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i. Mall ner and Purpose of Voting. Under the Code, creditors holding <br />Allowed Claims which are in an impaired class under the Plan are entitled to vote to <br />accept or reject the Plan. The Code requires that at least two-thirds in dollar amount and <br />more than one-half in number of the Allowed Claims voting in each impaired class of <br />creditors must vote to accept the Plan in order for it to be accepted by that class. In <br />order for interest holders to accept the Plan, at least two-thirds of the voting interest <br />holders must accept the Plan. In the event the Plan is not accepted by an impaired class <br />of creditors or interest holders, the Court may,nevertheless. confirm the Plan if it finds that <br />certain requirements for confirmation under the Code are met. See "ACCEPTANCE <br />OF THE PLAN AND CONFIRMATION" for a more complete explanation of the <br />approval process. <br />ii. Defined Terms. Capitalized terms used in this Disclosure Statement and <br />which are not otherwise defined in this Disclosure Statement have the meanings given <br />those terms in the Plan and the Code. <br />C. Summary of Plan and Disclosure Statement. <br />1. The Plan of Reorganization. On, or prior to, the Effective Date. the <br />following will <br />occur: <br />a. RPL will loan $125,000 to the Debtor in exchange for a promissory <br />note in such amount payable by the Debtor to the Plan Proponent with interest at the prime <br />rate (as reported in the Wall Street Journal on the date of such loan) plus one percent (1 %). <br />secured by the assets of the Debtor ("Loan Obligation"); <br />b. The Debtor shall pay the Administrative Expenses; <br />C. The Class 2 Allowed Secured Claims of Pride of the West, LLC, Todd <br />C. Hennis, San Juan Corp and Salem Minerals, Inc. (collectively "San Juan" ). shall be <br />treated as follows: The Class 2 claim shall retain its liens on the Permit and Financial <br />Warranty but shall be required to forebear from any and all enforcement of such liens for <br />a period of three years from the Effective Date unless there is a default of the Plan and/or <br />the Joint Venture Agreement as set forth below. The Debtor and the Reorganized Debtor <br />stipulate and agree that San Juan holds a validly perfected pre -petition lien on the Permit <br />and Financial Warranty which is not subject to avoidance and/or set off. San Juan shall <br />waive and release any and all rights, including any security interest in the interest proceeds <br />from the Financial Warranty held by the Estate. San Juan shall also waive Proofs of Claim <br />no. 9 and 10 filed as general unsecured claims which shall be deemed allowed; <br />3 <br />