George
Hofmann (the “Trustee”), in his capacity as the Chapter
11 Trustee of VidAngel, Inc. (“VidAngel” or the
“Debtor”) and its bankruptcy estate, on the one hand,
and each of Disney Enterprises, Inc., Lucasfilm Ltd. LLC, Twentieth
Century Fox Film Corporation, Warner Bros. Entertainment Inc., MVL
Film Finance LLC, New Line Productions, Inc., and Turner
Entertainment Co. (collectively, “Studios”), on the
other hand, hereby jointly propose the following plan of
reorganization under Section 1121 of Title 11 of the United States
Bankruptcy Code.
i
C:
TABLE
OF CONTENTS
Page
ARTICLE
I DEFINITIONS AND CONSTRUCTION OF TERMS
1
ARTICLE
II TREATMENT OF ALLOWED ADMINISTRATIVE EXPENSE CLAIMS AND ALLOWED
PRIORITY TAX CLAIMS
8
Section
2.1
Non-Classification
8
Section
2.2
Administrative
Expense Claims
9
Section
2.3
Priority
Tax Claims.
9
ARTICLE
III CLASSIFICATION OF CLAIMS
10
ARTICLE
IV TREATMENT OF CLAIMS AND EQUITY INTERESTS
10
Section
4.1
Class 1
- Priority Claims
10
Section
4.2
Class 2
- General Unsecured Claims
10
Section
4.3
Class 3
- Studios Monetary Claims
11
Section
4.4
Class 4
- Credit Holders’ Claims
11
Section
4.5
Class 5
- Equity Interests
12
Section
4.6
No
Penalties
12
Section
4.7
All
Defaults Cured and Waived; All Notes and Obligations Decelerated
and Reinstated
12
Section
4.8
No
Assumed Liability
12
Section
4.9
Satisfaction
of Claims and Release
12
Section
4.10
Amendments
to Claims
12
ARTICLE
V MEANS FOR EXECUTION OF THE PLAN
13
Section
5.1
Revesting
of Property; Discharge and Release of Chapter 11 Trustee; Notice of
Effective Date
13
Section
5.2
Continuation
of Business Operations
13
Section
5.3
Continuation
of Anti-Discrimination Provisions of Bankruptcy Code
13
Section
5.4
Effect
of Entry of Case Closing Order
13
Section
5.5
Promissory
Note
13
Section
5.6
Security
Agreement and Compliance Lien
14
Section
5.7
Distributions
on Account of Claims and Interests
14
Section
5.8
Employment
of Professionals
14
Section
5.9
Ability
to Incur Debt
15
Section
5.10
Management
of Reorganized Debtor
15
Section
5.11
Settlement
and Compromise
15
Section
5.12
New
Equity and Restructuring Options
15
ii
ARTICLE
VI IMPLEMENTATION OF THE PLAN
16
Section
6.1
Method
of Distributions Under the Plan
16
Section
6.2
Objections
to Disputed Claims
16
Section
6.3
Resolution
of Claims
16
Section
6.4
Estimation
of Claims
17
Section
6.5
Retention
and Preservation of Claim Objections and Causes of
Action
17
ARTICLE
VII EXPRESS COVENANTS
17
Section
7.1
Debtor’s
Management Covenant Not to Compete
17
Section
7.2
Abandonment
of Debtor’s Appeals in California Action; Covenant Not to
Sue; Covenant Not to Seek Certain Changes in Law
18
Section
7.3
“No
Use Covenant” Applicable to the Studios’ Copyrighted
Works
18
Section
7.4
Effective
Date of the Express Covenants
18
Section
7.5
No
Intended Third Party Beneficiaries; Enforcement of the Express
Covenants
18
ARTICLE
VIII VOTING ON THE PLAN
18
Section
8.1
Voting
of Claims
18
Section
8.2
Nonconsensual
Confirmation
19
ARTICLE
IX EXECUTORY CONTRACTS AND UNEXPIRED LEASES
19
Section
9.1
Assumption
of Executory Contracts and Unexpired Leases; Deemed Cure
Amount
19
Section
9.2
Post-Petition
Agreements Unaffected By Plan
19
Section
9.3
Credit
Holders’ Claims Treated Under Section 4.4
19
ARTICLE
X CONDITIONS PRECEDENT TO EFFECTIVE DATE
19
Section
10.1
Conditions
Precedent to Effectiveness
19
Section
10.2
Failure
of Conditions Precedent
20
Section
10.3
Waiver
of Conditions
20
ARTICLE
XI RETENTION OF JURISDICTION
20
Section
11.1
Retention
of Jurisdiction
20
Section
11.2
Exclusive
Jurisdiction
21
Section
11.3
Alternative
Exclusive Jurisdiction
21
Section
11.4
Exclusive
Jurisdiction Over Permanent Injunction
21
Section
11.5
Closure
of Case
21
iii
ARTICLE
XII MISCELLANEOUS
22
Section
12.1
Continuation
of Injunctions or Stays Until Effective Date
22
Section
12.2
All
injunctions or stays provided for in the Bankruptcy Case under
Sections 105 or 362 of the Bankruptcy Code, or otherwise, and in
existence on the Confirmation Date, shall remain in full force and
effect until the Effective Date.Discharge
22
Section
12.3
Injunction
Relating to the Plan
22
Section
12.4
Broad
Injunction
23
Section
12.5
Exculpation
23
Section
12.6
Release
of Claims
23
Section
12.7
Default
of Plan
23
Section
12.8
Setoffs
23
Section
12.9
Amendment
or Modification of the Plan
23
Section
12.10
Severability
24
Section
12.11
Revocation
or Withdrawal of the Plan
24
Section
12.12
Binding
Effect
24
Section
12.13
Written
Notices
24
Section
12.14
Governing
Law
24
Section
12.15
Post-Confirmation
Fees, Final Decree
24
Section
12.16
Headings
24
Section
12.17
Filing
of Additional Documents
24
Section
12.18
Inconsistency
24
iv
ARTICLE I
DEFINITIONS AND CONSTRUCTION OF
TERMS
For
purposes of this Plan, the following terms shall have the meanings
specified in this Article I. A term used but not defined herein,
which is also used in the Bankruptcy Code, shall have the meaning
ascribed to that term in the Bankruptcy Code. A term used but not
defined herein, but which is defined in the Settlement Agreement
(as defined below and attached as an exhibit hereto), shall have
the meaning ascribed to that term in the Settlement Agreement.
Wherever from the context it appears appropriate, each term stated
shall include both the singular and the plural, and pronouns shall
include the masculine, feminine and neuter, regardless of how
stated. The words “herein,”“hereof,”“hereto,”“hereunder” and other words of
similar import refer to the Plan as a whole, including exhibits
attached hereto, and not to any particular Section, sub-Section or
clause contained in the Plan. The rules of construction contained
in Section 102 of the Bankruptcy Code shall apply to the terms of
this Plan. The headings in the Plan are for convenience of
reference only and shall not limit or otherwise affect the
provisions hereof.
“Administrative Expense
Claim” shall mean a Claim that is Allowed under
Section 503(b) of the Bankruptcy Code or otherwise is allowed under
this Plan, and that is entitled to priority under Section 507(a)(1)
of the Bankruptcy Code and/or under Section 2.2 of this Plan,
including, without limitation:
(a) fees
and expenses of Professionals Allowed pursuant to an Order of the
Bankruptcy Court,
(b) all
fees and charges assessed against the Estate pursuant to 28 U.S.C.
§ 1930,
(c) Post-Confirmation
fees and expenses of the Chapter 11 Trustee and his Professionals
payable pursuant to this Plan, and
(d) other
Post-Confirmation Date Administrative Expenses.
“Allowed” shall mean, with
reference to any Claim:
(a) a
Claim that has been listed by the Debtor in its Schedules and (i)
is not listed as disputed, contingent or unliquidated, and (ii) is
not a Claim as to which a proof of claim has been
filed;
(b) a
Claim as to which a timely proof of claim has been filed by the Bar
Date and either (i) no objection thereto, or application to
estimate, equitably subordinate or otherwise limit recovery, has
been made on or before any applicable deadline, or (ii) if an
objection thereto, or application to estimate, equitably
subordinate or otherwise limit recovery has been interposed, the
extent to which such Claim has been allowed (whether in whole or in
part) by a Final Order;
(c) a
Claim arising from the recovery of property under Section 550 or
553 of the Bankruptcy Code and allowed in accordance with Section
502(h) of the Bankruptcy Code; or
(d) any
Claim expressly allowed under this Plan or pursuant to the
Confirmation Order.
1
Except
as otherwise specified in the Plan (or, as to the Studios, in the
Settlement Agreement, the Note and/or the Security Agreement) or
any Final Order of the Bankruptcy Court, the amount of an Allowed
Claim shall not include any attorneys’ fees, costs,
penalties, or interest on such Claim occurring or incurred from and
after the Petition Date.
“Approval Order” shall
mean the order entered by the Bankruptcy Court approving the
Settlement Agreement, including pursuant to Section 1123(b)(3)(A)
of the Bankruptcy Code and/or Federal Rule of Bankruptcy Procedure
9019. It is anticipated that the Confirmation Order will be the
Approval Order.
“Avoidance Actions” shall
mean Causes of Action arising or held by the Estate under Sections
502, 510, 541, 544, 545, 547, 548, 549, or 550 of the Bankruptcy
Code, or under related state or federal statutes and common law,
including fraudulent or avoidable transfer laws.
“Bankruptcy Case” shall
mean the Debtor’s case pending in the Bankruptcy Court under
case number 17-29073.
“Bankruptcy Code” shall
mean Title 11 of the United States Code, as amended from time to
time, as applicable to the Bankruptcy Case.
“Bankruptcy Court” shall
mean the United States Bankruptcy Court for the District of Utah in
which the Bankruptcy Case is pending and, to the extent of any
reference under 28 U.S.C. § 157, the unit of such
District Court specified pursuant to 28 U.S.C.
§ 151.
“Bankruptcy Rules” shall
mean the Federal Rules of Bankruptcy Procedure as promulgated under
28 U.S.C. § 2075, and any applicable local rules of the
Bankruptcy Court.
“Bar Date” shall mean: (i)
February 14, 2018, with respect to a Claim against the Estate other
than a Claim of a Governmental Unit, a Credit Holders’ Claim,
or a Pre-Appointment Administrative Expense Claim; (ii) February14, 2018, with respect to a Claim of a Governmental Unit against
the Estate; (iii) December 13, 2019, with respect to a
Pre-Appointment Administrative Expense Claim; (iv) April 17, 2020,
with respect to a Credit Holders’ Claim; and (v) if this Plan
and/or an order of the Bankruptcy Court establishes a different bar
date for a specific claim or category of Claims (e.g., rejection
damages Claims or other post-Petition Date Claims), the date
established by the Plan or order of the Court.
“Business Day” shall mean
any day other than a Saturday, Sunday or an officially designated
legal public holiday as designated in 5 U.S.C. §
6103.
“California Action” shall
means the case captioned Disney
Enterprises, Inc. et al. v. VidAngel, Inc., No.
2:16-cv-04109-AB-PLA, filed in the United States District Court for
the Central District of California, including any appeals therefrom
and related thereto (which appeals include without limitation Ninth
Circuit Case Nos. 19-56174, 20-55352).
“California Court” shall
mean the United States District Court for the Central District of
California.
“Cash” shall mean lawful
currency of the United States of America (including wire transfers,
cashier’s checks drawn on a bank insured by the Federal
Deposit Insurance Corporation, certified checks and money
orders).
2
“Causes of Action” shall
mean, without limitation, any and all actions, causes of action,
defenses, liabilities, obligations, rights, suits, debts, sums of
money, damages, judgments, Claims or proceedings to recover money
or property and demands of any nature whatsoever, whether known or
unknown, in law, equity or otherwise, including, without
limitation, Avoidance Actions.
“Chapter 11 Trustee” shall
mean the duly-appointed chapter 11 trustee in the Case, who is
presently George Hofmann, acting on behalf of the Debtor, VidAngel,
Inc. It is anticipated that the Chapter 11 Trustee will be
discharged upon the earlier of (a) the entry of a final decree
and Order closing the case pursuant to Section 350 of the
Bankruptcy Code and Federal Rule of Bankruptcy Procedure 3022, or
(b) entry of an order discharging and releasing him from his
duties and obligations as Chapter 11 Trustee, whereupon the Chapter
11 Trustee shall have no further duties under this
Plan.
“Circumvention or
Circumvent” shall have the meaning set forth in the
Settlement Agreement.
“Claim” shall mean a claim
against a Person or its property as defined in Section 101(5) of
the Bankruptcy Code, including, without limitation, (i) any right
to payment, whether or not such right is reduced to judgment, and
whether or not such right is liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal,
equitable, secured or unsecured; or (ii) any right to an equitable
remedy for breach of performance, if such breach gives rise to a
right to payment, whether or not such right to an equitable remedy
is reduced to judgment, or is fixed, contingent, matured,
unmatured, disputed, undisputed, secured or unsecured.
“Class” shall mean those
classes designated in Article III of this Plan.
“Collateral” shall mean
any property or interest in property of the Estate subject to a
Lien to secure the payment or performance of a Claim, which Lien is
not subject to avoidance under the Bankruptcy Code or otherwise
invalid under the Bankruptcy Code or applicable law.
“Confirmation Date” shall
mean the date on which the clerk of the Bankruptcy Court enters the
Confirmation Order on the docket in the Bankruptcy
Case.
“Confirmation Order” shall
mean the order of the Bankruptcy Court confirming the Plan pursuant
to the provisions of the Bankruptcy Code.
“Contingent or Unliquidated
Claim” shall mean any Claim for which a proof of claim
has been filed with the Bankruptcy Court but which was not filed in
a sum certain, or which has not occurred and is dependent upon a
future event that has not occurred or may never occur, and which
has not been Allowed.
“Copyrighted Work(s)”
shall have the meaning set forth in the Settlement
Agreement.
“Credit Holders” means the
holders of VidAngel Credits, referred to in the Debtor’s
Schedule E/F, paragraph 3.5, located at Docket No. 47 in the
Bankruptcy Case, as modified pursuant to the Stipulated Order
Approving Trustee’s Motion for Order: (i) Fixing a Bar Date
for Filing Customer Claims; (ii) Approving the Form and Method of
Providing the Bar Date Notice; (iii) Approving the Mailing
Procedures; and (iv) Approving the Form of Amended Schedules E/F
[Docket No. 568].
3
“Credit Holders’
Claims” means all Claims held by Credit Holders which
arise from currently held VidAngel Credits. For the avoidance of
doubt, if a Credit Holder holds a Claim or that is not related to a
VidAngel Credit (e.g., a General Unsecured Claim), then such Claim
shall be treated in the more appropriate Class(es) of Claims as set
forth herein.
“Cure” shall have the
meaning (a) set forth in the Settlement Agreement as to
matters covered by the Settlement Agreement, the Note and/or the
Security Agreement, and (b) as to other matters, either
(i) a meaning specified by this Plan (if applicable), or
(ii) as shall be determined by the Bankruptcy
Court.
“Cure Period” shall have
the meaning (a) set forth in the Settlement Agreement as to
matters covered by the Settlement Agreement, the Note and/or the
Security Agreement, and (b) as to other matters, either
(i) a meaning specified by this Plan (if applicable), or
(ii) as shall be determined by the Bankruptcy
Court.
“Debtor” shall mean
VidAngel, Inc. References to the Debtor shall mean and refer to the
Reorganized Debtor at any point in time after the Effective
Date.
“Default” (a) shall
have the meaning set forth in the Settlement Agreement as to
matters covered by the Settlement Agreement, the Note and/or the
Security Agreement, or (b) as to other matters, shall mean the
material failure to comply with the Plan.
“Default Remedies” shall
have the meaning set forth in the Settlement
Agreement.
“Disputed Claim” shall
mean:
(a) if
no proof of claim relating to a Claim has been filed, a claim that
is listed in the Schedules as unliquidated, disputed or
contingent;
(b) if
a proof of claim relating to a Claim has been filed, a Claim as to
which a timely objection or request for estimation, or request to
equitably subordinate or otherwise limit recovery in accordance
with the Bankruptcy Code and the Bankruptcy Rules, has been made,
or which is otherwise disputed by the Chapter 11 Trustee, Debtor,
or Reorganized Debtor in accordance with applicable law, which
objection, request for estimation, action to limit recovery or
dispute has not been withdrawn or determined by Final
Order;
(c) a
Claim which is a Contingent or Unliquidated Claim; or
(d) a
Claim that is specifically identified as “disputed” or
a Disputed Claim in this Plan.
“Disputed Claim Amount”
shall mean either the amount set forth in the proof of claim
relating to a Disputed Claim, or an amount estimated pursuant to an
order of the Bankruptcy Court in respect of a Disputed Claim in
accordance with Section 502(c) of the Bankruptcy Code.
“Distribution Funds” shall
mean all Cash and funds available or to become available to the
Debtor prior to the Confirmation Date, which Distribution Funds are
required to be distributed to holders of Claims under this
Plan.
4
“Effective Date” shall
mean the first calendar day after the date of entry by the
Bankruptcy Court of the Approval Order and the Confirmation Order
and all other conditions for the Plan to become effective as
specified in section 10.1 of the Plan have been satisfied, or have
been waived by both the Trustee and the Studios pursuant to section
10.3 of the Plan.
“Employees” shall mean
such persons as are employed by the Debtor as of the Effective
Date.
“Enforcement Action” shall
have the meaning set forth in the Settlement
Agreement.
“Equity Interest” shall
mean the interest of any holder of any stock in the Debtor, and any
and all options, warrants and rights, contractual or otherwise, to
acquire any such stock, as such interests exist immediately prior
to the Effective Date.
“Estate” shall mean the
estate created in the Bankruptcy Case pursuant to Section 541 of
the Bankruptcy Code.
“Express
Covenants” shall mean each of the express
covenants specified in Article 7 of this Plan, including
(a) the Express Covenants as defined in the Settlement
Agreement and specified in Section 2 of the Settlement Agreement,
which are incorporated by reference and made part of this Plan
under sections 7.2(b) (the Covenant Not to Sue), 7.2(c) (the
Covenant Not to Seek Certain Changes in Law) and 7.3 (the No Use
Covenant), and (b) the additional covenants specified in
Article 7, including under section 7.1 (the Covenant Not to
Compete) and 7.2(a) (the Dismissal of the California Action
appeals).
“Final Order” shall mean
an order or judgment which has not been reversed, stayed, modified
or amended and as to which (i) the time to appeal or seek review or
rehearing has expired and as to which no appeal or petition for
certiorari, review or rehearing is pending, or (ii) if appeal,
review, reargument or certiorari of the order has been sought, the
order has been affirmed or the request for review, reargument or
certiorari has been denied and the time to seek a further appeal,
review, reargument or certiorari has expired, and as a result of
which such order shall have become final and nonappealable in
accordance with applicable law; provided, however, that the
possibility that a motion under Rule 59 or Rule 60 of the Federal
Rules of Civil Procedure, or any analogous rule under the
Bankruptcy Rules, may be filed with respect to such order shall not
cause such order not to be a Final Order.
“General Unsecured Claim”
shall mean a Claim that is not a Secured Claim or that is not
entitled to priority of payment under Section 507 of the Bankruptcy
Code, other than the Studios Monetary Claims and the Credit
Holders’ Claims.
“Harmon Parties” shall
mean Neal Harmon and Jeffrey Harmon.1
“License” shall have the
meaning set forth in the Settlement Agreement.
“Lien” shall have the
meaning set forth in Section 101(37) of the Bankruptcy Code; except
that a Lien that has been avoided in accordance with Sections 544,
545, 546, 547, 548, 549 or 553 of the Bankruptcy Code shall not
constitute a Lien.
“Monetary Judgment” shall
mean that certain $62,448,750.00 monetary judgment entered
September 23, 2019, at Docket No. 525, in the California Action, as
amended by any award or settlement of the Studios’ claim for
attorneys’ fees.
“Motion Picture” shall
have the meaning set forth in the Settlement
Agreement.
“No Use Covenant” shall
mean the covenant specified in Section 2.A of the Settlement
Agreement which is incorporated by reference and made part of this
Plan under section 7.3 of this Plan.
“Non-Compliant
Professionals” shall mean those Persons who, in the
Chapter 11 Trustee’s or the Reorganized Debtor’s
judgment, subject to the ultimate determination of the Bankruptcy
Court, should have (i) been employed as a
“Professional” of the Debtor pursuant to an order of
the Bankruptcy Court in accordance with Sections 327 or 1103 of the
Bankruptcy Code, or (ii) sought Bankruptcy Court approval for
compensation for their services to the Debtor pursuant to Sections
327, 328, 329, 330 and 331 of the Bankruptcy Code, but failed to
seek such Court approval in either or both instances.
“Note” shall have the
meaning outlined in Section 4.3(b). A true and correct copy of the
Note is attached as Exhibit B hereto.
“Notice of Default”
(a) shall have the meaning set forth in the Settlement
Agreement as to matters covered by the Settlement Agreement, the
Note and/or the Security Agreement, or (b) as to other
matters, shall mean a notice of default given according to the
requirements of this Plan.
“Notice of Settlement”
means and refers to the form of notice attached as Exhibit D
hereto, which shall be filed with the California Court upon
satisfaction of the conditions specified in section 6.D of the
Settlement Agreement.
“Payment Agent” shall have
the meaning outlined in Section 4.3(b).
“Permanent Injunction”
shall mean the Permanent Injunction entered September 5, 2019, at
Docket No. 520, in the California Action, which shall remain in
full force and effect and shall not be modified or impaired by this
Plan.
“Person” shall mean any
individual, corporation, limited liability company, partnership,
limited liability partnership, joint venture, association,
joint-stock company, trust, unincorporated association or
organization, Governmental Unit or political subdivision
thereof.
“Plan” or
“Joint Chapter 11
Plan” shall mean this Plan of Reorganization,
including, without limitation, the exhibits, supplements,
appendices, Plan Supplement Documents, and schedules hereto, either
in their present form or as the same may be altered, amended or
modified from time to time.
“Plan Supplement
Documents” shall mean the Note, the Security
Agreement, the Settlement Agreement, the Covenant Not to Compete,
and any other legal or contractual documents provided for by this
Plan.
“Post-Confirmation Date Administrative
Expenses” shall mean: (i) the fees and expenses of the
Chapter 11 Trustee’s attorneys’ and other professionals
following the Confirmation Date; (ii) the fees and expenses of the
attorneys and Professionals hired to represent the Chapter 11
Trustee, the Debtor, the Reorganized Debtor, and the Estate (or any
one of them) in any contested matter, or any adversary proceeding
arising under or related to this Bankruptcy Case; and (iii) the
fees, expenses, and costs of the Chapter 11 Trustee following the
Confirmation Date.
“Preference Claims” shall
mean and refer to all claims to recover a payment or property
transferred on account of an antecedent debt, including without
limitation claims under Section 547 of the Bankruptcy Code, and
claims under Utah Code Ann. § 25-6-203(2) and other similar
state statutes.
6
“Pre-Appointment Administrative Expense
Claim” shall mean an Administrative Expense Claim
against the Estate under Bankruptcy Code § 503(b), arising on
or after October 18, 2017, and on or before August 28, 2019, as
described in the Trustee’s Motion for Order: (i) Fixing a Bar
Date for Filing Applications to Allow Administrative Expense
Claims; (ii) Approving the Form of the Bar Date Notice; and (iii)
Approving the Mailing Procedures, found at Docket No. 375 in the
Bankruptcy Case, and the Order: (i) Fixing a Bar Date for Filing
Applications to Allow Administrative Expense Claims; (ii) Approving
the Form of the Bar Date Notice; and (iii) Approving the Mailing
Procedures, found at Docket No. 399 in the Bankruptcy
Case.
“Priority Claims” shall
mean any and all Claims (or portions thereof), if any, entitled to
priority under Section 507(a) of the Bankruptcy Code other than
Administrative Expense Claims and Priority Tax Claims.
“Priority Tax Claims”
shall mean any Claim of a Governmental Unit entitled to priority
under Section 507(a)(8) of the Bankruptcy Code.
“Pro Rata” shall mean a
proportionate share of the total distribution made at any
particular time under this Plan to the holders of Allowed Claims in
a Class.
“Professionals” shall mean
(i) those Persons employed pursuant to an order of the Bankruptcy
Court in accordance with Sections 327 or 1103 of the Bankruptcy
Code and to be compensated for services pursuant to Sections 327,
328, 329, 330 and 331 of the Bankruptcy Code, and (ii) those
Persons for which compensation and reimbursement is allowed by the
Bankruptcy Court pursuant to Section 503(b)(4) of the Bankruptcy
Code.
“Reorganized Debtor” shall
mean the Debtor, as reorganized after the Effective Date pursuant
to the terms of this Plan. Any reference to the
“Debtor” that follows the Effective Date shall be
deemed to mean the Reorganized Debtor.
“Schedules” shall mean the
schedules of assets and liabilities, the list of holders of
interests and the statements of financial affairs filed by the
Debtor or the Chapter 11 Trustee under Section 521 of the
Bankruptcy Code and Bankruptcy Rule 1007, as such schedules, lists
and statements have been or may be supplemented or amended from
time to time.
“SEC” shall mean the
United States Securities and Exchange Commission.
“Secured Claim” shall mean
any Allowed Claim that is secured by a Lien on Collateral to the
extent of the value of such Collateral, as determined in accordance
with Section 506(a) of the Bankruptcy Code, or, in the event that
such Claim is a claim of setoff under Section 553 of the Bankruptcy
Code, to the extent of such setoff.
“Security Agreement” shall
have the meaning outlined in Section 4.3(c). A true and correct
copy of the Security Agreement is attached as Exhibit C
hereto.
“Settlement Agreement”
shall mean the Settlement Agreement entered into on August 27, 2020
by (a) the Studios, (b) the Trustee on behalf of the
Debtor, and (c) the Harmon Parties. A true and correct copy of
the Settlement Agreement is attached as Exhibit A
hereto.
“Settlement Amount” shall
have the meaning set forth in the Settlement
Agreement.
“Strike” shall have the
meaning set forth in the Settlement Agreement.
7
“Studios” shall mean
Disney Enterprises, Inc., Lucasfilm Ltd. LLC, Twentieth Century Fox
Film Corporation, Warner Bros. Entertainment Inc., MVL Film Finance
LLC, New Line Productions, Inc. and Turner Entertainment Co.,
individually and/or collectively, as the context may
require.
“Studio
Affiliates” shall have the meaning set forth
in the Settlement Agreement.
“Studios Monetary Claim”
shall have the meaning set forth in the Settlement Agreement. To
avoid any confusion, provided,
however, that the term “Studios Monetary Claims”
shall not mean any Claims (if any) arising out of or pursuant to
this Plan and the rights and protections granted to the Studios
hereunder.
“Third Party” shall have
the meaning set forth in the Settlement Agreement as to matters
covered by the Settlement Agreement.
“Uncured Default”
(a) shall have the meaning set forth in the Settlement
Agreement as to matters covered by the Settlement Agreement, the
Note and/or the Security Agreement, or (b) as to other
matters, shall mean a Default not Cured within the Cure
Period.
“Written Notice”
(a) shall have the meaning set forth in the Settlement
Agreement as to matters covered by the Settlement Agreement, the
Note and/or the Security Agreement, or (b) as to other
matters, (i) shall have the meaning specified by this Plan (if
applicable), or (ii) shall have the meaning as determined by
the Bankruptcy Court.
“VidAngel Credits” means
any credit(s) that any Credit Holder has as of the Effective Date
that can be used in lieu of payment for any aspect of the
Debtor’s consumer-facing business.
“Voting Deadline” shall
mean the deadline set by the Bankruptcy Court for voting on the
Plan.
ARTICLE II
TREATMENT
OF ALLOWED ADMINISTRATIVE EXPENSE CLAIMS AND ALLOWED PRIORITY TAX
CLAIMS
Section 2.1 Non-Classification.
As provided in Section 1123(a)(1) of the Bankruptcy Code,
Administrative Expense Claims and Priority Tax Claims are not
classified for the purposes of voting on, or receiving
distributions under, the Plan. All such Claims are instead treated
separately in accordance with the terms in this Article
II.
8
Section 2.2 Administrative
Expense Claims.
(a) Bar
Date. All applications for allowance of Administrative
Expense Claims other than (i) fees and expenses of Professionals
Allowed pursuant to an Order of the Bankruptcy Court, (ii) fees and
charges assessed against the Estate pursuant to 28 U.S.C.
§ 1930, and (iii) Pre-Appointment Administrative Expense
Claims, shall be filed not later than thirty (30) days after the
Effective Date. All Administrative Expense Claims not filed within
thirty days after the Effective Date shall be barred. The deadline
in the preceding sentence shall be construed and have the same
force and effect as a statute of limitations. The Reorganized
Debtor shall provide notice to all creditors listed on the mailing
matrix of this bar date within ten days after the Effective Date.
The Bankruptcy Court shall determine all Administrative Expense
Claims. This clause is not intended, and shall not be construed, to
set a bar date for Post-Effective Date Administrative Expenses,
which will be paid by the Reorganized Debtor as set forth in
Section 2.2(d)(2) of this Plan.
(b) General.
Except as otherwise agreed to by the Chapter 11 Trustee or the
Reorganized Debtor, as applicable, and the holder of an Allowed
Administrative Expense Claim, and subject to Section 2.2(c) below,
each such holder shall be paid in full in Cash on the later of (i)
the date such Allowed Administrative Expense Claim becomes due in
accordance with its terms, and (ii) the Effective Date. If the
Chapter 11 Trustee, the Reorganized Debtor, or their successor(s)
or assign(s) dispute any portion of an Administrative Expense
Claim, the Reorganized Debtor shall pay such Claim within 30 days
after the entry of a Final Order with respect to the allowance of
such disputed Administrative Expense Claim.
(c) U.S.
Trustee’s Fees. The United States Trustee’s
quarterly fees shall be paid in full without prior approval
pursuant to 28 U.S.C. § 1930.
(d) Professional
Compensation and Expense Reimbursement Claims.
(1) Each
Professional shall file a final application for the allowance of
compensation for services rendered or reimbursement of expenses
incurred through and including the Effective Date within thirty
(30) days after the Effective Date. Any award granted by the
Bankruptcy Court shall be paid (i) within fifteen days of the entry
of the order of the Bankruptcy Court approving such award, unless a
stay is obtained, or (ii) upon such other terms as may be mutually
agreed upon between such holder of an Allowed Administrative
Expense Claim and the Chapter 11 Trustee or the Reorganized Debtor,
as applicable.
(2) All
Post-Effective Date Administrative Expenses of Professionals,
including the attorneys’ fees and costs of the Trustee and
his Professionals from the Effective Date through the date of entry
of a final decree and Order closing the case (the
“Case Closing
Order”), shall be paid by the Reorganized Debtor upon
receipt of reasonably detailed invoices therefor in such amounts
and on such terms as such Professional and the Chapter 11 Trustee
or the Reorganized Debtor, as applicable, may agree, without the
need for further Bankruptcy Court authorization or entry of a Final
Order.
Section
2.3 Priority
Tax Claims.
At the
sole election of the Reorganized Debtor, each holder of an Allowed
Priority Tax Claim shall be paid either (i) upon such terms as may
be agreed to between the Debtor and such holder of an Allowed
Priority Tax Claim, or (ii) in full in Cash on the later of the
Effective Date or the date that such Allowed Priority Tax Claim
would have been due if the Bankruptcy Case had not been
commenced.
9
ARTICLE III
CLASSIFICATION
OF CLAIMS
Claims,
other than Administrative Expense Claims and Priority Tax Claims,
shall be classified for all purposes, including voting on,
confirmation of, and distribution pursuant to the Plan, as
follows:
Class 1
- Priority Claims. Class 1 shall consist of all Allowed Priority
Claims against the Debtor, other than Priority Tax
Claims.
Class 2
- General Unsecured Claims. Class 2 shall consist of all Allowed
General Unsecured Claims against the Debtor except for the Studios
Monetary Claims and the Credit Holders’ Claims.
Class 3
– Studios Monetary Claims. Class 3 shall consist of the
Studios Monetary Claims against the Debtor, all of which are deemed
Allowed under this Plan.
Class 4
- Credit Holders’ Claims. Class 4 shall consist of all
Allowed Credit Holders’ Claims.
Class 5
- Equity Interests in the Debtor. Class 5 shall consist of all
Equity Interests in the Debtor.
ARTICLE IV
TREATMENT
OF CLAIMS AND EQUITY INTERESTS
Section 4.1 Class
1 - Priority Claims.
(a) Impairment.
Class 1 is not impaired under the Plan. Holders of an Allowed Class
1 Claim shall be deemed to have voted to accept the
Plan.
(b) Payment.
On the Effective Date, the holders of Allowed Class 1 Claims shall
be paid from Distribution Funds the full amount of their claims in
full satisfaction of those Claims.
Section 4.2 Class
2 - General Unsecured Claims.
(a) Impairment.
Class 2 is not impaired under the Plan. Holders of Allowed Class 2
Claims shall be deemed to have voted to accept the
Plan.
(b) Payment.
On the Effective Date, the holders of Allowed Class 2 General
Unsecured Claims shall be paid the full amount of their claims in
Cash in full satisfaction of those Claims.
10
Section 4.3 Class
3 - Studios Monetary Claims.
(a) Impairment.
Class 3 is impaired under the Plan. Notwithstanding such
impairment, the Studios are proponents of this Plan, and shall be
deemed to have voted to accept the Plan.
(b) Treatment
of Claim. The Studios Monetary Claims are Allowed under this
Plan (i.e., the Allowed
Class 3 Claims) and shall be treated consistent with the terms set
forth in the Settlement Agreement, Note and Security Agreement,
which are incorporated by referenced as if restated herein in its
entirety. To the extent of any inconsistency between the Settlement
Agreement and the provisions of this Plan that govern the
relationship(s) of the Studios and the Reorganized Debtor, the
terms of the Settlement Agreement shall control. By way of summary,
and without limitation:
(i) the
Reorganized Debtor shall be bound by, and shall observe and
perform, the Express Covenants (excepting the Covenant Not to
Compete described in Section 7.1 of the Plan, which does not apply
as to the Reorganized Debtor), including (A) the Express
Covenants as defined in the Settlement Agreement which are
incorporated by reference and made part of this Plan under sections
7.2(b) (the Covenant Not to Sue), 7.2(c) (the Covenant Not to
Seek Certain Changes in Law) and 7.3 (the No Use Covenant), and
(B) the additional covenant specified in Section 7.2(a) (the
Dismissal of the California Action appeals);
(ii) as
described in section 6.D of the Settlement Agreement, the
Studios’ Monetary Claims, the Studios’ proofs of claims
in the Bankruptcy Case and the Monetary Judgment in the California
Action will be superseded by this Plan, Settlement Agreement, the
Note, and the Security Agreement after all of the following events
have occurred: (1) entry of the Approval Order and Confirmation
Order and the occurrence of the Effective Date; (2) the dismissal
of the appeals in the California Action; and (3) execution and
delivery of the Note and the Security Agreement;
(iii) the
Permanent Injunction shall remain in full force and effect and is
not considered part of the Studios’ Monetary
Claims;
(iv) the
Reorganized Debtor will make and deliver the Note to the Studios as
contemplated by the Settlement Agreement, and will perform
according to its terms;
(v) the
Reorganized Debtor will make and deliver the Security Agreement to
the Studios as contemplated by the Settlement Agreement, pursuant
to which the Studios will be granted the Compliance Lien, and will
perform according to its terms; and
(vi) the
Studios shall have the rights and remedies specified in the
Settlement Agreement, the Note, the Security Agreement and this
Plan.
(d) Plan
Supplement Documents. The Settlement Agreement, Note,
Security Agreement, and other legal and contractual documents (the
“Plan Supplement
Documents”) contemplated or required by this Plan are
attached hereto as Exhibits A through D respectively. The
Confirmation Order shall specifically approve the form and content
of the Plan Supplement Documents.
Section 4.4 Class
4 - Credit Holders’ Claims.
(a) Impairment.
Class 4 is arguably impaired under the Plan. Holders of Allowed
Class 4 Claims shall be entitled to vote to accept or reject the
Plan.
11
(b) Payment.
Holders of Allowed Class 4 Claims shall be entitled to use their
VidAngel Subscription Credits as a credit towards the Reorganized
Debtor’s Self-Selected Viewing Services, provided however,
that any Credit Holder that has not used all of his or her VidAngel
Subscription Credits by the date that is 18 months after the
Effective Date he or she shall be assumed to have been abandoned
and such Holder shall lose his or her remaining VidAngel
Subscription Credits; and provided further, that no Credit Holder
shall have any right to redeem his or her VidAngel Subscription
Credits for Cash and no Credit Holder shall be paid from
Distribution Funds.
(c) Effect
of Use of VidAngel Credits Prior to Effective Date. To the
extent that a holder of an Allowed Class 4 Claim redeems some or
all of its VidAngel Credits Prior to the Effective Date, the
Allowed Claim of such Credit Holder(s) shall be deemed satisfied up
to the amount redeemed.
Section 4.5 Class
5 - Equity Interests.
(a) Impairment.
Class 5 is arguably impaired under the Plan. Holders of Class 5
Equity Interests shall be entitled to vote to accept or reject the
Plan.
(b) Treatment.
Each record holder of an Equity Interest in the Debtor shall retain
its interest in the Debtor. The Reorganized Debtor shall be
prohibited from making any distributions of Cash or other property
to the holders of Equity Interests on account of such Equity
Interests unless and until the Settlement Amount has been paid in
full; provided, however, that such Equity Interests may be
purchased by the Reorganized Debtor or redeemed from the proceeds
of New Equity Options or capital contributions.
Section 4.6 No
Penalties. Except as
expressly stated in the Plan or the Plan Supplement Documents, or
allowed by the Bankruptcy Court, no late charge or penalty,
including but not limited to prepayment penalties, shall be allowed
on any Claim subsequent to the Petition Date.
Section 4.7 All
Defaults Cured and Waived; All Notes and Obligations Decelerated
and Reinstated. Pursuant to
Sections 1123(a)(5)(G) and 1124(2) of the Bankruptcy Code, among
others, and except as otherwise provided by this Plan, all defaults
by the Debtor that existed or that may have existed under any
promissory note, loan document, unexpired lease, executory contract
or other written agreement of or by the Debtor shall be deemed
cured and waived as of the Effective Date. All notes, instruments
or obligations that were accelerated pre-petition and/or
pre-confirmation shall be decelerated and reinstated as of the
Effective Date.
Section 4.8 No
Assumed Liability. Except as
otherwise expressly set forth in the Plan, the Reorganized Debtor
shall not assume or be liable for any Claims.
Section 4.9 Satisfaction
of Claims and Release. As of the
Effective Date, all Claims against the Debtor and the Estate
existing as of the Confirmation Date shall be satisfied and
released except as provided in the Plan (and in the case of the
Studios, except as provided in the Plan and in the Plan Supplement
Documents).
Section 4.10 Amendments
to Claims. On or after the
Confirmation Date, a Claim may not be amended without the prior
authorization of the Bankruptcy Court. Absent such authorization,
any amended Claim filed shall be deemed disallowed in full and
expunged without any further action.
12
ARTICLE
V
MEANS
FOR EXECUTION OF THE PLAN
Section 5.1 Revesting
of Property; Discharge and Release of Chapter 11 Trustee; Notice of
Effective Date. Except as
otherwise provided in this Plan, the Reorganized Debtor, as of the
Effective Date, shall be vested with all of the assets of the
Estate; provided, however, that the Reorganized Debtor shall remain
subject to the supervision and control of the Chapter 11 Trustee
until he is discharged and released him from his duties and
obligations as Chapter 11 Trustee by Order of the Bankruptcy Court.
Upon the earlier of (a) the entry of a final decree and Order
closing the case pursuant to Section 350 of the Bankruptcy Code and
Federal Rule of Bankruptcy Procedure 3022, or (b) entry of an
order discharging and releasing him from his duties and obligations
as Chapter 11 Trustee, the Chapter 11 Trustee and shall have no
further obligations to the Court, the Debtor, its creditors or its
equity holders. Unless such period is enlarged by Order of
the Bankruptcy Court, the Chapter 11 Trustee, the Studios and/or
the Reorganized Debtor shall request entry of the Case Closing
Order within no more than sixty (60) days from the Effective Date,
and the Case Closing Order shall be entered by no later than one
hundred (100) days from the Effective Date. The Studios, the
Chapter 11 Trustee or the Reorganized Debtor shall file a Notice of
Effective Date with the Court indicating that the Effective Date
has occurred.
Section 5.2 Continuation
of Business Operations. Except as
otherwise expressly set forth in the Plan, from and after the date
of entry of the Case Closing Order, the Reorganized Debtor is
authorized to continue its normal business operations, and enter
into such transactions as it deems advisable, free of any
restriction or limitation imposed under any provision of the
Bankruptcy Code.
Section 5.3 Continuation
of Anti-Discrimination Provisions of Bankruptcy
Code. A governmental
unit may not deny, revoke, suspend, or refuse to renew a license,
permit, charter, franchise, or other similar grant to, condition
such a grant to, or discriminate with respect to such a grant
against, the Debtor, the Reorganized Debtor, or another Person with
whom the Debtor or the Reorganized Debtor have been or are
associated or affiliated, solely because of the commencement,
continuation, or termination of the Bankruptcy Case or because of
any provision of the Plan or the legal effect of the Plan, and the
Confirmation Order will constitute an express injunction against
any such discriminatory treatment by a governmental
unit.
Section 5.4 Effect
of Entry of Case Closing Order. As of the date of
entry of the Case Closing Order, the Debtor’s existing
management team shall assume full control of the Debtor and its
Assets subject to the terms and requirements of this Plan and the
Plan Supplement Documents, and all Assets will vest in the
Reorganized Debtor free and clear of all Claims, Liens, and other
interests except as otherwise expressly provided in and subject to
the terms of the Plan and the Plan Supplement Documents and the
Confirmation Order. As more particularly specified in the
Settlement Agreement and the Security Agreement:
(a) substantially all of the Assets of the Reorganized Debtor
will be subject to the Compliance Lien during the 14-year period
after the Effective Date; (b) the Reorganized Debtor may be
subject to restrictions on selling assets without the
Studios’ consent; (c) the Reorganized Debtor remains
subject to the California Court’s Permanent Injunction; and
(d) the Reorganized Debtor shall remain obligated to observe
the Express Covenants (excepting the covenant specified in section
7.1 of the Plan, which does not apply as to the Reorganized
Debtor).
Section 5.5 Promissory
Note.
(a) As
set forth more fully in the Settlement Agreement and Section
4.3(b)(iv) of the Plan, and subject to and effective upon the
occurrence of the Effective Date, the Reorganized Debtor (and/or
the Chapter 11 Trustee on behalf of the Reorganized Debtor) shall
execute and deliver the Note to the Studios.
(b) If,
upon the expiration of fourteen (14) years after the Effective
Date, the Settlement Amount is timely paid in full and there is no
Uncured Default and there have not been four Strikes in a
consecutive five (5) year period, then the Note shall be cancelled,
and the original Note marked “Paid and Cancelled” shall
be returned to the Reorganized Debtor.
(c) Even
if the Settlement Amount is timely paid in full, the Note shall
remain valid and effective for fourteen (14) years from the
Effective Date. If prior to the expiration of fourteen (14) years
from the Effective Date, the Studios prevail in an Enforcement
Action against the Reorganized Debtor, as set forth in Section 4.E
of the Settlement Agreement, the Bankruptcy Court (or, if
applicable, the alternative Utah courts specified in Section 11.3)
may, in addition to any other relief authorized under section 4.E
of the Settlement Agreement, order the immediate acceleration of
the Note and may enter a money judgment in the amount of the unpaid
balance of the Note.
13
Section 5.6 Security
Agreement and Compliance Lien.
(a) As
set forth more fully in the Settlement Agreement and Section
4.3(b)(v) of the Plan, and subject to and effective upon the
occurrence of the Effective Date, the Reorganized Debtor (and/or
the Chapter 11 Trustee on behalf of the Reorganized Debtor) shall
execute and deliver the Security Agreement to the
Studios.
(b) Pursuant
to the Settlement Agreement and upon delivery of the fully executed
Security Agreement, the Reorganized Debtor shall be deemed to have
granted the Compliance Lien to the Studios as of the Effective
Date, which Compliance Lien shall constitute a lien on the
Collateral (as defined and specified in the Security
Agreement).
(c) Upon
delivery of the fully executed Security Agreement to the Studios,
the Compliance Lien shall attach and become valid, binding,
continuing, enforceable, fully-perfected and non-avoidable by
operation of law as of the Effective Date without any further
action by the Studios or any other party in interest, and without
the necessity of execution by the Debtor, the Chapter 11 Trustee or
any other party in interest of a separate document, or the filing
or recordation, of any financing statements, security agreements,
mortgages, deeds of trust, or other documents. Nonetheless, the
Studios may file financing statements (and at the appropriate time
continuation statements) in appropriate filing offices (including
the State of Utah, Department of Commerce, Division of Corporations
and Commercial Code, and United States Patent & Trademark
Office) as they deem necessary or appropriate to perfect the
Compliance Lien. Provided the Reorganized Debtor is not in Default
(i.e., there is no Notice of Default that is not Cured or the
subject of a Notice of Dispute or Enforcement Action proceeding),
the Compliance Lien shall be released and eliminated, and the
Security Agreement shall expire, fourteen (14) years after the
Effective Date. Neither the expiration of the Compliance Lien, nor
satisfaction of payment obligations of the Note, shall relieve the
Reorganized Debtor of its obligations to comply with the Express
Covenants.
(d) The
Studios shall be obligated to subordinate the Compliance Lien on
the terms and conditions specified in the Settlement Agreement and
in the Security Agreement.
(e) Compliance
Lien Shall Not Trigger a Default. Notwithstanding any
provision in this Plan or in any lease, loan agreement or executory
contract of the Debtor to the contrary, neither the execution of
the Security Agreement, nor the granting of the Compliance Lien,
nor the continuation of the Compliance Lien, nor any acts by the
Reorganized Debtor or the Studios to perfect the Compliance Lien
shall constitute, create or trigger a default by the Debtor or an
event of default.
(f) Limitations
on Enforcement. The Compliance Lien shall be limited to, and
enforceable only to the extent authorized by, the Settlement
Agreement. Without limitation, the Compliance Lien granted
hereunder and Secured Parties’ rights in collateral pledged
under the Security Agreement, may be enforced only through the
institution of an Enforcement Action, subject to the notice
requirements and limitations specified in the Settlement Agreement,
including in section 4.E thereof.
Section 5.7 Distributions
on Account of Claims and Interests. The Reorganized
Debtor shall make the distributions contemplated under the Plan (or
establish the reserves required by this Plan) from Cash assets in
existence on the Effective Date and from additional cash, assets
and property generated or obtained after the Effective Date, and in
accordance with the procedures set forth in Section 6.1 of this
Plan. Pursuant to Section 1142 of the Bankruptcy Code, in the event
the Reorganized Debtor fails to fulfill its payment obligations
under this Plan the Studios or any other parties in interest may,
but shall not be required to, request that the Court enter an order
either (a) directing the Reorganized Debtor to make such payments,
(b) appointing an appropriate third party to control and oversee
the Reorganized Debtor’s payment obligations, or (c) exercise
the other rights granted to them by this Plan (or, in the case of
the Studios, by the Plan Supplement Documents).
Section 5.8 Employment
of Professionals. Following the
Effective Date, the Reorganized Debtor may employ attorneys,
accountants, or other professionals as it may deem appropriate in
the ordinary course of business and pay such professionals’
reasonable fees and expenses. Professionals employed by the
Reorganized Debtor after the Effective Date shall not be subject to
Bankruptcy Court approval.
14
Section 5.9 Ability
to Incur Debt. The Reorganized
Debtor may incur debt after the Effective Date on a secured or
unsecured basis without further notice, opportunity for hearing or
order, except only to the extent the terms and provisions of this
Plan or the Settlement Agreement expressly and specifically provide
otherwise.
Section 5.10 Management
of Reorganized Debtor. Effective upon the entry of the Case
Closure Order, the Reorganized Debtor shall be managed day-to-day
by the Debtor’s officers, including Neal Harmon (CEO),
Jeffrey Harmon (CMO), Elizabeth Ellis (President/COO), Patrick
Reilly (CFO), and Joseph Wecker (CTO). Until the date of entry of
the Case Closure Order, the Reorganized Debtor shall be managed by
the same individuals, but subject to the oversight and direction of
the Trustee.
Section 5.11 Settlement
and Compromise.
Pursuant to and
consistent with Section 1123(b)(3) of the Bankruptcy Code, Federal
Rule of Bankruptcy Procedure 9019 and other applicable law, this
Plan (including the Plan Supplement Documents) provides for the
settlement and adjustment of legal claims and interests belonging
to the Debtor and the estate. In exchange for the consideration
provided to the Studios herein and in the Plan Supplement
Documents—including the covenants and agreements in Sections
7.2 and 7.3, the release of the Studios under the Settlement
Agreement, the Note, the Security Agreement, the Compliance Lien
and the Settlement Agreement—the Studios have agreed to
substantially reduce their Claims as provided herein. The
Confirmation Order shall, among other provisions, specifically
approve this settlement and compromise pursuant to Section
1123(b)(3), Bankruptcy Rule 9019 and other applicable
law.
Section 5.12 New
Equity and Restructuring Options.
Notwithstanding
anything to the contrary under the Plan, the Reorganized Debtor may
issue new equity interests after the Effective Date, including
without limitation, by: (i) offering employees
“options” or “rights” to purchase equity
interests in the Reorganized Debtor; (ii) implementing new rounds
of Crowdfunding; (iii) issuing or selling shares, certificates,
notes, bonds, indentures, purchase rights, options, warrants, or
other instruments, documents, or methods providing for new
ownership interests in the Reorganized Debtor (collectively, the
“New Equity Options”). Nothing herein is intended to
constitute the disclosure of such information as may be required by
the SEC, similar state agencies, or federal or state law for the
sale of securities. In the event that any or all of the New Equity
Options are implemented, the Reorganized Debtor shall provide such
disclosures at such time as are required by applicable law. The
Debtor is, and shall be, authorized to issue and award up to
956,200 Class A Stock Options to the Debtor’s Employees as of
the Effective Date. To the extent that the Debtor has reserved
additional Class A Options for its Employees or future employees,
the Reorganized Debtor may issue or award such options at any time
after the Effective Date. Subject to the requirements of its
organizational and other corporate documents, the Reorganized
Debtor shall retain full discretion as to how, to whom, and in what
amounts it will issue the Class A Stock Options.
The
Reorganized Debtor may restructure or otherwise reorganize its
corporate structure, including, without limitation, by
“spinning off” its “original content” line
of business, its Self-Selected Viewing Service business, and its
“DryBar Comedy” line of business into three or more
separate entities. It is possible that such a “spin
off” could entail the transfer of a portion, all, or
substantially all of the Reorganized Debtor’s assets into one
or more newly formed entities. Notwithstanding any “spin
off” of any of its lines of business, the new entities, the
Reorganized Debtor, and all property of the new entities and the
Reorganized Debtor, shall remain subject to the provisions of this
Plan, the Settlement Agreement and the Plan Supplement Documents as
though each is considered to be part of “Reorganized
Debtor” or its property, including without limitation paying
obligations under the Plan, the Express Covenants, and the Notes
and Security Agreement. Further, each new entity shall sign such
further documentation as the Studios may reasonably request in
order to document and affirm or reaffirm their agreement to be
bound by the terms of this Settlement Agreement, the Plan and the
Plan Supplement Documents, and the Studios are hereby authorized to
file and/or record such UCC-1 financing statements or other
document as they deem appropriate in their sole discretion to
evidence the creation, attachment and/or perfection of their lien
on the assets of the new entities.
15
ARTICLE VI
IMPLEMENTATION
OF THE PLAN
Section 6.1 Method
of Distributions Under the Plan.
(a) In
General. Subject to Bankruptcy Rule 9010, all distributions
under the Plan to be made to the holder of each Allowed Claim shall
be mailed by first class mail, postage prepaid, to the address of
such holder as listed on the Schedules as of the Confirmation Date,
unless the Debtor or the Reorganized Debtor has been notified in
writing of a change of address, including, without limitation, by
the filing of a proof of claim or notice of transfer of claim filed
by such holder that provides an address for such holder different
from the address reflected on the Schedules. The Debtor and the
Reorganized Debtor shall have no obligation to locate such holders
whose distributions or notices are properly mailed but nevertheless
returned.
(b) Form
of Distributions. Any payment of Cash made by the
Reorganized Debtor pursuant to the Plan shall be made by check;
provided, however, that after the occurrence of the Effective Date,
the Reorganized Debtor is not obligated to make any Cash payment
under the Plan unless the payment exceeds fifty dollars ($50);
provided, further, that Cash equal to 100% of the distributions to
which the holder of a Claim would be entitled under the Plan if the
payment to such holder was less than or equal to fifty dollars
($50) shall be maintained in a reserve (the “Small Payment
Reserve”) for the benefit of such holder until an aggregate
of at least fifty ($50) dollars is payable to such holder and at
such time the holder shall receive a payment equal to 100% of the
distributions to which it would otherwise be entitled. The
remaining balance of the Small Payment Reserve shall be returned to
the Reorganized Debtor’s general funds once all objections to
Claims have been resolved, free and clear of any claim or interest
of any holder of a Claim under the Plan.
(c) Reversion
of Unclaimed Checks. The amount of any checks issued for
distributions under the Plan that remain uncashed for a period of
180 days after the date of such distribution shall revert and be
vested in the Reorganized Debtor free and clear of any claim or
interest of any holder of a Claim under the Plan.
(d) Distributions
to be on Business Days. Any payment or distribution required
to be made under the Plan on a day other than a Business Day shall
be made on the next succeeding Business Day.
(e) Distributions
to Holders as of the Confirmation Date. As of the close of
business on the Confirmation Date, the claims register shall be
closed. The Reorganized Debtor shall have no obligation to
recognize any transfer of any Claims occurring after the close of
business on the Confirmation Date, and shall instead be entitled to
recognize and deal for all purposes under the Plan with only those
holders of record as of the close of business on the Confirmation
Date.
(f) Withholding
Taxes on Distributions. The Reorganized Debtor shall
withhold from any Cash or property distributed under the Plan such
amounts as the Reorganized Debtor is obligated under non-bankruptcy
law to withhold and transmit to taxing authorities.
Section 6.2 Objections
to Disputed Claims. Any objections to
Claims against the Estate may be prosecuted by the Debtor, the
Reorganized Debtor or any other party in interest. Except for the
Studios Monetary Claims, which are deemed Allowed by this Plan, or
as otherwise provided by order of the Bankruptcy Court, the Debtor,
Reorganized Debtor or any other party in interest may file an
objection to any Claim until ninety (90) days after the Effective
Date.
Section 6.3 Resolution
of Claims. The Court shall
have entered orders or there shall be agreements satisfactory to
the Chapter 11 Trustee or the Reorganized Debtor concerning Claims,
any Liens asserted by holders of Claims, and any interests in the
Debtor (which may be orders included within the Confirmation Order)
that, in the sole discretion of the Chapter 11 Trustee are required
for the feasibility and implementation of the Plan.
16
Section 6.4 Estimation
of Claims. Prior to the
Confirmation Date, the Chapter 11 Trustee and/or the Studios may
request that the Bankruptcy Court estimate a Disputed Claim,
pursuant to Section 502(c) of the Bankruptcy Code, as necessary to
confirm the Plan. If the Bankruptcy Court determines the maximum
limitation of such Claim, such determination shall not preclude the
Studios, the Chapter 11 Trustee, the Debtor or any other party in
interest from pursuing any additional proceedings to object to any
ultimate payment of such Claim. If the Bankruptcy Court determines
the Allowed amount of such Claim, the amount so determined shall be
deemed the amount of the Disputed Claim for all purposes under this
Plan. All such proceedings are cumulative and not exclusive
remedies. For the avoidance of doubt, the Studios Monetary Claims
are not subject to estimation.
Section 6.5 Retention
and Preservation of Claim Objections and Causes of
Action. Except as
otherwise provided by this Plan, pursuant to Section 1123(b)(3)(B)
of the Bankruptcy Code, on the date of entry of the Case Closing
Order, the Debtor and the Reorganized Debtor’s rights to
object to all Claims and Interests asserted against the Estate and
all of the Debtor’s or Estate’s Causes of Action,
including without limitation: (1) the Debtor’s Causes of
Action asserted in any adversary proceeding, state court
proceeding, or any other proceeding which is pending as of the
Confirmation Date; (2) all Claims and Causes of Action disclosed in
the Schedules or Statement of Financial Affairs which are
incorporated herein by reference; (3) all Claims and Causes of
Action described in the Trustee’s Disclosure Statement; (4)
any Claims and Causes of Action contained in any contested matter
or objection to Claim pending on the Confirmation Date; (5) any
Claims and Causes of Action held by the Debtor or the Estate,
arising pre- or post-Petition Date, against the Debtor’s
officers, employees, directors, and shareholders; (6) any Claims
and Causes of Action held by the Debtor or the Estate, arising pre-
or post-Petition Date, for professional or legal malpractice,
including without limitation Claims and Causes of Action against
David Quinto, Kupferstein Manuel & Quinto, LLP, and Kaplan
Voekler Cunningham & Frank, PLC; (7) any Claims and Causes of
Action against Non- Compliant Professionals, including without
limitation, Fred Pena, Pena Legal, LLC, J. Morgan Philpot, and
Oyster Consulting, LLC; (8) any Claims and Causes of Action against
VAS Portal, LLC, VAS Brokerage, LLC, and Studio Brokerage, LLC; (9)
all Avoidance Actions, including without limitation actions under
Bankruptcy Code § 549 for unauthorized transfers made by the
Debtor; and (10) any and all other Claims and Causes of Action that
the Debtor holds preconfirmation, including, but not limited to,
Claims for unpaid accounts receivable, shall vest in the Estate,
and shall be subject to the exclusive control and authority of the
Reorganized Debtor. Prior to the date of entry of the Case Closing
Order, all such rights shall continue to be held by the Chapter 11
Trustee, as the representative of the Estate.
As more
fully outlined in the Settlement Agreement and this Plan, the Class
3 Studios Monetary Claims are Allowed under this Plan; the
Debtor’s appeals of those claims shall be deemed abandoned
and dismissed pursuant to Section 7.2(a) of this Plan; and the
Reorganized Debtor will not retain any rights to pre-Confirmation
Claims or Causes of Action that the Debtor or the Estate may
otherwise have been entitled to assert against the
Studios.
ARTICLE VII
EXPRESS
COVENANTS
Section 7.1 Debtor’s
Management Covenant Not to Compete.
Consistent with
this Plan and the Settlement Agreement, the Confirmation Order
shall provide that for Neal Harmon and Jeffrey Harmon to remain in
management positions with the Reorganized Debtor, and as a
condition to their continued employment, each shall execute in
favor of the Reorganized Debtor a one-year covenant not to compete
in the business of “Self-Selected Viewing” (a) in form
substantially similar to what is attached hereto as Exhibit E, or
(b) in an alternative form approved by, and acceptable to,
Neal Harmon and Jeffrey Harmon, the Trustee and the
Studios.
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Section 7.2 Abandonment
of Debtor’s Appeals in California Action; Covenant Not to
Sue; Covenant Not to Seek Certain Changes in Law.
(a) As
of the Effective Date, and as specified in the Confirmation Order,
the Chapter 11 Trustee, the Debtor, the Reorganized Debtor and the
Estate shall be deemed to have abandoned all appeals in the
California Action; and within three (3) business days after the
Effective Date the Chapter 11 Trustee, on behalf of the Debtor and
Reorganized Debtor, shall file a Notice of Voluntary Dismissal, and
take all other steps necessary to dismiss all appeals in the Ninth
Circuit, including Nos. 19-56174 and 20-55352.
(b) Section
2.B of the Settlement Agreement is incorporated by reference as if
restated in its entirety in this section 7.2(b) (such terms and
conditions, the “Covenant Not to Sue”) as
a covenant of the Reorganized Debtor.
(c) Section
2.C of the Settlement Agreement is incorporated by reference as if
restated in its entirety in this section 7.2(c) (such terms and
conditions, the “Covenant Not to Seek Certain Changes
to Law”) as a covenant of the Reorganized
Debtor.
Section 7.3“No
Use Covenant” Applicable to the Studios’ Copyrighted
Works. Section 2.A of
the Settlement Agreement is incorporated by reference as if
restated in its entirety in this section 7.3 (such terms and
conditions, the “No Use Covenant”) as a covenant of the
Reorganized Debtor.
Section 7.4 Effective
Date of the Express Covenants. The Express
Covenants become effective as of the Effective Date and claims
alleging a breach of an Express Covenant are limited to conduct
occurring on or after the Effective Date.
Section 7.5 No
Intended Third Party Beneficiaries; Enforcement of the Express
Covenants. The covenant not
to compete contemplated under section 7.1 of this Plan is solely
for the benefit of the Reorganized Debtor, and there are no
intended third-party beneficiaries (including the Studios). Only
the Reorganized Debtor may enforce the covenant not to compete
under section 7.1 of this Plan, and then only according to the
terms and conditions of the written agreement and the limits of
Utah law.
Only
the Studios may enforce the Express Covenants under sections 7.2
and 7.3 of this Plan and/or the Studios’ rights and remedies
under the Settlement Agreement, the Note and the Security
Agreement. The right and ability of the Studios to enforce the
Settlement Agreement, the Note, the Security Agreement and/or the
Express Covenants under sections 7.2 and 7.3 of this Plan are
subject to the limits imposed under, and the terms and conditions
of, the Settlement Agreement, including (as specified in the
Settlement Agreement) certain notice obligations, cure rights, and
dispute resolution procedures. Without limitation, the Express
Covenants under sections 7.2 and 7.3 of this Plan may be enforced
only by instituting an Enforcement Action in the Bankruptcy Court
(or, if applicable, the alternative Utah courts specified in
Section 11.3).
ARTICLE VIII
VOTING
ON THE PLAN
Section 8.1 Voting
of Claims. Each holder of an
Allowed Claim in an impaired Class which retains or receives
property under the Plan shall be entitled to vote separately to
accept or reject the Plan and indicate such vote on a duly executed
and delivered ballot as provided in such order as is entered by the
Bankruptcy Court establishing certain procedures with respect to
the solicitation and tabulation of votes to accept or reject the
Plan. As the treatment of Class 4 Credit Holders’ Claims
under Section 4.4 and Class 5 Equity Interests under Section 4.5 is
substantively identical to the treatment of such classes under the
Trustee’s proposed Plan of Reorganization, dated April 9,2020 [Dkt. 596], and as voting has already been conducted on that
plan, the Trustee and the Studios reserve the right to assert that
the results of voting by Classes 4 and 5 on the Trustee’s
proposed Plan of Reorganization (i.e., their acceptance of the
plan) should likewise apply to this Plan.
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Section 8.2 Nonconsensual
Confirmation. If any impaired
Class entitled to vote shall not accept the Plan or be deemed to
have accepted the Plan by the requisite statutory majorities
provided in Sections 1126(c) or 1126(d) of the Bankruptcy Code, as
applicable, or if any impaired class is deemed to have rejected the
Plan, the Trustee and the Studios reserve the right (i) to confirm
the Plan under Section 1129(b) of the Bankruptcy Code, and (ii) to
amend the Plan to the extent necessary to obtain entry of a
Confirmation Order.
Section 9.1 Assumption
of Executory Contracts and Unexpired Leases; Deemed Cure
Amount. Any executory contract or unexpired
lease which (i) has not expired by its own terms on or prior to the
Confirmation Date, (ii) has not been assumed and assigned or
rejected with the approval of the Bankruptcy Court on or prior to
the Confirmation Date, (iii) is not the subject of a motion to
assume or reject which is pending at the time of the Confirmation
Date, or (iv) is not the basis of a Credit Holders’ Claim,
shall be deemed assumed as of the Effective Date. If there has been
a default in an executory contract or unexpired lease, then the
Reorganized Debtor shall cure or provide adequate assurance that it
will promptly cure such default prior to its assumption of such
lease or contract, as required under (and subject to the
limitations of) Bankruptcy Code § 365(b), unless otherwise
agreed to by the Reorganized Debtor and the counterparty to such
lease or executory contract. Unless the counterparty to an
unexpired lease or executory contract provides notice on or before
the Confirmation Date, any existing defaults shall be deemed cured
as of the Effective Date, and the deemed cure amount for any such
lease or contract is $0. Any dispute regarding a cure amount or the
cure of any other existing default under an unexpired lease or
executory contract shall be heard and determined by the Bankruptcy
Court. Any claim for a cure amount or the cure of any other
existing default under an assumed lease or executory contract must
be filed with the Court and served on the Reorganized Debtor by no
later than 30 days after the Confirmation Date.
Section 9.2 Post-Petition
Agreements Unaffected By Plan. Except as
otherwise expressly provided herein, nothing contained in the Plan
shall alter, amend or supersede any agreements or contracts entered
into by the Debtor after the Petition Date that were otherwise
valid, effective and enforceable against the Debtor as of the
Confirmation Date. The Reorganized Debtor shall be deemed to be
substituted for any Debtor in such contract or agreement, as
applicable, and the Reorganized Debtor shall have all right, title
and interest of the Debtor under such contract or agreement as if
the Reorganized Debtor had been the original contracting party
thereunder.
Section 9.3 Credit
Holders’ Claims Treated Under Section 4.4. Neither the
assumption nor rejection of any executory contract under this plan
shall alter, amend, or supersede the treatment afforded to Credit
Holders under Section 4.4 of this Plan. Accordingly, the executory
contracts on which the Credit Holders’ Claims are based are
deemed rejected under the Plan, provided, however, that the Credit
Holders shall be entitled to treatment under Section 4.4 of this
Plan.
ARTICLE X
CONDITIONS
PRECEDENT TO EFFECTIVE DATE
Section 10.1 Conditions
Precedent to Effectiveness. The Plan shall
not become effective, and the Effective Date shall not occur,
unless and until the following conditions shall have been satisfied
or waived:
(a) this
Plan is confirmed without material change (unless such change has
been expressly agreed to by the Studios and the Trustee), the Plan
Supplement Documents are approved by the Bankruptcy Court without
material change (unless such change has been expressly agreed to by
the Studios and the Trustee) and the Confirmation Order, in form
and substance reasonably acceptable to the Studios and the Trustee,
shall have been entered by the Bankruptcy Court;
(b) The
form and content of the Plan Supplement Documents have all been
approved in the Confirmation Order, and the same have all been
executed, delivered and, if necessary, properly acknowledged and/or
recorded, and all other actions, documents and agreements necessary
to implement the Plan and the Settlement Agreement shall have been
executed, delivered and, if necessary, properly acknowledged and/or
recorded, and shall have become effective; and
19
(c) the
Estate shall have sufficient Cash to meet all Cash funding
obligations under the Plan required to be made on the Effective
Date.
Section 10.2 Failure
of Conditions Precedent. Notwithstanding
anything in this Plan to the contrary, the conditions set forth in
Section 10.1 above must be satisfied or waived on or before sixty
(60) days after the Confirmation Date. In the event that the
conditions set forth in Section 10.1 above are not satisfied on or
before sixty (60) days after the Confirmation Date, then the Plan
shall be deemed revoked and withdrawn, the Confirmation Order shall
be deemed vacated, and the Plan Supplement Documents shall become
void and unenforceable.
Section 10.3 Waiver
of Conditions. The Studios and
the Trustee may jointly waive one or more of the conditions
precedent to the effectiveness of the Plan set forth in Section
10.1 above, but neither the Studios nor the Trustee shall have the
right to unilaterally waive such conditions.
ARTICLE XI
RETENTION
OF JURISDICTION
Section 11.1 Retention
of Jurisdiction. Except only as
expressly and specifically permitted under the Settlement Agreement
or this Plan, after the Effective Date and for a period of fourteen
(14) years thereafter, and notwithstanding the entry of the Case
Closure Order, the Bankruptcy Court shall retain exclusive
jurisdiction over the Bankruptcy Case, the Plan, the Settlement
Agreement, the Note and the Security Agreement, including to
address the following specified matters arising out of, and related
to, the Bankruptcy Case and the Plan pursuant to, and for the
purposes of, Sections 105(a) and 1142 of the Bankruptcy
Code:
(a) to
hear and determine any and all objections to the allowance of any
Claims or any controversies as to the classification of any Claims
or estimate any Disputed Claim;
(b) to
hear and determine any and all applications by Professionals for
compensation and reimbursement of expenses;
(c) to
hear and determine any and all pending applications for the
rejection or assumption of executory contracts and unexpired
leases, and fix and allow any Claims resulting
therefrom;
(d) to
enforce the provisions of the Plan, the Settlement Agreement, the
Note and the Security Agreement, subject to the terms
thereof;
(e) to
correct any defect, cure any omission, or reconcile any
inconsistency in the Plan or in the Confirmation Order as may be
necessary to carry out the purpose and the intent of the
Plan;
(f) to
determine any Claim or liability to a Governmental Unit which may
be asserted as a result of the transactions contemplated
herein;
20
(g) to
hear and determine matters concerning state, local, and federal
taxes in accordance with Sections 346, 505 and 1146 of the
Bankruptcy Code;
(h) to
hear and determine any and all adversary proceedings, applications,
contested matters and other litigated matters pending on the
Confirmation Date;
(i) to
enforce the releases, exculpatory provisions and/or injunctions
described or provided under this Plan, which shall include
jurisdiction to enter temporary restraining orders, preliminary
injunctions, permanent injunctions, contempt sanctions and other
appropriate orders and remedies, including to stay and prevent
litigation filed or pending before another court or tribunal;
and
(j) to
determine such other matters as may be provided for in the
Confirmation Order.
Except
only as expressly and specifically permitted under the Settlement
Agreement or this Plan, the Studios will pursue their Default
Remedies in the Bankruptcy Court (or, if applicable, the
alternative Utah courts specified in section 11.3, below). The
Bankruptcy Court’s retention of exclusive jurisdiction under
this section 11.1, and/or under section 11.2 below, is not
intended, and shall not be construed, to limit the Studios’
rights to seek relief as specified in section 4.B.1 of the
Settlement Agreement.
Section 11.2 Exclusive
Jurisdiction. Except only as
expressly and specifically permitted under the Settlement Agreement
or this Plan, the Bankruptcy Court (or, if applicable, the
alternative Utah courts specified in Section 3.G.) shall have
exclusive jurisdiction to enforce the Settlement Agreement, the
Note, the Security Agreement, and the Studios’ rights under
this Plan. Without limitation, the Bankruptcy Court (or, if
applicable, the alternative Utah courts specified in Section 3.G.)
shall have exclusive and continuing jurisdiction to enforce the
Express Covenants under sections 7.2 and 7.3 of this Plan (and
under Section 2 of the Settlement Agreement) and any and all
remedies under the Note, the Security Agreement, and/or the
Compliance Lien. The Studios will pursue their Default
Remedies under the Settlement Agreement, the Note, the Security
Agreement and under the Plan, including remedies for any Uncured
Breach, exclusively in the Bankruptcy Court (or, if applicable, the
alternative Utah courts specified in Section 11.3). The Bankruptcy
Court’s retention of exclusive jurisdiction under this
section 11.2, and/or under section 11.1 above, is not intended, and
shall not be construed, to limit the Studios’ rights to seek
relief as specified in section 4.B.1 of the Settlement
Agreement.
Section 11.3 Alternative
Exclusive Jurisdiction. To the extent the
Bankruptcy Court does not accept jurisdiction of enforcement
proceedings as described in the Settlement Agreement (incorporated
herein), such must then be filed with the Federal District Court
for the District of Utah (Salt Lake City), and the Studios and the
Reorganized Debtor consent to jurisdiction (and will not dispute
jurisdiction) before that court and agree to stipulate and abide by
the same timing considerations described in section 3.E of the
Settlement Agreement unless ordered otherwise. If both the
Bankruptcy Court and the Federal District Court for the District of
Utah refuse to accept jurisdiction, the proceedings must then be
filed with the Third Judicial District Court in and for Salt Lake
County, State of Utah, located at Matheson Courthouse, 450 South
State Street in Salt Lake City, Utah.
Section 11.4 Exclusive
Jurisdiction Over Permanent Injunction. Nothing in this
Plan shall impact the exclusive jurisdiction of the California
Court to interpret and enforce the Permanent
Injunction.
Section 11.5 Closure
of Case.
(a) Closing
the Bankruptcy Case. Pursuant to Local Rule 3022-1, the
Bankruptcy Case shall be administratively closed pursuant to 11
U.S.C. § 350, following (i) notice and a motion for final
decree filed by the Trustee or by the Reorganized Debtor to the
Bankruptcy Court that all payments due as of the Effective Date
have been paid and the Plan has been substantially consummated; and
(ii) the entry of the Case Closing Order.
21
(b) Post-Confirmation
Payments to United States Trustee. Until entry of an Order
closing, dismissing or converting the Bankruptcy Case, any
quarterly payments due to the office of the United States Trustee
prior to the Effective Date of the Plan shall be paid in accordance
with 28 U.S.C. § 1930(a)(6) by the Reorganized Debtor. No
quarterly payments shall come due or be required after the
Bankruptcy Case is closed, unless the Bankruptcy Case for any
reason is reopened.
(c) Reopening
Case. At any time after the entry of the Case Closing Order,
the Bankruptcy Case may be reopened to address the matters set
forth in this Plan or to address any other matters authorized by
the Bankruptcy Code upon ex
parte application of the Reorganized Debtor, the Studios or
any other party in interest and submission of an appropriate order
to the Bankruptcy Court provided, however, that any order reopening
the Bankruptcy Case shall not reinstate the Chapter 11 Trustee.
Rather, as set forth in Section 5.1 of this Plan, upon entry of the
Case Closing Order the Chapter 11 Trustee shall be discharged and
shall have no further obligations to the Court, the Debtor, its
creditors or its equity holders.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Continuation
of Injunctions or Stays Until Effective Date
Section 12.2 .
All injunctions or stays provided for in the Bankruptcy Case under
Sections 105 or 362 of the Bankruptcy Code, or otherwise, and in
existence on the Confirmation Date, shall remain in full force and
effect until the Effective Date. Discharge. Pursuant to Section 1141(d) of the
Bankruptcy Code, and except as otherwise specifically provided in
the Plan, or in any contract, instrument, or other agreement or
document created pursuant to the Plan (including, without
limitation, the Plan Supplement Documents), the distributions,
rights, and treatment that are provided in the Plan shall be in
complete satisfaction, discharge, and release, effective as of the
Effective Date, of Claims, Interests, and Causes of Action,
including any interest accrued on Claims or Interests from and
after the Petition Date, whether known or unknown, against,
liabilities of, Liens on, obligations of, rights against, and
Interests in, the Debtor, the Estate, or any of their assets or
properties, regardless of whether any property shall have been
distributed or retained pursuant to the Plan on account of such
Claims and Interests, including demands, liabilities, and Causes of
Action that arose before the Confirmation Date, any liability
(including withdrawal liability) to the extent such Claims or
Interests relate to services performed by employees of the Debtor
prior to the Confirmation Date and that arise from a termination of
employment, any contingent or non-contingent liability on account
of representations or warranties issued on or before the Effective
Date, and all debts of the kind specified in Sections 502(g),
502(h), or 502(i) of the Bankruptcy Code, in each case whether or
not: (1) a Proof of Claim based upon such debt or right is filed or
deemed filed pursuant to Section 501 of the Bankruptcy Code; (2) a
Claim or Interest based upon such debt, right, or Interest is
Allowed pursuant to Section 502 of the Bankruptcy Code; or (3) the
Holder of such a Claim or Interest has accepted the Plan or voted
to reject the Plan. The Confirmation Order shall be a judicial
determination of the discharge of all pre-Confirmation Date Claims,
Interests, and Causes of Action, subject to the occurrence of the
Effective Date, except as otherwise specifically provided in the
Plan.
Section 12.3 Injunction
Relating to the Plan. As of the
Effective Date, and except as otherwise provided in this Plan or
the Plan Supplement Documents, all Persons are hereby permanently
enjoined from commencing or continuing, in any manner or in any
place, any action or other proceeding, whether directly,
indirectly, derivatively or otherwise against the Debtor, its
Estate, the Reorganized Debtor, or their successors-in-interest or
assigns, on account of, or respecting any Claims, debts, rights,
Causes of Action or liabilities discharged or treated pursuant to
the Plan. Upon entry of the Confirmation Order, and except as
otherwise authorized by this Plan or the Plan Supplement Documents,
all holders of Claims and Equity Interests and other parties in
interest, along with all persons in active concert or participation
with them, shall be enjoined from taking any actions to interfere
with the implementation or consummation of the Plan. Further,
except as otherwise expressly provided in the Plan, the Plan
Supplement Documents or the Confirmation Order, all Persons who
have held, hold, or may hold Claims against the Debtor, or who have
held, hold or may hold any debt or interest relating to the Debtor,
are permanently enjoined, from and after the Effective Date, to the
maximum extent permitted by law, from (i) commencing or continuing
in any manner any action or other proceeding of any kind with
respect to any such Claim, debt or interest against the Reorganized
Debtor or the Estate or (ii) enforcing, attaching, collecting or
recovering by any manner or means any judgment, award, decree or
order against the immediate or any mediate transferee of any
property distributed pursuant to the Plan or of any putative
securities, based upon a claim that the transferor’s receipt
of such property constituted a fraudulent transfer, fraudulent
conveyance, preference, violation of bulk sales or other law, or
based upon any other claim that receipt and/or distribution of
property by transfer pursuant to the Plan is wrongful, whether in
law or equity.
22
Section 12.4 Broad
Injunction. The intent of
sections 12.2 and 12.3 is to provide the broadest possible
injunction permitted by law and, to the extent permitted by law, to
expand the scope of that injunction for the benefit of the
Reorganized Debtor to the extent that, at any time after the
Effective Date, the law is clarified or changed to permit such a
broader injunction. The injunction in the Confirmation Order shall
provide that, except as otherwise authorized by the Settlement
Agreement, the Plan or the Confirmation Order, the holders of
Claims shall be enjoined from commencing or continuing any such
specified action or proceeding against Reorganized Debtor with
respect to any Claim or property of the Estate, including Claims
based in whole or in part on an allegation: (i) that the Debtor
breached any contract, with, or any duty or obligation to the
Creditor; (ii) that the Debtor was the alter ego or instrumentality
of another Person; (iii) that the Debtor made any preferential or
fraudulent transfer or any other voidable transfer or payment to
any Person; or (iv) that the Debtor or the Estate are liable for
any act or omission.
Section 12.5 Exculpation.
Notwithstanding anything herein to the contrary, the Studios, the
Debtor, the Chapter 11 Trustee, and their attorneys, accountants,
officers, employees, professionals, or agents (the
“Exculpated Parties”) shall not have or incur, and each
Exculpated Party is released and exculpated from, any liability to
any Holder of a Cause of Action, Claim, or Interest for any act or
omission in connection with, relating to, or arising out of the
formulation, preparation, dissemination, negotiation, filing, or
consummation of this Plan or any contract, instrument, release or
other agreement or document created or entered into in connection
with this Plan or the pursuit of consummation of this Plan. The
Exculpated Parties have, and upon confirmation of the Plan shall
not be liable at any time for the violation of any applicable law,
rule, or regulation governing the solicitation of acceptances or
rejections of this Plan.
Section 12.6 Release
of Claims.
(a) Release
of Claims Against the Debtor, Other Than Those Preserved by the
Plan and the Settlement Agreement. Except as contemplated by
the Settlement Agreement or this Plan, the rights afforded to
holders of Claims in the Plan shall be in exchange for a complete
release, satisfaction and discharge of all Claims against the
Debtor or the Reorganized Debtor, and acceptance of such
distributions under the Plan shall be deemed irrevocably to release
any and all claims of any type, kind or nature against the Debtor.
Persons deemed to have released Claims pursuant to this paragraph
shall be forever precluded from asserting against the Debtor, the
Reorganized Debtor or their respective assets any Claim, including
any Claim of the type released or deemed released
herein.
(b) Mutual
Releases Among the Reorganized Debtor and the Studios. The
limited release provisions under Section 8.J of the Settlement
Agreement hereby are incorporated as if restated herein in their
entirety.
Section 12.7 Default
of Plan. The provisions
governing dispute resolution and Default Remedies regarding
Defaults of the Express Covenants and payment defaults are set
forth in the Plan Supplement Documents which are attached to this
Plan. All other Defaults shall be handled according to this Plan
and the Bankruptcy Code.
Section 12.8 Setoffs.
Except as otherwise provided in this Plan, nothing contained in
this Plan shall constitute a waiver or release by the Estate of any
rights of setoff the Estate may have against any Person. All claims
of setoff or recoupment against the Debtor or Estate, however, are
discharged and released pursuant to Sections 12.2 and 12.5 of this
Plan.
Section 12.9 Amendment
or Modification of the Plan. Alterations,
amendments or modifications of the Plan may be proposed in writing
jointly by the Trustee and the Studios at any time prior to the
Confirmation Date, provided that the Plan, as altered, amended or
modified, satisfies the conditions of Sections 1122 and 1123 of the
Bankruptcy Code, and the Trustee and the Studios shall have
complied with Section 1125 of the Bankruptcy Code. The Plan may be
altered, amended or modified at any time before or after the
Confirmation Date and before substantial consummation, provided
that the Plan, as altered, amended or modified, satisfies the
requirements of Sections 1122 and 1123 of the Bankruptcy Code and
the Bankruptcy Court, after notice and a hearing, confirms the
Plan, as altered, amended or modified, under Section 1129 of the
Bankruptcy Code. A holder of a Claim that has accepted the Plan
shall be deemed to have accepted the Plan, as altered, amended or
modified, if the proposed alteration, amendment or modification
does not materially and adversely change the treatment of the Claim
of such holder. The Trustee and the Studios may, without notice to
holders of Claims insofar as it does not materially and adversely
affect the interests of any such holders, file any non-material
modification of the Plan to correct any defect or omission in this
Plan and any exhibit hereto. Neither the Trustee, nor the Studios
may amend the Plan without the consent of the other.
23
Section 12.10 Severability.
If, prior to the Confirmation Date, any term or provision of the
Plan is determined by the Bankruptcy Court to be invalid, void or
unenforceable, the Bankruptcy Court may, upon the request of the
Trustee and the Studios, alter and interpret such term or provision
to make it valid or enforceable to the maximum extent practicable,
consistent with the original purpose of the term or provision held
to be invalid, void or unenforceable, and such term or provision
shall then be applicable as altered or interpreted. Notwithstanding
any such holding, alteration or interpretation, the remainder of
the terms and provisions of the Plan shall remain in full force and
effect and shall in no way be affected, impaired or invalidated by
such holding, alternation or interpretation. The Confirmation Order
shall constitute a judicial determination that each term and
provision of the Plan, as it may have been altered or interpreted
in accordance with the foregoing, is valid and enforceable
according to its terms.
Section 12.11 Revocation
or Withdrawal of the Plan. The Trustee and
the Studios reserve the right to individually or collectively
revoke or withdraw the Plan prior to the Confirmation Date. If the
Trustee and/or the Studios revoke or withdraw the Plan prior to the
Confirmation Date, then the Plan shall be deemed null and void. In
such event, nothing contained herein shall constitute or be deemed
a waiver or release of any Claims by or against the Estate or any
other Person or to prejudice in any manner the rights of the
Studios in any further proceedings involving the
Estate.
Section 12.12 Binding
Effect. The rights,
duties and obligations of any Person named or referred to in this
Plan shall be binding upon, and shall inure to the benefit of, the
successors and assigns of such Person.
Section 12.13 Written
Notices. All notice
provisions of the Settlement Agreement are incorporated by
reference as if restated herein in their entirety, including
without limitation Section 8.A of the Settlement Agreement. All
Notices under this Plan, the Settlement Agreement, the Note and/or
the Security Agreement shall be in writing. Except as provided in
Settlement Agreement (solely with respect to notices by and between
the Studios and the Reorganized Debtor) notices under this Plan
shall be send by first class mail, postage-prepaid or by overnight
courier.
Section 12.14 Governing
Law. Except to the
extent the Bankruptcy Code, the Bankruptcy Rules or other federal
law is applicable, the rights and obligations arising under this
Plan shall be governed by, and construed and enforced in accordance
with, the laws of the State of Utah, without giving effect to the
principles of conflicts of law of such jurisdiction.
Section 12.15 Post-Confirmation
Fees, Final Decree. The Reorganized
Debtor shall be responsible for the payment of any
post-confirmation fees due pursuant to 28 U.S.C. § 1930
and the filing of post-confirmation reports, until a final decree
is entered pursuant to the Case Closing Order.
Section 12.16 Headings.
Headings are used in the Plan for convenience and reference only,
and shall not constitute a part of the Plan for any other
purpose.
Section 12.17 Filing
of Additional Documents. On or before
substantial consummation of the Plan, the Chapter 11 Trustee and
Studios shall file with the Bankruptcy Court any agreements or
other documents that may be necessary or appropriate to effectuate
and further evidence the terms and conditions hereof.
Section 12.18 Inconsistency.
In the event of any inconsistency between the Plan and the
Settlement Agreement, the terms of the Settlement Agreement shall
control. Nothing in this Plan is intended, or shall be construed,
to amend, limit or to augment the rights, remedies, duties and
obligations of the parties to the Settlement Agreement, including
without limitation (a) the scope and interpretation of the
Express Covenants, (b) notice and opportunity to cure
procedures specified in the Settlement Agreement, (c) the
dispute resolution procedures specified in the Settlement
Agreement, (d) the remedies for breach of contract specified
in section 4.E of the Settlement Agreement, or (e) the right
of the Studios to seek relief as specified in section 4.B.1 of the
Settlement Agreement. In the event of any inconsistency between the
Plan and any other Supplement Document, the terms of the Plan shall
control.
