Exhibit 10.1

 
Christopher Alliotts (CA Bar No. 161302)
Marcus A. Tompkins (CA Bar No. 190922)
SULMEYERKUPETZ
A Professional Corporation
1080 Marsh Road, Suite 110
Menlo Park, California 94025
Telephone: 650.326.2245
Facsimile: 650.326.5134

Attorneys for Official Committee of Unsecured Creditors

Van C. Durrer, II (CA Bar No. 226693)
Kurt Ramlo (CA Bar No. 166856)
Melissa T. Kahn (CA Bar No. 229185)
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Telephone: 213.687.5000
Facsimile: 213.687.5600

Attorneys for Debtors and Debtors in Possession

UNITED STATES BANKRUPTCY COURT
 
NORTHERN DISTRICT OF CALIFORNIA, SAN FRANCISCO DIVISION
 
In re
 
 
 
 
FIRST VIRTUAL COMMUNICATIONS, INC.,
 
 
Debtor.
 
 
Case No. 05-30145 TEC
Case No. 05-30146 TEC
 
Jointly Administered Chapter 11 Cases
 
FIRST AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION PROPOSED BY DEBTORS AND
OFFICIAL COMMITTEE OF UNSECURED CREDITORS (Dated September 21, 2005)
 
In re
 
CUseeMe NETWORKS, INC.
 
 
Debtor.
 
 
 
 
Plan Confirmation Hearing
DATE:  November 14, 2005
TIME:  9:30 a.m.
PLACE: U.S. Bankruptcy Court
Courtroom 23
235 Pine Street
San Francisco, CA 94104
JUDGE: Hon. Thomas E. Carlson

 
 

TABLE OF CONTENTS
                               
I. INTRODUCTION
II. DEFINITIONS AND INTERPRETATION
 
A.
Definitions
   
B.
Interpretation; Rules of Construction; Computation of Time
 
III. CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS
 
A.
General Overview
   
B.
Unclassified Claims
     
1. Administrative Expense Claims
 
   
2. Priority Tax Claims
 
 
C.
Classified Claims and Interests
     
1. Class 1 -- Secured Tax Claims
 
   
2. Class 2 -- Secured Non-Tax Claims
 
   
3. Class 3 -- Priority Non-Tax Claims
 
   
4. Class 4 -- General Unsecured Claims
 
   
5. Class 5 - Penalty Claims
 
   
6. Class 6 - Preferred Stock Interests
 
   
7. Class 7 - Old Common Stock Interests
 
IV. MEANS FOR IMPLEMENTATION AND EXECUTION OF THE PLAN
 
A.
Substantive Consolidation
   
B.
Funding for the Plan
   
C.
The Liquidating Trust
     
1. Appointment of Liquidating Trustee
 
   
2. Establishment of Liquidating Trust
 
   
3. Transfer of Assets to the Liquidating Trust
 
   
4. Rights, Powers and Duties of Liquidating Trust/Trustee
 
   
5. Prosecution of Causes of Action
 
   
6. Post-Effective Date Administrative Fees and Expenses
 
   
7. Dissolution of Liquidating Trust
 
 
D.
Employee Issues
 
   
1. Employees
 
   
2. Treatment of Employee Benefit Programs
 
 
E.
Dissolution of CUseeMe
 
V. THE COMMITTEE
 
A.
Survival of the Committee
   
B.
Rights, Powers and Duties of the Committee
     
1. Powers of Committee, Generally
 
   
2. Powers of the Committee Over the Liquidating Trustee
 
 
C.
Replacement and Removal of Committee Members
   
D.
Liability of the Committee and its Members
     
1. Standard of Care
 
   
2. No Implied Obligations
 
   
3. Advice of Professionals
 
   
4. Exculpation of the Committee
 
   
5. Indemnification of the Committee
 
 
E.
Employment and Compensation of Committee’s Counsel
 
VI. DISPUTED CLAIMS
 
A.
Objections to Claims
     
1. Authority to Prosecute Claim Objections
 
   
2. Claims Objection Deadline
 
   
3. No Distributions Pending Allowance
 
   
4. Authority to Settle Disputed Claims
 
 
B.
Setoffs
   
C.
Estimation of Claims
   
D.
Amendments to Claims
 
VII. DISTRIBUTIONS
 
A.
Disbursing Agent
   
B.
Claim Distribution Record Date
     
1. Disputed Claims Reserve
 
 
C.
Manner of Payment Under the Plan
   
D.
Delivery of Distributions and Undeliverable Distributions
   
E.
Interest on Claims
   
F.
Compliance with Tax Requirements
   
G.
Allocation of Distributions
   
H.
Fractional Distributions
   
I.
De Minimis Distributions
   
J.
No Distributions On Account of Intercompany Claims
   
K.
Investment of Cash
   
L.
Claims Covered by Insurance
     
1. Authorized Insurance Payments
 
   
2. Exhaustion of Insurance
 
   
3. Coverage Denied
 
   
4. Calculation of Claim for Distributions
 
VIII. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
 
A.
Approval of Rejection of Executory Contracts and Unexpired Leases
   
B.
Bar Date for Filing Proofs of Claim Relating to Executory Contracts and
Unexpired Leases Rejected Pursuant to the Plan
 
IX. SETTLEMENT, EXCULPATION, INDEMNIFICATION AND RELEASES
 
A.
Exculpation of Plan Proponents and their Agents
   
B.
Indemnification
   
C.
Release of Parties Entitled to Indemnification and Exculpation
 
X. EFFECT OF CONFIRMATION OF PLAN
 
A.
Binding Effect of the Plan
   
B.
Subordination of Claims
   
C.
Term of Bankruptcy Injunction or Stays
   
D.
Discharge
 
XI. RETENTION OF JURISDICTION
 
A.
Scope of Jurisdiction
   
B.
Abstention
 
XII. MISCELLANEOUS ITEMS
 
A.
Modification/Amendment of Plan and Liquidating Trust
   
B.
Withdrawal or Revocation.
   
C.
Result of Stay Pending Appeal/Plan Voidability
   
D.
Notices.
   
E.
Representation of the Debtors
   
F.
Successors and Assigns
   
G.
Severability
   
H.
Governing Law
   
I.
Headings
   
J.
Saturday, Sunday or Legal Holiday.
   
K.
Incorporation of Liquidating Trust Agreement and Exhibits.
   
L.
Post-Confirmation Status Report.
   
M.
Post-Confirmation Conversion/Dismissal
   
N.
Supremacy Clause
   
O.
Final Decree
 

 
 
I.  
 
INTRODUCTION
First Virtual Communications, Inc., a Delaware corporation, and its wholly-owned
subsidiary, CUseeMe Networks, Inc., a Delaware corporation, are the debtors and
debtors in possession in the above-captioned jointly administered Chapter 11
bankruptcy cases. On January 20, 2005, the Debtors commenced their bankruptcy
cases by each filing a voluntary Chapter 11 petition under the United States
Bankruptcy Code with the United States Bankruptcy Court for the Northern
District of California, San Francisco Division. This document is the First
Amended Joint Chapter 11 Plan proposed by the Debtors and the Official Committee
of Unsecured Creditors appointed in the bankruptcy cases. Sent to you in the
same envelope as this document is the First Amended Disclosure Statement which
has been approved by the Court, and which is provided to help you understand the
Plan.
This Plan is a plan of reorganization. Pursuant to this Plan, it is anticipated
that the Liquidating Trustee will (1) facilitate the Merger of FVC and U.S. Dry
Cleaning, (2) make payments to Creditors and holders of Interests of the Debtors
by distributing proceeds received from the sale of the Debtors’ assets and any
other amounts recovered from the prosecution of the Causes of Action, and (3)
distribute the 275,698 shares of New Common Stock to be issued to the
Liquidating Trust on behalf of Creditors of the Estate pursuant to the Merger of
FVC and U.S. Dry Cleaning.
In addition, the Plan contemplates the substantive consolidation of the Debtors’
Chapter 11 estates, such that all of the assets and liabilities of each estate
will be treated as one and the same. The Plan Proponents will file a separate
motion, to be heard at the same time as confirmation of the Plan, for such
substantive consolidation, which is needed to eliminate any issue over the
allocation of assets and liabilities between the separate Chapter 11 estates
resulting from the incomplete acquisition of CUseeMe by FVC and to avoid the
substantial fees and costs associated with making that determination.
Finally, the Plan provides for the distribution of all of the Debtors’ assets in
accordance with the priority scheme set forth in the Bankruptcy Code. There may
be Persons who may wish to claim a lien or other interest in such property. Any
Person who wishes to assert a lien or other interest in such property must file
a written objection to confirmation of the Plan and serve such objection on
counsel for the Debtors and the Committee by no later than October 31, 2005.
Absent such an objection, the right to assert a lien or other interest in
property of the Debtors’ Chapter 11 estates will be forever barred.
If confirmed, the Effective Date of the Plan shall be November 25, 2005.
 
II.  
 
DEFINITIONS AND INTERPRETATION
A.  Definitions
In addition to such other terms as are defined in other sections of this Plan,
the terms below shall have the following meanings:
1.  “Administrative Expense Claim” means a Claim under sections 503(b) and
507(a)(1) of the Bankruptcy Code, including but not limited to: (a) the actual
and necessary costs and expenses of preserving the Estate, (b) the actual and
necessary costs and expenses of operating the business of the Debtors, (c)
compensation and reimbursement of expenses for legal and other services awarded
under sections 328, 330(a) and 331 of the Bankruptcy Code, and (d) all fees and
charges assessed against the Estate pursuant to Chapter 123 of Title 28, United
States Code (28 U.S.C. §§ 1911 et seq.).
2.  “Allowed” means, with respect to a Claim or Equity Interest (other than an
Administrative Expense Claim):
(a) A Claim or Equity Interest (i) either listed by the Debtors on their
Schedules as other than disputed, unliquidated, or contingent; or asserted in a
proof of claim which was timely and properly filed or late filed with leave of
the Bankruptcy Court or by written agreement with the Debtors or the Liquidating
Trustee (with the consent of the Committee); and (ii) not objected to on or
before the expiration of the time within which to object to such Claim or Equity
Interest as set forth in the Plan or such other applicable period of limitation
fixed by the Bankruptcy Code, the Bankruptcy Rules, or the Bankruptcy Court, or
as to which any objection has been withdrawn or determined by a Final Order to
the extent such objection is determined in favor of the respective holder; or
(b) A Claim or Equity Interest that has been allowed by Final Order or by
stipulation between the holder of the Claim or Equity Interest and the
Liquidating Trustee as to the amount and nature of the Claim or Equity Interest.
With respect to an Administrative Expense Claim, “Allowed ” means any
Administrative Expense Claim for which a request for payment was timely and
properly filed and served in accordance with Article III.B.1.a of the Plan; to
the extent such request is approved by Final Order of the Bankruptcy Court,
except that a request for fees and charges assessed against the Estate pursuant
to Chapter 123 of Title 28, United States Code (28 U.S.C. §§ 1911 et seq.), need
not be approved by Final Order of the Bankruptcy Court if such fees are not
objected to on or before the expiration of the time within which to object to
such Claim as set forth in the Plan relating thereto. Administrative Expense
Claims paid prior to the Effective Date shall be deemed Allowed.
Unless otherwise specified in the Plan or by order of the Bankruptcy Court, an
Allowed Claim shall not, for purposes of computation of distributions under the
Plan, include interest on such Claim from and after the Petition Date.
3.  “Allowed Investments” means only the following investments: demand and time
deposits, such as short-term certificates of deposit in banks or other savings
institutions rated AA or better by Moody’s or Standard & Poor’s or other high
quality temporary liquid investments, such as United States Treasury Bills or
Notes, or such other investments as may be authorized by the Bankruptcy Court.
4.  “Bankruptcy Code” means title 11 of the United States Code (i.e. 11 U.S.C.
§§ 101 et seq.), including all amendments thereto, to the extent such amendments
apply to the Chapter 11 Cases.
5.  “Bankruptcy Court” means the United States Bankruptcy Court for the Northern
District of California, San Francisco Division, or such other court as may have
jurisdiction over the Chapter 11 Cases.
6.  “Bankruptcy Rules” means the Federal Rules of Bankruptcy Procedure
promulgated pursuant to 28 U.S.C. § 2075, including all amendments thereto, to
the extent such amendments apply to the Chapter 11 Cases.
7.  “Business Day” means any day except Saturday, Sunday or any “legal holiday”
as defined by Bankruptcy Rule 9006(a).
8.  “Cash” means legal tender of the United States of America.
9.  “Causes of Action” means all claims, rights and causes of action that could
have been brought by or on behalf of the Debtors, whether arising before, on or
after the Petition Date, known or unknown, suspected or unsuspected, in law or
in equity, including but not limited to (a) those referred to in the Disclosure
Statement, (b) causes of action under sections 542, 544, 545, 546, 547, 548,
549, 550, 551, or 553 of the Bankruptcy Code, (c) derivative claims, and (d)
rights to setoff or recoupment. However, pursuant to the Debtors’ asset purchase
agreement with RADvision, Ltd., which was approved by an order of the Bankruptcy
Court, the Estate is barred from prosecuting any causes of action against third
parties having an ongoing relationship with RADvision, Ltd.
10.   “Chapter 11 Cases” means the jointly administered cases under Chapter 11
of the Bankruptcy Code commenced by FVC and CUseeMe, respectively, bearing case
numbers 05-30145-TEC and 05-30146-TEC.
11.  “Claim” means (a) any right to payment from any Debtor, whether or not such
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured; or (b) any right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment from any Debtor, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured or unsecured; in either case,
however, only to the extent such right arose prior to the Effective Date.
12.   “Claim Distribution Record Date” means the record date for purposes of
making distributions under the Plan, which date shall be the date of entry of
the order approving the Disclosure Statement.
13.   “Class” means a category of Claims or Equity Interests as designated in
Article III of the Plan.
14.   “Collateral” means 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
valid, perfected and enforceable under applicable law, and is not subject to
avoidance under the Bankruptcy Code or otherwise invalid under the Bankruptcy
Code or applicable state law.
15.   “Committee” means the Official Committee of Unsecured Creditors appointed
by the U.S. Trustee in the Chapter 11 Cases on January 25, 2005, as constituted
as of the Effective Date, and as it may thereafter be reconstituted in
accordance with the Plan.
16.   “Committee’s Counsel” means SulmeyerKupetz, a Professional Corporation, or
its successors.
17.   “Confirmation Date” means the date on which the Bankruptcy Court enters
the Confirmation Order.
18.   “Confirmation Order” means the order entered by the Bankruptcy Court
confirming the Plan in accordance with section 1129 of the Bankruptcy Code.
19.   “Creditor” means the holder of a Claim, whether or not such Claim is an
Allowed Claim.
20.   “CUseeMe” means CUseeMe Networks, Inc., a Delaware corporation, whether as
a debtor or as a debtor in possession in the Chapter 11 Cases.
21.   “Debtors” mean (a) First Virtual Communications, Inc., a Delaware
corporation, and (2) CUseeMe Networks, Inc., a Delaware corporation; whether as
debtors or as debtors in possession in the Chapter 11 Cases.
22.   “Debtors’ Counsel” means Skadden, Arps, Slate, Meagher & Flom LLP, or its
successors.
23.   “Disclosure Statement” means the first amended disclosure statement
describing the Plan, including all exhibits thereto, as approved by the
Bankruptcy Court pursuant to section 1125 of the Bankruptcy Code.
24.   “Disputed Claim” means with respect to a Claim proof of which has been
filed with the Bankruptcy Court and (a) which is listed on the Schedules at zero
or as disputed, unliquidated, or contingent, and which has not been resolved by
written agreement between the claimant and the Liquidating Trustee, or by a
Final Order; or (b) as to which any other party in interest has filed an
objection in accordance with the Bankruptcy Code, the Bankruptcy Rules, and this
Plan, which objection has not been settled, withdrawn, waived through payment,
or overruled by a Final Order. Prior to (i) the time an objection is filed and
(ii) expiration of the time within which an objection to such Claim must be
filed pursuant to this Plan or a Final Order, a Claim shall be considered a
Disputed Claim to the extent that the amount of such Claim specified in a Proof
of Claim exceeds the amount of such Claim scheduled by the Debtor(s) as
undisputed, noncontingent and liquidated.
25.   “Disputed Claims Reserve” means the reserve established in accordance with
Article VI of this Plan.
26.   “Disputed Claims Reserve Account” means a deposit account, interest
bearing if possible, opened by the Liquidating Trustee at an F.D.I.C. insured
depository institution into which shall be deposited Cash representing Unclaimed
Property and Cash sufficient to fund the Disputed Claims Reserve.
27.   “Effective Date” means the date on which the Plan shall become effective,
which is the first Business Day at least eleven (11) days after the Confirmation
Date, on which no stay of the Confirmation Order is in effect.
28.   “Employee Benefit Programs” means all health, dental, flexible medical
payment, pension, welfare and retirement plans, and life and disability
insurance policies, established by the Debtors for the benefit of their
employees, whether or not such plans or programs were or had been terminated
according to their terms before or after the Petition Date or during the Chapter
11 Cases.
29.   “Equity Interest” means (a) a share in the Debtors, whether or not
transferable or denominated “stock,” or similar security; or (b) a warrant or
right, other than a right to convert, to purchase, sell or subscribe to a share
or security.
30.   “Estate” means the estates of the Debtors created pursuant to section
541(a) of the Bankruptcy Code, as consolidated pursuant to Article IV.A of the
Plan.
31.   “Excess Cash” means the monies available for distribution on General
Unsecured Claims, which equals the remaining Cash held by the Liquidating Trust
after payment or reservation of all amounts to be distributed under the Plan to
the holders of Administrative Expense Claims, Priority Claims, Secured Claims,
and Post-Effective Date Administrative Fees and Expenses.
32.   “Final Order” means an order, judgment or other decree of the Court or any
Court of competent jurisdiction: (a) the operation or effect of which has not
been stayed or reversed; (b) as to which no appeal, review, or rehearing is
pending, and as to which the time for appeal, review or rehearing has expired;
(c) as to which any right to appeal or move for review or rehearing has been
waived in writing in form and substance satisfactory to the Liquidating Trustee;
or (d) as to which any appeal, review or rehearing has been resolved, and the
time to take any further appeal, review or rehearing has expired.
33.   “FVC” means First Virtual Communications, Inc., a Delaware corporation,
whether as a debtor or as a debtor in possession in the Chapter 11 Cases.
34.   “General Unsecured Claim” means any Claim against the Debtors that is not
a Secured Claim, an Administrative Expense Claim, a Priority Claim, a Penalty
Claim, a Preferred Stock Interest, a Post-Effective Date Administrative Fee and
Expense, an Old Common Stock Interest, or an Intercompany Claim.
35.   “Intercompany Claim” means a Claim held by FVC against CUseeMe, or a Claim
held by CUseeMe against FVC.
36.   “Liquidating Trust” means the entity established pursuant to Article IV of
the Plan for the purpose of holding and distributing the Trust Assets to the
holders of Claims and Equity Interests in accordance with the Plan.
37.   “Liquidating Trust Agreement” means the agreement that will create the
Liquidating Trust and govern its affairs and administration. The Liquidating
Trust Agreement will be in substantially the form attached hereto as Exhibit A.
38.   “Liquidating Trustee” means Gregory Sterling of Receivers Incorporated,
who has been appointed Chief Restructuring Officer and designated the Estate’s
Responsible Individual by order dated June 7, 2005 and who shall be appointed in
accordance with the Liquidating Trust Agreement to administer the Liquidating
Trust.
39.   “Local Bankruptcy Rules” means the “Bankruptcy Local Rules” adopted by the
Bankruptcy Court.
40.  “Merger” means the merger of FVC with and into U.S. Dry Cleaning that is to
close on or prior to the Effective Date and which will result in the Estate
receiving 339,320 shares of New Common Stock which is estimated to be 4.0% of
the issued and outstanding common stock of U.S. Dry Cleaning as of July 15,
2005.
41.  “New Common Stock” means all shares of the common stock of the Reorganized
Debtor issued on or after the Effective Date pursuant to this Plan.
42.  “Old Common Stock” means all shares of the common stock of FVC issued and
outstanding immediately before the Effective Date, any Equity Interests in FVC’s
common stock, and any other right or related Claim with respect to FVC’s common
stock (including any Claim subordinated to the priority of FVC’s common stock in
accordance with section 510 of the Bankruptcy Code).
43.  “Penalty Claim” means a Claim by a governmental unit for a penalty or other
non-pecuniary loss.
44.   “Person” has the meaning ascribed to such term in section 101(41) of the
Bankruptcy Code.
45.   “Petition Date” means January 20, 2005.
46.   “Plan” means this First Amended Joint Chapter 11 Plan of Reorganization,
either in its present form or as amended or modified, including all exhibits
hereto.
47.   “Plan Disbursement Account” means a deposit account opened by the
Liquidating Trustee at an F.D.I.C. insured depository institution,
interest-bearing if possible, into which shall be deposited Cash for
Distributions in accordance with the Plan.
48.   “Plan Proponents” means the Debtors and the Committee.
49.   “Post-Effective Date Administrative Fees and Expenses” means fees and
expenses incurred by the Liquidating Trust or the Estate on or after the
Effective Date, including but not limited to compensation of Professionals,
quarterly fees payable to the U.S. Trustee pursuant to 28 U.S.C. § 1930(a)(6),
and tax obligations.
50.   “Preferred Stock Interest” means the preferred stock of FVC issued and
outstanding immediately before the Effective Date, any Equity Interests in FVC’s
preferred stock, and any other right or related Claim with respect to FVC’s
preferred stock (including any Claim subordinated to the priority of FVC’s
preferred stock in accordance with section 510 of the Bankruptcy Code).
51.   “Priority Claim” means a Priority Non-Tax Claim or a Priority Tax Claim.
For purposes of distribution and otherwise under the Plan, an Allowed Priority
Tax Claim shall not include any amounts claimed for penalties or other
non-pecuniary loss; such amounts shall be separately classified in a Class
junior to all Claims for pecuniary losses.
52.   “Priority Non-Tax Claim” means a Claim entitled to priority in payment as
specified in section 507(a) of the Bankruptcy Code, other than an Administrative
Expense Claim or a Priority Tax Claim.
53.   “Priority Tax Claim” means any Claim against the Debtors or the Estate
entitled to priority in payment as specified in section 507(a)(8) of the
Bankruptcy Code. For purposes of distribution and otherwise under the Plan, an
Allowed Priority Tax Claim shall not include any amounts claimed for penalties
or other non-pecuniary loss; such amounts shall be separately classified in a
Class junior to all Claims for pecuniary losses.
54.   “Professional” means any Person or entity (a) retained in the Bankruptcy
Case pursuant to an order of the Court in accordance with sections 327 or 1103
of the Bankruptcy Code, or (b) an attorney, accountant, appraiser, auctioneer,
or other professional employed by the Liquidating Trustee or the Committee, if
any, on or after the Effective Date.
55.   “Pro Rata” means, except as otherwise expressly provided in the Plan, a
number (expressed as a percentage) equal to the proportion that an Allowed Claim
or Equity Interest in a particular Class bears to the aggregate amount of: (a)
Allowed Claims or Equity Interests, plus (b) Disputed Claims or Equity Interest
(in their aggregate face amount) in such Class as of the date of determination.
56.   “Reorganized Debtor” means First Virtual Communications, Inc., a Delaware
corporation, as of the Effective Date and thereafter, as reorganized pursuant to
this Plan and the Confirmation Order, to be known as U.S. Dry Cleaning
Corporation.
57.   “Schedules” means the schedules of assets and liabilities and the
statement of financial affairs filed by the Debtors as required by section 521
of the Bankruptcy Code and Bankruptcy Rule 1007, including any supplements or
amendments thereto through the Confirmation Date.
58.   “Secured Claim” means a Claim held by any Person against the Debtors or
the Estate that is secured by Collateral, but only to the extent of the value,
as set forth in the Plan, as agreed to by the holder of such Claim and the
Estate, or as determined by a Final Order of the Bankruptcy Court pursuant to
section 506(a) of the Bankruptcy Code, of such entity’s interest in the Estate’s
interest in such property; provided, however, that a Secured Claim shall not
include any portion of the Claim to the extent that the value of such entity’s
interest in the Estate’s interest in such property is less than the amount of
such Claim.
59.   “Secured Non-Tax Claim” means a Secured Claim other than a Secured Tax
Claim.
60.   “Secured Tax Claim” means a Secured Claim of a governmental unit. For
purposes of distribution and otherwise under the Plan, an Allowed Secured Tax
Claim shall not include any amounts claimed for penalties or other non-pecuniary
loss; such amounts shall be separately classified in a Class junior to all
Claims for pecuniary losses.
61.   “Trust Assets” means all property held by the Liquidating Trust,
including, but not be limited to: (a) property of the Estate transferred to the
Liquidating Trust in accordance with Article IV.C.3 of the Plan, (b) any amounts
recovered by the Liquidating Trust from the prosecution of Causes of Action, (c)
the 275,698 shares of New Common Stock to be issued to the Liquidating Trust on
behalf of Creditors of the Estate pursuant to the Merger of FVC and U.S. Dry
Cleaning, and (d) any other property of the Estate received or recovered by the
Liquidating Trust.
62.   “U.S. Dry Cleaning” means U.S. Dry Cleaning Corporation, a Delaware
Corporation.
63.   “U.S. Trustee” means the United States Trustee appointed to serve in the
Northern District of California pursuant to 28 U.S.C. § 581.
B.  Interpretation; Rules of Construction; Computation of Time
1. Any term used in this Plan that is not defined herein, whether in this
Article II or elsewhere, but that is used in the Bankruptcy Code or the
Bankruptcy Rules, has the meaning subscribed to that term in (and shall be
construed in accordance with the rules of construction under) the Bankruptcy
Code or the Bankruptcy Rules.
2. The words herein, hereof, hereto, hereunder and others of similar import
refer to this Plan as a whole and not to any particular article, section,
subsection or clause contained in this Plan.
3. Unless specified otherwise in a particular reference, a reference in this
Plan to an article or a section is a reference to that article or section of
this Plan.
4. Any reference in this Plan to a document being in a particular form means
that the document shall be in substantially such form.
5. Any reference in this Plan to an existing document means such document, and
any amendments, modifications or supplements thereto.
6. Whenever it is appropriate from the context, each term stated in either the
singular or the plural shall include both the singular and the plural.
7. In addition to the foregoing, the rules of construction set forth in section
102 of the Bankruptcy Code shall apply to this Plan.
8. In computing any period of time prescribed or allowed by the Plan, the
provisions of Bankruptcy Rule 9006(a) shall apply.
9. All Exhibits to this Plan are incorporated into this Plan, and shall be
deemed included in this Plan, regardless of when filed with the Court.
 
III.  
 
CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS
A.  General Overview
As required by the Bankruptcy Code, the Plan classifies Claims and Equity
Interests into various classes according to their right to priority of payments
as provided in the Bankruptcy Code. The Plan states whether each class of Claims
or Equity Interests is impaired or unimpaired. The Plan provides the treatment
each Class will receive under the Plan.
B.  Unclassified Claims
Certain types of Claims are not placed into voting Classes; instead, they are
unclassified. They are not considered impaired and they do not vote on the Plan
because they are automatically entitled to specific treatment provided for them
in the Bankruptcy Code. As such, the Plan Proponents have not placed the
following Claims into a Class. The treatment of these Claims is provided below.
1.  Administrative Expense Claims
a. Bar Date for Requests
Except for requests by Professionals for fees and reimbursement of expenses, all
requests for payment of Administrative Expense Claims must be filed with the
Bankruptcy Court and served on the Liquidating Trustee, the Committee’s Counsel,
and the U.S. Trustee on or before ten (10) days after the Effective Date. Any
Person who fails to file a request for payment of an Administrative Expense
Claim in accordance with the Plan shall be forever barred from asserting such
Administrative Expense Claim against the Debtors, the Estate or the Liquidating
Trust, and shall receive no distribution under the Plan. Notwithstanding this
deadline, anyone whose Administrative Expense Claims have been paid in full by
the Debtors prior to the Effective Date need not comply with this subsection.
Any objection to a request for payment of an Administrative Expense Claim must
be filed within the time period, and served upon the parties specified in, the
applicable Local Bankruptcy Rules and this Plan.
b. Treatment
Each holder of an unpaid and Allowed Administrative Expense Claim shall receive
an amount in Cash equal to the Allowed amount of such Claim on or as soon as
reasonably practicable after the later of (i) the Effective Date, or (ii) the
date such Administrative Expense Claim becomes Allowed; provided, however, that
an Allowed Administrative Expense Claim that is a post-Petition Date trade
payable incurred by the Debtors in the ordinary course of business during the
Chapter 11 Cases shall be paid in the ordinary course of business in accordance
with the terms and conditions of any agreements relating thereto. Distributions
to holders of Administrative Expense Claims under the Plan shall be made by the
Liquidating Trustee.
2.  Priority Tax Claims
  In accordance with section 1129(a)(9)(C) of the Bankruptcy Code, each holder
of an unpaid and Allowed Priority Tax Claim shall receive an amount in Cash
equal to the Allowed amount of such Claim on or as soon as reasonably
practicable after the later of (i) the Effective Date, (ii) the date such
Priority Tax Claim becomes Allowed; or (iii) if the payment on the Claim is not
due as of the Effective Date, the date the payment is due in the ordinary course
of the Debtors’ business. For purposes of distribution and otherwise under the
Plan, an Allowed Priority Tax Claim shall not include any amounts claimed for
penalties or other non-pecuniary loss; such amounts shall be separately
classified in a Class junior to all other Classes for pecuniary losses.
Distributions to holders of Priority Tax Claims under the Plan shall be made by
the Liquidating Trustee.
C.  Classified Claims and Interests
1.  Class 1 -- Secured Tax Claims
a. Impairment and Voting
Class 1 is impaired by the Plan, and holders of Class 1 Claims are entitled to
vote on the Plan.
b. Treatment
Unless otherwise agreed, each holder of an unpaid and Allowed Class 1 Claim
shall receive an amount in Cash equal to the Allowed amount of such Claim on or
as soon as reasonably practicable after the later of: (i) the Effective Date,
(ii) the date such Claim becomes Allowed; or (iii) if the payment on the Claim
is not due until after the Effective Date, the date the payment is due in the
ordinary course of the Debtors’ business. No deficiency claim will be Allowed,
as set forth in section 502(b)(3) of the Bankruptcy Code. For purposes of
distribution and otherwise under the Plan, an Allowed Secured Tax Claim shall
not include any amounts claimed for penalties or other non-pecuniary loss; such
amounts shall be separately classified in a Class junior to all other Classes
for pecuniary losses. Distributions to holders of Class 1 Claims under the Plan
shall be made by the Liquidating Trustee.
2.  Class 2 -- Secured Non-Tax Claims
a. Impairment and Voting
Class 2 is not impaired by the Plan, and holders of Class 2 Claims are not
entitled to vote on the Plan. Holders of Class 2 Claims are conclusively
presumed to have accepted the Plan.
b. Treatment
Each unpaid Allowed Class 2 Claim shall (i) be reinstated or rendered unimpaired
in accordance with section 1124 of the Bankruptcy Code, or (ii) receive such
other treatment as the Liquidating Trustee, the Committee and the holder of the
Claim agree to in writing. The Liquidating Trustee shall satisfy any obligations
resulting from such reinstatement or agreement.
3.  Class 3 -- Priority Non-Tax Claims
a. Impairment and Voting
Class 3 is not impaired by the Plan, and holders of Class 3 Claims are not
entitled to vote on the Plan. Holders of Class 3 Claims are conclusively
presumed to have accepted the Plan.
b. Treatment
Unless otherwise agreed, each holder of an Allowed Class 3 Claim shall receive
an amount in Cash equal to the Allowed amount of such Claim on or as soon as
reasonably practicable after the later of (i) the Effective Date, (ii) the date
such Claim becomes Allowed; or (iii) if the payment on the Claim is not due as
of the Effective Date, the date the payment is due in the ordinary course of the
Debtors’ business. Distributions to holders of Class 3 Claims under the Plan
shall be made by the Liquidating Trustee.
4.  Class 4 -- General Unsecured Claims
a. Impairment and Voting
Class 4 is impaired by the Plan, and holders of Class 4 Claims are entitled to
vote on the Plan.
b. Treatment
Except to the extent that a holder of a General Unsecured Claim agrees to
different treatment, each holder of an Allowed Class 4 Claim shall receive an
amount equal to no more than the Allowed amount of such Claim of the following
in order: (1) New Common Stock equal in number to the Pro Rata share of 275,698
shares of New Common Stock, and (2) Cash equal to the Pro Rata share of the
remaining Cash held by the Liquidating Trust after payment or reservation of all
amounts to be distributed under the Plan to the holders of Administrative
Expense Claims, Priority Claims, Secured Claims, and Post-Effective Date
Administrative Fees and Expenses. Distributions will be made to Creditors
holding General Unsecured Claims as soon as practicable after all of the Trust
Assets have been liquidated (other than the New Common Stock) and all Disputed
Claims have been resolved in accordance with Article VI of the Plan. If
appropriate, the Liquidating Trust may authorize interim distributions.
Distributions to holders of General Unsecured Claims under the Plan shall be
made by the Liquidating Trustee.
5.  Class 5 - Penalty Claims
a. Impairment and Voting
Class 5 is impaired by the Plan, and holders of Class 5 Penalty Claims are
entitled to vote on the Plan.
b. Treatment
The Plan Proponents expect that there will not be any funds available for
distribution to holders of Class 5 Penalty Claims. However, if the aggregate
value of the New Common Stock, as determined in accordance with Article IV.C of
the Plan, and Excess Cash exceeds the amount of Class 4 Claims, and except to
the extent that a holder of an Allowed Class 5 Penalty Claim agrees to a
different treatment, each holder of an Allowed Class 5 Penalty Claim shall
receive an amount in Cash equal to its Pro Rata share of any Excess Cash
remaining after Class 4 Claims have been paid in full with pre-petition
interest. Distributions will be made to holders of Class 5 Penalty Claims as
soon as practicable once all of the Debtors’ assets have been liquidated and all
Disputed Claims have been resolved in accordance with Article VI of this Plan.
Distributions to holders of Class 5 Penalty Claims under the Plan shall be made
by the Liquidating Trustee.
6.  Class 6 - Preferred Stock Interests
a. Impairment and Voting
Class 6 is impaired by the Plan, and holders of Class 6 Preferred Stock
Interests are entitled to vote on the Plan.
b. Treatment
The Plan Proponents expect that there will not be any funds available for
distribution to holders of Class 6 Stock Interests. However, if the value of the
New Common Stock, as determined in accordance with Article IV.C of the Plan, and
Excess Cash exceeds the amount of Class 4 Claims and Class 5 Claims, and except
to the extent that a holder of an Allowed Class 6 Preferred Stock Interest
agrees to a different treatment, each holder of an Allowed Class 6 Preferred
Stock Interest shall receive an amount in Cash equal to its Pro Rata share of
any Excess Cash remaining after Class 5 Claims have been paid in full with
pre-petition interest. Distributions will be made to holders of Class 6
Preferred Stock Interests as soon as practicable once all of the Debtors’ assets
have been liquidated and all Disputed Claims have been resolved in accordance
with Article VI of this Plan. Distributions to holders of Class 6 Preferred
Stock Interests under the Plan shall be made by the Liquidating Trustee. All
Class 6 Preferred Stock Interests shall be cancelled and extinguished on the
Effective Date.
7.  Class 7 - Old Common Stock Interests
a. Impairment and Voting
Class 7 is impaired by the Plan. Because holders of Class 7 Old Common Stock
Interests are not entitled to receive or retain any property under the Plan,
holders of Class 7 Old Common Stock Interests are deemed not to have accepted
the Plan.

b. Treatment
On the Effective Date, Class 7 Old Common Stock Interests shall be cancelled and
extinguished and holders of Class 7 Old Common Stock Interests shall not be
entitled to, and shall not receive, any property or interest in property on
account of such Class 7 Old Common Stock Interests; provided, however, that
after payment of all Class 6 Preferred Stock Interests in full, each holder of a
Class 7 Old Common Stock Interest shall receive an amount equal to such holder’s
Pro Rata share of any remaining Cash held by the Liquidating Trust.
 
IV.  
 
MEANS FOR IMPLEMENTATION AND EXECUTION OF THE PLAN
A.  Substantive Consolidation
On the Effective Date, all assets of FVC and CUseeMe shall be deemed merged and
treated as though they were held by a single entity, and all liabilities of FVC
and CUseeMe shall be treated as though they were owed by a single entity, for
all purposes related to the Plan, including, but not limited to, voting,
confirmation, and distribution. No distributions shall be made under the Plan on
account of any Intercompany Claim. Any and all obligations of FVC arising from
guarantees of CUseeMe’s liabilities, and any and all obligations of CUseeMe
arising from guarantees of FVC’s liabilities, shall be deemed eliminated so that
any Claim against one of the Debtors and any guarantee thereof executed by the
other Debtor and any joint or several liability of any of the Debtors shall be
deemed to be one obligation of the consolidated Debtors, and each and every
Claim filed or to be filed in the Chapter 11 Cases shall be deemed filed against
the consolidated Debtors. Such substantive consolidation shall not (other than
for purposes related to the Plan) affect the legal and corporate structures of
the Debtors.
B.  Funding for the Plan
The Plan will be funded by the Trust Assets, which include (a) all property of
the Estate transferred to the Liquidating Trust in accordance with this Article
of the Plan, (b) any amounts recovered by the Liquidating Trust from the
prosecution of Causes of Action, (c) the 275,698 shares of New Common Stock to
be issued to the Liquidating Trust on behalf of Creditors of the Estate pursuant
to the Merger of FVC and U.S. Dry Cleaning, and (d) any other property of the
Estate received or recovered by the Liquidating Trust.
C.  Merger with U.S. Dry Cleaning
On the Effective date, U.S. Dry Cleaning will merge with and into FVC. Upon
successful completion of the Merger, the Liquidating Trust shall receive the
275,698 shares of New Common Stock for the benefit of the beneficiaries of the
Liquidating Trust in accordance with the Plan, the Liquidating Trust Agreement,
the Confirmation Order and applicable law. In accordance with the order
approving the retention of Gregory Sterling as Chief Restructuring Officer, he
will receive 0.75% of common stock in the Reorganized Debtor, or 63,622 shares
of New Common Stock, upon successful completion of the Merger; the 63,622 shares
of New Common Stock to be issued to Gregory Sterling are in addition to the
275,698 shares of New Common Stock to be issued to the Liquidating Trust.
For purposes of calculating distributions to be made under the Plan, the value
of the 275,698 shares of New Common Stock shall be calculated based upon the
average closing bid price for a share of stock for the five (5) trading days
prior to the close of trading on the sixtieth (60th) day following the first day
that such stock was traded publicly. The Liquidating Trustee shall not
distribute any of the New Common Stock any earlier than the later of (a) the
sixtieth (60th) day following the first day that such stock was traded publicly,
and (b) the date of the initial distribution (other than New Common Stock) to
holders of Class 4 General Unsecured Claims.
D.  The Liquidating Trust
1.  Appointment of Liquidating Trustee
Gregory Sterling of Receivers Incorporated, who has been appointed Chief
Restructuring Officer and designated the Estate’s Responsible Individual by
order dated June 7, 2005, shall be appointed Liquidating Trustee in the
Confirmation Order. Such appointment is subject to the terms of the Liquidating
Trust Agreement.
2.  Establishment of Liquidating Trust
On the Effective Date, the Debtors and the Liquidating Trustee shall execute the
Liquidating Trust Agreement and shall take all other steps necessary to
establish the Liquidating Trust. The Liquidating Trust shall be represented by,
and shall act through, the Liquidating Trustee, and the affairs and
administration of the Liquidating Trust shall be governed by the Plan, the
Confirmation Order, the Liquidating Trust Agreement, and applicable bankruptcy
and non-bankruptcy law.
3.  Transfer of Assets to the Liquidating Trust
On the Effective Date, the Debtors shall transfer all of the Trust Assets to the
Liquidating Trust, except for assets, including the Debtors’ computer system,
needed to consummate the anticipated Merger of FVC and U.S. Dry Cleaning. The
Debtors shall also execute and deliver all documents reasonably required by the
Liquidating Trust, including the endorsement of any instruments, all business
records of the Debtors, and authorizations to permit the Liquidating Trust to
access all bank records, tax returns, and other files and records of the
Debtors. All business records of the Debtors transferred to the Liquidating
Trust shall constitute the business records of the Liquidating Trust pursuant to
Federal Rule of Evidence 803(b) in any subsequent legal proceeding(s). The
Liquidating Trust, after the Effective Date, shall control all of the Debtors’
applicable legal privileges, including control over the attorney-client
privilege, for matters arising from or relating to transactions occurring, in
whole or in part, prior to the Effective Date. Holders of Claims and Interests
and other parties bound by the Plan shall look solely to the Liquidating Trust
for distributions to be made pursuant to the Plan, and the Reorganized Debtor
will have no liability for pre-confirmation liabilities or obligations of the
Debtors.
On the Effective date, U.S. Dry Cleaning will merge with and into FVC. Upon
successful completion of the Merger, the Liquidating Trust shall receive the
275,698 shares of New Common Stock for the benefit of the beneficiaries of the
Liquidating Trust in accordance with the Plan, the Liquidating Trust Agreement,
the Confirmation Order and applicable law. In accordance with order approving
the retention of Gregory Sterling as Chief Reorganization Officer, he will
receive 0.75% of common stock in the Reorganized Debtor or 63,622 shares of New
Common Stock, upon successful completion of the Merger; the 63,622 shares of New
Common Stock to be issued to Gregory Sterling are in addition to the 275,698
shares of New Common Stock to be issued to the Liquidating Trust.
For purposes of calculating distributions to be made under the Plan, the value
of the 275,698 shares of New Common Stock shall be calculated based upon the
average closing bid price for a share of stock for the five (5) trading days
prior to the close of trading on the sixtieth (60th) day following the first day
that such stock was traded publicly. The Liquidating Trustee shall not
distribute any of the New Common Stock any earlier than the later of (a) the
sixtieth (60th) day following the first day that such stock was traded publicly,
and (b) the date of the initial distribution (other than New Common Stock) to
holders of Class 4 General Unsecured Claims.
The transfer of assets to the Liquidating Trust shall be treated for federal
income tax purposes and for all purposes of the Internal Revenue Code of 1986,
as amended (the "Tax Code") (e.g., sections 61(a)(12), 483, 1001, 1012 and
1274), as a transfer to creditors to the extent creditors are beneficiaries of
the Liquidating Trust. The transfer will be treated as a deemed transfer to the
beneficiary-creditors followed by a deemed transfer by the beneficiary-creditors
to the Liquidating Trust. The beneficiaries of the Liquidating Trust shall be
treated as the grantors and deemed owners of the Liquidating Trust for federal
income tax purposes.
4.  Rights, Powers and Duties of Liquidating Trust/Trustee
The Liquidating Trustee shall have all rights, powers and duties specified in
this Plan, the Liquidating Trust Agreement, the Confirmation Order and
applicable law. The Liquidating Trustee’s duties shall include, but not be
limited to, converting to Cash the Trust Assets, making timely distributions,
and not unduly prolonging the duration of the Liquidating Trust. The Liquidating
Trustee’s rights and powers shall include, but not be limited to, the rights and
powers of a debtor in possession under section 1107 of the Bankruptcy Code, the
power to administer the Trust Assets, the power to prosecute any Causes of
Action for the benefit of the Liquidating Trust in the event the Committee fails
to do so, and to otherwise perform the functions and take the actions provided
for or permitted in the Liquidating Trust Agreement. On the Effective Date, the
Liquidating Trustee and the Committee shall be designated and serve as
representatives of the Estate in accordance with section 1123(b)(3)(B) of the
Code. Committee’s Counsel shall have authority to prosecute Causes of Action on
behalf of the Liquidating Trustee.
5.  Prosecution of Causes of Action
The Committee and the Liquidating Trustee may, but are not required to,
prosecute, settle, adjust, retain, enforce or abandon any Cause of Action as
representatives of the Estate under Section 1123(b) of the Bankruptcy Code or
otherwise in accordance with the Plan and the Liquidating Trust Agreement. Any
and all proceeds generated from the prosecution of the Causes of Action shall
constitute property of the Liquidating Trust to be distributed in accordance
with the Plan. The Liquidating Trust shall not be subject to any counterclaims
in respect of the Causes of Action; provided, however, that the Causes of Action
will be subject to any setoff rights to the same extent as if the Debtors had
pursued the Causes of Action themselves.
Notwithstanding any provision or interpretation to the contrary (except Article
IX of this Plan), nothing in the Plan or the Confirmation Order, including the
entry thereof, or the Liquidating Trust Agreement shall constitute or be deemed
to constitute a release, waiver, relinquishment or bar, in whole or in part, of
any Causes of Action possessed by the Estate or the Debtors prior to the
Effective Date. In the event that the Bankruptcy Court, or any other court of
competent jurisdiction, determines that the assignment of any Causes of Action
to the Liquidating Trust pursuant to this Plan is invalid or does not grant to
the Liquidating Trust the standing to pursue such Causes of Action, then in such
case the Liquidating Trust shall be deemed appointed as the representative of
the Estate for purposes of pursuing such Causes of Action, and the proceeds
thereof shall be distributed in accordance with the terms of the Plan.
6.  Post-Effective Date Administrative Fees and Expenses
Except as otherwise ordered by the Bankruptcy Court, this Plan or the
Liquidating Trust Agreement, the amount of any reasonable Post-Effective Date
Administrative Fees and Expenses shall be paid by the Liquidating Trustee in
Cash in accordance with the Liquidating Trust Agreement. The Liquidating Trustee
shall also comply with all reporting requirements of the U.S. Trustee. The
Liquidating Trustee shall have the authority to employ counsel by order of the
Bankruptcy Court upon a duly-filed application in accordance with the Bankruptcy
Code and Bankruptcy Rules.
7.  Dissolution of Liquidating Trust
Upon completion of its function as designated in this Plan and in the
Liquidating Trust Agreement, the Liquidating Trust shall be dissolved.
E.  Employee Issues
1.  Employees
As of the Effective Date, the then-current directors, officers and other
employees of the Debtors shall be relieved of their positions and corresponding
duties and obligations, and shall be deemed terminated “without cause,”
including for purposes of any employment agreements or severance obligations, in
addition to any rejection of employment agreements or severance obligations in
accordance with Article VIII.
2.  Treatment of Employee Benefit Programs
Except as otherwise provided in this Plan, as soon as practicable following the
Effective Date, to the extent not otherwise accomplished prior to the Effective
Date, all Employee Benefit Programs shall be deemed terminated in accordance
with their terms without further action by the Debtors, the Estate, the
Liquidating Trustee, or the Committee. All rights are reserved to assert that
the agreements underlying any of the Employee Benefit Programs constitute
executory contracts that are rejected pursuant to Article VIII of this Plan. The
Liquidating Trustee, in consultation with the Committee, shall take any actions
and make payment of the actual amount, if any, required to be contributed to or
on account of an employee program to permit the termination of such program and
discharge all benefit liabilities to participants and beneficiaries of such
program.
F.  Dissolution of CUseeMe
As of the Effective Date, CUseeMe, after having transferred all of its property
to the Liquidating Trust pursuant to the Plan, and after having terminated the
employment of all employees, if any, shall be deemed dissolved without the
necessity for any further actions, except for such administrative actions as may
be necessary to carry out the purposes of the Plan and wind-up its affairs;
provided, however, that CUseeMe or the Liquidating Trustee shall file with the
Secretary of State for its state of incorporation a certificate of dissolution
and/or other document necessary for dissolution, which may be executed by an
officer of CUseeMe (or the Liquidating Trustee) without the need for approval by
the Board of Directors or Equity Interest holders or compliance with
non-bankruptcy law.
F. Exemption From Registration
The 339,320 shares of New Common Stock issued pursuant to the Plan to holders of
Allowed Claims shall be issued pursuant to the exemption contained in section
1145 of the Bankruptcy Code from the requirements of section 5 of the Securities
Act of 1933, and other applicable federal, state or local law requiring
registration. The shares subject to the exemption of Section 1145 of the
Bankruptcy Code include the 63,622 shares to be issued to Gregory Sterling in
partial satisfaction of his administrative claim for services rendered to the
Estate as the Chief Restructuring Officer in accordance with the order
authorizing his employment.
G. Amendments to Articles of Incorporation
On the Effective Date, the Board of Directors of the Reorganized Debtor shall be
authorized to amend the Articles of Incorporation and Bylaws to accomplish the
following:
1. Authorize the issuance of fifty million (50,000,000) shares of the
Reorganized Debtor’s common stock, fifty million (50,000,000) shares of the
Reorganized Debtor’s Series B common stock, and twenty million (20,000,000)
shares of the Reorganized Debtor’s preferred stock. The Board of Directors shall
determine in their discretion the rights, privileges and restrictions granted or
imposed on such shares;
2. Effect a quasi-reorganization for accounting purposes;
3. Issue shares to carry out any transaction contemplated in the Plan without
solicitation of or notice to shareholders;
4. Take all action necessary and appropriate to carry out the terms of the Plan,
including, but not limited to, a name change for the Reorganized Debtor to U.S.
Dry Cleaning Corporation.
5. Amend the Reorganized Debtor’s Articles of Incorporation and/or Bylaws to
provide the maximum indemnification or other protections to the Reorganized
Debtor’s officers, directors and agents and employees allowed under applicable
law;
6. In accordance with Section 1123(a)(b) of the Code, include within its charter
a provision prohibiting the issuance of nonvoting equity securities;
7. Institute one or more stock option, stock grant, and director/officer
programs to an amount up to twenty percent (20%) of the total issued and
outstanding shares of New Common Stock ninety (90) days after the Effective
Date.
H. Taking Required Actions
Without shareholder approval, the Board of Directors of the Reorganized Debtor
shall be authorized to take any and all action necessary or appropriate to
effectuate any amendments to the Reorganized Debtor’s Certificate of
Incorporation and/or Bylaws called for under the Plan and the Board of Directors
and officers of the Reorganized Debtor shall be authorized to execute, verify,
acknowledge, file and publish any and all instruments or documents that may be
required to accomplish same.

V.  
 
THE COMMITTEE
A.  Survival of the Committee
Except as otherwise provided in the Plan, the Committee shall continue, as
presently constituted in the Chapter 11 Cases, after the Effective Date and
shall exercise the rights and powers set forth in this Article.
B.  Rights, Powers and Duties of the Committee
1.  Powers of Committee, Generally
After the Effective Date and until the Chapter 11 Cases are closed or dismissed,
the Committee shall continue to have all the powers and duties provided under
section 1103 of the Bankruptcy Code and the Plan. The Committee is also
appointed as an additional representative of the Estate under section 1123(b)(3)
of the Bankruptcy Code, subject to the limitations set forth in the Plan and the
Liquidating Trust Agreement.
2.  Powers of the Committee Over the Liquidating Trustee
With respect to the Liquidating Trustee, the Committee shall have the power to
(a) monitor and supervise the Liquidating Trustee; (b) remove the Liquidating
Trustee upon a majority vote of the Committee approving such removal and thirty
(30) days’ written notice to the Liquidating Trustee; (c) appoint a replacement
Liquidating Trustee (in the event that the Liquidating Trustee voluntarily
resigns or is removed by the Committee) upon a majority vote of the Committee;
(d) in the event of a breach by the Liquidating Trustee, take such action as the
Committee deems necessary to protect the interests of the Estate or the
beneficiaries of the Liquidating Trust; and (e) prosecute Causes of Action on
behalf of the Estate, the Liquidating Trust and Liquidating Trustee.
C.  Replacement and Removal of Committee Members
Committee members shall have the right to resign upon ten (10) days’ written
notice to the Committee. In addition, a Committee member may be removed if a
majority of the entire Committee (not including the named member) finds there is
cause, and written notice is provided to the affected member. Cause shall
include, but is not limited to:
(i) Intentional violation of Committee Bylaws;
(ii) Willful failure to disclose to the Committee facts that give rise to a
conflict of interest in any matter upon which the Committee member participates
in Committee deliberations or voting;
(iii) The member no longer holds a General Unsecured Claim against the Estate;
(iv) The designated representative of the Committee member frequently fails to
participate (by telephone or in person) in Committee meetings and telephone
conferences, and the Committee, in good faith believes that unsecured creditors
would be better served by a replacement; or
(v) The presence of circumstances that makes the member incapable of
representing the interests of unsecured creditors.
The Bankruptcy Court shall retain exclusive jurisdiction over any dispute
between the Committee and the removed member with respect to whether cause for
removal exists. Upon resignation or removal, the Committee member shall be
discharged from any further duties.
If a Committee member is removed or resigns, the Committee, by majority vote of
the remaining Committee members, shall select a replacement member. The selected
replacement shall represent interests similar to those of the removed or
resigned member; provided, however, that no Person may be selected as a member
of the Committee unless such Person holds a General Unsecured Claim against the
Debtors and the Estate.
D.  Liability of the Committee and its Members
1.  Standard of Care
Except in the case of willful misconduct or gross negligence, neither the
Committee nor any member thereof shall be liable for any loss or damage by
reason of any action taken or omitted by it pursuant to the discretion, power,
and authority conferred by the Plan or Bankruptcy Court orders.
2.  No Implied Obligations
There are no implied covenants or obligations of the Committee or its members
except for those that are in the Plan or Confirmation Order.
3.  Advice of Professionals
In the exercise or administration of any powers granted under the Plan, or in
the performance of any of the Committee’s duties and obligations in connection
therewith, the Committee may consult with and act directly or through any
Professional. Neither the Committee nor its members shall be liable for anything
done, suffered or omitted in good faith in accordance with the advice or opinion
of any Professional.
4.  Exculpation of the Committee
The Committee shall have no duties or obligations to the Estate or the
Liquidating Trust except as set forth in the Plan and the Confirmation Order.
5.  Indemnification of the Committee
Neither the Committee nor any Committee member shall be liable to any individual
creditor, and shall be liable only to the Estate, for acts or omissions related
to performance of its duties for the Estate. The Committee shall be liable to
the Estate only for such of its own acts as shall constitute willful misconduct
or gross negligence. Except as provided herein, the Committee shall be defended,
held harmless, and indemnified by the Estate against any and all losses, claims,
costs, expenses, and liabilities (including reasonable legal fees and expenses)
asserted by any Person other than the Estate and any costs of defending any
action brought by any Person other than the Estate to which the Committee may be
subject by reason of its execution in good faith of its duties under the Plan
and the Confirmation Order and in a manner the Committee reasonably believes to
be in the best interests of the Estate. This indemnity is intended to be and
shall be interpreted as providing indemnity to the fullest extent permissible
under California law.

E.  Employment and Compensation of Committee’s Counsel
1. After the Effective Date, the employment of Committee’s Counsel by the Estate
shall continue post-Confirmation on the same terms and conditions as its
employment in the Chapter 11 Cases. Committee’s Counsel shall monitor the
post-Confirmation activities of the Liquidating Trust, advise the Committee of
such activities and perform all reasonably necessary actions to ensure the
execution of the Plan. The Committee may not employ additional Professionals
absent an order of the Bankruptcy Court, after a hearing on notice to the
Liquidating Trustee, the U.S. Trustee, and parties requesting post-confirmation
notice. Committee’s Counsel shall be compensated from assets of the Estate, with
such compensation being subject to approval by the Bankruptcy Court on notice to
the Committee, the Liquidating Trustee, the U.S. Trustee and parties requesting
post-confirmation notice.
2. Committee members shall serve without compensation, but shall be entitled to
reimbursement of reasonable and necessary out of pocket expenses. Committee
members shall submit a detailed invoice to the Liquidating Trustee, which
invoice shall be paid within thirty (30) days of the submission thereof. If the
Liquidating Trustee objects to a portion of the invoice, the Liquidating Trustee
shall timely pay the undisputed portion of the invoice and shall reserve monies
in the amount of the disputed invoice pending resolution of the objection by (a)
written agreement between the member submitting the invoice and the Liquidating
Trustee, or (b) resolution of the disputed amount by the Bankruptcy Court
pursuant to a Final Order. Committee members shall also be entitled to coverage
by an errors and omissions policy to indemnify them against claims, including
defense costs, to the same extent as the Liquidating Trustee.

VI.  
 
DISPUTED CLAIMS
A.  Objections to Claims
1.  Authority to Prosecute Claim Objections
Unless otherwise ordered by the Bankruptcy Court after notice and a hearing, and
except as expressly provided herein, from and after the Effective Date the
Liquidating Trustee and the Committee shall have the exclusive right to file
objections to Claims and Equity Interests. As to objections filed by the Debtors
or the Committee prior to the Effective Date but not resolved or determined
before the Effective Date, the Liquidating Trustee and the Committee shall be
vested on the Effective Date with all rights, interests, and authority of the
Debtors or the Committee with respect to the objections.
2.  Claims Objection Deadline
Except as otherwise provided in the Plan, the deadline for objecting to Claims
shall be one hundred eighty (180) days after the Effective Date or as may be
further extended by order of the Bankruptcy Court; provided, however, that if
the holder of the Claim is a debtor under any Chapter of the Bankruptcy Code,
then the deadline shall be one hundred eighty (180) days after the Liquidating
Trustee or the Committee obtains relief from stay or other relief which will
permit the filing of an objection to such Claim.
3.  No Distributions Pending Allowance
Notwithstanding any other provision of the Plan, no Cash or other property shall
be distributed under the Plan on account of any Claim or portion thereof unless
and until such Claim or portion thereof becomes Allowed.
4.  Authority to Settle Disputed Claims
From and after the Effective Date, the Liquidating Trustee and the Committee
shall be authorized to compromise or settle, pursuant to Bankruptcy Rule 9019
and section 105(a) of the Bankruptcy Code, Disputed Claims or Equity Interests
that are not Allowed hereunder or by Final Order of the Bankruptcy Court in
accordance with the following procedures, which shall constitute sufficient
notice in accordance with the Bankruptcy Code and the Bankruptcy Rules for
compromise or settlement of claims:
a. If the proposed amount at which the Disputed Claim to be Allowed is less than
or equal to $10,000, the Liquidating Trustee or the Committee, as appropriate,
shall be authorized and empowered to settle the Disputed Claim and execute
necessary documents, including a stipulation of settlement or release, upon (i)
the Liquidating Trustee or the Committee’s receipt of the consent (such consent
not to be unreasonably withheld) of the Committee in the case of a settlement by
the Liquidating Trustee or the consent of the Liquidating Trustee in the case of
a settlement by the Committee, or (ii) Bankruptcy Court approval of such
settlement after a hearing on notice to the Liquidating Trustee or the
Committee, as appropriate, the U.S. Trustee and parties requesting
post-confirmation notice; and
b. If the proposed amount at which the Disputed Claim is to be Allowed is
greater than $10,000, the Liquidating Trustee or the Committee (as appropriate)
shall be authorized and empowered to settle such Disputed Claim and execute
necessary documents, including a stipulation of settlement or release, only upon
receipt of Bankruptcy Court approval of such settlement after a hearing on
notice to the Liquidating Trustee or the Committee, as appropriate, the U.S.
Trustee and parties requesting post-confirmation notice.
B.  Setoffs
The Liquidating Trustee may, in accordance with section 553 of the Bankruptcy
Code and applicable non-bankruptcy law, set off against any Allowed Claim and
the distributions to be made pursuant to the Plan on account of such Claim
(before any distribution is made on account of such Claim), the claims, rights
and causes of action of any nature that the Debtors or the Estate may hold
against the holder of such Allowed Claim; provided, however, that neither the
failure to effect such a setoff nor the allowance of any Claim hereunder shall
constitute a waiver or release by the Debtors, the Estate, the Liquidating
Trustee or the Committee of any such claims, rights and causes of action that
the Debtors or the Estate may possess against such holder.
C.  Estimation of Claims
Subject to the allocation of authority and responsibility provided in the Plan,
the Liquidating Trustee or the Committee may at any time request that the
Bankruptcy Court estimate, pursuant to section 502(c) of the Bankruptcy Code,
any Claim that is contingent, unliquidated, or disputed regardless of whether
any party in interest has previously objected to such Claim or whether the
Bankruptcy Court has ruled on any such objection, and the Bankruptcy Court will
retain jurisdiction to estimate any Claim at any time during litigation
concerning any objection to any Claim, including during the pendency of any
appeal relating to any such objection. In the event that the Bankruptcy Court
estimates any contingent or unliquidated Claim, the amount of such estimation
will constitute either the Allowed amount of such Claim or a maximum limitation
on such Claim, as determined by the Bankruptcy Court. If the estimated amount
constitutes a maximum limitation on such Claim, the Liquidating Trustee or the
Committee, as appropriate, may elect to pursue any supplemental proceedings to
object to any ultimate payment on such Claim. All of the aforementioned Claims
objection, estimation and resolution procedures are cumulative and are not
necessarily exclusive of one another. Claims may be estimated and thereafter
resolved by any mechanism permitted under the Bankruptcy Code or the Plan.
D.  Amendments to Claims
Prior to the Confirmation Date, a Claim may be amended only as agreed upon by
the Liquidating Trustee, the Committee, and the holder of such Claim, or as
otherwise permitted by the Bankruptcy Court, the Bankruptcy Rules and applicable
law. After the Confirmation Date, a Claim may be filed only with the
authorization of the Bankruptcy Court, and may be amended only with the
authorization of the Bankruptcy Court or as agreed upon by the Liquidating
Trustee, the Committee, and the holder of such Claim. Any new or amended Claim
filed in violation of this paragraph shall be deemed Disallowed in full without
any action by the Debtors, the Liquidating Trustee, or the Committee.
 
VII.  
 
DISTRIBUTIONS
A.  Disbursing Agent
The Liquidating Trustee shall act as the disbursing agent under this Plan. The
Liquidating Trustee shall make distributions of Cash and New Common Stock in
accordance with the Plan.
B.  Claim Distribution Record Date
The date of record for determining the entitlement of any holder of a Claim is
the Claim Distribution Record Date. The Debtors, the Liquidating Trustee, and
each of their respective agents, successors, and assigns shall have no
obligation to recognize any transfer of Claims occurring after the Claim
Distribution Record Date and shall be entitled instead to recognize and deal for
all purposes hereunder only with those record holders of Claims as of the Claim
Distribution Record Date irrespective of the number of distributions to be made
under the Plan to such Persons or the date of such distributions. An assignee of
a transferred and assigned scheduled or filed Claim shall be permitted to
receive distributions in accordance with the Plan only if the transfer and
assignment has been reflected on the Bankruptcy Court’s docket as of the Claim
Distribution Record Date.
1.  Disputed Claims Reserve
On the Effective Date and from time-to-time as further distributions are made,
the Liquidating Trustee shall (a) deposit into the Disputed Claims Reserve
Account Cash distributions, and (b) reserve shares of New Common Stock for any
Disputed Claims based on the assumption that all such Disputed Claims will be
allowed in full, unless the Bankruptcy Court shall estimate that a smaller
reserve is sufficient. If the Bankruptcy Court so orders, any claimant whose
Claim is so estimated shall have recourse only to the reserve established by the
Bankruptcy Court for such claimant’s Disputed Claim, and not to the Debtors, the
Estate, the Reorganized Debtor, the Liquidating Trustee, the Liquidating Trust,
the Committee or any Person receiving property or distributions under the Plan,
even if the Allowed Claim of such Claimant exceeds the maximum estimation of
such Claim. THUS, THE BANKRUPTCY COURT’S ESTIMATION OF A DISPUTED CLAIM WILL
LIMIT THE DISTRIBUTION TO BE MADE THEREON, REGARDLESS OF THE AMOUNT FINALLY
ALLOWED ON ACCOUNT OF SUCH CLAIM. All interest, dividends, and profits earned in
the Disputed Claims Reserve Account shall be property of the Estate and shall
accrue for the benefit of the Estate, and no holder of any Claim or any Disputed
Claim shall have any rights in such interest, dividends, or profits, except as
provided in the Plan.
C.  Manner of Payment Under the Plan
Any payments of Cash made by the Liquidating Trustee on account of Allowed
Claims pursuant to the Plan may be made either by check or by wire transfer, at
the option of the Liquidating Trustee, and drawn on or from the Plan
Disbursement Account.
D.  Delivery of Distributions and Undeliverable Distributions
Distributions to holders of Allowed Claims under the Plan shall be made at the
address of each such holder as set forth on the Schedules filed with the
Bankruptcy Court, unless superseded by a new address as set forth (i) on a proof
of claim filed by a holder of the Claim, (ii) in another writing notifying the
Liquidating Trustee of a change of address prior to the Claim Distribution
Record Date, or (iii) in a request for payment of an Administrative Expense
Claim, as the case may be. If any holder’s distribution is returned as
undeliverable, no further distributions to such holder shall be made unless and
until the Liquidating Trustee is notified of such holder’s then-current address,
at which time all missed distributions shall be made to such holder, without
interest.
Except as provided in the Plan, any distribution of Cash under the Plan on
account of an Allowed Claim that is undeliverable to the claimant’s last known
address and which is unclaimed (“Unclaimed Property”) shall be deposited into
the Disputed Claims Reserve Account to be held for the benefit of the holders of
Allowed Claims entitled thereto under the terms of the Plan. Upon presentation
of proper proof by a claimant entitled to such Unclaimed Property, the Unclaimed
Property due the claimant shall be released from the Disputed Claims Reserve
Account and paid to such claimant.
Notwithstanding the foregoing, one (1) year after the Unclaimed Property is
initially distributed, claimants shall cease to be entitled to the Unclaimed
Property in which they previously had an interest, and such Unclaimed Property
shall then be transferred to the Plan Disbursement Account and distributed in
the same manner as other Cash distributions, and the claimant to whom such
Unclaimed Property was delivered shall forever be removed as the holder of an
Allowed Claim against the Debtors or the Estate and shall receive no
distributions under the Plan. Any distribution of New Common Stock under this
Plan on account of an Allowed Claim that is undeliverable to the claimant’s last
known address and which is unclaimed for one (1) year following the initial
distribution shall be cancelled on the books and records of the Reorganized
Debtor one (1) year after the New Common Stock is initially distributed under
this Plan.
E.  Interest on Claims
Unless otherwise specifically provided for in the Plan or the Confirmation
Order, or required by applicable bankruptcy law, interest, fees, costs, and
other charges accruing or incurred on or after the Petition Date shall not be
paid on any Claim or Equity Interest. With respect to oversecured Claims (see 11
U.S.C. § 506(b)), post-petition interest shall accrue on such Claims at the
applicable statutory or contractual non-default rate, as the case may be.
F.  Compliance with Tax Requirements
In connection with the Plan, to the extent applicable, the Liquidating Trustee
in making Distributions under the Plan shall comply with all tax withholding and
reporting requirements imposed by any governmental unit, and all distributions
pursuant to the Plan shall be subject to such withholding and reporting
requirements. The Liquidating Trustee may withhold the entire distribution due
to any holder of an Allowed Claim until such time as such holder provides the
necessary information to comply with any withholding requirements of any
governmental unit. Any property so withheld will then be paid by the Liquidating
Trustee to the appropriate authority. If the holder of an Allowed Claim fails to
provide the information necessary to comply with any withholding requirements of
any governmental unit within six (6) months from the date of first notification
to the holder of the need for such information or for the Cash necessary to
comply with any applicable withholding requirements, then the holder’s
distribution shall be treated as an undeliverable distribution in accordance
with this Plan.
G.  Allocation of Distributions
Distributions to any holder of an Allowed Claim shall be allocated first to the
original principal portion of any such Allowed Claim, and then, to the extent
the consideration exceeds such amount, to the remainder of such Claim.
H.  Fractional Distributions
Any other provision of the Plan notwithstanding, payments of fractions of
dollars shall not be made. Whenever any payment of a fraction of a dollar under
the Plan would otherwise be called for, the actual payment made shall reflect a
rounding of such fraction to the nearest whole dollar (up or down), with half
dollars being rounded up. No fractional shares of New Common Stock shall be
issued and all fractional shares shall be rounded down to the nearest whole
share. Holders of Allowed Claims who would be entitled to fractional shares but
for this provision shall receive no consideration therefor because such amount
will be de minimis.
I.  De Minimis Distributions
No Cash payment of less than twenty dollars ($20.00) shall be made by the
Liquidating Trustee to any holder of an Allowed Claim unless a request therefor
is made in writing to the Liquidating Trustee. Any undistributed amount shall be
held over to the next distribution date, if any. No distribution of New Common
Stock shall be made to any holder of an Allowed Claim of less than five hundred
dollars ($500.00) as such distribution will be de minimis.

J.  No Distributions On Account of Intercompany Claims
Notwithstanding anything to the contrary in the Plan, there shall be no
distributions on account of Intercompany Claims.
K.  Investment of Cash
The Liquidating Trustee shall invest and deposit Cash only in Allowed
Investments and the Accounts referenced in the Plan and Liquidating Trust
Agreement. Interest earned on any invested and deposited Cash shall not be
payable to any particular Class or Claim, but shall be held generally as Cash of
the Estate.
L.  Claims Covered by Insurance
Any Allowed Claim that has available as a source of payment either an insurance
policy issued to the Debtors or the Liquidating Trustee or in which either the
Debtors, the Liquidating Trustee or the Estate has any rights as named insured
or beneficiary, including but not limited to general liability, workers
compensation, and automobile insurance, shall receive distributions pursuant to
this section. Nothing in the Plan modifies, limits, impairs, or otherwise
affects the terms or provisions of any particular insurance policy, program, or
agreement, or the nature and extent of coverage thereunder.
1.  Authorized Insurance Payments
If an insurer stipulates that payment of an Allowed Claim will not affect
coverage for other Claims that may be made under the same insurance policy
(i.e., aggregate limits are sufficient to cover all such Claims), the claimant
may receive payment from said insurer without further order of the Bankruptcy
Court. If there is no such stipulation by the insurer (i.e., an aggregate limit
may exist), the Liquidating Trustee shall use his best efforts to obtain an
order from the Bankruptcy Court authorizing the insurer to exercise either of
the following two (2) payment options:
a. Option A: The insurer shall pay the amount of the Allowed Claim (up to the
amount of policy limits) to the claimant if the Bankruptcy Court estimates that
total Claims will not exceed the limits of the policy at issue and authorizes
payment; or
b. Option B: The insurer shall pay the amount of the Allowed Claim (up to the
amount of the policy or bond limits) to the Estate for Pro Rata distribution to
all holders of Allowed Claims whose Claims are insured by the particular
insurance policy at issue. Upon said payment, all suits against the insurer
based upon, arising out of, or related to the Claim for which payment was made
shall be enjoined. The funds paid to the Estate under this section shall be
deposited into a separate account, which shall be interest-bearing if possible,
and held for payment of only those Allowed Claims that are covered by the
insurance policy at issue; and distribution of funds in this account shall be
made only when and on such terms as the Bankruptcy Court authorizes.
c. The Liquidating Trustee or any holder of an Allowed Claim that is covered by
an insurance policy may file a motion in the Bankruptcy Court for an order
authorizing payment or distribution under this section, on notice to the
claimant, the Committee, the Debtors, the Liquidating Trustee, the U.S. Trustee,
parties requesting post-confirmation notice in accordance with Article XII of
the Plan, the claimant, and the applicable insurance company.
2.  Exhaustion of Insurance
Distributions on account of Allowed Claims shall be made first from the
applicable insurance policies before any distribution is made on account of such
Allowed Claims from the Cash in the Estate, including from the Disputed Claims
Reserve Account. The Bankruptcy Court may provisionally determine or estimate
that a Claim would be covered by an insurance policy, if and to the extent it
were an Allowed Claim, in which event the Claim shall be provisionally
disallowed and shall not receive any distributions from the Estate or the
Disputed Claims Reserve Account pending a determination by an arbitrator, judge,
or court of competent jurisdiction as to whether and to what extent such Claim
is covered by the insurance policy. The distribution on account of each such
Allowed Claim shall be reduced by all payments that the holders of said Allowed
Claim receives pursuant to any insurance policy.

3.  Coverage Denied
a. If an insurer denies coverage of an Allowed Claim, then such Claim shall be
treated the same as an Allowed Claim in accordance with the Plan.
b. If the Estate, or the holder of an Allowed Claim, obtains a recovery from an
insurer for an Allowed Claim for which coverage was earlier denied, then the
recovery shall be treated the same as a payment on account of distributions made
to holders of Allowed Claims in the same Class under this Plan. If the claimant
has previously received a distribution of Cash from the Estate on account of its
Allowed Claim, such distribution shall be credited against the distribution made
on account of Allowed Claims in its Class and, to the extent that the insurance
recovery plus the prior distribution exceeds the distribution on account of such
Allowed Claim, said surplus shall be retained by the Estate or, if held by the
claimant, turned over to the Estate.
4.  Calculation of Claim for Distributions
In the event an Allowed Claim receives payment from an insurance policy and the
holder thereof also seeks distributions of Cash from the Estate, then the
aggregate of (a) all payments received on account of said Allowed Claim from any
insurance, plus (b) distributions of Cash from the Estate on account of said
Allowed Claim, shall not exceed (c) an amount equal to the Cash and New Common
Stock said Allowed Claim would have been entitled to under this Plan.
VIII.  
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
A.  Approval of Rejection of Executory Contracts and Unexpired Leases
All executory contracts and unexpired leases that exist between the Debtors and
any Person, whether or not previously listed by the Debtors on their respective
Schedule G, shall be deemed rejected on the Effective Date, subject to sections
365(g) and 507(g) of the Bankruptcy Code, except for any executory contract or
unexpired lease (a) that has been assumed or rejected pursuant to an order of
the Bankruptcy Court entered prior to the Confirmation Date, or (b) as to which
a motion for approval of the assumption of such contract or lease has been filed
and served prior to the Confirmation Date. Entry of the Confirmation Order shall
constitute the approval, pursuant to section 365(a) of the Bankruptcy Code, of
the rejection of the executory contracts and unexpired leases rejected pursuant
to the Plan.
B.  Bar Date for Filing Proofs of Claim Relating to Executory Contracts and
Unexpired Leases Rejected Pursuant to the Plan
Claims arising out of the rejection of an executory contract or unexpired lease
pursuant to the Plan must be filed with the Bankruptcy Court no later than
thirty (30) days after the Confirmation Date. Any Claims not filed within such
applicable time periods shall be forever barred from assertion and shall receive
no Distributions under this Plan.
 
IX.  
 
SETTLEMENT, EXCULPATION, INDEMNIFICATION AND RELEASES
A.  Exculpation of Plan Proponents and their Agents
Neither the Debtors, the Committee, nor any of their respective members,
officers, directors, employees, representatives, and agents (including, but not
limited to any attorneys, advisors, investment bankers and other professionals
retained by such Persons) shall have or will incur any liability to any holder
of a Claim or Equity Interest for any act or omission in connection with, or
arising out of the Chapter 11 Cases, the pursuit of confirmation of the Plan,
the consummation of the Plan, the administration of the Plan, or the
distribution of property under the Plan, except for liability based on willful
misconduct as determined by Final Order of the Bankruptcy Court. This provision
shall not supercede the “safe harbor” from liability provided by section 1125(e)
of the Bankruptcy Code.
B.  Indemnification
The Estate shall indemnify all of its officers and directors in office on the
Confirmation Date from and against any liability to the extent such liability is
covered by any insurance policy in which such directors and officers are
insured.

C.  Release of Parties Entitled to Indemnification and Exculpation
All Creditors and Equity Interest holders who affirmatively vote to accept the
Plan and to grant a release shall be deemed to release the members, officers,
directors, employees, representatives, and agents of the Debtors and the
Committee (including, but not limited to any attorneys, advisors, investment
bankers and other professionals retained by such Persons) with respect to all
claims, rights and causes of action that could have been brought by or on behalf
of such Creditors or Equity Interest holders, whether arising before, on or
after the Petition Date, known or unknown, suspected or unsuspected, in law or
in equity.
In addition, the Debtors shall be deemed to release the members, officers,
directors, employees, representatives, and agents of the Debtors and the
Committee (including, but not limited to any attorneys, advisors, investment
bankers and other professionals retained by such Persons) with respect to all
claims, rights and causes of action that could have been brought by or on behalf
of such Creditors or Equity Interest holders, whether arising before, on or
after the Petition Date, known or unknown, suspected or unsuspected, in law or
in equity, except for liability based on willful misconduct as determined by
Final Order of the Bankruptcy Court.
 
X.  
 
EFFECT OF CONFIRMATION OF PLAN
A.  Binding Effect of the Plan
The provisions of this Plan and the Liquidating Trust Agreement shall bind the
Debtors, each Creditor, each Equity Interest holder, the Committee, the
Liquidating Trustee, and any successor or assign, including a Chapter 7 or
Chapter 11 trustee, whether or not the Claim or Equity Interest of such Person
arose before or after the Petition Date or the Effective Date, whether or not
the Claim or Equity Interest is Impaired under the Plan, and whether or not such
Person has accepted the Plan. Except as provided for in the Plan, all property
of the Estate is free and clear of all liens, interests in such property, Claims
and Equity Interests.
B.  Subordination of Claims
Nothing in this Plan shall be deemed to release the rights, if any, that the
Debtors, the Estate, the Committee, the Liquidating Trustee, or any creditor may
have to seek to subordinate any Claim pursuant to section 510 of the Bankruptcy
Code.
C.  Term of Bankruptcy Injunction or Stays
All injunctions or stays provided for in the Chapter 11 Cases 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 all property of
the Estate and all Trust Assets have been distributed in accordance with the
Plan and all other actions required by the Plan have been taken. Without
limiting the foregoing, except as otherwise provided in the Plan or the
Confirmation Order, on and after the Effective Date, all Persons who have held,
currently hold or may hold a Claim or an Equity Interest treated or provided for
pursuant to the Plan are enjoined, until all Trust Assets have been distributed
and the Liquidating Trust has been dissolved, from taking any of the following
actions, without leave of the Bankruptcy Court, on account of such Claim or
Equity Interest: (i) commencing or continuing, in any manner and in any place,
any action or proceeding against the Debtors, the Estate, the Reorganized
Debtor, the Liquidating Trust, the Liquidating Trustee, Professionals or the
Committee; (ii) enforcing, attaching, collecting, or recovering in any manner
any judgment, award, decree or other order against the Debtors, the Estate, the
Liquidating Trust, the Reorganized Debtor, the Liquidating Trustee,
Professionals or the Committee; (iii) creating, perfecting or enforcing any lien
against property of the Estate or any Trust Asset; (iv) taking any action to
obtain possession of property of the Estate or any Trust Asset or to obtain
possession of property from the Estate or the Liquidating Trust or to exercise
control over the Estate, property of the Estate, the Liquidating Trust or Trust
Assets; and (v) commencing or continuing any action or proceeding, in any manner
and in any place, that does not comply with or is inconsistent with the
provisions of the Plan; provided, however, that injunctions and stays provided
under the Plan shall not affect or apply to (i) the filing and prosecution of
requests for payment of Administrative Expense Claims in accordance with Article
III.B.1.a of the Plan, (ii) adversary proceedings or Claims resolution
proceedings commenced in or pending in the Bankruptcy Court, (iii) proceedings
commenced in the Bankruptcy Court to enforce provisions of the Plan or with
respect to disputes concerning payment of Post-Effective Date Administrative
Fees and Expenses, (iv) proceedings pending in courts other than the Bankruptcy
Court for the sole purpose of liquidating post-Petition Date Claims, (v)
accepting any distributions made in accordance with the Plan or payments on
Post-Effective Date Claims, and (vi) settling, adjusting, litigating, paying, or
otherwise handling, processing, or administering claims under any insurance
programs or policies of the Debtors.
D.  Discharge
FVC will receive a discharge under this Plan pursuant to and in accordance with
the provisions of Section 1141 of the Bankruptcy Code because FVC, following its
anticipated Merger with U.S. Dry Cleaning, will survive as the Reorganized
Debtor.
 
XI.  
 
RETENTION OF JURISDICTION
A.  Scope of Jurisdiction
Notwithstanding confirmation of the Plan or the occurrence of the Effective
Date, the Bankruptcy Court shall retain exclusive jurisdiction over all matters
arising out of, arising in, or related to the Chapter 11 Cases and the Plan to
the fullest extent legally permissible, including, without limitation, for the
following purposes:
1.  To determine any and all objections to the validity, priority, amount and/or
allowance of Claims, and to determine any motion, action or adversary proceeding
concerning the classification and/or subordination of Claims; 
2.  To determine any and all applications, motions, adversary proceedings, and
contested or litigated matters, whether pending before the Bankruptcy Court on
the Confirmation Date or instituted after the Effective Date, including, without
limitation, the Causes of Action;
3.  To estimate the amount of any Claim and to estimate or determine the amount
of Cash reasonably necessary to be deposited in the Disputed Claims Reserve
Account and the number of shares of New Common Stock to be reserved on account
of any Claim or Disputed Claim; 
4.  To determine the extent, validity, priority or amount of any lien asserted
against property of the Debtors or the Estate;
5.  To determine matters related to the collection, liquidation, realization
upon and enforcement of rights regarding property of the Debtors or property of
the Estate;
6.  To enforce, interpret, and modify the Plan, the Liquidating Trust Agreement,
or the Confirmation Order to remedy any defect or omission, or to reconcile any
inconsistency in any order of the Bankruptcy Court, including the Confirmation
Order, to the extent authorized by the Bankruptcy Code;
7.  To determine all controversies, suits, and disputes that may arise in
connection with the interpretation, enforcement, implementation, consummation,
or administration of the Plan, the Liquidating Trust Agreement, and the
Confirmation Order;
8.  To enter a final decree closing the Chapter 11 Cases;
9.  To determine such other matters as may arise in connection with the Plan or
the Confirmation Order,
10.  To issue orders regarding, and in furtherance of, execution and
consummation of the Plan, the Liquidating Trust Agreement and the Confirmation
Order;
11.  To hear and determine any disputes regarding assets of the Estate or the
Liquidating Trust, wherever located;
12.  To hear and determine any disputes regarding the Liquidating Trustee, the
Committee or its members, and to authorize the Liquidating Trustee or the
Committee to take certain actions consistent with the Plan, the Liquidating
Trust Agreement, and the Confirmation Order;
13.  To authorize and approve, or disapprove, any settlements or compromises of
Claims, causes of action, defenses, or controversies asserted by or against the
Liquidating Trust and the Estate, and the sale, lease or other disposition of
property of the Liquidating Trust and the Estate;
14.  To determine, as is necessary or appropriate under section 505 of the
Bankruptcy Code or otherwise, matters relating to tax returns filed or to be
filed on behalf of the Debtors or the Estate for all periods through the end of
the fiscal year in which the Chapter 11 Cases are closed, including the
determination of the amount of basis, depreciation, net operating losses, or
other tax attributes of the Debtors or the Estate;
15.  To implement the provisions of this Plan and to enter orders in aid of
confirmation of the Plan, including without limitation, appropriate orders to
(a) recover all assets of the Estate, (b) determine causes of action which may
be asserted by or against the Estate, the Liquidating Trustee, Professionals, or
the Committee, (c) determine, under section 541 of the Bankruptcy Code, whether
property is property of the Estate, (d) protect the assets of the Estate from
creditor action, (e) enter orders enabling Persons to perform acts necessary for
consummation of this Plan under section 1142 of the Bankruptcy Code; and (f)
enter orders confirming the appointment of a successor or replacement
Liquidating Trustee, if required under the Plan, or to appoint a successor or
replacement Liquidating Trustee if the Committee is unable to do so;
16.  To enter such orders as may be appropriate in the event the Confirmation
Order is for any reason stayed, revoked, modified, rescinded or vacated;
17.  To determine motions for the rejection, assumption, or assignment of
executory contracts or unexpired leases filed before the Effective Date and the
allowance of any Claims resulting therefrom; and
18.  To issue injunctions, make determinations of declaratory relief, or take
such other legal or equitable actions or issue such other orders as may be
necessary or appropriate to restrain interference with this Plan, the
Liquidating Trust Agreement, the Confirmation Order, the Estate, the Debtors,
the Reorganized Debtor, the Liquidating Trustee, Professionals, or the
Committee.

B.  Abstention
If the Bankruptcy Court abstains from exercising, or declines to exercise,
jurisdiction or is otherwise without jurisdiction over any matter arising out of
the Chapter 11 Cases, including the matters set forth in this Article, this
Article shall have no effect upon and shall not control, prohibit, or limit the
exercise of jurisdiction by any other court having competent jurisdiction with
respect to such matter.
 
XII.  
 
MISCELLANEOUS ITEMS
A.  Modification/Amendment of Plan and Liquidating Trust
The Plan Proponents may modify the Plan at any time before the Confirmation
Date. However, the Court may require a new disclosure statement and/or re-voting
on the Plan if the Plan Proponents modify the Plan before confirmation.
The Plan Proponents may also seek to modify the Plan at any time after
confirmation if (1) the Plan has not been substantially consummated, and (2) the
Court authorizes the proposed modifications after notice and a hearing.
The Liquidating Trust Agreement shall not be amended without the consent of the
Plan Proponents or a Final Order of the Bankruptcy Court.
B.  Withdrawal or Revocation.
The Plan Proponents may withdraw or revoke the Plan at any time prior to the
Confirmation Date. If the Plan Proponents revoke or withdraw the Plan prior to
the Confirmation Date, or if the Confirmation Date does not occur, then the Plan
shall be deemed null and void. In such event, nothing contained herein shall be
deemed to constitute a waiver or release of any Claim by or against the Debtors
or the Estate or any other Person or to prejudice in any manner the rights of
the Debtors or the Estate or any other Person in any further proceedings
involving the Debtors or the Estate.
C.  Result of Stay Pending Appeal/Plan Voidability
In the event that a stay of the Confirmation Order is issued or in effect, the
Plan Proponents may, but are not required or in any way obligated to, declare
the Plan null and void. If the Plan Proponents declare the Plan null and void
pursuant to this section, they shall file and serve written notice to that
effect on all known holders of Claims and Equity Interests against the Debtors
and the Estate, the Liquidating Trustee and the U.S. Trustee.
D.  Notices.
All notices or requests required or permitted to be made in accordance with the
Plan shall be in writing and delivered either (a) by first class mail, (b) by
facsimile transmission, (c) by electronic mail as an attachment and in a format
readable by Adobe Acrobat®, or (d) personally, as follows:
Debtors’ Counsel:
Van C. Durrer, II, Esq.
Kurt Ramlo, Esq.
SKADDEN, ARPS, SLATE, MEAGHER &  FLOM LLP
300 South Grand Avenue, Suite 3400
Los Angeles, CA 90071
Telephone: (213) 687-5000
Facsimile: (213) 687.5600
E-mail: vdurrer@skadden.com
Committee’s Counsel:
Christopher Alliotts, Esq.
SULMEYERKUPETZ
A Professional Corporation
1080 Marsh Road, Suite 110
Menlo Park, CA 94025
Telephone: (650) 326-2245
Facsimile: (650) 326-5134
E-mail: calliotts@sulmeyerlaw.com
Liquidating Trustee:
Mr. Gregory Sterling
Receivers Incorporated
718 University Avenue, Suite 213
Los Gatos, CA 95032
Telephone: (408) 354-9797
Facsimile: (408) 354-9701
E-mail: gsterling@receiversinc.com
Committee:
Ms. Tracy Wemett
BroadPR, Inc.
1770 Massachusetts Avenue, Suite 267
Cambridge, MA 02140
Telephone: (617) 868-5031
Facsimile: (603) 812-3088
E-mail: tracy@broadpr.com
U.S. Trustee:
Patricia A. Cutler, Esq.
Office of the United States Trustee
235 Pine Street, Suite 700
San Francisco, CA 94101
Telephone: (415) 705-3333
 
 
Reorganized Debtor:
Martin J. Brill, Esq.
Levene, Neale, Bender, Rankin & Brill LLP
1801 Avenue of the Stars, Suite 1120
Los Angeles, CA 90067
Telephone: (310) 229-1234
Facsimile: (310) 229-1244
E-mail: mjb@lnbrb.com

Following confirmation of the Plan, general notices will be sent only to those
parties listed above. If any other party would like to receive such notices
post-confirmation, that party must make a written request to the Liquidating
Trustee and the Committee. Any notice to any holder of a Claim or Equity
Interest shall be given at the address set forth in its Proof of Claim or
Interest filed with the Bankruptcy Court, or if none, at the address set forth
in the Schedules.
Notice shall be deemed given upon the earlier of (1) if notice is given by
facsimile transmission or by overnight delivery service, the first business day
after transmissions of facsimile or deposit with the delivery service, (2) if
notice is mailed, the third calendar day after deposit in the United States
Mail, first class postage prepaid, or (3) if notice is given by electronic mail,
the day such transmission is received provided that a hardcopy of the notice is
also sent by regular first class mail on the same day.
Any Person may change the address at which such Person is to receive notices
under the Plan by sending written notice, pursuant to the provisions of this
section, to the Liquidating Trustee and the Committee, and by filing such notice
with the Bankruptcy Court.
E.  Representation of the Debtors
Upon the Effective Date, the representation of the Debtors by general bankruptcy
counsel whose retention was approved by this Court shall terminate and their
withdrawal as counsel of record for the Debtors shall be deemed approved by the
Court.
F.  Successors and Assigns
The rights, benefits and obligations of any Person named or referred to in this
Plan shall be binding upon and inure to the benefit of any heir, executor,
administrator, successor, or assignee of such Person.
G.  Severability
In the event that the Bankruptcy Court determines, prior to the Confirmation
Date, that any provision of the Plan is invalid, void or unenforceable, the
Bankruptcy Court shall, with the consent of the Plan Proponents, have the power
to 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, alteration or
interpretation. The Confirmation Order shall constitute a judicial determination
and shall in no way be affected, impaired or invalidated by such holding,
alteration or interpretation. The Confirmation Order shall provide 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 pursuant to its terms.
H.  Governing Law
Except to the extent the Bankruptcy Code or Bankruptcy Rules are applicable, the
rights and obligations arising under the Plan shall be governed by, and
construed and enforced in accordance with, the laws of the State of California,
without giving effect to the principles of conflicts of law thereof.
I.  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.
J.  Saturday, Sunday or Legal Holiday.
If any payment or act under the Plan is required to be made or performed on a
date that is not a Business Day, then the making of such payment or the
performance of such act may be completed on the next succeeding Business Day in
accordance with Bankruptcy Rule 9006(a), but such payment or act shall be deemed
to have been completed as of the required date.
K.  Incorporation of Liquidating Trust Agreement and Exhibits.
The Liquidating Trust Agreement is essential to and constitutes a material and
integral part of this Plan. As such, the Liquidating Trust Agreement is hereby
incorporated into this Plan in its entirety by this reference as if set forth in
full. All exhibits to the Plan are also hereby incorporated into and are a part
of the Plan as if fully set forth herein.

L.  Post-Confirmation Status Report.
Within 120 days of the entry of the order confirming the Plan, the Liquidating
Trustee shall file a status report with the Bankruptcy Court explaining what
progress has been made toward consummation of the confirmed Plan. The status
report shall be served on the Debtor’s Counsel, the Committee’s Counsel, the
U.S. Trustee, and those parties who have requested post-confirmation notice.
Further status reports shall be filed every 120 days and served on the same
entities.
M.  Post-Confirmation Conversion/Dismissal
A Creditor or other party in interest may bring a motion to convert or dismiss
the case under § 1112(b), after the Plan is confirmed, if there is a default in
performing the Plan. If the Bankruptcy Court orders the case converted to
Chapter 7 after the Plan is confirmed, then all property that had been property
of the Estate or the Liquidating Trust, and that has not been disbursed pursuant
to the Plan, will revest in the Chapter 7 estate, and the automatic stay will be
reimposed upon the revested property only to the extent that relief from stay
was not previously granted by the Bankruptcy Court during this case.
N.  Supremacy Clause
If any conflict exists between the terms of the Plan and the Disclosure
Statement, the terms of the Plan shall control.
O.  Final Decree
Once the Estate has been fully administered as referred to in Bankruptcy Rule
3022, the Liquidating Trustee, the Committee or other party as the Court shall
designate
in the Confirmation Order, shall file a motion with the Court to obtain a final
decree closing the Chapter 11 Cases.
 
DATED: September 21, 2005   FIRST VIRTUAL COMMUNICATIONS, INC., a
                          Delaware corporation, debtor and debtor in possession

By: /s/ Jonathan G. Morgan   
Name: Jonathan G. Morgan
Title: President and CEO

DATED: September 21, 2005        CUseeME NETWORKS, INC., a Delaware
                             corporation, debtor and debtor in possession

By: /s/ Jonathan G. Morgan   
Name: Jonathan G. Morgan
Title: President and CEO

DATED: September 21, 2005         OFFICIAL COMMITTEE OF UNSECURE
                      CREDITORS

By: /s/ Tracy Wemett    
Name: Tracy Wemett, BroadPR, Inc.
Title: Chairperson

DATED: September 21, 2005         SKADDEN, ARPS, SLATE, MEAGHER & FLOM L
                      A Professional Corporation
 
By: /s/ Van C. Durrer    
Van C. Durrer
Kurt Ramlo
Melissa T. Kahn
Attorneys for the First Virtual Communications,
Inc. and CUseeMe Networks, Inc.,
Debtors and Debtors in Possession

DATED: September 21, 2005         SULMEYERKUPETZ
                  A Professional Corporation

By: /s/ Christopher Alliotts   
Christopher Alliotts
Attorneys for the Official Committee
of Unsecured Creditors

 

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