions
of the Plan.
Rounding of Fractional Shares
Only whole numbers of shares of New Common Stock will be distributed. All
Allowed Claims or Allowed Interests of a holder in a particular Class will be
aggregated and treated as an Allowed Claim or Allowed Interest for purposes of
distribution. If any calculated distribution on account of such Allowed Claim or
Allowed Interest would otherwise result in the distribution of a number of New
Common Stock that is not a whole number, then the actual distribution of shares
of such stock or such warrants will be rounded to the nearest whole number.
Holders of Allowed Claims or Allowed Interests that would be entitled to
fractional shares of New Common Stock but for this provision shall receive no
consideration therefor because such amount would be de minimis.
"Unclaimed Distribution" Procedure
In an effort to diminish the number of unclaimed plan distributions,
resulting inadvertently from invalid mailing addressed and/or lack of knowledge
of being a holder of an Allowed Claim or Interest, and in compliance with Rule
17AD-17 and Rule 17a-24 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), Menard will file with the Bankruptcy Court a listing of
unclaimed distribution holders on the second, third and fourth anniversary of
the Effective Date. This procedure allows the Reorganized Debtor to use
reasonable efforts to ascertain correct mailing information during the first two
years after the Effective Date and then provide unclaimed distribution
information in a public forum, thereby increasing the possibility of notice of
an unclaimed distribution to previously "lost" Claim or Interest holders.
Applicability of Federal and Other Securities Laws to the New Securities to Be
Distributed under the Plan
The shares of New Common Stock to be issued on the Effective Date to the
Existing Food Court stockholders and the Food Court unsecured creditors will be
issued pursuant to the exemption from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act") (and of equivalent
state securities or "blue sky" laws) provided by section 1145(a)(1) of the
Bankruptcy Code. Generally, section 1145(a)(1) of the Bankruptcy Code exempts
from the registration requirements of the Securities Act and equivalent state
securities and "blue sky" laws the issuance of securities if the following
conditions are satisfied: (a) the securities are issued by a debtor (or its
successor) under a chapter 11 plan; (b) the recipients of the securities hold a
claim against, an interest in, or a claim for an administrative expense against,
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<PAGE>
the debtor and (c) the securities are issued entirely in exchange for the
recipient's claim against or interest in the debtor or are issued "principally"
in such exchange and "partly" for cash or property. The Debtor believes that the
issuance of the New Common Stock will satisfy the aforementioned requirements.
The New Common Stock may be resold by the holders thereof without
registration unless, as more fully described below, any such holder is deemed to
be an "underwriter" with respect to such securities, as defined in section
1145(b)(1) of the Bankruptcy Code. Generally, section 1145(b)(1) of the
Bankruptcy Code defines an "underwriter" as any person who (a) purchases a claim
against, or interest in, a bankruptcy case, with a view towards the distribution
of any security to be received in exchange for such claim or interest, (b)
offers to sell securities issued under a bankruptcy plan on behalf of the
holders of such securities, (c) offers to buy securities issued under a
bankruptcy plan from persons receiving such securities, if the offer to buy is
made with a view towards distribution of such securities and under an agreement
made in connection with the plan, with the consummation of the plan or with the
offer of sale of securities under the plan, or (d) is an issuer within the
meaning of Section 2(11) of the Securities Act. Although the definition of the
term "issuer" appears in Section 2(4) of the Securities Act, the reference
(contained in Section 1145(b)(1)(D) of the Bankruptcy Code) to Section 2(11) of
the Securities Act purports to include as "underwriters" all persons who,
directly or indirectly, through one or more intermediaries, control, are
controlled by, or are under common control with, an issuer of securities.
"Control" (as such term is defined in Rule 405 of Regulation C under the
Securities Act) means the possession, direct or indirect, of the power to direct
or cause the direction of the policies of a person, whether through the
ownership of voting securities by contract, or otherwise.
The shares of New Common Stock to be issued on the Effective Date to the
Principal Stockholder will be issued pursuant to the exemption from the
registration requirements of the Securities Act provided by Section 4(2) of the
Securities Act as a private placement transaction, and such shares will be
"restricted securities" as defined under the Securities Act (and the rules
promulgated thereunder).
Resales of Restricted Securities
Rule 144A, promulgated under the Securities Act, provides a non-exclusive
safe harbor exemption from the registration requirements of the Securities Act
for resales to certain "qualified institutional buyers" of securities which are
"restricted securities" within the meaning of the Securities Act, irrespective
of whether the seller of such securities purchased its securities with a view
towards reselling such securities under the provisions of Rule 144A. Under Rule
144A, a "qualified institutional buyer" is defined to include, among other
Persons, any entity which purchases securities for its own account or for the
account of another qualified institutional buyer and which (in the aggregate)
owns and invests on a discretionary basis at least $100 million in the
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<PAGE>
securities of unaffiliated issuers. Subject to certain qualifications, Rule 144A
does not exempt the offer or sale of securities which, at the time of their
issuance, were securities of the same class of securities then listed on a
national securities exchange (registered as such under the Exchange Act), or
quoted in a U.S. automated inter-dealer quotation system (e.g., NASDAQ). The
Debtor intends to make available to holders of New Common Stock such financial
information as may be required to enable such holders to meet the financial
information delivery requirements of Rule 144A.
To the extent that Rule 144A is unavailable, holders of New Common Stock
may, under certain circumstances, be able to sell their securities pursuant to
the more limited safe harbor resale provisions of Rule 144 under the Securities
Act. Generally, Rule 144 provides that if certain conditions are met (e.g.,
one-year holding period with respect to "restricted securities," volume
limitations, manner of sale, availability of current information about the
issuer, etc.), specified persons who (i) resell "restricted securities" or (ii)
resell securities which are not restricted but who are "affiliates" of the
issuer of the securities sought to be resold, will not be deemed to be
"underwriters" as defined in Section 2(11) of the Securities Act. Under
paragraph (k) of Rule 144, the aforementioned conditions to resale will no
longer apply to restricted securities sold for the account of a holder of New
Common Stock who is not an affiliate of the Reorganized Debtor at the time of
such resale and who has not been such during the three-month period next
preceding such resale, so long as a period of at least two years has elapsed
since the later of (i) the Effective Date and (ii) the date on which such holder
of New Common Stock acquired his or its securities from an affiliate of the
Debtor. The Securities and Exchange Commission has taken the position in
no-action letters that the holding period requirement set forth in Rule 144(d)
is not applicable to holders of securities issued pursuant to section 1145 of
the Bankruptcy Code.
Under section 1145(a)(4) of the Bankruptcy Code, stockbrokers are required
to deliver a copy of this Supplemental Disclosure Statement (and supplements
hereto, if any, if ordered by the Bankruptcy Court) at or before the time of
delivery of securities issued under the Plan to their customers for the first 40
days after the Effective Date. This requirement specifically applies to trading
and other aftermarket transactions in such securities.
THE FOREGOING SUMMARY DISCUSSION IS GENERAL IN NATURE AND HAS BEEN INCLUDED
IN THIS SUPPLEMENTAL DISCLOSURE STATEMENT SOLELY FOR INFORMATIONAL PURPOSES. THE
DEBTOR DOES NOT MAKE ANY REPRESENTATIONS CONCERNING, AND DO NOT PROVIDE ANY
OPINION OR ADVICE WITH RESPECT TO, THE SECURITIES LAW AND BANKRUPTCY LAW MATTERS
DESCRIBED ABOVE. THE DEBTOR ENCOURAGES EACH PERSON WHO IS TO RECEIVE NEW COMMON
STOCK PURSUANT TO THE PLAN TO CONSIDER CAREFULLY AND CONSULT WITH HIS, HER OR
ITS OWN LEGAL ADVISOR(S) WITH RESPECT TO SUCH (AND ANY RELATED) MATTERS, IN VIEW
OF THE UNCERTAINTY CONCERNING THE AVAILABILITY OF EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND EQUIVALENT STATE SECURITIES
18
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AND "BLUE SKY" LAWS TO A RECIPIENT OF NEW COMMON STOCK WHO MAY BE DEEMED TO BE
AN "UNDERWRITER" (WITHIN THE MEANING OF BANKRUPTCY CODE SECTION 1145(B)(1)
AND/OR AN "AFFILIATE" OF, OR A PERSON WHO EXERCISES "CONTROL" OVER, THE DEBTOR
UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS.
19
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
FOOD COURT ENTERTAINMENT NETWORK, INC.
Food Court Entertainment Network, Inc., a corporation organized and
existing under the laws of the State of Delaware (the "Corporation"), hereby
certifies that:
1. The present name of the Corporation is Food Court Entertainment Network,
Inc.
2. The Corporation was originally formed as Advanced Media Inc., by filing
a certificate of incorporation with the Secretary of State of the State of
Delaware on February 12, 1992. On April 29, 1992, the Corporation filed a
Certificate of Amendment of Certificate of Incorporation whereby its name was
changed to Applebell Communications, Inc. On October 15, 1993 the Corporation
filed an Amended and Restated Certificate of Incorporation whereby, among other
amendments, the name of the Corporation was changed to Food Court Entertainment
Network, Inc. On November 12, 1993 and September 29, 1995, the Corporation filed
amendments to the Amended and Restated Certificate of Incorporation whereby,
among other matters, certain changes were made to the Corporation's capital
stock. On October 16, 1995, the Corporation filed another Amended and Restated
Certificate of Incorporation whereby, among other amendments, certain changes
were made to the Corporation's capital stock. On November 12, 1996, the
Corporation filed an amendment to its Amended and Restated Certificate of
Incorporation whereby the number of authorized shares of Capital Stock was
increased.
3. The First paragraph of the Corporation's Amended and Restated
Certificate of Incorporation is hereby amended and restated in its entirety to
read as follows:
FIRST: The name of the Corporation is Moro Corporation (the "Corporation").
4. The Fourth paragraph of the Corporation's Amended and Restated
Certificate of Incorporation is hereby amended and restated in its entirety as
follows:
FOURTH: (a) Capital Stock. The total number of shares of all classes of
stock which the Corporation shall have authority to issue is 30,000,000 shares,
consisting of 5,000,000 shares of Preferred Stock, par value $.001 per share
(the "Preferred Stock"), as more fully described below and 25,000,000 shares of
Common Stock, par value $.001 per share (the "Common Stock").
<PAGE>
(b) Preferred Stock. The shares of Preferred Stock may be divided and
issued from time to time in one or more series as may be designated by the Board
of Directors of the Corporation, each such series to be distinctly titled and to
consist of the number of shares designated by the Board of Directors. All shares
of any one series of Preferred Stock so designated by the Board of Directors
shall be alike in every particular, except that shares of any one series issued
at different times may differ as to the dates from which dividends thereon (if
any) shall accrue or be cumulative (or both). The designations, preferences and
relative, participating, optional or other special rights (if any), and the
qualifications, limitations or restrictions thereof (if any), of any series of
Preferred Stock may differ from those of any and all other series at any time
outstanding. The Board of Directors of the Corporation is hereby expressly
vested with authority to fix by resolution the powers, designations, preferences
and relative, participating, optional or other special rights (if any), and the
qualifications, limitations or restrictions and (if any), of the Preferred Stock
and each series thereof which may be designated by the Board of Directors,
including, but without limitation the generality of the foregoing, the
following:
(i) The voting rights and powers (if any) of the Preferred Stock and
each series thereof;
(ii) The rates and times at which, and the terms and conditions on
which, dividends (if any) on the Preferred Stock, and each series thereof,
will be paid and any dividend preferences or rights of cumulation.
(iii) The rights (if any) of holders of the Preferred Stock, and each
series thereof, to convert the same into, or exchange the same for, shares
of other classes (or series of classes) of capital stock of the Corporation
and the terms and conditions for such conversion or exchange, including
provisions for adjustment of conversion or exchange prices or rates in such
events as the Board of Directors shall determine;
(iv) The redemption rights (if any) of the Corporation and of the
holders of the Preferred Stock, and each series thereof, and the times at
which, and the terms and conditions on which, the Preferred Stock and each
series thereof, may be redeemed; and
(v) The rights and preferences (if any) of the holders of the
Preferred Stock, and each series thereof, upon the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation.
(c) Prohibition on Issuance of Nonvoting Capital Stock. The Corporation
will not issue nonvoting capital stock to the extent prohibited by Section
1123(a)(6) of Title 11 of the United States Code (the "Bankruptcy Code");
provided, however, that this paragraph (c),: (i) will have no further force and
effect beyond that required under Section 1123 of the Bankruptcy Code, (ii) will
have such force and effect, if any, only for so long as such Section is in
effect and applicable to the Corporation, and (iii) in all events may be deemed
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<PAGE>
void or eliminated in accordance with applicable law as from time to time in
effect.
(d) No Cumulative Voting. The stockholders of the Corporation shall not be
entitled to cumulate their votes in the election of directors.
5. This Certificate of Amendment was duly adopted by the Corporation in
accordance with the provisions of Section 242 and Section 303 of the General
Corporation Law of the State of Delaware pursuant to the authority of the United
States Bankruptcy Court, District of Delaware, by Order (dated May 7, 1999)
Confirming Debtor's First Modified Chapter 11 Plan of Reorganization (In Re:
Food Court Entertainment Network, Inc., Debtor, Case No. 98-1889).
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed on its behalf this 7th day of June, 1999:
By: /s/ David W. Menard
-----------------------------------------
David W. Menard, President and Secretary
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