ex10-5.htm


    Exhibit
10.5 – Second Joint Plan of Reorganization of Visitalk.com, Inc.

    


    Mark J.
Giunta (#015079)

    Law
Office of Mark J. Giunta

    845 N.
Third Ave.

    Phoenix,
AZ 85003-1408

    Phone:
(602) 307-0837

    Fax:
(602) 307-0838

    Email:
Mark.Giunta@Azbar.org

    Attorney
for visitalk.com, Inc.

    


    IN THE
UNITED STATES BANKRUPTCY COURT

    FOR THE
DISTRICT OF ARIZONA

    


    
      	
              In
      re:

              VISITALK.COM,
      INC.,

              Tax
      I.D. #86-0930147

              Debtor,

            	
              Chapter
      11 Proceeding

              Case
      No. 00-13035-PHX-RTB

            


    

    


    SECOND
JOINT PLAN OF REORGANIZATION

    Dated
June 22, 2004

    


    Visitalk.com,
Inc., an Arizona corporation (“Visitalk”), the Debtor and Debtor-in-Possession
(the “Proponent”) in the above-captioned case; hereby proposes a Joint Plan of
Reorganization (“Plan”) pursuant to 11 U.S.C. §1129 with affiliates formed or to
be formed before the Effective Date; VT Equities Corp., (“VTEC”), Visitalk,
Inc., d/b/a VT Consumer Services (“CSI”), VT Business Products, Inc. (“BPI”), VT
Gaming Services, Inc. (“Gaming”), VT Financial Services, Inc. (“Financial”), VT
International Corp. (“International”), VT Billing Services, Inc. (“Billing”), VT
Marketing Services, Inc. (“Marketing”), VT Video Services, Inc. (“Video”), VT
Language Specific One, Inc. through VT Language Specific Ten, Inc. (“Languages
1-10”) and NavEdge Networks, Inc. (“NavEdge”). The Proponent, VTEC, CSI, BPI,
Gaming, Financial, International, Billing, Marketing, Video, Languages 1-10 and
NavEdge are referred to in the Plan following as the
“Co-Proponents.”

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    INDEX FOR
SECOND JOINT PLAN OF REORGANIZATION

    


    
      
        
          
            	 	Article	
                    Page

                  
	
                    I

                  	
                    Definitions

                  	
                    3

                  
	
                    II

                  	
                    Objective
      Of The Reorganization

                  	
                    3

                  
	
                    III

                  	
                    Classification
      Of Claims And Interests

                  	
                    5

                  
	
                    IV

                  	
                    Identification
      Of Classes Impaired Under The Plan

                  	
                    8

                  
	
                    V

                  	
                    Treatment
      Of Classified Claims And Interests

                  	
                    8

                  
	
                    VI

                  	
                    Post
      Confirmation Management Of The Reorganized Debtor

                  	
                    13

                  
	
                    VII

                  	
                    Anticipated
      Post Confirmation Litigation

                  	
                    14

                  
	
                    VIII

                  	
                    Acceptance
      And Rejection Of Executory Contracts

                  	
                    15

                  
	
                    IX

                  	
                    Descriptions
      Of Securities To Be Issued In Satisfaction Of Claims And
      Interests

                  	
                    15

                  
	
                    X

                  	
                    Post
      Confirmation Business Operations

                  	
                    21

                  
	
                    XI

                  	
                    Ownership
      Of The Debtor’s Assets And Causes Of Action

                  	
                    21

                  
	
                    XII

                  	
                    The
      Creditor’s Trust

                  	
                    22

                  
	
                    XIII

                  	
                    Continuation
      And Termination Of Security Interests

                  	
                    28

                  
	
                    XIV

                  	
                    Insurance

                  	
                    28

                  
	
                    XV

                  	
                    Satisfaction
      Of Claims And Interests

                  	
                    28

                  
	
                    XVI

                  	
                    Binding
      Nature Of The Plan

                  	
                    29

                  
	
                    XVII

                  	
                    Termination
      Of The Automatic Stay And Discharge

                  	
                    29

                  
	
                    XVIII

                  	
                    Implementation
      Of The Plan

                  	
                    29

                  
	
                    XIX

                  	
                    Modification
      Of And Amendments To This Plan

                  	
                    33

                  
	
                    XX

                  	
                    Remedies
      For Defaults By The Reorganized Debtor

                  	
                    33

                  
	
                    XXI

                  	
                    Retention
      Of Bankruptcy Court Jurisdiction

                  	
                    33

                  
	
                    XXII

                  	
                    Request
      For Confirmation

                  	
                    34

                  


          

        

      

    

    


    LIST OF
EXHIBITS

    Appendix
A Definitions

    Exhibit 1
Form of merger document between VTEC and the Debtor

    Exhibit 2
Form of Equity Incentive Plan


    
      
        
        

      

      
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    ARTICLE
I

    DEFINITIONS

    


    1.1 Defined
Terms. The capitalized terms used in this Plan shall have the meanings as
set forth in Appendix “A” attached hereto.

    


    1.2 Undefined
Terms. Terms and phrases, whether capitalized or not, that are used and
not defined in Appendix “A” attached hereto, but are defined by the Bankruptcy
Code, have the meanings ascribed to them in the Bankruptcy Code.

    


    1.3 Interpretation.
The headings in this Plan are for convenience and reference only and shall not
limit or otherwise affect the provisions hereof. Words denoting the singular
number shall include the plural number and vice versa, and words denoting one
gender shall include the other gender.

    ARTICLE
II

    OBJECTIVE OF THE
REORGANIZATION

    


    2.1 General
Plan. This Plan
provides for the reorganization of Debtor through the creation of Operating
Subsidiaries and a subsequent merger of the Debtor with VTEC, in which the
Allowed Unsecured Creditors of the Debtor have an equity interest, and a
conveyance of the Debtor’s Causes of Action and $50,000 to a Creditor’s Trust
whose beneficiaries include in part the Allowed Unsecured Creditors of the
Debtor.

    


    VTEC,
which will be incorporated in Nevada, will be the survivor in the merger. The
form of merger document is attached as Exhibit 1. VTEC will operate as a holding
company. After the Effective Date, VTEC will initially control eighteen
Operating Subsidiaries based on Visitalk’s businesses and will own an interest
in NavEdge. VTEC will become the Reorganized Debtor. The purpose of this post
confirmation structure is to have a fresh start Reorganized Debtor with modern
Articles of Incorporation and by-laws, incorporated in a state with favorable
laws and low costs. Once the Plan has been implemented and the Articles of
Merger filed, the Debtor shall be dissolved in accordance with Arizona
law.

    


    Any of
the Operating Subsidiaries may acquire other assets and/or existing business
operations with the objective of creating additional value for such Operating
Subsidiaries’ shareholders and for the shareholders of the Reorganized Debtor.
The Plan creates “currency” in the form of securities that may be issued by the
Operating Subsidiaries, which will have potentially publicly trading
securities.

    


    The
Co-proponents believe that these securities could be used to, among other
beneficial objectives:

    


    (a)
attract capital;

     

    (b)
attract additional qualified management; or

     

    (c)
acquire assets or entities and for mergers or acquisitions.

    
      
        
        

      

      
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    The
Debtor’s creditors and claim holders may be issued VTEC securities and Operating
Subsidiary securities or Series A Senior Notes or Series B Notes in differing
amounts depending upon their election to be paid with securities issued under
the Plan and the classification and amount of their Allowed Claims. Any of the
Debtor’s Funding Lenders, Administrative Claimants or Post petition Claimants
may elect to be paid their loans or claims with securities issued under the
Plan. No securities will be issued to Holders of Old Common Stock or Holders of
Old Preferred Stock except the Debtor will offer Holders of Old Preferred Stock
common stock purchase warrants solely in exchange for a release of all claims
and for which such holders will have to invest new value as further described in
Article IX. Such warrants would have nominal value but could be beneficial to
the Reorganized Debtor and the Operating Subsidiaries in the future. Except for
this option, all of the Debtor’s Old Common Stock and Old Preferred Stock shall
be canceled pursuant to this Plan.

    


    The
Debtor is authorized to issue securities of VTEC and its Operating Subsidiaries
to its creditors in satisfaction of their allowed claims.

    


    On the
Effective Date of the Plan, all the Causes of Action of the Debtor, defined
herein, shall be conveyed to the Creditors’ Trust along with $50,000 in cash to
fund the operation of the Trust. Active Professionals and Class 7 Allowed
Unsecured Creditors shall be the beneficiaries of the Creditor’s
Trust.

    


    2.2 Facilities.
The Debtor originally made a six-month arrangement with Aztoré, an advisor to
the Debtor, effective April 1, 2001, to move to an appropriate facility of
approximately 2,000 square feet. With this commitment, on May 31, 2001, the
Debtor completely vacated its 7th Street
facility, which totaled about 27,000 square feet and relocated its offices and
its network operating facility, necessary to maintain the Visitalk business, to
its new facility. This facility arrangement with Aztore included the
availability of appropriate Bandwidth, power and secure computer operating
facilities. Starting on October 1, 2001, the Debtor leased this facility
directly on a month-to-month basis from Quality Care Solutions, Inc., (“QCSI”)
through October 2002. The Debtor owes QCSI $96,784.35 plus interest. Aztoré
guaranteed this lease payment for a fee claim of $5,000 per month. On November
1, 2002 the Debtor again restructured its facilities requirements to minimize
overhead. Starting on that date a majority of the Debtor’s facility requirements
were supplied through the NavEdge Operating Agreement and the Debtor directly
rents additional storage space for records and equipment storage.

    


    2.3 Alternatives
to the Plan. As set forth in the Disclosure Statement accompanying this
Plan, if the Debtor’s assets were liquidated in a case under Chapter 7, the
creditors holding general unsecured claims would receive nothing for their
claims since value of the Debtor’s assets are less than the outstanding Secured
and Administrative Claims. The Debtor and its Co- Proponents believe that by
continuing the Debtor’s existing business through the structure created by this
Plan (which will result in part in the reduction of Administrative Claims) and
conveying Causes of Action to the Creditor’s Trust in which creditors holding
general unsecured claims are beneficiaries, that these unsecured creditors will
receive a greater return than through a liquidation.


    
      
        
        

      

      
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    2.4 The NOL’s
and the Investment Company Exemption. The Plan is structured to
maintain the Debtor’s estimated $40,000,000 in NOL’s. The Plan is also
structured so that the Reorganized Debtor may operate as an investment company
exempt from regulation under the Investment Company Act of 1940. Operating as an
investment company improves the Reorganized Debtor’s opportunities to exploit
the NOL’s. If the Debtor were liquidated, the NOL’s would be lost.

    


    2.5 Funding
Plan. The Court previously approved a financing motion allowing the
Debtor to raise funds to execute the Plan by borrowing up to (a) $1,000,000 from
a Primary Lender Group (“PLG”) and/or (b) up to $2,000,000 from a New Value
Lender Group (“NVLG”). Approximately $338,500 has already been borrowed. The
Holders of the Notes issued to the PLG and NVL groups can, at their sole option,
elect under the Plan to have such notes paid with securities of VTEC and the
Operating Subsidiaries issued under the Plan. The Debtor has a commitment from
Aztore, the largest PLG lender, or an Aztore affiliate, (jointly “Aztore”), to
advance up to $200,000 to fund the Plan. Aztore will lend the Debtor funds
within five days of the Plan being filed with the Court. In accordance with the
Court Order approving the PLG, the Debtor will loan the cash received to
NavEdge, the successor to Technology, Property and Equipment Corp. (“TPEC”)
referenced in the original Court Order and the Debtor will pledge the note it
receives from NavEdge (the “NavEdge Note”) to Aztore as collateral for Aztore’s
loan. Aztore’s PLG loan shall be an administrative claim but in the event the
Plan is not approved shall only have recourse to the NavEdge Note and Aztore’s
claim shall in no way impact the Creditors Trust. Aztore shall agree that if the
Plan is approved it shall accept either Class 1(a) treatment or shares issued
under the Plan in payment of its PLG loan as allowed by the Plan under Class
1(c).

    


    ARTICLE
III

    CLASSIFICATION OF CLAIMS AND
INTERESTS

    


    3.1 General.
For the purposes of organization only with respect to administrative expenses
and for purposes of organization, voting and all Confirmation matters with
respect to all Claims of Creditors of the Debtor, this Plan classifies Claims in
separate and distinct Classes as follows:

    


    3.2 Administrative
Expenses and Claims.

    


    (a) Class
1(a) shall consist of the costs and
expenses of administration as defined in Section 503 of the Bankruptcy Code
for which application or allowance is made, or a Claim is filed, as the
same are allowed, approved, and ordered paid by the Court. Administrative
Expenses shall consist of: (1) all Claims arising under Section 330 of the
Bankruptcy Code, including reasonable compensation for actual and necessary
services rendered by a professional person (including attorneys) and by an
paraprofessional persons employed by such, based on, among other things, the
nature, extent and value of such services, the time spent on such services, and
the cost of comparable services other than in a case under Title 11; (2) the
costs and expenses of the administration
of this proceeding, including, but not limited to, any Bankruptcy Court Clerk
fees or Court Reporter’s fees which have not been paid, the cost of reproduction
and mailing of this Plan and Disclosure Statement; (3) any post-petition
operating expenses of the Debtor which are due and unpaid at the Effective Date;
and (4) the actual and necessary costs of preserving the Debtor’s
estate.


    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    The
Debtor estimates that Class 1(a) claims, at the time of confirmation, will be
approximately $1,300,000 of which $450,000 is due to Active Professionals
performing services for the Debtor’s estate or the Debtor.

    


    (b) Class
1(b) claims shall consist of the Allowed
Administrative Claims of the Funding Lenders. This class shall include
the claims of the LLC in the asserted principal amount of $250,000, plus
interest. The LLC asserts a security interest in furniture and equipment (with
the exception of the Axient Equipment) and proceeds from the sale there from.
This class also includes the NVLG Noteholders and the PLG Noteholders, excluding
Aztoré’s PLG Claim, up to a principal amount of $3,000,000, less Aztore’s PLG
Claim, depending on the amount of funds actually advanced by the Primary Lender
Group or the New Value Lender Group to the Debtor. These notes are secured by
notes issued by NavEdge or other collateral.

    


    (c) Class
1(c) claims shall consist of Allowed
Administrative Claims of Aztoré. These claims include the (i) the Aztoré
Primary Lender Claim which is currently asserted to be $200,000 but may
increase; (ii) the asserted Aztoré
Agency Fee Claim in the amount of $100,000 under the Court approved NVLG
and PLG loan agreements; (iii) the asserted Aztoré
Facilities Fee Claim in the amount of $50,000 arising from supplying the
Debtor facilities between April 1, 2001 and September 30, 2001; (iv) the
asserted Aztore
Rent Guaranty Claim in the amount of $65,000 for guaranteeing the
Debtor’s rent, still currently unpaid, between October 1, 2001 and October 30,
2002 and (v) the asserted Aztore
Financial Services and Operations Fee Claim in the amount of $50,000
arising from supplying the Debtor management and consulting services including
assistance with structural issues, recruiting employees, designing incentive
programs in the bankruptcy context, financial analysis, financial reporting and
development and coordination of the creation of financing offerings under the
Plan.

    


    (d) Class
1(d) claims shall consist of the Allowed
Administrative claims of the post-petition employee group in the
estimated amount of about $558,000. This amount will depend on the date of the
Plan confirmation and Effective Date. A majority of this claim will be paid in
securities issued under the Plan.

    


    Included
in Class 1(d) is the Allowed Administrative Claim of Rick Rothwell (“Rothwell
Administrative Claim”), former President of the Debtor (post-petition). This
claim has two components. The first is known as the Rothwell Cash Claim which is
in the estimated amount of about $44,000. The second is the Rothwell Equity
Claim which Rothwell has agreed in advance could only be paid by equities under
a Plan of Reorganization. The Rothwell Equity Claim, if allowed, could be in
excess of $400,000. Class 1(d) also includes any Allowed Administrative Claim by
Gerry Mayo, the current President
of the Debtor which also has two components similar to the Rothwell
Administrative Claim. It is estimated that Mayo would have a cash claim of
$13,000 plus a $107,000 claim payable only in equity.


    
      
        
        

      

      
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    3.3 Class 2: Priority
Claims (Excluding Tax Claims). Class 2 consists of all Allowed Claims
entitled to priority under section 507(a)(1) through (9) excluding subsection
(8), tax claims, of the Bankruptcy Code. The Debtor estimates that there are
approximately $55,000 in priority wage claims arising under Section
507(a)(3).

    


    3.4 Class 3: Priority
Tax Claims (Section 507(a)(8)). Class 3 consists of all Allowed Claims
entitled to priority under section 507(a)(8) of the Bankruptcy Code, which
include tax claims. The Debtor believes that no amounts are due to the IRS or
State taxing authorities entitled to priority treatment pursuant to 11 U.S.C. §
507(a)(8).

    


    3.5 Class 4: Secured
Claim of Axient. Class 4 consists of any Allowed Secured Claim held by
Axient Communications, Inc. (“Axient”). The Allowance of Axient’s Secured Claim
has been resolved by a Stipulation wherein Axient released its security
interest, received a note for $30,000 to be paid pursuant to the Debtor’s Plan
and an Allowed Unsecured Claim of $250,000. This Class is impaired.

    


    3.6 Class 5: Secured
Claim of Cisco. Class 5 consists of any Allowed Secured Claim held by
Cisco Systems, Inc. (“Cisco”). Cisco purported to hold a security interest in
the Compaq Servers. On September 28, 2001, Cisco and the Debtor entered into a
stipulation settling their disputes regarding this claim entered by the Court on
or about October 11, 2001. Cisco agreed to a Class 1(a) Administrative Claim of
$70,490, a secured claim in the amount of $50,000, and an Allowed Unsecured
Claim against the Debtor in the amount of $625,374.46. This Class is
impaired.

    


    3.7 Class 6: Secured
Claim of American Fire Equipment Sales and Services Corp. Class 6 consists of
any Allowed Secured Claim by American Fire Equipment Sales and Services Corp.
(“Fire Equipment”) arising from the sale to the Debtor of a fire suppression
system in which Fire Equipment purported to retain a lien in the system securing
the approximate amount of $31,951. This Class is impaired.

    


    3.8 Class 7: Unsecured
Creditors Claims. Class 7 consisted of the Allowed Unsecured Claims of
Creditors. Based on proofs of claim filed with this Court there are allowed
and/or asserted, but not yet allowed, unsecured claims of approximately
$8,500,000.00. This Class is impaired.

    


    3.9 Class 8: Preferred
Stock Equity Interest Claims. Class 8 consists of the Allowed Interests
of all of the holders of the Debtor’s Old Preferred Stock.

    


    3.10 Class 9: Common
Stock Equity Interest Claims. Class 9 consists of the Allowed Interests
of all of the holders of the Debtor’s Old Common stock


    
      
        
        

      

      
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    ARTICLE
IV

    IDENTIFICATION OF CLASSES
IMPAIRED BY THE PLAN

    


    4.1 General. Only some of the
classes of claims and interests created by the Plan are considered “impaired”
pursuant to 11 U.S.C. § 1124. This means, in part, that the Plan modifies the
contractual rights of all holders of claims and interests, that holders of
classified claims will not receive the allowed amounts of their claims in cash
on the Effective Date of the Plan, and that holders of allowed interests will
not retain any fixed liquidation preference or be paid any fixed redemption
amount for equity securities held.

    


    4.2 Impaired
Classes of Claims. Classes 4, 5, 6, 7,
8 and 9 are impaired under this Plan. Class 3 is treated in accordance with
Section 1129(a) of the Bankruptcy Code.

    


    4.3 Impairment
Controversies.
If a controversy arises as to whether any Claim or any class of Claims is
impaired under this Plan, such class shall be treated as specified in this Plan
unless the Bankruptcy Court shall determine such controversy upon motion of the
party challenging the characterization of a particular Class or Claim under this
Plan.

    


    ARTICLE
V

    TREATMENT OF CLASSIFIED
CLAIMS AND INTERESTS

    


    5.1 Claim
Amounts. Because certain of the claims against the Debtor are either
unknown or for undetermined amounts, the amounts of claims specified in the Plan
reflect only the Debtor's best estimate as of the date hereof. A list of
creditors and claim amounts are included in the Schedules and Statement of
Affairs filed by the Debtor in this case. The Debtor reserves the right to
object to any claim and equity security interests noted in the Schedules and
Statement of Affairs, or any other claim asserted against the Debtor, either
prior to or following Confirmation. Under the Plan, objections to claims must be
filed within sixty (60) days following the Effective Date of the Plan.
The
Debtor shall distribute all securities to Holders of Allowed Claims, pursuant to
the terms of this Plan, within 120 days of the Effective Date. Regardless, on
the Final Effective Date the Holders of Allowed Claims shall become the owners
of the securities with all rights to transfer them on the books of the
Reorganized Debtor until issued. Unless otherwise specified, in calculating the
number of Securities to be distributed pursuant to any formulae set forth below,
the number of such Securities to be distributed to each Holder of an Allowed
Claim or Allowed Interest shall be rounded up to the next even number but in no
event shall any claimant receive less than 100 Shares or Units or a note with
less than $100 in principal.

    


    5.2
Treatment Of
Administrative Claims and Expenses

    


    (a) Class 1(a) Claims
(Administrative Expense Claims). On the Final Effective Date, the Allowed
Amount of Class 1(a) Administrative Expenses of all Class 1(a) claimants, except
Active Professionals, shall be paid in full through the issuance, at the option
of such administrative claimants, by a Series A Note OR a Series B Note
OR for each
$1.00 of allowed claim the following securities: one share of VTEC Common Stock
plus eight VTEC
Warrant Units plus 1/8 share of each Operating Subsidiary Common Stock plus one hundred
Operating Subsidiary Warrant Units. Such Series A Notes or Series B Notes will
be issued in $10 increments, rounded up, and will be a general unsecured claim
of VTEC. All trade and service debts and obligations incurred in the normal
course of the Debtor's business during the Chapter 11 case since January 1, 2003
shall be paid when due in the ordinary course of business except if otherwise
elected by the creditor. Such election regarding notes or other securities must
take place at no later than the date that the ballots are due for this Plan. If
the Claimant makes no election, the Claimant shall as a default receive Series A
Notes.


    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    On the
Effective Date, the claims of Active Professionals included in Class 1(a) shall
A) be reduced (to any extent that they have not already been so reduced) by the
proceeds paid to certain of these Professionals pursuant to page 5 of the Motion
To Approve Amendment To Note Agreement filed on September 27, 2002 and
subsequently approved by the Court, B) be paid a pro rata share of the Causes of
Action Proceeds (with $50,000 of said Causes of Action Proceeds to be held back
and conveyed to the Creditors’ Trust free and clear of liens to fund its
operation), and C) be paid their pro-rata share of an additional $75,000 to be
provided by the Funding Lenders, and D) the Active Professionals shall, to the
extent that their Claims remain unpaid, become beneficiaries of the Creditors
Trust and paid from the proceeds of such Trust.

    


    (b) Class 1(b) Claims (the
“Funding Lender Claims”). The holder of a Class 1(b) Claim may elect to
take payment of any portion of such claim plus interest as either a Series A
Senior Note or
Series B Note issued in $10.00 increments rounded up or for each $1.00 of
claim the following: two VTEC Common Shares plus eight VTEC
Warrant Units plus
one Operating Subsidiary Common Share plus four Operating
Subsidiary Warrant Units. Each member of the Funding Lender Group may elect to
direct payment of such securities issued under the Plan and these payments may
go directly to the Class 1(b)’s members as if they were direct lenders. To elect
to receive the Series A Senior Note, or to elect to receive the Series B Note,
any class member must notify the Debtor by certified mail by the time that
ballots are due for this Plan. If they do not provide such notice, they will be
deemed to have elected to be paid with securities issued under the Plan. The
elections of each of the members of the LLC shall occur in place of an election
by the LLC.

    


    (c) Class 1(c) Claims (the
Aztoré Claims). Class 1(c) Claims, plus interest, will be paid on the
Effective Date through the issuance of four VTEC Common Shares plus eight VTEC
Warrant Units for each $1.00 of claim. If Aztore acquires any Class 1(a) claims
it can elect to take Class 1(a) treatment or Class 1(c) treatment.

    


    (d) Class 1(d) Claims (the Post
petition Employee Claims). Except for Rothwell and Gerry Mayo, holders of
allowed Class 1(d) Claims may elect to receive in full satisfaction of those
claims the same treatment as Class 1(b). Rothwell has agreed to accept in full
settlement of the Rothwell Cash Claim a $44,000 Series B Note and in full
settlement of the Rothwell Equity Claim a $10,000 cash payment to be provided by
the Funding Lenders, plus the number of VTEC Common Shares equal to 4.99% of the
Reorganized
Debtor issued at the consummation of the Plan plus Operating
Subsidiary Common Shares equal to 1⁄2% of each Operating Subsidiary issued at the
consummation of the Plan.


    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    To the
extent Gerry Mayo receives an Allowed Administrative Claim, he has agreed to
settle such claim for $850 per month during the time of Mr. Mayo’s
pre-confirmation service to the Debtor plus VTEC Common Stock equal to 3% of the
VTEC Common Stock issued at the consummation of the Plan.

    


    5.3 Class 2: Priority
Claims (Excluding Tax Claims). Class 2 Claims shall be treated the same
as the Class 1(a) claimants. Class 2 Claims are not Active Professionals
Claims.

    


    5.4 Class 3: Priority
Tax Claims (Section 507(a)(8)). Class 3 Claims shall be paid in full by
receiving deferred even quarterly cash payments commencing on the first day of
the calendar quarter at least 90 days after the Effective Date and continuing
over a period of six years from the date of the claims’ assessment, of a value,
as of the Effective Date of the Plan, equal to the allowed amount of such claim.
The IRS has withdrawn its proof of claim and confirmed there are no amounts due
priority pursuant to 11 U.S.C. § 507(a)(8).

    


    5.5 Class 4: Secured
Claim of Axient. The Debtor will treat the Axient claim as if it were a
Class 1(b) Funding Lender claim for $30,000. Axient may elect to receive a
Series A Senior Note or a Series B Note. Unless the Claimant affirmatively
elects either such note it will receive the securities described in Section
5.2(b) herein. To maintain the same treatment as agreed to under a Stipulation
between the Debtor and Axient related to Axient’s treatment under the First
Amended Joint Plan of Reorganization, one year after the Effective Date Axient
may demand that the Reorganized Debtor repurchase all the securities so received
for $33,000 (the “Put”). The Debtor’s liability under the Put may be met by a
third party. Axient’s Allowed Unsecured Claim of $250,000 shall be included in,
and treated as, a Class 7 Claim.

    


    5.6. Class 5: Secured
Claim of Cisco. The Holder of the Class 5 Claim, Cisco, shall retain all
of its liens in the subject 32 Compaq servers. The Debtor will issue Cisco
Series B Convertible Notes for $120,000 in full settlement of both Cisco’s Class
1(a) Administrative Claim and Secured Claim and Cisco will transfer the
ownership of the Compaq Servers to the Debtor. Cisco’s Allowed Unsecured Claim
shall be included in, and treated as, a Class 7 Claim. Cisco’s Class 1(a) Claim
is treated in its entirety in this section, Section 5.6, of the Plan and will
receive no separate or additional consideration on account of Section 5.2(a) of
this Plan.

    


    5.7. Class 6: Secured
Claim of American Fire Equipment Sales and Services Corp. To the extent that
Fire Equipment holds an Allowed Secured Claim, Fire Equipment shall retain all
of its liens in the subject fire suppression system. The Debtor shall consent to
the return of the fire suppression system in full satisfaction of, and release,
of all claims of any type and description by Fire Equipment against the Debtor.
Any deficiency shall be treated as a Class 7 Claim.


    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    5.8. Class 7: Unsecured
Creditors Claims. Class 7 Claimants shall receive each claimant’s pro
rata share of the Class 7 Securities Pool based on the even dollar amount of
each Allowed Unsecured Claims plus one Creditor
Trust Unit for each even $1.00 of each Allowed Unsecured Claims. The Class 7
Securities Pool will hold the following: 500,000 or 10% of VTEC’s Common Shares
actually issued under the Plan, which ever is less, plus for each VTEC
Common Share issued to the Class 7 Securities Pool, the Class 7 Securities Pool
will receive four VTEC Warrant Units. In addition, the Class 7 Securities Pool
shall receive 100,000 Common Shares in each Operating Subsidiary plus 400,000
Operating Subsidiary Warrant Units. The Debtor and the Co-Proponents shall each
have the authority to issue such additional shares of the Reorganized Debtor and
Operating Subsidiaries to the Class 7 Securities Pool so that each Class 7
Allowed Claimant shall hold at least 100 units of any security excluding the
Trust Units.

    


    5.9 Class 8: Preferred
Stock Equity Interest Claims. All of Class 8 Equity Interest Holder’s
Claims for Old Preferred Stock of Debtor shall be canceled by operation of this
Plan. Therefore, the Class 8 Equity Interest Holders shall retain none of their
Old Preferred Stock or any other interests in the Debtor, the Reorganized Debtor
or the Operating Subsidiaries. In settlement of any claims against the Debtor in
the form of an executed release to be provided thereto, the Class 8 Interest
Holder’s may receive, only in exchange for a formal release against the Debtor
and all the Co-Proponents of such parties potential claims as a creditor and not
on account of their status as a shareholder, two VTEC Warrant Units for each ten
dollars ($10.00) invested in the Debtor’s Preferred Stock and one Operating
Subsidiary Warrant Unit in each Operating Subsidiary for each twenty dollars
($20.00) invested in the Debtor’s Preferred Stock.

    


    5.10 Class 9: Common
Stock Equity Interest Claims. All of Class 9 Equity Interest Holder’s
Claims for Old Common Stock of Debtor shall be canceled by operation of this
Plan. Therefore, the Class 9 Equity Interest Holders shall retain none of their
Old Common Stock or any other interests in the Debtor, the Reorganized Debtor or
any of the Operating Subsidiaries.

    


    5.11
Disputed Claims And
Interests.

    


    (a) The
Debtor or the Reorganized Debtor and its attorneys may file on or before ninety
(90) days from the Effective Date of the Plan:

    


    (1) an
objection to any claim;

    


    (2) a
motion to determine the extent, priority, or amount of any secured or other
claim; or

    


    (3) a
complaint to determine the validity, priority or extent of any lien or other
interest in property of the Debtor's estate.

    


    Copies of
responsive pleadings to all such objections, motions, or complaints must be
served
upon the Reorganized Debtor's attorney, Mark Giunta, Esq., or any successor
attorney for the Reorganized Debtor.


    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    5.11 Treatment
of Objections. Where objections are made to any claim or to any motions
or proceedings filed in regard to any lien, claim, or privilege, any payments or
distributions of securities that are due in accordance with the Plan shall be
held in trust by the Reorganized Debtor, subject to the Bankruptcy Court's
jurisdiction, in an interest-bearing or escrow account or accounts in Phoenix,
Arizona, which account or accounts shall be federally insured (in the event of a
distribution of a cash payment) and segregated unless otherwise stated herein
or, in the alternative, one or more of the following will be
provided:

    


    (a) a
letter of credit or other bond; or

    


    (b)
certificates of deposit or other security satisfactory to the Court to assure
the payment of the claim.

    


    (c)
Within thirty (30) days after entry of a final, non-appealable order resolving
any disputed claim, lien or privilege, payment, including accrued interest, or
securities shall be distributed to the claimant (subject to the terms of the
Plan) or any other entity entitled to distribution in accordance with the
Bankruptcy Court's order.

    


    5.12 Penalty
Claims. No
creditor, whether secured, unsecured, priority, or non-priority, shall be
entitled to any fine, penalty, exemplary or punitive damages, late charges,
default interest, or any other monetary charge relating to or arising from any
act or omission by the Debtor, and any claim for such sums shall be deemed
disallowed, whether or not a specific objection to the allowance of such sums is
filed. Creditors with allowed, secured claims shall be entitled to reasonable
attorneys' fees and interest at a non-default rate, subject to the limitations
of Section 506 of the Bankruptcy Code.

    


    5.13 Unclaimed
Distributions. All distributions of money or securities under the Plan
which are returned by the Post Office undelivered or which cannot be delivered
due to the distributee's failure to provide the Reorganized Debtor with a
current address will be retained by the Reorganized Debtor in trust in a
federally insured bank (in the event of a distribution of a cash payment) or by
the Reorganized Debtor as pertains to all classes except Class 7 and or by the
Creditors’ Trustee in the case of a Class 7 distribution. After the expiration
of six (6) months from the date of the first attempted distribution, any
unclaimed securities and all future distributions will vest in the Reorganized
Debtor or the Creditor’s Trust, as the case may be, free of any claim of the
distributee. The Creditors’ Trust will open a securities account and any such
unclaimed securities will be deposited into this account for the benefit of the
Creditors’ Trust. The Trustee shall have the authority to sell such securities
and use the proceeds for the benefit of the Creditors’ Trust.


    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    ARTICLE
VI

    POST CONFIRMATION
MANAGEMENT

    OF THE REORGANIZED
DEBTOR

    


    6.1 The Board
of Directors and Corporate Officers. Notwithstanding the issuance of
securities pursuant to this Plan, some or all of which may give full voting
rights to holders of those securities, on the Confirmation Date the Board of
Directors of the Debtor will change to the individuals designated below and the
initial Board of Directors of the Reorganized Debtor shall also consist of those
persons designated below. If a director, designated as a member of the initial
Board of Directors of the Reorganized Debtor, is unable to complete his tenure,
the remaining directors shall appoint a new director.

    


    
      
        	
                Name

              	
                Office

              	 	
                Remuneration

              
	
                Michael
      S. Williams

              	
                Chief
      Executive Officer and Chairman of the Board

              	 	
                $12,000
      per month and $1,200 per month per formed and active Operating Subsidiary
      unless not on the board of such entity.

              
	
                Lanny
      R. Lang

              	
                Vice
      President, Secretary, Treasurer and Director

              	 	
                $8,000
      for the Debtor and $800 per month per formed and active Operating
      Subsidiary unless not on the board of such
  entity.

              


      

    

    


    Unless
Officers and Directors of the Operating Subsidiaries are elected or appointed
prior to the Effective Date, the above officers and directors shall also serve
as the initial officers and directors of the Operating Subsidiaries until such
entities hold their first shareholder meeting and successors are duly elected.
Messrs. Williams and Lang agree to take securities for any claim that accrues
hereunder between the Confirmation Date and the Effective Date as if such
amounts were additional Class 1(c) Claims. After the Effective Date if the
Debtor or VTEC or an Operating Subsidiary has insufficient funds to pay such
amounts, then Williams and Lang will defer such compensation in exchange for
accumulating interest on unpaid amounts at 12% or take payment in the form of
securities to be issued by the Reorganized Debtor at fair market value. Williams
and Lang will qualify for employee stock option grants under VTEC’s Equity
Incentive Plan at fair market value. As to the Operating Subsidiaries, after the
Confirmation Date, if Williams and Lang are active in the management of the
subsidiaries, they will receive compensation commensurate with the operating of
such entity including potential awards under such subsidiary’s Equity Incentive
Plan.

    


    6.2 Qualifications
of Directors and Officers. The qualifications of the individuals who will
constitute the initial Board of Directors and serve as Officers of the Debtor
and the Reorganized Debtor are as set forth in an Exhibit to the Disclosure
Statement.


    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    6.3 Compensation
of Directors and Officers. The prior table shows the
initial proposed annual remuneration and fees of those individuals who will be
the directors and officers of the Debtor and the Reorganized Debtor, when it is
formed, anytime immediately following the Confirmation Date of the Plan.
However, payment of such remuneration is subject to the ability of the
Reorganized Debtor to make such payments without endangering the operating
ability of the Reorganized Debtor and ensuring the continued feasibility of the
Plan. Any salaries unable to be paid will be deferred and accrue interest at
12%. There are no employment contracts between either the Debtor or the
Reorganized Debtor and the proposed officers and directors listed
above.

    


    The
Debtor and the Co-Proponents propose the adoption, upon the Effective Date, of
an “Equity Incentive Plan” covering the issuance of up to 3,000,000 shares of
common stock, at fair market value, for the officers, directors and key
employees of VTEC and each of its Operating Subsidiaries. The proposed form of
equity incentive plan for VTEC and each Operating Subsidiary is attached hereto
as Exhibit 3. A vote to accept this Plan shall constitute an affirmative vote in
favor of the adoption of such Equity Incentive Plans and shall be deemed to be
the equivalent of a shareholder vote allowing such plans to qualify as
“qualified equity incentive plans” for all purposes under the IRS Code. As a
Co-proponent of this Plan, by virtue of confirmation of this Plan, VTEC shall be
deemed to have voted, as the majority shareholder of each Operating Subsidiary,
in favor of the adoption of such equity incentive plan for each Operating
Subsidiary.

    


    The
awarding of any such options under the approved equity incentive plans shall be
subject to sole discretion of the Board of Directors of each specific entity and
the terms of such equity incentive plans.

    


    The
directors of the Reorganized Debtor will also be authorized to approve
reimbursement to its officers and directors for actual expenses incurred,
compensation to directors for attendance at meetings of the board of directors,
and the salaries and fees for corporate officers set forth above following the
Effective Date. Nevertheless, the Reorganized Debtor's initial corporate board
has no plans to approve any such increased compensation for directors or
officers, other than as described in the Disclosure Statement and this
Plan.

    


    6.4 Meetings
of Directors and Selection of New Directors. Following the Effective Date
of this Plan, the board of directors of the Reorganized Debtor shall meet
monthly for six months. The initial board of directors shall serve until the
next meeting of shareholders held pursuant to the Articles of Incorporation
and/or Bylaws of the Reorganized Debtor.

    


    ARTICLE
VII

    ANTICIPATED POST
CONFIRMATION LITIGATION

    


    The
Debtor will review the Proofs of Claims filed in this case by alleged creditors
when submitted. The only contemplated post confirmation litigation by the Debtor
are objections to the allowance of certain claims that may be filed by the
Debtor.

     

    The
balance of all Causes of Action, regardless of their state of litigation,
including but not exhausted by all preference and avoidance actions, fraudulent
conveyance actions, potential fraudulent transfer against MP3.com, Inc., and
actions against former directors and officers, held by the Debtor will be
transferred upon the Effective Date to the Creditor Trust for the benefit of
unsecured creditors.


    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

    ARTICLE
VIII

    ACCEPTANCE AND REJECTION OF
EXECUTORY CONTRACTS

    


    In
accordance with 11 U.S.C. § 365, the Debtor hereby does not accept or assume any
executory contracts and unexpired leases except those executory contracts and
unexpired leases already paid in full by the Debtor, including, if applicable,
the Debtor’s Directors and Officers Liability Policy.

    


    Pursuant
to 11 U.S.C. § 365, the Debtor hereby rejects any and all executory contracts
and leases not already rejected except as noted elsewhere in this
Article.

    Any
person or entity injured by such rejection shall be deemed to hold an unsecured
claim against the Debtor to the extent allowed, and, unless a prior bar date has
not been established by the Court, within ten (10) days before the initial
hearing on confirmation of the Plan, must file a proof of claim for any damages
resulting therefrom or be forever barred from asserting any claim. The Debtor
reserves the right to apply to the Bankruptcy Court at any time prior to
confirmation of the Plan to reject any and all other contracts which are
executory.

    


    ARTICLE
IX

    DESCRIPTIONS OF SECURITIES
TO BE ISSUED

    IN SATISFACTION OF CLAIMS
AND INTERESTS

    


    9.1
Identification and
Attributes of Securities.

    


    (a) VTEC
Securities.

    


    (1) VTEC
Common Shares: Each share of VTEC Common Stock shall be fully paid,
non-assessable, and entitled to one vote per share.

    


    (2) VTEC
Warrant Unit: A VTEC Warrant Unit shall consist of six warrants to purchase
newly issued common stock in the Reorganized Debtor. The warrants will be issued
as a unit with a separate CUSIP number. As warrants expire or are exercised,
VTEC, in its sole option, may choose to issue a New Unit, create other
combination Units or may detach the warrants. These warrants are:

    


    (a) one
“A Warrant” which will allow the holder to purchase a share of common stock for
$2.00, expiring eighteen months after the Effective Date ;

    


    (b) one
“B Warrant” identical to the A Warrant;


    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    (c) one
“C Warrant” which will allow the holder to purchase a share of common stock for
$3.00, expiring eighteen months after the Effective Date;

    


    (d) one
“D Warrant” identical to the C Warrant;

    


    (e) one
“E Warrant” which will allow the holder to purchase a share of common stock for
$4.00, expiring eighteen months after the Effective Date;

    


    (f) one
“F Warrant” identical to the E Warrant;

    


    (3) Other
VTEC Unit Terms. The exercise prices of the warrants in the VTEC Warrant Unit
may be lowered from time to time for such periods as determined by the VTEC
Board in its sole discretion and the expiration dates of the warrants in the
VTEC Warrant Unit may be extended from time to time at the discretion of VTEC.
All the warrants in the VTEC Warrant Unit shall be subject to a Call anytime by
the Reorganized Debtor but the holders would have 20 days from the mailing of
the Call notice to the Warrant Holders address of record to exercise the right
to purchase new common stock associated with said warrants. The stock and
warrants are immediately detachable from the Unit at the discretion of the
Reorganized Debtor and may be regrouped into different Units at the option of
the Reorganized Debtor. The specific exercise terms and restrictions of the VTEC
Warrant Unit may be modified at any time by the VTEC Board to maintain the most
flexibility and capacity for the Reorganized Debtor to maintain the most NOL
value and limit claims of any Change of Control testing event as defined in the
Code.

    


    (b) Operating Subsidiary
Securities

    


    (1)
Operating Subsidiary Common Shares. Each share of Operating Subsidiary Common
Stock shall be fully paid, non-assessable, and entitled to one vote per share in
matters pertaining to each respective Operating Subsidiary.

    


    (2)
Operating Subsidiary Warrant Unit. Each Operating Subsidiary Warrant Unit shall
consist of six warrants of such subsidiary. These warrants are:

    


    (a) one
“A Warrant” which will allow the holder to purchase a share of common stock for
$2.00, expiring eighteen months after the Effective Date ;

    


    (b) one
“B Warrant” identical to the A Warrant;

    


    (c) one
“C Warrant” which will allow the holder to purchase a share of common stock for
$3.00, expiring eighteen months after the Effective
Date;


    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

    (d) one
“D Warrant” identical to the C Warrant;

    


    (e) one
“E Warrant” which will allow the holder to purchase a share of common stock for
$4.00, expiring eighteen months after the Effective Date;

    


    (f) one
“F Warrant” identical to the E Warrant;

     

    (3) Other
Operating Subsidiary Common Stock and Warrant Unit Terms. The exercise prices of
any of the Operating Subsidiary warrants may be lowered from time to time to
amounts and for periods to be established by and at the discretion of the
respective Boards of Directors of each Operating Subsidiary and the expiration
dates of any of the Operating Subsidiary warrants may be extended from time to
time at the discretion of the respective Boards of Directors of each Operating
Subsidiary. All the Warrants shall be subject to a Call anytime by the Operating
Subsidiaries Board of Directors but in the event of any Call the holders would
have 20 days from the mailing of the Call notice to exercise the right to
purchase new common stock associated with said warrants. The Operating
Subsidiaries may not Call or fail to extend the Warrants without the approval of
VTEC. The stock and warrants are immediately detachable from the Operating
Subsidiary Units at the discretion of the Reorganized Debtor as part of the
Plan’s implementation and thereafter at the discretion of the issuing Operating
Subsidiary’s Board of Directors and may be regrouped into different Units at the
option of such Board of Directors. The Operating Subsidiary Common Shares issued
to Classes 1(a) and PLG Lenders in Class 1(b) who elect Class 1(a) treatment
will not be diluted in the event of an Initial Change Of Control Acquisition Or
Merger.

    


    (e) The Series A Senior
Notes. The Series A Senior Notes will be transferable notes issued in $10
denominations. No partial notes will be issued but rounded up to the next whole
$10 amount. The Series A Notes will bear interest at 10% per annum due at
maturity. The Series A Senior Notes may be prepaid at any time and mature five
years after the Effective Date.

    


    (f) The Series B Notes.
The Series B Notes will be transferable, convertible notes issued in $10
denominations. No partial notes will be issued but rounded up to the next whole
$10 amount. The Series B Notes will bear interest at 5% per annum due at
maturity and the principal and accrued interest of the Series B Notes will
convert into VTEC Common Shares at $.75 per share. These Series B Notes may be
prepaid at any time and mature five years after the Effective
Date.


    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

    
      
        	
                9.2  Distribution of
      Securities.

              


      

    

    


    The
Debtor will distribute the following securities within 120 days of the Effective
Date. Regardless, until such securities are issued, the claim holders receiving
securities will

    possess
all the rights and benefits of all such securities including the right to
transfer their interest in any note or security on the books of the Reorganized
Debtor or any Operating Subsidiary to other holders prior to the formal
distribution. The Reorganized Debtor shall require that any such transfers shall
require customary stock powers, signature guarantees, corporate or other
resolutions and affidavits, legal opinions and purchase agreements prior to
being effective.

    


    (a) Up to
500,000 VTEC Common Shares, 2,000,000 VTEC Warrant Units, both as may be
adjusted for actual shares issued, plus 100,000 Common Shares of each of the
Operating Subsidiary and 400,000 Operating Subsidiary Warrant Units shall be
issued to the Class 7 Securities Pool.

    


    (b) The
Debtor shall issue shares of VTEC Common Stock and certificates representing the
VTEC Warrant Units to each claimant the elects to be paid on the Effective Date
with securities issued under the Plan in accordance with the proposed Plan
treatment.

    


    (c) The
Unsecured Creditors shall receive their pro rata percentage of securities from
the Class 7 Securities Pool and their pro rata share of the Trust Units based on
their Allowed Claims. Upon the Effective Date all such Common Shares will be
deemed fully paid and non-assessable and shall be entitled to one vote
each.

    


    (d) Under
the Plan, the Debtor will distribute securities of the Reorganized Debtor and
securities of each of the Operating Subsidiaries to settle its administrative
and other claims and its unsecured debts, certain employee obligations, Aztoré’s
claims and the claims of the Funding Lenders. If the Debtor increases the
Funding Lender Notes by borrowing approximately $100,000 additional from Aztoré
and all but approximately $133,100 of administrative claimants elect to take
Series A Senior Notes, the ownership of the Reorganized Debtor and the Operating
Subsidiaries will be as shown on the chart below.

    


    
      
        
          
            
              
                
                  	
                          Creditor Group

                        	 	
                          VTEC
      Shares

                        	 	 	
                          VTEC
      Units

                        	 	 	
                          Trust
      Units

                        	 	 	
                          Operating 

                            Subsidiary
      Shares

                          

                        	 	 	
                          Operating 

                            Subsidiary
      Units(a)

                          

                        	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                          Aztoré

                        	 	 	 	 	 	 	 	 	 	
                          2,875,000

                        	 	 	 	 	 	
                          5,750,000

                        	 
	
                          Funding
      Lenders

                        	 	 	1,010,100	 	 	 	4,040,400	 	 	 	 	 	 	 	63,200	 	 	
                          252,800

                        	 
	
                          Post
      Petition Employees

                        	 	 	348,100	 	 	 	576,000	 	 	 	 	 	 	 	31,000	 	 	
                          25,000

                        	 
	
                          Unsecured
      creditors

                        	 	 	500,000	 	 	 	2,000,000	 	 	 	8,500,000	 	 	 	100,000	 	 	 	400,000	 
	
                          Admin
      claims who elect securities

                        	 	 	266,800	 	 	 	1,067,200	 	 	 	 	 	 	 	16,675	 	 	 	66,700	 
	
                          VTEC

                        	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 4,790,000	 
	
                          Class
      8

                        	 	 	 	 	 	 	 	 	 	 	8,000,000 	 	 	 	 	 	 	 	4,000,000	 
	
                          Total
      common shares

                        	 	 	
                        	 	 	 	 	 	 	 	5,000,000 	 	 	 	 	 	 	 	5,000,000	 


                

              

            

          

        

      

    

    


    This
Chart does not include a representation of the Active Professionals Claimants
from Class 1(a) who also shall have a priority beneficial interest in the
Creditors’ Trust.


    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

    9.4 Dividends. No dividends have ever been
paid by the Debtor. The declaration of any future cash or stock dividends will
be made at the discretion of the Reorganized Debtor’s board of directors. It is
anticipated that any income received by the Reorganized Debtor or the Operating
Subsidiaries will be devoted to such entities’ future operations. The
Co-Proponents do not anticipate the payment of cash dividends on the Reorganized
Debtor's or Operating Subsidiaries’ common stock in the foreseeable future, and
any decision to pay dividends will depend on the Reorganized Debtor's or each
Operating Subsidiaries’ profitability, funds legally available there for and
other factors.

    


    9.5 Transfer
Agent. The
registrar and transfer agent for the stock, the warrants, the Series A Senior
Notes and the Series B Notes issued pursuant to the Plan will be a qualified
stock transfer agent or note agent, as required, as selected by the Board of
Directors of each entity. Such Boards may also elect to have such corporation
act as its own transfer, warrant and note agent without requiring any bond and
such entity may change customary agency fees for services.

    


    9.6 SEC
Reporting. The Debtor is not currently subject to the reporting
requirements of the Exchange Act. VTEC and the Operating Subsidiaries expect to
voluntarily subject themselves to the requirements of the Exchange Act when they
have capital available for the necessary filings. Being subject to the Exchange
Act will allow VTEC and the Operating Subsidiaries to trade on the Over the
Counter Bulletin Board System (the “OTC Bulletin Board) rather than on the “Pink
Sheets.” Trading on the OTC Bulletin Board generally offers holders of
securities enhanced liquidity.

    


    9.7
Resale of
Securities.

    


    (a) Resales in General.
In general, securities issued by a debtor in a Chapter 11 reorganization to a
creditor on account of a claim may be resold by such recipient without further
registration under the Exchange Act or other laws, in reliance on the exemption
from registration provided by the Bankruptcy Code. This exemption does not apply
to holders who are deemed “underwriters” with respect to such securities, as the
term “underwriter” is defined in the Bankruptcy Code.

    


    Section
1145(b)(1) of the Bankruptcy Code provides that “except with respect to ordinary
trading transactions,” an entity is an “underwriter” if such entity: (i)
purchases a claim against or interest in a debtor with a view to distribution of
any security received in exchange for such claim or interest; (ii) offers to
sell securities offered or sold under the Plan for the holders of such
securities (except certain offers to sell fractional interests); (iii) offers to
buy securities offered or sold under the Plan from the holders of such
securities if the offer to buy is made with a view to distributing such
securities and the offer to buy if made under an agreement made in connection
with the Plan, with the consummation of the Plan, or with the offer or sale of
securities under the Plan of reorganization;
or (iv) is an issuer with respect to a reorganized debtor's securities, as the
term “issuer” is used in § 2(11) of the Securities Act.

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

    In the
context of the Plan, an “issuer” under § 2(11) of the Securities Act includes
any person directly or indirectly controlling or controlled by the Debtor or any
person under direct or indirect control with the Debtor. Whether a person is an
“issuer” and, therefore, an “underwriter” for purposes of § 1145(b) of the
Bankruptcy Code depends upon a number of factors, including the relative size of
the shareholder's equity interest in the Debtor; the distribution and
concentration of other equity interests in the Debtor; whether the person,
either alone or acting in concert with others, has a contractual or other
relationship giving that person power over management policies and decisions;
and whether the person actually has such power notwithstanding the absence of
formal indicia of control.

    


    Because
of complex and subjective issues involved in determining issuer and underwriter
status, creditors and equity interest holders are urged to consult with their
attorneys concerning whether they will be able to trade freely any securities
they are to receive under the Plan. NEITHER THE DEBTOR NOR ANY OF ITS
REPRESENTATIVES MAKE ANY REPRESENTATIONS AS TO WHETHER ANY SECURITIES ISSUED
PURSUANT TO THE PLAN, ONCE PLACED IN THE HANDS OF RECIPIENTS UNDER THE PLAN, MAY
BE FREELY TRADED. Persons who may be underwriters must either register the
securities under the Securities Act in connection with a resale or use an
applicable exemption from registration.

     

    The
Reorganized Debtor is not obligated to register securities issued pursuant to
the Plan or to assist holders of such securities in establishing an exemption
from registration. Accordingly, any entity becoming a holder of such securities
who is determined to be an underwriter may be able to dispose of the securities
only in limited circumstances.

    If the
Reorganized Debtor has reason to believe that a recipient of its securities
pursuant to the Plan may be an underwriter, the Reorganized Debtor may require
from such recipient a statement that the recipient is aware of Section 1145 of
the Bankruptcy Code and the requirements of the Securities Act regarding resale
of those securities and that those securities held by such recipient will be
sold in compliance with the Securities Act.

    


    (b) State “Blue Sky”
Laws. State laws affecting resales of securities issued in connection
with bankruptcy reorganizations may vary. Those who become holders of securities
issued pursuant to the Plan should consult with their attorneys concerning the
applicability of any state law affecting resales of such
securities.

    


    (c) Listing and Trading.
IT IS ADVISABLE FOR EACH RECIPIENT OF SECURITIES ISSUED PURSUANT TO THE PLAN TO
CONSULT INDEPENDENT COUNSEL PRIOR TO SELLING THOSE SECURITIES. ALL CREDITORS AND
EQUITY HOLDERS ARE ALSO URGED TO CONSULT COUNSEL REGARDING TAX CONSEQUENCES OF
THE PLAN AND, IN PARTICULAR, ANY TAX CONSEQUENCES OF RECEIVING SECURITIES UNDER
THE PLAN. The securities issued under the Plan will only trade if the
Reorganized Debtor or the Operating Subsidiaries apply with a member of the
National Association of Securities Dealers. The Debtor believes that the
proposed management of the Reorganized Debtor and the Operating
Subsidiaries will be able to attract a sponsoring broker-dealer but such
sponsorship will require audits of each entity and registration under the
Exchange Act. Both of these activities require capital investment and there is
no assurance that such additional capital will be available.


    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

    (d) Restrictions related to the
maintenance of NOL’s. There are various rules limiting the maintenance of
the Reorganized Debtor’s NOL’s if there are changes of control of the
Reorganized Debtor. All Shares and Warrants issued by the Reorganized Debtor
will have a legend restricting the ability of any shareholder or shareholder
affiliate from acquiring more than 4.99% of the Reorganized Debtor’s Stock or
Warrants without the Reorganized Debtor’s approval. There are no NOL
restrictions on Holders of Operating Subsidiaries shares or warrants. Holders of
less than 4.99% of the Reorganized Debtor may sell their stock without impact as
long as the buyer of such stock owns after the acquisition less than 4.99% of
the Reorganized Debtor. In the event a holder accumulates more than 4.99% this
sale will be void. In addition, any warrants to be issued that would violate the
NOL rules will be void.

    


    (e) Timing of Reorganized Debtor
Warrant Exercise. When a Holder exercises their VTEC Warrants, whether
voluntarily or in response to a Call, such Warrants will be accumulated and
exercised at the convenience of the Reorganized Debtor, but not less than
monthly, to avoid or minimize multiple “change testing dates” which could
negatively impact the maintenance of the NOL’s.

    


    ARTICLE
X

    POST CONFIRMATION BUSINESS
OPERATIONS

    


    After the
Effective Date, the Reorganized Debtor will continue its business through the
Operating Subsidiaries and manage its affairs without supervision by the
Bankruptcy Court except as expressly set forth herein, and it may enter into
agreements to transfer, convey, encumber, use and lease any and all of its
assets.

    


    ARTICLE
XI

    OWNERSHIP OF THE DEBTOR’S
ASSETS AND CAUSES OF ACTION

    


    11.1 The
Assets. Excluding the Causes of Action and the Causes of Action Proceeds,
as of the Effective Date of the Plan, the Reorganized Debtor and the Operating
Subsidiaries shall retain and be vested with ownership of all property of the
Debtor's Chapter 11 estate, as defined in 11 U.S.C. § 541, and the Reorganized
Debtor shall own all such property free and clear of all liens, claims and
interests of any person or entity, except as specifically provided in the Plan
or the order confirming the Plan. Not withstanding any statement in this
section, all control of, and any benefit arising from, a preference avoidance
action against Axient shall be retained and vested with the Debtor.

    


    11.2 The
Causes of Action. All the Causes of Action and all the Causes of Action
Proceeds shall be conveyed to the Creditors’ Trust.

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

    ARTICLE
XII

    THE CREDITOR’S
TRUST

    


    12.1 Purpose
of the Creditor’s Trust. The purpose of the Creditor’s Trust is to
marshal, maintain, administer, pursue, collect, settle, dispose of and disburse
the Trust Property for the benefit of the holders of the Active Professionals
Claims included in Class 1(a) and the Allowed Unsecured Claims under Class
7.

    


    12.2 Beneficiaries
of Creditor’s Trust. The Active Professionals and the holders of Allowed
Unsecured Claims under Class 7 shall be the beneficiaries of the Creditor’s
Trust until the claims of the Active Professionals and all the holders of all
allowed claims under Class 7 shall be paid. The Claims of the Active
Professionals shall be paid with priority and in full by the Creditors’ Trust
prior to any payment of the allowed claims under Class 7.

    


    12.3 Appointment
by Court Order. In the Confirmation Order, the Creditor’s Trustee will be
appointed and will be bound to perform as required by the Plan, provided,
however, that the appointment of the Creditor’s Trustee will be subject to the
Creditor’s Trustee delivering a bond in a reasonable amount to be determined by
the Court.

    


    12.4
Termination of the
Unsecured Creditors Committee and Appointment of Creditor’s Trust Trustee and
operation of the Creditors’ Trust.

    


    (a) Prior
to the Effective Date of the Plan, the Debtor shall select the Creditor’s
Trustee, which Creditor’s Trustee shall be the subject to the approval of the
Committee and Debtor shall submit an application for appointment of the
Creditor’s Trustee to the Court. The Debtor shall send a copy of said
application to all unsecured creditors and said creditors shall have ten days
following service to object to the Application and to submit additional names to
be considered by the Court. Thereafter, the Court may select and appoint the
Creditor’s Trustee.

    


    (b) On
the Effective Date or upon the appointment of the Creditor’s Trustee, whichever
is later to occur, the Unsecured Creditors Committee will
terminate.

    


    (c) Termination Events.
The authority of the Creditor’s Trustee will be effective as soon as the
Creditor’s Trustee is appointed and will remain in full force and effect
until:

     

    (1)
payment in full of all the claims of the Active Professionals and all the Trust
Unit holders; or

    


    (2) the
liquidation of all Trust Property and distribution of all Trust Property
proceeds; or

     

    (3) the
determination by the Creditor’s Trustee in his reasonable business judgment that
no further action should be taken with regard to the remaining Trust Property
and that no additional distributions will be made

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

    (d) Termination of the
Trust. Upon any of the above Termination Events, the Creditor’s Trustee
shall file with the Court a “Notice of Termination” (the “Notice”). The Notice
shall be mailed to all holders of Trust Units and state that such Trust Unit may
file an objection to the Notice, with a copy to the Creditor’s Trustee within
twenty days of filing of the Notice and then a hearing shall be set on such
objections. The Notice also shall contain an accounting of the Creditor’s Trust
and a summary of action taken by the Creditor’s Trustee to dispose of the Trust
Property and the results obtained. The Notice shall certify that the terms of
this provision have been satisfied in full and unless an objection is received
from a party in interest, the duties and responsibilities of the Creditor’s
Trustee shall terminate twenty days after service of the Notice. If a party in
interest objects, then the Creditor’s Trustee’s duties and responsibilities will
not terminate until the Court has so ruled following Notice and a hearing.
Concurrently therewith, the Creditor’s Trustee shall be discharged from all
further duties and responsibilities in connection with the Trust Property and
the holders of Trust Units. All tax returns and any filings or reports shall
have been filed with the appropriate state or federal regulatory authorities and
all taxes have been paid prior to termination of the Creditors’ Trustee’s
duties. Further, the service of the Creditor’s Trust under the Plan will be
subject to the following:

    


    (e) Tenure, Removal and
Replacement of Creditor’s Trustee. The Creditor’s Trustee will serve
until resignation pursuant to subsection (1) below, removal pursuant to
subsection (2) below, or the completion of his or her duties;

    


    (1) The
Creditor’s Trustee may resign at any time by providing a written notice of
resignation to the beneficiaries of the Creditor’s Trust and the Bankruptcy
Court. Such resignation will be effective when a successor is appointed as
provided herein;

    


    (2) The
Creditor’s Trustee may be removed for cause by Order of the Bankruptcy Court,
which may be sought by any Trust Unit holder of the Creditor’s Trust, or upon a
vote of greater than 50% of the outstanding Trust Units of beneficiaries of the
Creditor’s Trust without Court approval; and

    


    (3) In
the event of a vacancy in the position of the Creditor’s Trustee, whether by
removal, resignation, illness, incapacity, or death, the vacancy will be filled
by the appointment of a successor Creditor’s Trustee approved by the Bankruptcy
Court after appropriate notice and hearing.

    


    (f) Powers and Duties of the
Creditor’s Trustee. The Creditor’s Trustee shall marshal, maintain,
administer, pursue, collect, settle, dispose of, and disperse the Trust Property
for the benefit of Allowed Unsecured Claim holders of Class 7. Effective on the
Effective Date, the Creditor’s Trustee will be the representative of the Estate
as that term is used in Bankruptcy Code §1123(b)(3)(B) and will have the rights
and powers provided for in a Bankruptcy Code in addition to any rights and
powers granted herein to pursue the Causes of Action. In his or her capacity as
the representative of the Estate, the Creditor’s Trustee will be the successor
in interest to the Debtor with respect to the Causes of
Action. The Creditor’s Trustee will hold all right, title and interest in and to
the Causes of Action on behalf of the beneficiaries of the Creditor’s Trust and
will pay from the Creditor’s Trust all ordinary and necessary costs of
protecting, preserving, investigating and pursuing the Causes of Action. The
Creditor’s Trustee will administer the Creditor’s Trust, will liquidate the
Causes of Action of the Creditor’s Trust, and will make distributions from the
Creditor’s Trust all in the accordance with the terms of the Plan. Unless
otherwise excused or exempted from doing so by the Bankruptcy Code, the
Creditor’s Trustee will abide by all laws including tax laws and regulations,
and will prepare or cause to be prepared all local, state, or federal tax
returns, filings, and/or reports that are necessary or appropriate. The
Creditor’s Trustee shall also have the power to settle any of the Causes of
Action. That Creditor’s Trustee shall have the power to retain and employ, for
reasonable compensation and upon reasonable terms professional persons,
including but not limited to appraisers, accountants, brokers, attorneys, and
clerical assistants to assist in the administration and liquidation of the Trust
Property. The Creditor’s Trustee shall have power to borrow funds on reasonable
business terms to finance the investigation and litigation of the Causes of
Action.


    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

    (g) Distribution of
Proceeds. Proceeds from the liquidation of the Causes of Action shall be
disbursed in the following manner and order:

     

    (1)
First, to satisfy any valid loans that have been obtained by the Creditor’s
Trust for purposes of financing the Creditor’s Trust activities;

    


    (2)
Second, to pay all costs and expenses related to the care and maintenance of the
Trust Property, including but not limited to, the expenses of the Creditor’s
Trust (including the fees and expenses of the Creditor’s Trustee and his or her
professionals) and the expenses related to prosecution of the Causes of Action
and to pay the Active Professionals Claimants included in Class 1(a) on a
pro-rata basis in full for remaining fees and costs owed as of the Effective
Date. All unpaid fees and costs of the Active Professionals, any fees and costs
of the Active Professonals incurred post-Effective Date and all costs and
expenses of the Creditor’s Trustee and his or her professionals shall have
administrative priority pursuant to 11 U.S.C. section 507 and 503(b) over all
other obligations of the Creditor’s Trust.

    


    (3)
Third, to establish and fund a reserve account of no less than $50,000 to
provide for future expenses of the Creditor’s Trust (the initial reserve account
shall be established by the conveyance of $50,000 from Causes of Action Proceeds
free and clear of liens by the Debtor to the Creditor’s Trust on the Effective
Date);

    


    (4)
Fourth, to pay holders of Trust Units on a pro-rata basis with any amounts
attributable to an unsecured claim that is still a Disputed Claim as of the date
of the distribution being set aside in a separate interest bearing account
pending determination by the Court as to whether or not the Claim is an Allowed
Unsecured Claim.


    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

    (h) Compensation of the
Creditor’s Trustee. The Creditor’s Trustee shall be compensated on an
hourly basis and shall not receive compensation until such time as the
Creditor’s Trustee files with the Court a written application requesting
compensation which includes, at a minimum, a written detailed time statement
setting out each task performed and the amount of time spent for each task as
well as quarterly reports discussed below. When said application is filed, the
Creditor’s Trustee shall send notice to all remaining Trust Unit holders of the
Creditor’s Trust. Thereafter, all parties will have fifteen days from service of
the notice to object to compensation requested.

    


    (i) Reporting
Requirements. Beginning with a date which is 90 days after the effective
date, and continuing quarterly thereafter until the final distribution under the
Creditor’s Trust, the Creditor’s Trustee will provide written reports to those
Trust Unit holders who request special notice from the Creditor’s Trustee on or
after the Effective Date. The reports will provide information on collections
and disbursements, administrative costs, settlements, and the Creditor’s
Trustee’s ongoing efforts to administer the Trust Property.

    


    (j) Limitation on
Liability. Subject to applicable law, the Creditor’s Trustee will not be
liable for any act he or she may do or omit to do as Creditor’s Trustee
hereunder while acting in good faith and in the exercise of his or her
reasonable business judgment; nor will the Creditor’s Trustee be liable in any
event except for his or her own gross negligence or willful fraud or willful
misconduct. The foregoing limitation on liability also will apply to any person,
including professionals, employed by the Creditor’s Trustee and acting on behalf
of the Creditor’s Trustee in the fulfillment of the Creditor’s Trustee’s duties
hereunder.

    


    (k) Transfer of Trust Property
to the Creditor’s Trust. Except as otherwise provided in the Plan, title
to the Trust Property, including the Causes of Action and the $50,000 from the
Causes of Action Proceeds, will pass to the Creditor Trust on the Effective Date
free and clear of all claims and equity interest in accordance with Bankruptcy
Code §1141. Note that no other Causes of Action Proceeds, other than the $50,000
described herein, shall be transferred by the Debtor to the Creditor’s Trust.
The Creditor’s Trustee will pay or otherwise make distributions on account of
the Active Professional’s pro rata claim amounts and thereafter the Trust Unit
holders in accordance with the terms of the Plan.

    


    (l) Effect of Transfer.
For federal and applicable state income tax purposes, the transfer of the Trust
Property to the Creditor’s Trust will be a disposition of the Trust Property
directly to and for the benefit of the beneficiaries of the Creditor’s Trust in
partial satisfaction of their claims, immediately followed by a deemed
contribution of the Trust Property by the beneficiaries to the Creditor’s Trust.
The beneficiaries will be treated as the grantors and deemed owners of the
Creditor’s Trust.

    


    (m) Preservation of Debtor’s
Claims, Demands and Causes of Action. All claims and Causes of Action of
any kind or nature whatsoever held by, through or on behalf of the Debtor and/or
its Estate against any other person, including, but not limited to, all
Avoidance
Actions, and all claims or Causes of Action arising before the Confirmation Date
which has not been resolved or disposed of prior to the Confirmation Date are
preserved in full for the benefit of the Creditor’s Trust. The Creditors’ Trust
shall be entitled to name the Reorganized Debtor or the Debtor as a nominal
party to any claim but shall provide indemnification for any liability that may
arise form such action pursuant to a formal agreement to be executed with the
RLOC agreement.


    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

    

    (n) Further
Documentation. Within sixty (60) days of Confirmation, the Debtor shall
execute any and all further documents and instruments which may be reasonably
required to establish the Creditor’s Trust and to assist the Creditor’s Trustee
in his or her responsibilities and upon the terms set forth herein.

    


    (o) Schedule of
Distributions. Distributions shall be made to the Trust Unit holders on
semi-annual distribution dates to be determined by the Creditor’s Trustee,
except that no distribution shall be necessary when, in the Creditor’s Trustee’s
discretion, the Creditor’s Trustee determines that insufficient funds exist in
the accounts considering the likely costs and expenses which the Creditor’s
Trust is likely to incur and the likely income available to the Creditor’s Trust
for the reasonable future.

    


    (p) Return Distributions.
All distributions to Class 7, which are returned by the United States Post
Office undelivered, or, which cannot be delivered due to lack of a current
address will be retained by the Creditor’s Trustee for said distributee. After
the expiration of six (6) months from the date of the first attempted
distribution, any unclaimed securities and all future distributions will vest in
the Creditor’s Trust, free of any claim of the distributee. The Creditors’ Trust
will open a securities account and any such unclaimed securities will be
deposited into this account for the benefit of the Creditors’ Trust. The Trustee
shall have the authority to sell such securities and use the proceeds for the
benefit of the Creditors’ Trust or the Creditors’ Trust may distribute the
securities if it bears all transfer fees.

    


    12.5
Further Obligation of
Debtor and the Reorganized Debtor.

    


    (a) Access to Documents.
Upon Confirmation, the Reorganized Debtor and will be in possession of various
documents and information that may be needed by the Creditor’s Trust for
purposes of investigating and pursuing the Causes of Action. Among other things,
Debtor has documentation and information containing information about or related
to accounts receivable, accounts payable, payments to vendors and other third
parties that took place within one year preceding the following bankruptcy,
employee agreements, equipment leases, equipment purchase agreements, vendor
agreements, investigative reports, demand letters, stockholder agreements, due
diligence files, marketing agreements, ledgers, invoices, financial statements,
corporate records, stock bond offering documents, stock and bond purchase
agreements, loan documents, security agreements, license agreements,
etc.


    
      
        
        

      

      
        -26-

        
          

        

      

      
        
        

      

    

    (b) Storage of Documents.
The Reorganized Debtor agrees to store all such documents for at least two years
at their business location and to maintain all of Debtor’s and the
Estate’s computerized records including all accounting information until
Creditor’s Trust is terminated at no cost to the Creditor’s Trust. All
accounting information and other computerized records of the Debtor and the
Estate shall be “backed up” by the Reorganized Debtor. The Reorganized Debtor
shall provide Creditor’s Trustee, the Trustee’s representatives and
professionals with liberal access to all such documentation and information at
no cost to the Creditor’s Trust. However, the Reorganized Debtor may elect to
transfer all computerized records of the Debtor and the Estate onto a segregated
computer system to which Creditor’s Trustee, the Trustee’s representative and
professionals shall be given liberal access during regular business hours. The
Creditor’s Trustee, the Trustee’s representatives and professionals may make
such other arrangements with the Reorganized Debtor for the maintenance and
access of documents and information as may be reasonably agreed to between the
parties. Two years after the Effective Date, the Reorganized Debtor may notify
the Creditor’s Trustee, via written notice, of its intent to dispose of any of
the documents. The Creditor’s Trustee shall have thirty days from receipt of
such notice to notify the Reorganized Debtor of any documents that the
Creditor’s Trustee would like transferred to a different storage site. Upon
receipt of such notice, the Reorganized Debtor and the Creditor’s Trustee shall
cooperate in effectuating such transfer in a manner, which will preserve the
integrity of the documents and the validity of such documentation for use in
pursuit of any of the Causes of Action. Any and all of the above-referenced
documentation information may be copied at the request of Creditor’s Trustee or
the Trustee’s representatives or professionals and such cost of $.10 per copy
will be borne by the Creditors’ Trust. Any research assistance provided by the
Reorganized Debtor exceeding a cumulative total of 100 hours will be billed to
the Creditors’ Trust at $100 per hour.

    


    (c) Audit and Work paper
access. If the Reorganized Debtor has audits performed, the Reorganized
Debtor will request its auditors provide the Creditors’ Trustee access to such
audits and all of auditor’s work papers with backup documents within ten days of
receipt of a final audit. Further, the Reorganized Debtor agrees to request that
its auditors to provide copies of all work papers and underlying documentation
for the audits to Creditor’s Trustee, Trustee’s representatives and
professionals. The Creditors’ Trust shall pay the extra cost of such copies,
documentation or delivery charged to the Reorganized Debtor by the
auditors.

    


    (d) Funding of the Creditor
Trust provided by the Reorganized Debtor. The Debtor is conveying to the
Creditor’s Trust on the Effective Date $50,000 from the Causes of Action
Proceeds free and clear of any liens or encumbrances to operate the Creditors
Trust.

    


    Any lien
that the NVL lenders, Navedge or the Reorganized Debtor or their successors,
have in any of the Causes of Action or Causes of the Action Proceeds are
released on the Effective Date of the Plan.


    
      
        
        

      

      
        -27-

        
          

        

      

      
        
        

      

    

    ARTICLE
XIII

    CONTINUATION AND TERMINATION
OF SECURITY INTERESTS

    


    Unless
otherwise provided in the Plan or in the Final Order, all creditors possessing
allowed, secured claims shall retain their liens on any of their collateral the
Reorganized Debtor acquires to secure payment of all cash or other property to
be distributed to them pursuant to the terms of the Plan. Such liens on the
Reorganized Debtor's property shall be deemed relinquished and reconveyed to the
Reorganized Debtor upon the payment to the holders of such liens of all money,
property or securities due them in satisfaction of their allowed, secured claims
pursuant to the terms of the Plan.

     

    Moreover,
once any lien is deemed relinquished and reconveyed to the Reorganized Debtor
pursuant to the terms of the Plan, the creditor who had claimed such lien shall
immediately deliver to the Reorganized Debtor all documents, properly signed and
notarized, needed to document the release of the lien according to any
applicable state or federal law. If the required documentation is not supplied
within one (1) week
after demand there for has been made, the Reorganized Debtor may seek an
order from the Bankruptcy Court enforcing the lien release provisions of this
Plan or entry of an order declaring the lien to be released or
void.

    


    Except as
stated previously in this Article, all security interests and liens of any kind
in any property the Reorganized Debtor acquires under the Plan shall terminate
and shall be deemed to have terminated upon the Effective Date of the
Plan

    


    ARTICLE
XIV

    INSURANCE

    


    The
Reorganized Debtor shall maintain insurance on all of its and its subsidiaries'
tangible personal and real property in an amount not less than the fair market
value of that property and shall keep its and its subsidiaries' property in good
repair, reasonable wear and tear excepted.

     

    ARTICLE
XV

    SATISFACTION OF CLAIMS AND
INTERESTS

    


    All
classes of allowed claims and allowed interests shall receive the distributions
set forth herein on account of and in complete satisfaction of those allowed
claims and interests. Without limiting the foregoing, upon the Effective Date of
the Plan, each holder (and each successor of a holder) of an Allowed Claim or an
Allowed Interest shall be deemed to have waived, relinquished and released any
and all of its rights and claims against the Debtor and the Reorganized Debtor,
except as provided in the Plan or the Final Order. The Creditor’s Trust, the
Debtor’s note holders and the Debtor’s shareholders retain their rights, if any,
to pursue claims and causes of action against the Debtor’s directors, officers
and employees, non Debtor third parties and Debtor’s Directors and Officers
Insurance.


    
      
        
        

      

      
        -28-

        
          

        

      

      
        
        

      

    

    ARTICLE
XVI

    BINDING NATURE OF THE
PLAN

    


    Upon the
entry of the Order Confirming the Plan, the Plan shall bind the Debtor, the
Reorganized Debtor, all entities that are to acquire any property under the
Plan, all creditors, and all equity security holders, whether or not their
claims and interests are impaired under the Plan and whether or not they have
accepted the Plan, as determined by § 1141(a) of the Bankruptcy
Code.

    


    This
means, in part, that, except as provided by an express order of the Bankruptcy
Court or pursuant to the terms of the Plan or the Order Confirming the Plan, all
judicial, administrative or other actions or proceedings pending against the
Debtor or arising out of claims accrued prior to the confirmation of the Plan
shall be permanently enjoined.

     

    ARTICLE
XVII

    TERMINATION OF THE AUTOMATIC
STAY AND DISCHARGE

    


    The
automatic stay imposed by 11 U.S.C. § 362(a) shall terminate when the Final
Order becomes non-appealable. Pursuant to Section 1141(a) of the Bankruptcy
Code, the entry of the Final Order shall permanently bar the filing and
asserting of any claims against the Debtor and the Reorganized Debtor which
arose or relate to the period of time prior to the date of entry of that order,
except as provided in the Plan or the Order Confirming the Plan. The Creditor’s
Trust, the Debtor’s convertible note holders and the Debtor’s shareholders
retain their rights, if any, to pursue claims and causes of action against the
Debtor’s directors, officers and employees, non Debtor third parties and
Debtor’s D&O Insurance.

    


    ARTICLE
XVIII

    IMPLEMENTATION OF THE
PLAN.

    


    The Plan
will be implemented, in part, as follows:

    


    18.1 Formation
of the required entities. No later than immediately prior to the
Effective Date, VTEC shall be designated as the Reorganized Debtor with the
Directors specified in Article VI. The Debtor, at its option shall take actions
to form or acquire the Operating Subsidiaries, by purchasing shares of common
stock at either par value or the amount necessary to pay the legal fees and
stock issuance fees of formation. Any funding required to form the Operating
Subsidiaries or VTEC shall be provided by Aztoré in the form of additional PLG
loans or other Funding Lenders in the form of additional PLG or NVLG loans. The
Debtor, at its option, can incorporate in any state. The most likely states the
Debtor will select are either Nevada or Arizona. The Debtor is authorized to
file Articles of Incorporation authorizing up to 200,000,000 common shares and
25,000,000 undesignated preferred.

    


    18.2 Merger.
This Plan provides for the reorganization of Debtor through a merger of the
Debtor with VTEC. VTEC, incorporated in Nevada, will be the survivor in the
merger. The form
of merger document is attached as Exhibit 1. VTEC will operate as a holding
company. All assets and rights of the Debtor shall be transferred to the
appropriate entity in accordance with the Plan. After all liabilities and claims
are settled and all assets transferred, the Plan implemented and the Articles of
Merger filed, the Debtor shall be dissolved in accordance with Arizona
law.


    
      
        
        

      

      
        -29-

        
          

        

      

      
        
        

      

    

    18.3 Election
of Directors of the Operating Subsidiaries. The Directors of the Debtor
or the Reorganized Debtor will vote to elect the Officers and Directors of each
of the Operating Subsidiaries. Unless determined otherwise by the VTEC Board of
Directors, the Officers and Directors of each Operating Subsidiary will be
identical to the VTEC Officers and Directors until the first shareholders
meeting of each Operating Subsidiary, at which time new officers and directors
will be elected.

    


    18.4 Licensing
of the Visitalk Rights. Each Operating Subsidiary shall, in exchange for
an Operating License from the Debtor to each Operating Subsidiary for its
Visitalk line of business and related rights, issue VTEC 5,000,000 or more as
required for rounding shares of Operating Subsidiary Common Stock and sufficient
Operating Subsidiary Warranty Units to allow for the Plan
Implementation.

    


    18.5 Create an
Employee Equity Incentive Plan. The Board of Directors of each entity
created under the Plan will be considered to have adopted an employee Equity
Incentive Plan for covering up to 3,000,000 shares of common stock. Acceptance
of the Plan is deemed the equivalent of a stockholder vote in favor of the
employee Equity Incentive Plan. The form of employee Equity Incentive Plan is
attached as Exhibit 3 hereto.

    


    18.6 The Board of Directors of
the Debtor or the Reorganized Debtor shall oversee implementation of the Plan
and be fully empowered to act for the Debtor to implement the Plan.

    


    18.7 The Debtor shall transfer
all the Causes of Action and all Causes of Action Proceeds to the Creditors’
Trust and transfer up to 500,000 VTEC Common Shares, 2,000,000 VTEC Warrant
Units (both as adjusted for actual issuances under the Plan), 100,000 Operating
Subsidiary Common Shares and 400,000 Operating Subsidiary Warrant Units in each
Operating Subsidiary to the Class 7 Securities Pool.

    


    18.8 The Board of Directors of
the Reorganized Debtor shall take the necessary actions to;

    


    (a) transfer the Assets to the
Reorganized Debtor free and clear of any liens or judgments against such
assets;

    


    (b) elect the officers and directors of
the Operating Subsidiaries;

    


    (c) merge the Debtor with VTEC, its
100% owned subsidiary; and


    
      
        
        

      

      
        -30-

        
          

        

      

      
        
        

      

    

    (d) After all such implementation
actions have been completed, the Debtor shall have no remaining assets and no
remaining liabilities and shall be formally dissolved in accordance with Arizona
law.

    


    18.9 The Board of Directors of
VTEC and the Operating Subsidiaries shall have all of the powers granted any
board of directors by applicable state or federal laws.

    


    18.10 The Board of Directors
of VTEC and the Operating Subsidiaries shall have the power to amend the
Articles of Incorporation and the Bylaws of VTEC and the Operating Subsidiaries
in any manner necessary to carry out the provisions of the Plan. The board of
directors shall be entitled to use and exercise all pertinent provisions of
state and federal law.

    


    18.11 To implement the
issuance of the securities provided for in the Plan, the Board of Directors of
VTEC and the Operating Subsidiaries shall take all necessary steps required by
the Code, Federal and state laws and to perform such implementation in a cost
effective manner, the Board of Directors shall have the authority to vary, alter
or revise any of the steps outlined above so long as such change does not
negatively affect any of the distributions provided for by the Plan. Any
fractional shares due to the election of payment with securities shall be
rounded up to the next whole share or Unit.

    


    18.12 The Board of Directors
of VTEC and the Operating Subsidiaries shall have the authority to make
provision for payment of cash and/or distribution of securities to creditors as
required hereby on the Effective Date of the Plan or as otherwise provided
herein.

    


    18.13 NOL
Restrictions. In order to facilitate the Debtor’s ability to preserve and
utilize its NOL’s, VTEC has approved the imposition of a less than 5% limitation
on the ability of certain shareholders to acquire additional securities issued
by the VTEC (the “5% Limitation”). The Certificate of Incorporation of VTEC
specifies that any acquisition of Common Stock or

    


    Warrants or other securities made in
violation of the 5% Limitation will be null and void ab initio. It also will
allow the Reorganized Debtor, in its sole discretion, to exempt from application
of the 5% Limitation any acquisition of shares of Common Stock (or of Warrants
or other securities), so long as such acquisition will not jeopardize the
Company’s ability to preserve and utilize its NOLs.

    


    It is the
purpose of the 5% Limitation to facilitate the Reorganized Debtor’s ability to
preserve and utilize its NOLs and to that end the Board of Directors of the
Reorganized Debtor is authorized to take actions, to the extent permitted by law
and not inconsistent with the provisions of the 5% Limitation, which it deems
necessary or advisable to protect the Company and the interests of holders of
its equity and debt securities by maintaining the Company’s ability to preserve
and utilize its NOLs. In this regard, the Board of Directors may, to the extent
permitted by law, from time to time, establish, modify, amend or rescind, by
by-law or otherwise, regulations and procedures not
inconsistent with the terms of the 5% Limitation for the orderly application,
administration and implementation of the provisions of the 5% Limitation.
As a
mechanism for enforcing the 5% Limitation, the Certificate of Incorporation of
the Company provides that any transfer of shares of Common Stock, Warrants or
other securities in violation of the 5% Limitation is automatically null and
void as to that number of shares of Common Stock or Warrants or other securities
which caused the acquirer thereof (the “Purported Owner”) to exceed the 5%
Limitation (the shares and/or Warrants or other securities which cause the
Purported Owner to exceed the 5% Limitation being herein referred to as the
“Excess Shares”)

    
      
        
        

      

      
        -31-

        
          

        

      

      
        
        

      

    

    The
purported transfer of the Excess Shares to the Purported Owner will not be
recognized by the Company. Instead, if necessary, the Purported Owner will be
instructed to deliver the Excess Shares to, or otherwise place the Excess Shares
under the control of, a trustee (the “Share Trustee”) who will proceed forthwith
to sell the Excess Shares in the market to a Permitted Transferee.

    


    18.14 Securities
Distribution. The Board of Directors of VTEC shall have the right to
distribute any securities issued under the Plan directly into an account at any
insured broker-dealer. Any security recipient that desires to have actual
certificates shall pay the standard price to the Transfer Agent for the issuance
of such requested physical certificate. The Reorganized Debtor may assist
creditors in opening accounts to receive any securities in any reasonable
way.

    


    18.15 NOL
Legend. Certificates evidencing shares of Common Stock and the Warrant
Certificates will bear the following or a substantially similar legend notifying
the holder of the restrictions imposed by the 5% Limitation:

    


    “Pursuant
to provisions of the Certificate of Incorporation of VT Equities Corp. (the
“Company”) which are designed to facilitate the Company’s ability to preserve
and utilize its net operating loss carryovers for federal income tax purposes,
the transfer of the shares represented hereby to any person who would own
subsequent thereto 5% or more of the Company’s outstanding common stock or other
securities (as calculated pursuant to the provisions of the Certificate of
Incorporation of the Company) is restricted and will not be recognized except in
certain circumstances. Copies of the applicable provisions of the Certificate of
Incorporation and the regulations adopted by the Board of Directors of the
Company there under will be available for inspection at the offices of the
Company, and the Company will mail a copy thereof without charge within five
days after receipt of a written request for such provisions and regulations sent
to the Secretary at such address”.

    


    18.16 Option to
report as an Investment Company. The Reorganized Debtor may choose to act
as an investment company if it meets the requirements under Section 6(a)2 of the
Investment Company Act of 1940. The Reorganized Debtor is authorized to take
such actions to allow it to qualify for this exemption.

    


    18.17 Percentage
ownership references under
the Plan. All percentage ownership
amounts
referenced in the Plan, except for the 5% Limitation, are for actual common
stock issues and outstanding. Any potential warrant exercises are ignored in
such calculations.


    
      
        
        

      

      
        -32-

        
          

        

      

      
        
        

      

    

    18.18 Name
Changes and authorized shares. VTEC or the Operating subsidiaries,
without further shareholder vote are, prior to the printing of share and warrant
certificates, authorized to increase their authorized shares or to change their
name to a name more reflective of their business and marketing
plans.

    


    ARTICLE
XIX

    MODIFICATION OF AND
AMENDMENTS TO THIS PLAN

    


    Prior to
the entry of the Final Order, the Debtor may propose amendments or modifications
in accordance with 11 U.S.C. §1127(a). After confirmation, the Reorganized
Debtor may amend this Plan in the manner provided by Section 1127(b) of the
Bankruptcy Code.

    


    The
Bankruptcy Court may, at any time, so long as it does not materially or
adversely affect the interests of creditors and equity interest holders, remedy
defects and omissions or reconcile any inconsistencies herein or in the Final
Order as may be appropriate to effectuate this Plan.

    


    ARTICLE
XX

    REMEDIES FOR DEFAULTS BY THE
REORGANIZED DEBTOR

    


    If the
Reorganized Debtor fails to comply with the terms hereof, the holders of
unsecured claims or equity interests in any class materially harmed thereby may
proceed against the Reorganized Debtor and its property to enforce this Plan,
taking any action permissible under federal or state law, in any court of
competent jurisdiction.

    With
respect to holders of liens on the Reorganized Debtor’s property, such creditors
may act in accordance with any applicable and existing mortgage, deed of trust,
security agreement, or other instrument evidencing a lien or encumbrance on
their collateral.

    


    ARTICLE
XXI

    RETENTION OF BANKRUPTCY
COURT JURISDICTION

    


    Following
confirmation of this Plan, the Bankruptcy Court shall retain, without
limitation, jurisdiction for the following purposes and to provide any relief
the Reorganized Debtor may require to effectuate the Plan or any modification of
the Plan:

    


    (a)
Deciding the proper classification of any claim, determining the proper
allowance for purposes of distribution of claims estimated for purposes of
voting, and resolving objections to claims.

    


    (b)
Resolving all disputes regarding title to assets of the Reorganized Debtor and
all disputes arising under the Bankruptcy Code;


    
      
        
        

      

      
        -33-

        
          

        

      

      
        
        

      

    

    (c)
Hearing all matters and deciding all issues regarding the prosecution by the
Debtor, the Reorganized Debtor or the Creditors’ Trust of any Causes of
Action;

    


    (d)
Entering any order required to

    


    (1)
enforce the rights and powers of the Creditor’s Trustee;

     

    (2)
removal or appointment of the Creditor’s Trustee or any successor;

     

    (3)
clarify or establish the formation, matters of form, structure, operations,
distribution from, or closure of the Creditors’ Trust; or

     

    (4)
clarify or approve the allowance, compensation and payment of the Creditors’
Trustee.

     

    (e)
Correcting of any defect, curing any omission, or reconciling any inconsistency
between this Plan and the Final Order as may be appropriate to effectuate the
purposes and intent of this Plan;

    


    (f)
Modifying this Plan after confirmation;

     

    (g)
Enforcing and interpreting the terms and conditions of this Plan, any securities
issued under this Plan, or any other documentation effectuating this
Plan;

     

    (h)
Resolve any claims or causes of action, including any avoidance actions arising
by operation of U.S.C. §§ 542 through 551, against any creditors or equity
security holders held by the Debtor, the Reorganized Debtor, the Creditor’s
Trust or any creditors of the Debtor;

     

    (i)
Entering any order required to enforce the rights and powers of the Reorganized
Debtor;

     

    (j)
Determining any claim entitled to priority under Section 507 of the Bankruptcy
Code; and

     

    (k)
Entering any order required to close the Debtor's case.

    


    ARTICLE
XXII

    REQUEST FOR
CONFIRMATION

    


    The
Debtor and the Co-proponents requests entry of an Order confirming the Plan
pursuant to Section 1129 of the Bankruptcy Code.

    


    
      
        
          
            
              
                
                  
                    	 	
                            RESPECTFULLY
      SUBMITTED this 22nd
      day of June, 2004.

                          
	 	 
	 	 
	 
      	
                            By
      /s/
      015079

                          
	 
      	
                            Mark
      J. Giunta, Esq.

                          
	 
      	
                            845
      North Third Ave.

                          
	 
      	
                            Phoenix,
      Arizona 85003-1408

                          
	 
      	
                            Attorney
      for Debtor/Debtor-in-Possession

                          


                  

                

              

            

          

        

      



    ORIGINAL
AND ONE COPY of the

    


    Foregoing
were filed with the Clerk of the U.S.
Bankruptcy Court this 22nd day of June, 2004.


    
      
        
        

      

      
        -34-

        
          

        

      

      
        
        

      

    

    Copy of
the foregoing mailed/or emailed the 22nd day of June, 2004 to:

    


    Dean M.
Dinner

    Jennings,
Haug & Cunningham

    2800 N.
Central Avenue, Suite 1800

    Phoenix,
Arizona 85004-1049

    


    Kelly G.
Black

    Jackson
White Gardner Weech & Walker P.C.

    40 North
Center, Suite 200

    Mesa,
Arizona 85201

    


    Carolyn
J. Johnsen

    Edward M.
Zachary

    Gallagher
& Kennedy

    2575 E.
Camelback Road, 11th
floor

    Phoenix,
Arizona 85016-9225

    


    Paul S.
Gerding

    Paul S.
Gerding, Jr.

    Lieberman,
Dodge, Gerding, Kothe

    &
Anderson, Ltd.

    Phoenix
Corporate Center

    3003
North Central Avenue, Suite 1800

    Phoenix,
Arizona 85012-2909

    


    Eric E.
Sagerman, Esq.

    Murphy,
Sheneman, Julian & Rogers

    2049
Century Park East, Suite 2100

    Los
Angeles, California 90067

    


    Terri P.
Durham, Esq.

    MP3.Com,
Inc.

    4790
Eastgate Mall

    San
Diego, CA 92121-1970

    


    Richard
L. Cobb

    Hank E.
Pearson

    LAKE
& COBB, PLC

    101 North
First Avenue

    Suite
2000

    Phoenix,
Arizona 85003

    


    Michael
D. Curran, Esq.

    Maynard
Murray Cronin & O’Sullivan, P.L.C.

    3200
North Central Avenue, Suite 2300

    Phoenix,
Arizona 85012


    
      
        
        

      

      
        -35-

        
          

        

      

      
        
        

      

    

    Dorian
Daley

    Assistant
General Counsel

    Oracle
Corporation

    500
Oracle Parkway

    Mail Stop
5op7

    Redwood
City, CA 94065

    


    Lawrence
M. Schwab, Esq.

    Thomas M.
Gaa, Esq.

    Bialson,
Bergen & Schwab

    2600 El
Camino Real, Suite 300

    Palo
Alto, CA 94306

    


    Christopher
R. Kaup, Esq.

    Tiffany
& Bosco, P.A.

    1850
North Central Ave, 5th Floor,
VIAD Tower

    Phoenix,
AZ 85004-4546

    


    Robert
Miller, Esq.

    Bryan
Cave LLP

    Two North
Central Ave., Suite 2200

    Phoenix,
AZ 85004-4406

    


    Arnold
Reyes

    The Reyes
Law Firm P.C.

    4407 Bee
Cave Road, Suite 512

    Austin,
TX 78746-6496

    


    Ronald E.
Warnicke, Esq.

    Warnicke
& Littler, PLC

    1411
North Third Street

    Phoenix,
AZ 85004

    


    Michael
R. King

    GAMMAGE
& BURNHAM, P.L.C.

    Two North
Central, 18th
Floor

    Phoenix,
Arizona 85004

    


    Rick
Cuellar

    United
States Trustee’s Office

    P.O. Box
36170

    Phoenix,
Arizona 85067

     

    MetroGroup

    26
Broadway, Suite 400

    New York,
NY 1004

    Att:
Marcus L. Arky, Esq.

    
      
        
        

      

      
        -36-