EXHIBIT 10.30
SETTLEMENT AND COMPROMISE AGREEMENT
This Settlement and Compromise Agreement (hereinafter the "Agreement")
is entered into as of August 17, 2001, by and among the entities listed on
Exhibit "A" hereto; (collectively, the "Debtors"), The Chase Manhattan Bank as
agent (the "Agent") for PNC Bank, N.A., ▇▇▇▇▇ Fargo Bank, N.A., CIBC, Inc.,
Michigan National Bank (as assignee from Mellon Bank, N.A.), and itself
(collectively, the "Bank Group") and the Official Committee of Creditors Holding
Unsecured Claims (the "Committee", and, collectively with the Debtors and the
Bank Group, the "Parties") in the chapter 11 cases of the Debtors, with
reference to the following facts and recitals:
A. The Debtors are the debtors and debtors in possession in cases
(the "Bankruptcy Cases") pending under chapter 11 of Title 11 of the United
States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for
the Central District of California, San ▇▇▇▇▇▇▇▇ Valley Division (the "Court"),
that are jointly administered under Case No. SV 00-13471-KL. The Debtors filed
their voluntary petitions that commenced the Bankruptcy Cases on April 6, 2000
(the "Petition Date").
B. Prior to the Petition Date, certain of the Debtors, the Bank
Group, and ING Equity Partners, L.P. I ("ING") were parties to a series of
agreements pursuant to which certain of the Debtors obtained financing from the
Bank Group and ING, certain of the Debtors guaranteed the primary obligors'
indebtedness to the Bank Group and ING, and certain of the Debtors granted
security interests to the Bank Group and ING in virtually all of such Debtors'
assets. These agreements include, among others, the "Amended and Restated Credit
Agreement Dated as of August 14, 1997, among ▇▇▇▇▇▇▇▇ Studio Equipment Group,
▇▇▇▇▇▇▇▇ Studio Equipment, Inc., Hollywood Rental Co., Inc., ▇▇▇▇▇▇▇▇ Acceptance
Corporation, Duke City Video, Inc., Certain Guarantors Named Therein, Certain
Lenders Named Therein, and The
Chase Manhattan Bank, As Agent"; the "Amended and Restated Credit Agreement
Among ▇▇▇▇▇▇▇▇ Studio Equipment Group, ▇▇▇▇▇▇▇▇ Studio Equipment, Inc.,
Hollywood Rental Co., Inc., ▇▇▇▇▇▇▇▇ Acceptance Corporation, Duke City Video,
Inc., HDI Holdings, Inc., Four Star Lighting, Inc., Certain Guarantors Named
Therein, Certain Lenders Named Therein and The Chase Manhattan Bank, As Agent,
Dated as of April 1, 1998"; and "▇▇▇▇▇▇▇▇ Studio Equipment Group $10,000,000
Convertible Subordinated Note to ING Equity Partners, L.P. I June 30, 1999".
C. In April 1998, the Debtors borrowed approximately $27 million
from the Bank Group to acquire the stock of Four Star Holding, Inc. and Four
Star Lighting, Inc. ("Four Star"). Each of the then existing Debtor affiliates
guaranteed this indebtedness to the Bank Group and pledged their respective
assets as security. The Committee contends that the security interests that the
Bank Group asserts to secure this indebtedness may be avoidable as fraudulent
conveyances pursuant to 11 U.S.C. (S) 544(b) and may be preserved against ING
and others for the benefit of the Debtors' estates pursuant to 11 U.S.C. (S)
551. The Bank Group disputes this contention and maintains, in the alternative,
that even if it were true, the remaining portion of the Bank Group debt is
valid, the liens securing such debt are unavoidable and the amount of such
remaining debt far exceeds the value of the estates and that it would be
entitled to all of the proceeds from the liquidation of its claimed collateral.
D. The Debtors proposed to sell the assets of some of the Debtor
entities, namely, ▇▇▇▇▇▇▇▇ Studio Equipment Group, Hollywood Rental Company,
LLC, HDI Holdings, Inc., and ▇▇▇▇▇▇▇▇ Studio Sales (collectively, "HRC"), to
Hollywood Rentals Production Services, LLC (the "HRC Sale"). The Court approved
the HRC Sale on January 4, 2001. The Bank Group asserted that it was entitled
to receive all of the proceeds of the HRC Sale, including all interest earned on
such funds while held by the Debtors, (the "HRC Proceeds") and requested that
the Court direct the Debtors to pay the HRC Proceeds to the Bank Group upon the
close of the HRC Sale. The HRC Sale closed as of January 23, 2001. Because the
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Committee disputes the validity of the Bank Group's liens on HRC's assets, the
Committee opposed the payment of the HRC Proceeds to the Bank Group. The Court
entered an Order approving the payment to the Bank Group of one-third of the net
proceeds of the HRC Sale, and the Debtors have paid that amount to the Agent.
E. The Debtors proposed to sell the assets of Debtor Four Star to
Four Star Acquisition Company, LLC (the "Four Star Sale"). The Court approved
the Four Star Sale on or about May 15, 2001. The Bank Group asserted that it was
entitled to receive all of the proceeds of the Four Star Sale, including all
interest earned on such funds while held by the Debtors (the "Four Star
Proceeds" and together with the HRC Proceeds, the "Sale Proceeds"). Because the
Committee disputes the validity of the Bank Group's liens on the Four Star's
assets, the Committee opposed the payment of the Four Star proceeds to the Bank
Group. The Order approving the Four Star Sale provided that one-third of the net
proceeds of the Four Star Sale were to be paid to the Agent for the benefit of
the Bank Group. That portion of the Four Star Proceeds have been paid to the
Agent.
F. The Debtors have undertaken an analysis of payments made to
unsecured creditors during the ninety days preceding the Petition Date. The
Debtors shared with the Parties an analysis from ASK Financial Services
indicating that approximately $6.9 million of payments made by Duke City Video,
Inc. and Duke City Holdings, Inc. (collectively, the "Duke City Debtors") and
approximately $4.7 million in payments made by the Debtors other than the Duke
City Debtors (the "Non-Duke City Debtors") could be avoidable as preferences
pursuant to section 547 of the Bankruptcy Code (respectively, the "Duke City
Preference Recovery Claims" and "Non-Duke City Preference Recovery Claims," and,
collectively, the "Preference Recovery Claims"). Some of the Creditors who
received payments that might be avoidable as preferences are members of the
Committee. As a result, the Committee undertook its own analysis of some of the
payments made by the Non-Duke City Debtors, including those made to Committee
members, and has concluded that the Debtors' analysis of
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the payments made by the Non-Duke City Debtors and the analysis conducted by ASK
Financial Services failed to take into account the extent to which these
payments represented contemporaneous exchanges of new consideration, were in the
ordinary course of business, or were followed by a creditor's extension of new
credit on an unsecured basis to one or more of the Non-Duke City Debtors.
Therefore, the Committee believes that, pursuant to section 547(c) of the
Bankruptcy Code, most of the payments included in the Non-Duke City Debtors'
preference analysis would not be avoidable. Based upon this analysis, the
Committee believes that the filing of actions to recover alleged Non-Duke City
Preference Recovery Claims would result in very modest recoveries and would
create significant expense to the creditors who received such payments that
would not be offset by amounts recovered by the Non-Duke City Debtors' estates.
The Debtors and the Bank Group disagree with the Committee's conclusions but
agree to compromise the Non-Duke City Preference Actions on the terms of this
Agreement.
G. As of July 24, 2001, the Debtors held approximately $ 18,863,500
of cash in the estates, not including amounts in the Existing Fee Reserve. The
Bank Group maintains that the Debtors do not have any equity in property of the
estates, including the above-referenced cash, that such property is not
necessary to an effective reorganization and that, accordingly, the Bank Group
is entitled to relief from the automatic stay to foreclose upon such property
forthwith, in satisfaction of the Bank Group's claims. The Committee disputes
some of these contentions.
H. The Committee, the Debtors and the Bank Group desire to resolve
all disputes which exist among them relating to (i) the amount of the Debtors'
indebtedness to the Agent and the Bank Group, and any setoffs, counterclaims or
defenses to such indebtedness, (ii) the validity or invalidity of the Bank
Group's security interests on the Debtors' assets, including, without
limitation, the Sale Proceeds, (iii) the distribution of the Sale Proceeds and
the proceeds from the sale of the Debtors' other assets, (iv) the prosecution or
waiver of the Preference Recovery Claims, and (v) the payments to be made by the
Debtors to creditors
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based upon enforcement of any of the Preference Recovery Claims. In furtherance
of that objective, and in consideration of the following mutual promises, the
Committee, the Debtors and the Bank Group enter into the Agreement set forth
below.
NOW, THEREFORE, the Parties hereto hereby agree as follows:
1. Definitions. "Accrued Liability Reserve" shall have the meaning
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given to such term in the definition of "Administrative Reserve".
b. "Administrative Reserve" shall mean the amount of $700,000
of the Sale Proceeds retained by the Debtors for the purposes set forth in
section 4 hereof. The Administrative Reserve shall be allocated into three
sub-reserves: (i) the "Administrative Operating Reserve" in the amount of
$250,000 (ii) the "Accrued Liability Reserve" in the amount of $ 375,000;
and (iii) the "Unsecured Claim Expense Reserve" in the amount of $75,000.
c. "Administrative Operating Reserve" shall have the meaning
given to such term in the definition of "Administrative Reserve".
d. "Agent" shall have the meaning given to such term in the
Preamble to this Agreement.
e. "Allowed Administrative Expenses" shall have the meaning
given to such term in section 4b(1) hereof.
f. "Allowed Priority Claims" shall mean the pre-petition
unsecured claims against the Debtors which are entitled to priority
pursuant to 11 U.S.C. (S)(S)507(a)(3) - (8) and, as to which, no objection
is asserted by the applicable deadline therefor or, if an objection is
filed, such claim is thereafter allowed by a Final Order of the Court.
g. "Bank Group" shall have the meaning given to such term in
the Preamble to this Agreement.
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h. "Bankruptcy Cases" shall have the meaning given to such term
in Recital A above, and shall include any chapter 7 case which supersedes
any of the pending cases under chapter 11.
i. "California State BOE Claim" shall mean that certain
priority tax claim filed by the California State Board of Equalization in
the amount of $617,000.
j. "Closing Date" shall mean the first business day after the
satisfaction of all conditions precedent to the effectiveness of this
Agreement.
k. "Collateral" shall mean all of the property owned by any of
the Debtors on which the Agent and the Bank Group have a lien or security
interest to secure the pre-petition indebtedness of the Debtors to the
Agent and the Bank Group.
l. "Committee" shall have the meaning given to such term in the
Preamble to this Agreement.
m. "Compromise Order" shall have the meaning given to such term
in section 9a hereof.
n. "Court" shall have the meaning given to such term in the
Recital A above.
o. "Debtors" shall have the meaning given to such term in the
Preamble to this Agreement, and consists of the Duke City Debtors and the
Non-Duke City Debtors.
p. "Duke City Debtors" shall have the meaning given to such
term in Recital F above.
q. "Duke City Preference Recovery Claim" shall have the meaning
given to such term in Recital F above.
r. "Duke City Allocated Proceeds" shall mean the first $1.2
million of proceeds from certain assets of Duke City Video, Inc. as
described more particularly in
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paragraph 8 of that certain Order re Use of Cash Collateral and Adequate
Protection entered by the Court on May 31, 2000.
s. "Existing Fee Reserve" shall have the meaning given to such
term in section 4b(6) hereof.
t. "Filing Deadline" shall have the meaning given to such term
in section 2 hereof.
u. "Final Order," shall mean, with respect to any order, such
order has become final and is not subject to a timely appeal, or if an
appeal is filed timely with respect to such Order, the earlier of (i) the
date such appeal is finally resolved and no further appeals are pending and
(ii) the date the Parties hereto mutually waive the requirement that such
Order become a Final Order.
v. "Four Star" shall have the meaning given to such term in
Recital C above.
w. "Four Star Proceeds" shall have the meaning given to such
term in Recital E above.
x. "Four Star Sale" shall have the meaning given to such term
in Recital E above.
y. "General Unsecured Creditors" shall mean creditors of any of
the Debtors with respect to their pre-petition unsecured non-Priority
Claims against any of the Debtors or unsecured deficiency claims of holders
of secured claims, but excluding any claims of the Bank Group, any of its
members, successors or assigns, and any claims of ING.
z. "HRC" shall have the meaning given to such term in Recital D
above.
aa. "HRC Proceeds" shall have the meaning given to such term in
Recital D above.
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bb. "HRC Sale" shall have the meaning given to such term in
Recital D above.
cc. "Interim Sale Proceed Payments" shall have the meaning given
to such term in the definition of Net Sale Proceeds in section 1ee hereof.
dd. "Management Fees" shall have the meaning given to such term
in section 4b(2) hereof.
ee. "Net Sale Proceeds" shall mean the Sale Proceeds less the
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amount of all payments made by the Debtors from Sale Proceeds prior to the
date hereof, consisting of the direct costs incurred and paid by the
Debtors in connection with the HRC Sale or the Four Star Sale and the
payments to the Agent and the Bank Group of one-third of the net proceeds
of each of the HRC Sale and the Four Star Sale, plus certain interest
accrued on such funds, (the "Interim Sale Proceed Payments").
ff. "Non-Duke City Debtors" shall have the meaning given to such
term in Recital F above.
gg. "Non-Duke City Preference Recovery Claims" shall have the
meaning given to such term in Recital F above.
hh. "Parties" shall have the meaning given to such term in the
Preamble to this Agreement.
ii. "Petition Date" shall have the meaning given to such term in
Recital A above.
jj. "Preference Recovery Claim" shall have the meaning given to
such term in Recital F above.
kk. "Priority Claim Reserve" shall mean the amount of $600,000
of the Sale Proceeds retained by the Debtors for the purposes set forth in
section 4 hereof.
ll. "Professional Fees" shall have the meaning given to such
term in section 4b(2) hereof.
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mm. "Released Claims" shall have the meaning given to such term
in section 11 hereof.
nn. "Sale Proceeds" shall have the meaning given to such term in
Recital E above.
oo. "Settlement Amount" shall mean five hundred fifty thousand
dollars ($550,000.00) of the Sale Proceeds.
pp. "Unsecured Claim Expense Reserve" shall have the meaning
given to such term in the definition of "Administrative Reserve".
qq. "Vitec" shall mean Vitec DC Holding Corp., and any
affiliate thereof, which is obligated to pay any funds withheld by Vitec
from the purchase price paid to the Duke City Debtors for Vitec's purchase
of certain Duke City assets.
rr. "Vitec Tax Reserve" shall mean the $800,000 tax reserve
withheld by Vitec from the purchase price paid to the Duke City Debtors for
Vitec's purchase of certain Duke City assets.
ss. "Waiver Portion" shall have the meaning given to such term
in section 2 hereof.
tt. Any terms not otherwise defined in the Agreement shall have
any definition given to such terms in the Bankruptcy Code.
2. Motion for Approval of Agreement. Within five (5) days following
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the execution of this Agreement (the "Filing Deadline"), (a) the Debtors
shall file a motion with the Court seeking (i) approval of this Agreement
and of the compromises of the rights and obligations of the Parties set
forth herein, and (ii) entry of the Compromise Order; and (b) the Committee
shall file with the Court a declaration establishing the appropriateness of
that portion of the compromise provided herein under which the Non-Duke
City Preference Recovery Claims are released and waived ("Waiver Portion").
The Debtors' Motion shall indicate that the Committee has been allocated
this
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responsibility. The Debtors neither endorse nor oppose the Waiver Portion,
but have agreed to be bound by the provision of the Compromise Order
approving the Waiver Portion. The form and content of the motion, the
notice of hearing, and all other matters relating thereto, shall be
reasonably satisfactory to each of the Parties.
3. Validity of Bank Group Claims and Liens. Effective upon the
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Closing Date, the Parties acknowledge and agree (and the Compromise Order
shall provide) that in accordance with this Agreement, as of the Closing
Date (i) the Debtors will be indebted to the Bank Group on account of pre-
petition indebtedness in an unpaid amount of not less than approximately
$60,000,000 less all payments made by the Debtors to the Bank Group after
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the date hereof, after crediting all post-petition payments made by the
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Debtors to the Bank Group including payments made under a reservation of
rights, (ii) the amount of such pre-petition indebtedness is, but for the
pendency of the Bankruptcy Cases, immediately due and payable to the Bank
Group, (iii) the Debtors do not have or assert any claim, counterclaim,
setoff, or defense of any kind or nature which would in any way reduce or
affect their obligation to pay such pre-petition indebtedness to the Bank
Group; and (iv) the liens and security interests of the Bank Group are
valid and perfected security interests in all of the assets of the Debtors,
and are not subject to reduction or avoidance.
4. Disposition of the Funds of the Estates. Subject to the terms of
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this Agreement, effective as of the Closing Date, the Bank Group and each
member thereof, hereby irrevocably consent to the Debtors use of the cash
Collateral of the Bank Group for the purposes set forth in this Agreement
and no others, and only so long as (1) the Compromise Order is not revoked,
or modified or amended in any manner not acceptable to the Bank Group in
its sole discretion, (2) none of the Debtors' chapter 11 cases is converted
to a case under chapter 7 of the Bankruptcy Code, and (3) no trustee is
appointed in any of the Bankruptcy Cases. As to each sub-reserve in the
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Administrative Reserve and the Settlement Amount, the preceding consent to
use is solely for the purposes and up to the amounts specified in this
Agreement for each such sub-reserve and the Settlement Amount,
respectively, and funds in any sub-reserve or the Settlement Amount may not
be used for any purpose except as expressly provided in this Agreement,
provided, however, that the Debtors may use up to $25,000 of the funds in
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the Accrued Liability Reserve to make payments to be made from the Priority
Claim Reserve, or up to $25,000 of the funds in the Priority Claim Reserve
to make payments to be made from the Accrued Liability Reserve, but in no
event may more than $25,000 of funds in either of such sub-reserves be used
for a purpose other than payments covered by such sub-reserve, and any
portion of such $25,000 may only be used to satisfy an obligation expressly
covered by the other sub-reserve under the terms of this Agreement.
b. Effective as of the Closing Date, the Administrative
Reserve, the Priority Claim Reserve and the Settlement Amount shall be held
by the Debtors subject to the terms of this Agreement.
(1) The Administrative Reserve and the sub-reserves
thereunder shall be used only to pay any expenses of administration allowed
by Final Order of the Court if the incurring and payment of such expenses
are permitted by this Agreement ("Allowed Administrative Expenses") against
any of the estates.
(2) The funds in the Administrative Operating Reserve shall
be used to pay the following items to the extent such items are incurred or
accrue on or after August 1, 2001: (i) expenses incurred by the Debtors in
the ordinary course of the operation of their estates, including (a) wages
and salaries owed to non-professional persons employed by the estates at
the request of the estate representative, and (b) the costs of rent,
storage of the Debtors' books and records and occupancy charges; (ii) fees
and expenses of professional persons employed at the expense of the Debtors
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("Professional Fees") to the extent not satisfied out of the Existing Fee
Reserve; (iii) fees and expenses of Crossroads LLC as estate
representative, or any successor estate representative, ("Management Fees")
to the extent not satisfied out of the Existing Fee Reserve, (iv) fees owed
to the Office of the United States Trustee; and (v) Court costs; provided,
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however, that (a) none of the funds in the Administrative Reserve other
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than the $75,000 in the Unsecured Claim Expense Reserve shall be used to
pay for Professional Fees incurred directly or indirectly in connection
with objecting to disputed unsecured pre-petition non-Priority Claims of
the General Unsecured Creditors or administering the distribution of the
Settlement Amount to such creditors, whether Professional Fees in excess of
such amount are allowed by the Court or not.
(3) The funds in the Accrued Liability Reserve shall be
used to pay Allowed Administrative Expenses that accrued or were incurred
by reason of actions or occurrences prior to August 1, 2001.
(4) The funds in the Unsecured Claim Expense Reserve shall
be used to pay for Professional Fees incurred directly or indirectly in
connection with objecting to disputed unsecured pre-petition non-Priority
Claims of the General Unsecured Creditors or administering the distribution
of the Settlement Amount to such creditors. Any Professional Fees allowed
by the Court, or that are incurred after the dismissal of the Bankruptcy
Cases of the Non-Duke City Debtors and are approved by the Committee, for
such purposes in excess of the amount in the Unsecured Claim Expense
Reserve may only be charged against and paid from the funds in the
Settlement Amount.
(5) Expenses which are incurred or accrue from and after
August 1, 2001 but are incurred or accrued outside of the ordinary course
of the administration of the Bankruptcy Cases shall not be paid from the
Administrative Operating Reserve even if such expenses become Allowed
Administrative Expenses
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unless (i) prior written consent to such payment is given by the Bank
Group, (ii) an order of the Court is entered approving such payment
following notice to the Agent, the Bank Group and the Committee and an
opportunity for a hearing, or (iii) such payment is in accordance with the
existing monthly fee procedure (subject to the Court approval pursuant to
interim and final fee applications as provided in such procedures).
(6) The amounts of Professional Fees and Management Fees
included in budgets accompanying cash collateral stipulations approved by
the Court and funded in the professional fee reserve established thereunder
solely for such purpose (the "Existing Fee Reserve") prior to the execution
of this Agreement, shall be payable out of and from such reserve. The
approximate amount of funds in the Existing Fee Reserve as of July 31, 2001
was $495,663. The Agent and the Bank Group acknowledge that amounts paid
from the Professional Fee Reserve prior to the date hereof in accordance
with budgets accompanying cash collateral stipulations and orders of the
Court, or paid hereafter in accordance with the terms of this Agreement,
constituted and shall constitute an authorized use of cash Collateral
solely for the benefit of the parties entitled to receive such payments.
(7) The Debtors' proposed expenditure of cash in the
Administrative Reserve shall be made pursuant to stipulations covering 30-
day or longer periods reasonably approved by the Bank Group and presented
to and approved by the Court.
(8) No more than the funds in the Unsecured Claim Expense
Reserve shall be payable from the Administrative Reserve for Professional
Fees owed to professional persons employed by the Committee for services
rendered or costs incurred after the Closing Date.
(9) No cost or expense directly or indirectly related to
any Debtor commencing litigation or judicial proceedings to assert any
claim or cause of
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against any third party, including, without limitation, the Agent or any
member of the Bank Group, or the assertion of any counterclaim or cross-
complaint, shall constitute an Allowed Administrative Expense, provided
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that this provision shall not apply to the filing and prosecution of any
objection to any proof of claim filed against any of the Debtors.
(10) The funds in the Priority Claim Reserve shall be used only
to pay Allowed Priority Claims.
(11) The funds constituting the Settlement Amount shall only be
used in accordance with sections 4b, 4c, 4d, and 6 hereof.
c. Effective as of the Closing Date, the Bank Group and each
member thereof shall be deemed to have irrevocably directed that a portion
of the Collateral equal to the Settlement Amount (i) shall be held by the
Debtors in trust solely for the benefit of General Unsecured Creditors in a
segregated interest-bearing account, and such funds shall no longer be
property of any of the Debtors' estates, (ii) shall be free and clear of
all liens and security interests asserted by the Bank Group, ING, or any of
their successors or assigns, (iii) shall not be distributed to the Bank
Group, any of its members or ING, nor used to pay any Allowed
Administrative Expenses or Allowed Priority Claims, or for any other
purpose other than as provided in this Agreement; and (iv) shall, upon the
written request of the Committee, be disbursed by one or more of the
Debtors or, if a nominee for the benefit of the General Unsecured Creditors
is designated by the Committee, turned over to the nominee for distribution
to General Unsecured Creditors on a pro rata basis calculated on the
allowed amounts of said creditors' claims without duplication thereof in
the event that more than one Debtor is or may be liable to such creditor
with respect to such claim, and excluding any distribution with respect to
indebtedness which any Debtor owes to any other Debtor. Such funds shall
be treated in accordance with section 6 of this Agreement.
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d. On the Closing Date, after setting aside funds for the
Administrative Reserve, the Priority Claim Reserve and the Settlement
Amount as required by this Agreement, the balance of the Net Sale Proceeds
and all other funds held by any of the Debtors' estates, other than funds
in the Existing Fee Reserve, shall be paid to the Agent for the Bank Group
free and clear of any lien, claim or interest of any Debtor or of any third
party asserting any right to such funds on account of any conduct or
inaction by any Debtor.
e. The Agent for the Bank Group shall be entitled to receive from
time to time following the Closing Date, promptly upon receipt by the
Debtors, (i) any additional HRC Proceeds or Four Star Proceeds received by
the Debtors after the Closing Date, (ii) all funds received by the Debtors
after the Closing Date from (x) the sale of the Debtors' assets other than
the assets sold in the HRC Sale and the Four Star Sale, or (y) the
collection of any of the Debtors' promissory notes, receivables, deposits,
offset rights, claims or causes of action (except as expressly set forth in
this Agreement to the contrary with respect to Non-Duke City Preference
Recovery Claims), and (iii) one hundred percent (100%) of the Duke City
Allocated Proceeds, provided that, to the extent the Agent has received the
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proceeds of the Vitec Tax Reserve and the California State BOE Claim
thereafter becomes an Allowed Priority Claim, the Agent shall refund to the
Debtors the amount necessary to satisfy the California State BOE Claim, up
to the amount received with respect to the Vitec Tax Reserve.
f. Except to the extent of up to $25,000 as set forth in section 4a
hereof, the Administrative Operating Reserve, the Accrued Liability
Reserve, the Unsecured Claim Expense Reserve and the Priority Claim
Reserve, respectively, shall be used only to pay obligations up to the
amounts and for the purposes specified in this Agreement. To the extent any
portion of the Administrative Operating Reserve, the Accrued Liability
Reserve, the Unsecured Claim Expense Reserve or the Priority Claim
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Reserve is not used to satisfy the obligations specified in this Agreement
applicable to such reserve, respectively, at such time as the Debtors and
the Bank Group reasonably determine that no further obligations covered by
the applicable reserve will be allowed, then the unused funds in the
applicable reserve shall be paid to the Agent for the benefit of the Bank
Group. Further, any surplus funds in the Existing Fee Reserve will be paid
to the Agent for the benefit of the Bank Group as soon as the Debtors and
the Bank Group reasonably determine that there are surplus funds in the
Existing Fee Reserve.
g. Effective as of the Closing Date, to the extent the Interim
Sale Proceed Payments and other payments have been made by any of the
Debtors to the Agent and the Bank Group during the Bankruptcy Cases subject
to any reservation of rights on behalf of the estates or parties in
interest, all such reservations of rights shall be terminated and the Agent
and the Bank Group shall be entitled to retain all such payments free and
clear of any lien, claim, interest or reservation of rights on behalf of
these estates or any party in interest.
h. All payments made to the Agent or the Bank Group pursuant to
the terms of this Agreement shall be final when made and not subject to
recovery or avoidance, except as expressly set forth herein with respect to
the proceeds of the Vitec Tax Reserve.
5. Cash Collateral. Effective as of the Closing Date, except as set
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forth in section 5b hereof with respect to the proceeds of the Vitec Tax
Reserve and section 6 with respect to the Settlement Amount, the Debtors,
their estates, and their successors and assigns, including, without
limitation, any estate representative and any trustee who may be appointed
in any of the Bankruptcy Cases, shall not be entitled to (i) use any cash
Collateral of the Bank Group in excess of the amounts then remaining in the
Administrative Reserve, the Existing Fee Reserve or the Priority Claim
Reserve, (ii) pay any obligations other than Allowed Administrative
Expenses or Allowed Priority Claims,
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or (iii) seek to increase the amount of cash Collateral of the Bank Group
which may be used to pay Allowed Administrative Expenses or Allowed
Priority Claims over the objection of the Bank Group. The Debtors and their
estates, on behalf of themselves and their successors and assigns,
including, without limitation, any estate representative and any trustee
who may be appointed in any of the Bankruptcy Cases, agree that no cost or
expense which is incurred by the Debtors or any trustee during the pendency
of the Bankruptcy Cases, including any trustee appointed following
conversion of any of the pending cases to cases under chapter 7, whether or
not any such cost or expense is incurred in connection with or on account
of the preservation or disposition of any of the Collateral of the Bank
Group or which otherwise could be chargeable to the Agent or the Collateral
pursuant to Bankruptcy Code section 506(c) or otherwise, shall be
chargeable to the Agent or such Collateral, except for the amounts
remaining in the Administrative Reserve, the Priority Claim Reserve or the
Settlement Amount, or the Vitec Tax Reserve for payments necessary to
satisfy the California State BOE Claim. Nothing in this Agreement or in the
Compromise Order shall be deemed or construed to obligate the estate
representative or any professional employed by the Debtors or the Committee
to continue to render services unless they have assurance satisfactory to
them that they will be paid for their services at rates satisfactory to
them.
b. The Debtors may use the proceeds of the Vitec Tax Reserve to
satisfy the California State BOE Claim to the extent that claim becomes an
Allowed Priority Claim.
c. It is the intention of the Parties, and the Compromise Order
shall provide, that the sum of: the Administrative Reserve, the Priority
Claim Reserve, the Existing Fee Reserve, the Settlement Amount and any
proceeds of the Vitec Tax Reserve used to pay the California State BOE
Claim, constitutes the absolute limit on the proceeds of the Collateral
which may be used hereafter for any purpose in
17
connection with these Bankruptcy Cases other than for payment to and
satisfaction of the Agent and the Bank Group's claims against the Debtors
and their estates. Nothing in this Agreement or the Compromise Order shall
be deemed or construed to authorize the Debtors, any trustee in any of the
Bankruptcy Cases or any other third party to use cash Collateral of the
Bank Group, except as expressly set forth herein with respect to the
Administrative Reserve, the Priority Claim Reserve, the Existing Fee
Reserve, the proceeds of the Vitec Tax Reserve and the Settlement Amount,
without the prior written consent or the Bank Group, which the Bank Group
may withhold in their absolute discretion.
6. Settlement Amount. Effective as of the Closing Date:
-----------------
a. The Settlement Amount shall be held by the Debtors or the
nominee designated by the Committee solely to make payments on account of
the allowed prepetition claims of the holders of General Unsecured Claims
against any of the Debtors and to pay (i) Professional Fees related to
objecting to any of such claims which are disputed, to the extent such
Professional Fees are in excess of the Unsecured Claim Expense Reserve, and
(ii) expenses of distribution of the Settlement Amount. The amount of
Professional Fees or expenses of distribution which may be paid from the
Settlement Amount shall be reasonably agreed upon between the Committee and
the party seeking such payment, without the need for an order of the Court
approving such payment.
b. The Bank Group and its members shall be deemed to have
directed that the Settlement Amount shall be held in trust for the benefit
of the General Unsecured Creditors separate and apart from any other assets
of Debtors' estates, and shall no longer constitute property of said
estates. The General Unsecured Creditors shall be entitled to share pro
rata in the Settlement Amount free and clear of any liens of the Bank Group
or ING, and the Settlement Amount shall not be reduced by: (i) any
18
costs of administration of the Bankruptcy Cases, whether under section
506(c) of the Bankruptcy Code or otherwise; (ii) claims of the Bank Group
or ING; (iii) unsecured claims entitled to priority pursuant to section 507
of the Bankruptcy Code, or otherwise; (iv) payments made to creditors to
cure defaults in leases or executory contracts to be assumed; and (v)
payments made to secured creditors on account of their secured claims,
whether to reinstate secured claims or otherwise. General Unsecured
Creditors shall be entitled to a single satisfaction of their claims
regardless of the number of Debtors liable on such claims.
c. The Bank Group, and each of its members, expressly waive any
and all right to share in the Settlement Amount with General Unsecured
Creditors, whether as a deficiency claim pursuant to 11 U.S.C. (S) 506, or
otherwise. In addition, the Bank Group shall exercise its subordination
rights with respect to any right of ING to share in any portion of the
Settlement Amount otherwise payable to ING on account of any General
Unsecured Claim of ING. As a result, neither the Bank Group nor ING shall
share in any portion of the Settlement Amount.
d. Distributions of the Settlement Amount shall be made by one
or more of the Debtors or the nominee designated by the Committee pursuant
to section 4c hereof upon the satisfaction of the conditions to the
effectiveness of this Agreement in section 10 hereof and the earlier of (i)
entry of a Final Order dismissing the Bankruptcy Cases of the Non-Duke City
Debtors; and (ii) entry of a Final Order resolving the last dispute with
respect to any claims of General Unsecured Creditors with respect to the
Bankruptcy Cases of the Non-Duke City Debtors.
e. In the event all disputed claims of General Unsecured
Creditors have not been resolved by the earliest of the dates in section 6d
hereof, then the Debtors or the nominee designated by the Committee shall
reserve a portion of the Settlement Amount for all such disputed claims
equal to their pro rata share of the
19
Settlement Amount calculating each such disputed claim at the higher of the
amount filed or scheduled, or if the amount of the claim has been estimated
under section 502(c) of the Bankruptcy Code, at said estimated amount, and
a first distribution shall be paid to all holders of non-disputed claims.
If all disputes have not been resolved by the date of the first
distribution of the Settlement Amount, a second and final distribution
shall be made upon resolution of the last disputed claim of the General
Unsecured Creditors.
7. Modification of Stay. The Compromise Order shall provide that
--------------------
the automatic stay in effect in the Bankruptcy Cases pursuant to Bankruptcy
Code section 362 shall be deemed modified to enable the parties to
implement the terms of this Agreement. For example, where this Agreement
provides for the transfer of funds, such as the transfer of the Settlement
Amount, the automatic stay shall be deemed modified to authorize such
transfer in accordance with the terms of this Agreement.
8. Preference Recovery Claims. None of the Debtors, any estate
--------------------------
representative, any of their respective designees, nor any trustee
appointed in any of the Bankruptcy Cases, shall initiate, prosecute, or aid
in the prosecution of any action to recover any Non-Duke City Preference
Recovery Claim made by any of the Non-Duke City Debtors prior to the
commencement by such Debtor of its Bankruptcy Case. Nothing in this section
7a shall apply to or impair the right of the appropriate third party to
initiate or prosecute any Duke City Preference Recovery Claim or any claim,
cause of action or right of the Non-Duke City Debtors based upon any theory
other than the recovery of potential preferences pursuant to section 547 of
the Bankruptcy Code.
b. The proceeds of any recovery of any Duke City Preference
Recovery Claim or any avoidance actions held by either of the Duke City
Debtors shall be allocated in accordance with the provisions of the
Bankruptcy Code, such that only General Unsecured Creditors with direct
claims against the Duke City Debtors (not including any indebtedness of
either Duke City Debtor to the other) and the Bank
20
Group's unsecured claims against such Debtors shall share in such proceeds
pro rata. The Bank Group may exercise its subordination rights with respect
to any right of ING to share in any portion of the recovery claims
otherwise payable to ING on account of any General Unsecured Claim of ING.
9. Control of Liquidation of Assets Following the Closing Date. At
-----------------------------------------------------------
the request of the Bank Group, the Debtors shall assign and transfer to the
Bank Group at any time after the Closing Date all remaining assets in any
or all of the Debtors' estates, including, without limitation, (i) any
tangible assets, promissory notes, receivables, deposits, offset rights,
claims or causes of action, and (ii) the right to receive the Duke City
Allocated Proceeds, but not including (iii) Non-Duke City Preference
Recovery Claims, which, pursuant to this Agreement, shall not be
prosecuted, or (iv) Duke City Preference Recovery Claims or other avoidance
actions which cannot be assigned, and which shall be prosecuted by the Duke
City Debtors on behalf of creditors as provided in section 8b hereof. While
the Debtors retain ownership and control of any assets, prior to any such
assignment to the Bank Group, the Bank Group shall be entitled to review
and approve all administrative expenses with respect to such assets and all
Allowed Priority Claims which the Debtors propose to pay out of the
Administrative Reserve or the Priority Claim Reserve.
b. The Debtors will from and after the Closing Date provide the
Agent for the Bank Group (i) no less frequently than monthly, a budget of
revenues to be received and administrative expenses and Allowed Priority
Expenses to be paid, balance sheets, income statements, statements of cash
flow and schedules of all assets remaining in any of the Debtors' estates
in reasonable detail; (ii) weekly, a deposit report, while the level of
deposits makes it reasonable for the Agent to receive weekly deposit
reports, and monthly thereafter; (iii) weekly, on a consolidated basis, in
arrears, a reconciliation of actual revenues and expenditures to budget, an
a/r balance-previous
21
report plus sales and debt adjustments less collections, a reconciliation
showing any out of the ordinary course of business dispositions of assets,
and a cumulative expenses accrued but not paid; and (iv) from time to time,
such other financial and other information as the Agent shall reasonably
request.
10. Conditions to the Closing Date. The effectiveness of this
------------------------------
Agreement and the obligations of the Parties hereunder are expressly
conditioned upon the following:
a. The Court shall have entered an order (the "Compromise
Order") approving this Agreement, which order shall be in form and content
satisfactory to each of the Parties, and shall, without limitation,
authorize the Debtors and the Parties to implement the provisions of this
Agreement; compromise the alleged avoidance actions and any other claims
the Debtors' estates may have against the Bank Group; waive and release the
Non-Duke City Preference Recovery Claims (i.e. the Waiver Portion); and
impose the terms of this Agreement upon the Debtors, their estates, their
successors and assigns, any estate representative, any of their respective
designees, ING, and any trustee who might be appointed in any of the
Bankruptcy Cases.
b. The Compromise Order shall have been entered on or before
September 21, 2001, and shall have become a Final Order on or before
October 3, 2001, unless the Parties hereto agree to extend either or both
of such deadlines or waive the requirement for a Final Order in accordance
with the definition of Final Order.
c. If any of these conditions is not satisfied and the date for
satisfaction of such condition is not extended by the Parties, this
Agreement shall be deemed void ab initio.
-- ------
11. Duke City Allocated Proceeds. Notwithstanding anything in this
----------------------------
Agreement, including whether or not the conditions to the effectiveness of
this Agreement are ever satisfied and this Agreement becomes effective, the
Duke City Allocated Proceeds shall be paid by the Debtors to the Agent for
the Bank Group as they
22
are received by the Debtors, in accordance with the Order re Use of Cash
Collateral and Adequate Protection entered by the Bankruptcy Court on May
31, 2000,.
12. Release of the Agent and the Bank Group. Effective as of the
---------------------------------------
Closing Date, except for the obligations imposed under this Agreement, the
Debtors, and each of them, hereby forever release and discharge the Agent
and each member of the Bank Group and all of their officers, directors,
agents, employees, attorneys, shareholders, predecessors and successors,
jointly and severally, from any and all claims, demands, actions, causes of
action, liabilities, costs, expenses and damages of any kind whatsoever, in
law or in equity, past, present or future, ("Released Claims") and whether
such Released Claims are know or unknown, suspected or unsuspected, from
the beginning of time to the date hereof.
TO THE EXTENT THAT THE FOREGOING RELEASE IS A RELEASE TO
WHICH SECTION 1542 OF THE CALIFORNIA CIVIL CODE OR SIMILAR PROVISIONS
OF OTHER APPLICABLE LAW APPLIES, IT IS THE INTENTION OF THE DEBTORS
THAT THE FOREGOING RELEASE SHALL BE EFFECTIVE AS A BAR TO ANY AND ALL
ACTIONS, DAMAGES, LOSSES, CLAIMS, LIABILITIES AND DEMANDS OF
WHATSOEVER CHARACTER, NATURE AND KIND, KNOWN OR UNKNOWN, SUSPECTED OR
UNSUSPECTED, HEREINABOVE SPECIFIED TO BE BARRED. IN FURTHERANCE OF
THIS INTENTION, THE DEBTORS EXPRESSLY WAIVE ANY AND ALL RIGHTS AND
BENEFITS CONFERRED ON THEM BY THE PROVISIONS OF SECTION 1542 OF THE
CALIFORNIA CIVIL CODE, WHICH PROVIDES AS FOLLOWS:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
b. The Debtors represent to the Agent and the Bank Group that
they have thoroughly discussed all aspects of this Release with their
attorneys to the full extent that they deem it necessary to do so, have
been fully advised by their attorneys as to their rights, understands that
they may be waiving significant legal rights or
23
Released Claims, and enter into the Release under this Agreement with a
full and complete understanding of its terms.
13. Motion for Dismissal of Non-Duke City Bankruptcy Cases. As soon as
-------------------------------------------------------
practicable after (i) the Closing Date, (ii) the resolution of any disputed
administrative claims and any priority claims in the Non-Duke City
Bankruptcy Cases, and (iii) either the resolution of any disputed pre-
petition unsecured non-priority claims against any of the Non-Duke City
Debtors or the expenditure in full of the Unsecured Claim Expense Reserve,
the Non-Duke City Debtors shall file a motion with the Court seeking
approval for the dismissal of the Non-Duke City Bankruptcy Cases on notice
and hearing to the parties in interest, which order of dismissal shall
provide, however, that, in accordance with Bankruptcy Code section 349(b),
such dismissal shall not vacate any order, judgment or transfer ordered by
the Court during the Bankruptcy Cases. In the event the Settlement Amount
has not been distributed to the General Unsecured Creditors entitled to
receive such funds prior to the dismissal of the Non-Duke City Bankruptcy
Cases, such funds shall be distributed to such creditors outside of the
Bankruptcy Cases, with the cost of such distribution to be paid from the
Settlement Amount. In the event the Non-Duke City Bankruptcy Cases are not
dismissed, the parties shall reasonably cooperate regarding an alternative
mechanism to resolve those cases, provided that such non-dismissal shall
not invalidate any provision of this Agreement or any provision of the
Compromise Order.
14. MiscellaneousNotices. All notices, requests, demands, and other
---------------------
communications made in connection with this Agreement shall be in writing
and shall be deemed to have been duly given on the date of receipt if
personally delivered or delivered by overnight courier or received by
facsimile transmission (which facsimile shall be followed by a mailed
original), or five (5) business days after mailing if mailed by
24
certified or registered mail, postage prepaid, return receipt requested,
addressed to each Party as follows:
If to the Debtors
-----------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Crossroads, LLC
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
---------------
▇▇▇▇ Tuchin, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
If to the Committee:
-------------------
Wybron Incorporated
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President
With a copy to:
--------------
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
25
If to the Bank Group:
--------------------
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, V.P.
With a copy to:
--------------
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Any Party may change its address by giving written notice to the
other Parties in the manner set forth above.
b. Cooperation. The Parties agree to cooperate with one another
------------
and to take all commercially reasonable actions necessary or desirable to
satisfy the conditions to the effectiveness of this Agreement and to
implement the terms hereof.
c. Entire Agreement; Modification; Waiver. This Agreement
---------------------------------------
constitutes the entire agreement between the Parties and supersedes all
prior and contemporaneous agreements, representations, warranties, and
understandings of the Parties, whether oral, written, or implied, as to the
subject matter hereof. No supplement, modification, or amendment of this
Agreement shall be binding unless executed in writing by all Parties
affected thereby. No waiver of any of the provisions of this Agreement
shall be deemed or constitute a waiver of any other provision, whether or
not similar, nor shall any waiver constitute a continuing waiver. No waiver
shall be binding unless executed in writing, and specifying such waiver, by
the Party making the waiver .
d. Limitation on Third-Party Beneficiaries. Nothing contained in
----------------------------------------
this Agreement is intended to relieve or discharge the obligation or
liability of any third
26
party to any Party, nor shall any provision give any third party any right
of subrogation or action over or against any Party.
e. Successors and Assigns. This Agreement shall be binding upon,
-----------------------
and shall inure to the benefit of, the Parties and their respective legal
representatives, successors, and assigns, including, without limitation,
any trustee appointed in the Bankruptcy Cases, including any trustee
appointed following conversion of the pending cases to cases under chapter
7.
f. Further Assurances. Each Party hereto agrees to execute any
-------------------
and all documents and to do and perform any and all acts and things
necessary or proper to effectuate or further evidence the terms and
provisions of this Agreement.
g. No Representations or Warranties. Except as expressly set
---------------------------------
forth in this Agreement, none of the Parties makes, or has made, any
representation or warranty, written or oral, express or implied to any
other Party.
h. Severability. If any nonmaterial portion of this Agreement
-------------
shall be held to be invalid or unenforceable, then that portion shall be
deemed to have been severed from this Agreement and the Parties acknowledge
that the balance of this Agreement shall be valid and enforceable.
i. Headings. The descriptive headings of the sections of this
---------
Agreement are inserted for convenience of reference only and do not
constitute a part of this Agreement.
j. Applicable Law. This Agreement shall be governed in all
---------------
respects, including the validity, interpretation and effect, by the laws of
the State of California, without giving effect to the principles of
conflicts of law thereof.
k. Counterparts. This Agreement may be executed in two or more
-------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
27
l. No Admissions. Neither this Agreement, nor any of the terms
--------------
hereof, nor any negotiations or proceedings in connection herewith, shall
constitute or be construed as or be deemed to be evidence of an admission
on the part of any Party of any liability or wrongdoing whatsoever, or the
truth or untruth, or merit or lack of merit, of any claim or defense of any
Party; nor shall this Agreement, or any of the terms hereof, or any
negotiations or proceedings in connection herewith, or any performance or
forbearance hereunder, be offered or received in evidence or used in any
proceeding against any Party, or used in any proceeding, or otherwise, for
any purpose whatsoever, except with respect to the effectuation and
enforcement of this Agreement.
m. Termination of this Agreement. Upon the failure of any
------------------------------
condition to this Agreement as the date for satisfaction may be extended in
accordance with section 9 hereof, this Agreement shall terminate and the
Parties shall be returned to their positions as of the date of execution of
this Agreement.
n. Consent to Entry of Orders and Judgments by the Court. Each
------------------------------------------------------
Party hereto hereby consents to the determination by the Court, as a "core
proceeding" within the meaning of 28 U.S.C. (S) 157 or any successor
provision thereof, and to have the Court hear and determine and enter
appropriate orders and judgment subject to review under 28 U.S.C. (S) 158,
as provided in 28 U.S.C. (S) 157(c)(2) or any successor provision, in any
action brought to enforce, interpret, reform or rescind this Agreement or
any of the provisions hereof and over any action to determine or declare
the rights of any of the Parties under or with respect to this Agreement.
28
IN WITNESS WHEREOF, each of the Parties hereto has caused this
Agreement to be executed on its behalf, all as of the day and year first above
written.
DATED: August __, 2001 The Chase Manhattan Bank, as Agent
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Vice President
DATED: August __, 2001 The Official Committee of Creditors Holding
Unsecured Claims in the jointly administered cases
of ▇▇▇▇▇▇▇▇ Studio Equipment Group, Inc.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
By ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Its Chairman
DATED: August __, 2001 ▇▇▇▇▇▇▇▇ Studio Equipment Group, a California
corporation, f/k/a ▇▇▇▇▇▇▇▇ Studio Equipment, Inc.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Estate Representative
29
DATED: August __, 2001 ▇▇▇▇▇▇▇▇ Studio Electronics, Inc., a California
corporation
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Estate Representative
DATED: August __, 2001 Hollywood Rental Company, LLC, a Delaware limited
liability company
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Estate Representative
DATED: August __, 2001 ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Estate Representative
DATED: August __, 2001 ▇▇▇▇▇▇▇▇ Studio Group Centers, Inc., a California
corporation
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Estate Representative
DATED: August __, 2001 HDI Holdings, Inc., a Kentucky corporation
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Estate Representative
30
DATED: August __, 2001 Four Star Holding, Inc., a Delaware corporation
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Estate Representative
DATED: August __, 2001 ▇▇▇▇▇▇▇▇ Acceptance Corporation, a California
corporation
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Estate Representative
DATED: August __, 2001 Four Star Lighting, Inc., a New York corporation
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Estate Representative
DATED: August __, 2001 ▇▇▇▇▇▇▇▇ Studio Sales, Inc., a California
corporation, f/k/a ESS, Expendable Supply Stores,
▇▇▇▇▇▇, Four Star Los Angeles
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Estate Representative
31
Schedule A
----------
▇▇▇▇▇▇▇▇ STUDIO EQUIPMENT GROUP, a California corporation, f/k/a ▇▇▇▇▇▇▇▇ Studio
Equipment, Inc.
▇▇▇▇▇▇▇▇ STUDIO ELECTRONICS, INC., a California corporation
HOLLYWOOD RENTAL COMPANY, LLC, a Delaware limited liability company
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC., a Delaware corporation
▇▇▇▇▇▇▇▇ STUDIO GROUP CENTERS, INC., a California corporation
HDI HOLDINGS, INC., a Kentucky corporation
FOUR STAR HOLDING, INC., a Delaware corporation
▇▇▇▇▇▇▇▇ ACCEPTANCE CORPORATION, a California corporation
FOUR STAR LIGHTING, INC., a New York corporation
▇▇▇▇▇▇▇▇ STUDIO SALES, INC., a California corporation, f/k/a ESS, Expendable
Supply Stores, ▇▇▇▇▇▇, Four Star Los Angeles
