Free ERRATA - District Court of Arizona - Arizona

EXHIBIT C TO NOTICE OF ERRATA

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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: [email protected] Attorney for visitalk.com, Inc. IN THE UNITED STATES BANKRUPTCY COURT

7 FOR THE DISTRICT OF ARIZONA 8 In re: 9 10 11 12 13 14 15 16 Possession (the "Proponent") in the above-captioned case; hereby proposes a Joint Plan of 17 18 19 20 21 22 23 24 25 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, SECOND JOINT PLAN OF REORGANIZATION Dated June 22, 2004 visitalk.com, Inc., an Arizona corporation ("Visitalk"), the Debtor and Debtor-inVISITALK.COM, INC., Tax I.D. #86-0930147 Debtor, Case No. 00-13035-PHX-RTB Chapter 11 Proceeding

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BPI, Gaming, Financial, International, Billing, Marketing, Video, Languages 1-10 and NavEdge are referred to in the Plan following as the "Co-Proponents."

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 X XI XII XIII XIV XV XVI XVII XVIII XIX XX XXI XXII

INDEX FOR SECOND JOINT PLAN OF REORGANIZATION Article I II III IV V VI VII VIII IX Page 4 4 8 12 13 20 22 23 23

Definitions Objective Of The Reorganization Classification Of Claims And Interests Identification Of Classes Impaired Under The Plan Treatment Of Classified Claims And Interests Post Confirmation Management Of The Reorganized Debtor Anticipated Post Confirmation Litigation Acceptance And Rejection Of Executory Contracts Descriptions Of Securities To Be Issued In Satisfaction Of Claims And Interests Post Confirmation Business Operations Ownership Of The Debtor's Assets And Causes Of Action The Creditor's Trust Continuation And Termination Of Security Interests Insurance Satisfaction Of Claims And Interests Binding Nature Of The Plan Termination Of The Automatic Stay And Discharge Implementation Of The Plan Modification Of And Amendments To This Plan Remedies For Defaults By The Reorganized Debtor Retention Of Bankruptcy Court Jurisdiction Request For Confirmation

33 33 34 42 43 43 44 44 44 50 50 51 52

LIST OF EXHIBITS Appendix A Definitions Exhibit 1 Form of merger document between VTEC and the Debtor Form of Equity Incentive Plan

24 25

Exhibit 2

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1 2 1.1 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2.1 in Appendix "A" attached hereto. 1.2

ARTICLE I DEFINITIONS Defined Terms. The capitalized terms used in this Plan shall have the meanings as set forth

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 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.

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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:

8 9 10 11 12 13 14 15 16 17 18 19 stock purchase warrants solely in exchange for a release of all claims and for which such holders 20 will have to invest new value as further described in Article IX. Such warrants would have 21 22 23 24 25 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. (a) (b) (c) attract capital; attract additional qualified management; or acquire assets or entities and for mergers or acquisitions.

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

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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. 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

20 rents additional storage space for records and equipment storage. 21 22 23 24 25 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-

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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. 2.4 The NOL's and the Investment Company Exemption. The Plan is structured to

7 maintain the Debtor's estimated $40,000,000 in NOL's. The Plan is also structured so that the 8 9 10 11 12 13 14 15 16 17 18 19 commitment from Aztore, the largest PLG lender, or an Aztore affiliate, (jointly "Aztore"), to 20 advance up to $200,000 to fund the Plan. Aztore will lend the Debtor funds within five days of 21 22 23 24 25 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 PLG 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

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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

12 13 14 15 16 17 18 19 among other things, the nature, extent and value of such services, the time spent on such 20 21 22 23 24 25 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

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,

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Debtor which are due and unpaid at the Effective Date; and (4) the actual and necessary costs of preserving the Debtor's estate. 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

5 6 7 8 9 10 11 12 PLG Claim, up to a principal amount of $3,000,000, less Aztore's PLG Claim, depending on the 13 14 15 16 17 18 19 $100,000 under the Court approved NVLG and PLG loan agreements; (iii) the asserted Aztoré 20 21 22 23 24 25 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 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. 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

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

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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

5 6 7 8 9 10 11 12 about $44,000. The second is the Rothwell Equity Claim which Rothwell has agreed in advance 13 14 15 16 17 18 19 3.3 20 21 22 23 24 25 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 Class 2: Priority Claims (Excluding Tax Claims). Class 2 consists of all Allowed 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. 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

Claims entitled to priority under section 507(a)(8) of the Bankruptcy Code, which include tax

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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 5 6 7 8 9 10 11 12 disputes regarding this claim entered by the Court on or about October 11, 2001. Cisco agreed to 13 14 15 16 17 18 19 Corp. ("Fire Equipment") arising from the sale to the Debtor of a fire suppression system in 20 21 22 23 24 25 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 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. 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

Class 6 consists of any Allowed Secured Claim by American Fire Equipment Sales and Services

Claims of Creditors. Based on proofs of claim filed with this Court there are allowed and/or

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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

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. 18 4.3 19 20 21 22 23 24 25 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. Impairment Controversies. If a controversy arises as to whether any Claim or any class

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1 2 3 4 5 best estimate as of the date hereof. A list of creditors and claim amounts are included in the 6 7 8 9 10 11 12 The Debtor shall distribute all securities to Holders of Allowed Claims, pursuant to the 13 terms of this Plan, within 120 days of the Effective Date. Regardless, on the Final Effective Date 14 the Holders of Allowed Claims shall become the owners of the securities with all rights to 15 transfer them on the books of the Reorganized Debtor until issued. Unless otherwise specified, 16 in calculating the number of Securities to be distributed pursuant to any formulae set forth below, 17 the number of such Securities to be distributed to each Holder of an Allowed Claim or Allowed 18 Interest shall be rounded up to the next even number but in no event shall any claimant receive 19 less than 100 Shares or Units or a note with less than $100 in principal. 20 5.2 21 (a) 22 23 24 25 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 Class 1(a) Claims (Administrative Expense Claims). On the Final Effective Date, Treatment Of Administrative Claims and Expenses 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. 5.1 ARTICLE V TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS 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

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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

5 6 7 8 9 10 11 12 be reduced (to any extent that they have not already been so reduced) by the proceeds paid to 13 14 15 16 17 18 19 Lenders, and D) the Active Professionals shall, to the extent that their Claims remain unpaid, 20 21 22 23 24 25 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) 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 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. On the Effective Date, the claims of Active Professionals included in Class 1(a) shall A)

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

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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

5 6 7 8 9 10 11 12 Warrant Units for each $1.00 of claim. If Aztore acquires any Class 1(a) claims it can elect to 13 14 15 16 17 18 19 Equity Claim a $10,000 cash payment to be provided by the Funding Lenders, plus the number 20 21 22 23 24 25 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 ½% of each Operating Subsidiary issued at the consummation of the Plan. To the extent Gerry Mayo receives an Allowed Administrative Claim, he has agreed 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 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

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

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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

5 6 7 8 9 10 11 12 are no amounts due priority pursuant to 11 U.S.C. § 507(a)(8). 13 14 15 16 17 18 19 Amended Joint Plan of Reorganization, one year after the Effective Date Axient may demand 20 21 22 23 24 25 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 5.5 Class 4: Secured Claim of Axient. The Debtor will treat the Axient claim as if it were 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

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

all of its liens in the subject 32 Compaq servers. The Debtor will issue Cisco Series B

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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

5 6 7 8 9 10 11 12 13 pro rata share of the Class 7 Securities Pool based on the even dollar amount of each Allowed 14 Unsecured Claims plus one Creditor Trust Unit for each even $1.00 of each Allowed Unsecured 15 Claims. The Class 7 Securities Pool will hold the following: 500,000 or 10% of VTEC's 16 Common Shares actually issued under the Plan, which ever is less, plus for each VTEC Common 17 18 19 20 21 22 23 24 25 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 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. 5.8. Class 7: Unsecured Creditors Claims. Class 7 Claimants shall receive each claimant's

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

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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) 15 (2) 16 other claim; or 17 18 19 20 21 22 23 24 25 (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. 5.11 Treatment of Objections. Where objections are made to any claim or to any motions or a motion to determine the extent, priority, or amount of any secured or an objection to any claim;

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

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

15 reasonable attorneys' fees and interest at a non-default rate, subject to the limitations of Section 16 506 of the Bankruptcy Code. 17 5.13 18 19 20 21 22 23 24 25 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

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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. 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

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Lanny R. Lang Vice President, Secretary, Treasurer and Director 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 Michael S. Williams Office Chief Executive Officer and Chairman of the Board Remuneration $12,000 per month and $1,200 per month per formed and active Operating Subsidiary unless not on the board of such entity. $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

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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

8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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. 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

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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

8 9 10 11 12 13 14 15 16 17 18 19 directors or officers, other than as described in the Disclosure Statement and this Plan. 20 6.4 21 22 23 24 25 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 Meetings of Directors and Selection of New Directors. Following the Effective Date 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

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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

8 9 10 11 12 13 14 Liability Policy. 15 16 17 18 19 20 21 22 23 24 25 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 unsecured creditors. 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

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 (2) 9.1

IN SATISFACTION OF CLAIMS AND INTERESTS 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. 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) (c) one "B Warrant" identical to the A Warrant; 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; 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) (3) one "F Warrant" identical to the E Warrant; Other VTEC Unit Terms. The exercise prices of the warrants in

20 (e) 21 22 23 24 25

the VTEC Warrant Unit may be lowered from time to time for such

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 (b) 15 (1) 16 17 18 19 20 21 22 23 (2)

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. Operating Subsidiary Securities 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. 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 ;

24 (b) 25 one "B Warrant" identical to the A Warrant;

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(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) (e)

one "D Warrant" identical to the C Warrant; 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;

8 9 10 11 12 13 14 Subsidiary warrants may be extended from time to time at the discretion of 15 the respective Boards of Directors of each Operating Subsidiary. All the 16 Warrants shall be subject to a Call anytime by the Operating Subsidiaries 17 18 19 20 21 22 23 24 25 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. (3) (f) one "F Warrant" identical to the E Warrant;

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

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1 2 3 4 5 6 7 8 9 10 11 (e)

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. 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

12 13 14 15 16 17 18 19 20 21 22 23 (a) 24 may be adjusted for actual shares issued, plus 100,000 Common Shares of each of the Operating 25 Up to 500,000 VTEC Common Shares, 2,000,000 VTEC Warrant Units, both as $.75 per share. These Series B Notes may be prepaid at any time and mature five years after the Effective Date. 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.

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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 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Creditor Group Aztoré Funding Lenders Post Petition Employees Unsecured creditors Admin claims who elect securities VTEC Class 8 Total common shares VTEC Shares 2,875,000 1,010,100 348,100 500,000 266,800 VTEC Units Trust Units Claims. Upon the Effective Date all such Common Shares will be deemed fully paid and nonassessable 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. Operating Subsidiary Shares 63,200 31,000 100,000 16,675 4,790,000 8,000,000 5,000,000 5,000,000 4,000,000 Operating Subsidiary Units(a) 252,800 25,000 400,000 66,700

5,750,000 4,040,400 576,000 2,000,000 8,500,000 1,067,200

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 without requiring any bond and such entity may change customary agency fees for services. 19 20 21 22 23 24 25 9.6 SEC Reporting. The Debtor is not currently subject to the reporting requirements of the 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 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.

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

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

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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

5 6 7 8 9 10 11 12 13

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

14 15 16 17 18 19 20 21 22 23 24 25 factors, including the relative size of the shareholder's equity interest in the Debtor; the 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. 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

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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.

8 9 10 11 12 13 14 15 16 17 18 19 to the Plan may be an underwriter, the Reorganized Debtor may require from such recipient a 20 statement that the recipient is aware of Section 1145 of the Bankruptcy Code and the 21 22 23 24 25 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 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

connection with bankruptcy reorganizations may vary. Those who become holders of securities

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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 5 6 7 8 9 10 11 12 of the Reorganized Debtor and the Operating Subsidiaries will be able to attract a sponsoring 13 14 15 16 17 18 19 the Reorganized Debtor. All Shares and Warrants issued by the Reorganized Debtor will have a 20 21 22 23 24 25 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 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. (d) Restrictions related to the maintenance of NOL's. There are various rules 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

limiting the maintenance of the Reorganized Debtor's NOL's if there are changes of control of

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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 5 6 7 8 9 10 11 12 13 14 15 16 11.1 17 the Effective Date of the Plan, the Reorganized Debtor and the Operating Subsidiaries shall 18 retain and be vested with ownership of all property of the Debtor's Chapter 11 estate, as defined 19 in 11 U.S.C. § 541, and the Reorganized Debtor shall own all such property free and clear of all 20 liens, claims and interests of any person or entity, except as specifically provided in the Plan or 21 the order confirming the Plan. Not withstanding any statement in this section, all control of, and 22 any benefit arising from, a preference avoidance action against Axient shall be retained and 23 vested with the Debtor. 24 11.2 25 shall be conveyed to the Creditors' Trust. The Causes of Action. All the Causes of Action and all the Causes of Action Proceeds The Assets. Excluding the Causes of Action and the Causes of Action Proceeds, as of 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

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1 2 3 4 5 6 7 8 9 10 12.1

ARTICLE XII THE CREDITOR'S TRUST 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.

11 12.3 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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:

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 (d)

(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 sho