Pg 1 of 17 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------X In re Chapter 11 VELO HOLDINGS INC., et al., Case No. 12-11384 (MG) Debtors. 1 Jointly Administered ---------------------------------------------------------------X ORDER (A) ESTABLISHING BIDDING PROCEDURES TO DESIGNATE A SPONSOR FOR DEBTOR VELO HOLDINGS INC. AND CERTAIN OF ITS SUBSIDIARIES JOINT PLAN OF REORGANIZATION, (B) APPROVING THE FORM AND MANNER OF NOTICE, (C) SETTING A DESIGNATION HEARING, AND (D) GRANTING RELATED RELIEF Upon consideration of the motion, dated May 15, 2012 (the Motion ), of the Debtors 2 in the above-captioned chapter 11 cases, for the entry of an order (this Order ) (a) establishing the Bidding Procedures in connection with the Auction to determine the plan sponsor that submits the highest or otherwise best offer to acquire the New Equity Interest pursuant to the Plan, (b) approving the form and manner of the Notice of Auction and Designation Hearing, and (c) setting a date for the Designation Hearing to approve the designation of a plan sponsor that submits the highest or otherwise best offer for the New Equity Interest and authorize Velo to enter into an agreement with such plan sponsor, all as more fully described in the Motion; and this Court having jurisdiction to consider the Motion and the relief requested therein pursuant to 28 U.S.C. 157 and 1334; and consideration of the Motion and 1 2 The Debtors in these chapter 11 cases along with the last four digits of their respective federal tax identification numbers are Velo Holdings Inc. (3155), V2V Holdings LLC (8801), Coverdell & Company, Inc. (4660), V2V Corp. (0857), LN, Inc. (8759), FYI Direct Inc. (2491), Vertrue LLC (6882), Idaptive Marketing LLC (3362), My Choice Medical Holdings, Inc. (5870), Adaptive Marketing LLC (6882), Interactive Media Group (USA) Ltd. (1016), Brand Magnet, Inc. (8978), Neverblue Communications, Inc. (7832), Interactive Media Consolidated Inc. (0774), and FreeScore, LLC (3513). FreeScore, LLC filed its voluntary petition for relief on May 4, 2012 and its chapter 11 case was jointly administered with the above-captioned cases by order of this Court dated May 29, 2012 [Docket No. 198]. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Motion. 1
Pg 2 of 17 the relief requested therein being a core proceeding pursuant to 28 U.S.C. 157(b)(2)(A), (L), and (O); and venue being proper in this District pursuant to 28 U.S.C. 1408 and 1409; and notice of the Motion being adequate and appropriate under the circumstances and in accordance with the Bankruptcy Code, the Bankruptcy Rules, and the Local Bankruptcy Rules such that no additional or further notice need be provided; and upon a hearing held to consider the relief requested in the Motion (the Hearing ); and upon the record of the Hearing and all proceedings had before this Court; and this Court having found and determined that the relief sought in the Motion is in the best interests of the estates of Velo and Coverdell & Co., Inc., their creditors, and other parties in interest, and that the legal and factual bases set forth in the Motion establish just cause for the relief granted herein; and any objections to the requested relief having been withdrawn or overruled on the merits; and after due deliberation and sufficient cause appearing therefor, it is hereby ORDERED, ADJUDGED, AND DECREED AS FOLLOWS 1. The Motion is granted. 2. The Bidding Procedures, attached hereto as Exhibit 1, are hereby approved. Any entity that wishes to participate in the Bidding Process must be an Acceptable Bidder, and any entity that wishes to participate in the Auction must be a Qualified Bidder. To be an Acceptable Bidder, an entity must deliver the Preliminary Bid Documents in accordance with the Bidding Procedures. To be a Qualified Bidder, Acceptable Bidders must deliver the Required Bid Documents in accordance with the Bidding Procedures by 500 p.m. prevailing Eastern Time on July 27, 2012 (the Bid Deadline ), unless the Bid Deadline is extended by Velo with the consent of the First Lien Agent and after consultation with the Committee. The Stalking Horse Bid is a Qualified Bid for all purposes. 2
Pg 3 of 17 3. If, as of the Bid Deadline, Velo has received one or more Qualified Bids, the Auction shall take place at 1000 a.m. prevailing Eastern Time on July 31, 2012, at the offices of Dechert LLP, 1095 Avenue of the Americas, New York, New York 10036, or at such later time or other place as Velo determines after consultation with its advisors. If, as of the Bid Deadline, the only Qualified Bid received by Velo is the Stalking Horse Bid, Velo shall not conduct the Auction and will instead seek approval of the Stalking Horse Bid at the Designation Hearing. 4. The Notice of Auction and Designation Hearing, substantially in the form attached hereto as Exhibit 2, is approved. Within three business days of the entry of this Order, Velo shall commence service of the Notice of Auction and Designation Hearing, providing notice of the Bidding Procedures, the Auction, and the Designation Hearing via overnight mail, first-class mail, facsimile, and/or e-mail to the following parties (or counsel if known) (a) the U.S. Trustee; (b) the Committee; (c) agents under the Debtors prepetition and postpetition secured credit facilities; (d) the Internal Revenue Service; (e) any known parties who have expressed a written interest in possibly sponsoring the Plan or purchasing the Business; (f) parties who are known or reasonably believed to have asserted any lien, encumbrance, claim, or other interest in the Business; (g) all applicable federal, state, and local taxing authorities; and (h) each governmental agency that is an interested party with respect to the Stalking Horse Plan Sponsor Agreement and the transactions proposed thereunder. In addition, within ten business days after the entry of this Order, Velo shall cause the Notice of Auction and Designation Hearing to be published in the New York Times (National Edition) or comparable publication(s) that Velo determines will provide additional notice to parties who may be interested in acting as plan sponsor or purchasing the Business, with any modifications for ease of publication. 3
Pg 4 of 17 5. Objections, if any, to Velo s designation of a plan sponsor shall be filed with the Bankruptcy Court and served in accordance with the Notice of Auction and Designation Hearing, and this Order, so as to be actually received by 300 p.m. prevailing Eastern Time on August 2, 2012. The Designation Hearing shall be held before this Court at 1100 a.m. prevailing Eastern Time on August 7, 2012. 6. Notwithstanding the possible applicability of Rules 6004(h), 6006(d), 7062, or 9014 of the Bankruptcy Rules, any other Bankruptcy Rule, or Rule 62(a) of the Federal Rules of Civil Procedure, this Order shall be immediately effective and enforceable upon its entry and there shall be no stay of effectiveness or execution of this Order. 7. The Debtors and Velo are authorized to take all actions necessary to effectuate the relief granted pursuant to this Order in accordance with the Motion and take such actions that may be necessary or appropriate to implement and effectuate the procedures contemplated by this Order. 8. This Court shall retain jurisdiction to hear and determine all matters arising from or related to the implementation of this Order. Dated May 30, 2012 New York, New York /s/martin Glenn MARTIN GLENN United States Bankruptcy Judge 4
Pg 5 of 17 Exhibit 1 Proposed Form of Bidding Procedures
Pg 6 of 17 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------X In re Chapter 11 VELO HOLDINGS INC., et al., Case No. 12-11384 (MG) Debtors. 1 Jointly Administered ---------------------------------------------------------------X BIDDING PROCEDURES FOR THE SUBMISSION, RECEIPT, AND ANALYSIS OF BIDS TO SERVE AS PLAN SPONSOR FOR JOINT PLAN OF REORGANIZATION OF VELO HOLDINGS, INC. AND CERTAIN OF ITS SUBSIDIARIES These bidding procedures (the Bidding Procedures ) have been approved by an order of the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court ), entered on May, 2012 [Docket No. ] on the docket of the lead case in the abovecaptioned, jointly administered chapter 11 cases of Velo Holdings Inc. and certain of its affiliates (collectively, the Debtors ). A. Designation of a Plan Sponsor. These Bidding Procedures shall govern the competitive process run by Velo Holdings Inc. ( Velo ) to solicit proposals for the sponsorship and funding of a joint plan of reorganization of Velo and certain other Debtors (the Plan ). These Bidding Procedures set forth the terms by which prospective bidders, if any, may qualify for and participate in the Auction, 2 thereby competing to make the highest or otherwise best offer to acquire the business (the Business ) of Debtor Coverdell &Company, Inc. ( Coverdell ) by purchasing 100 percent of the new equity interests in reorganized Velo (the New Equity Interest ) that will be issued pursuant to the Plan. 1 2 The Debtors in these chapter 11 cases along with the last four digits of their respective federal tax identification numbers are Velo Holdings Inc. (3155), V2V Holdings LLC (8801), Coverdell & Company, Inc. (4660), V2V Corp. (0857), LN, Inc. (8759), FYI Direct Inc. (2491), Vertrue LLC (6882), Idaptive Marketing LLC (3362), My Choice Medical Holdings, Inc. (5870), Adaptive Marketing LLC (6882), Interactive Media Group (USA) Ltd. (1016), Brand Magnet, Inc. (8978), Neverblue Communications, Inc. (7832), Interactive Media Consolidated Inc. (0774), and FreeScore, LLC (3513). FreeScore, LLC filed its voluntary petition for relief on May 4, 2012 and its chapter 11 case was jointly administered with the above-captioned cases by order of this Court dated May 29, 2012 [Docket No. 198]. Capitalized terms used but not otherwise defined herein shall be ascribed the meanings provided in the Debtors Motion for Orders (A) Establishing Bidding Procedures to Designate a Sponsor for Debtor Velo Holdings Inc. and Certain of its Subsidiaries Joint Plan of Reorganization, (B) Approving the Form and Manner of Notice, (C) Setting a Designation Hearing, and (D) Granting Related Relief, dated May 15, 2012 (the Motion ) [Docket No. 141].
Pg 7 of 17 B. Stalking Horse Plan Sponsor. By the Bid Deadline (as defined herein), the Stalking Horse Plan Sponsor will enter into an agreement, substantially in the form of Exhibit A hereto (the Stalking Horse Plan Sponsor Agreement ), pursuant to which the Stalking Horse Plan Sponsor will credit bid $80,000,000 of outstanding debt under the First Lien Credit Facility for the opportunity to sponsor the Plan and acquire the Business by purchasing the New Equity Interest pursuant to the Plan (the Stalking Horse Bid ). C. Participation Requirements. To participate in the bidding process or otherwise be considered for any purpose hereunder, a person (other than the Stalking Horse Plan Sponsor) interested in submitting a bid to serve as plan sponsor (a Potential Bidder ) must deliver (unless previously delivered) to Velo s financial advisor and counsel, the First Lien Agent s financial advisor and counsel, and counsel to the Committee, the following documents (collectively, the Preliminary Bid Documents ) (i) (ii) a statement fully disclosing the identity of each Potential Bidder that will be bidding to serve as plan sponsor or otherwise participating in connection with such bid, and the complete terms of any such participation; an executed confidentiality agreement in form and substance acceptable to the Debtors (the Confidentiality Agreement ); and (iii) a statement setting forth the Potential Bidder s financial capacity of providing an all-cash bid in an amount greater than the Stalking Horse Bid, which may include current unaudited or verified financial statements, or other demonstration of financial capacity of the Potential Bidder, the adequacy of which shall be determined by Velo, with the consent of the First Lien Agent and in consultation with their respective advisors. Within three business days after a Potential Bidder delivers the Preliminary Bid Documents, Velo, with the consent of the First Lien Agent and after consultation with the Committee, shall determine and notify the Potential Bidder whether the Potential Bidder has submitted acceptable Preliminary Bid Documents so that the Potential Bidder may conduct due diligence review with respect to the Business. Only those Potential Bidders that have submitted acceptable Preliminary Bid Documents (each, an Acceptable Bidder ) may submit bids to serve as plan sponsor in accordance with the procedures below. The Stalking Horse Plan Sponsor shall at all times be deemed an Acceptable Bidder. Velo, with the consent of the First Lien Agent and after consultation with the Committee, shall determine whether any Potential Bidder is an Acceptable Bidder, coordinate the efforts of Acceptable Bidders in conducting their due diligence investigations of the Business, receive offers from Acceptable Bidders, and negotiate any offers made to serve as plan sponsor (collectively, the Bidding Process ). Any entity that wishes to participate in the Bidding 2
Pg 8 of 17 Process must be an Acceptable Bidder, and any entity that wishes to participate in the Auction must be a Qualified Bidder (as defined herein). Velo reserves the right, after consultation with the Committee and subject to the consent of the First Lien Agent, to modify the foregoing requirements or adopt such other rules for the Bidding Process that Velo believes in its reasonable business judgment will better promote the goals of the Bidding Process. D. Obtaining Due Diligence Access. After receipt of an executed Confidentiality Agreement and notification of Acceptable Bidder status, Velo shall designate an employee or other representative to coordinate all reasonable requests for additional information and due diligence access. Velo shall provide each Acceptable Bidder reasonable due diligence information, as requested, as soon as reasonably practicable after such request, which information shall be commensurate with that information provided to the Stalking Horse Plan Sponsor. To the extent that Velo provides any information to any Acceptable Bidder that it had not previously provided to the Stalking Horse Plan Sponsor, Velo shall promptly provide such information to the Stalking Horse Plan Sponsor. The due diligence period shall end on the Bid Deadline (as defined herein) and Velo shall not be obligated to furnish any due diligence information after the Bid Deadline. In connection with the provision of due diligence information to Acceptable Bidders, Velo shall not furnish any confidential information relating to Velo or the Business to any person except an Acceptable Bidder or such Acceptable Bidder s duly authorized representatives to the extent provided in the applicable Confidentiality Agreement. Velo, along with its advisors, shall coordinate all reasonable requests for additional information and due diligence access from Acceptable Bidders; provided, however, that Velo may decline to provide such information to Acceptable Bidders which, in Velo s reasonable business judgment, have not established that such Acceptable Bidders intend in good faith, or have the capacity, to serve as plan sponsor and purchase the New Equity Interest pursuant to the Plan. No conditions relating to the completion of due diligence shall be permitted after the Bid Deadline. Acceptable Bidders are advised to exercise their own discretion before relying on any information regarding Velo or the Business provided by anyone other than Velo or its representatives. E. Bid Requirements. To participate in the Auction, an Acceptable Bidder (other than the Stalking Horse Plan Sponsor) must deliver to Velo and its advisors an irrevocable offer, in writing, that must (i) provide an all-cash bid of not less than $80,000,000; (ii) (iii) constitute a good-faith, bona fide offer to serve as plan sponsor and purchase the New Equity Interest pursuant to the Plan; be accompanied by a clean and duly executed copy of a modified 3
Pg 9 of 17 Stalking Horse Plan Sponsor Agreement, and the documents set forth as schedules and exhibits thereto, along with copies that are marked to reflect the amendments and modifications to the Stalking Horse Plan Sponsor Agreement, which may not be materially more burdensome to Velo or inconsistent with these Bidding Procedures (the Modified Agreement ); (iv) (v) (vi) state that the Acceptable Bidder is financially capable of consummating the transactions contemplated by the Modified Agreement and maintains financial and other information that will allow Velo, the First Lien Agent, and their advisors to make a reasonable determination as to the Acceptable Bidder s financial and other capabilities to consummate the transactions contemplated by the Modified Agreement; not request or entitle the Acceptable Bidder to any transaction or break-up fee, expense reimbursement, or similar type of payment; state that, if such Acceptable Bidder submits the Successful Bid or Back-Up Bid (each as defined herein), such Acceptable Bidder s offer is irrevocable until the closing of the Modified Agreement; provided, however, that if the offer of such Acceptable Bidder is deemed to be the Back-Up Bid, the Acceptable Bidder s offer is irrevocable until the earlier of 500 p.m. prevailing Eastern Time on the date that is (a) the Outside Back-Up Date (as defined herein) or (b) the closing of the Modified Agreement with the Successful Bidder (as defined herein); (vii) not contain any due diligence or financing contingencies of any kind, and contain evidence that the Acceptable Bidder has received debt and/or equity funding commitments, or has financial resources readily available and sufficient in the aggregate to sponsor the Plan, which evidence is reasonably satisfactory to Velo and the First Lien Agent; (viii) include evidence of authorization and approval from the Acceptable Bidder s board of directors or comparable governing body with respect to the submission, execution, delivery, and closing of the Modified Agreement; and (ix) be accompanied by a deposit (the Good Faith Deposit ) in the form of a certified check or wire transfer of immediately available funds payable to the order of Velo Holdings Inc. in an amount equal to 3% of the cash purchase price specified in the Modified Agreement. The documents identified in subparagraphs (i) (ix) above are referred to herein as the Required Bid Documents. 4
Pg 10 of 17 F. Bid Deadline. The Required Bid Documents must be delivered so as to be actually received no later than 500 p.m. prevailing Eastern Time on July 27, 2012 (the Bid Deadline ). Velo may extend the Bid Deadline with the consent of the First Lien Agent after consultation with the Committee. G. Evaluation of Qualified Bids. Velo, with the consent of the First Lien Agent and after consultation with the Committee, shall by July 29, 2012 make a determination regarding whether an Acceptable Bidder has submitted a bid that adequately complies with the above requirements (a Qualified Bid ). An Acceptable Bidder that is determined to have submitted a Qualified Bid shall be deemed a Qualified Bidder. The Stalking Horse Bid is deemed a Qualified Bid and the Stalking Horse Plan Sponsor is deemed a Qualified Bidder. Subject to the consent of the First Lien Agent, Velo may (i) determine, in its reasonable business judgment, which Qualified Bid is the highest or otherwise best offer, and (ii) reject at any time before entry of an order of the Bankruptcy Court approving a Qualified Bid, any bid that, in Velo s discretion, is (a) inadequate or insufficient, or (b) not in conformity with the requirements of the Bankruptcy Code or these Bidding Procedures. Prior to the Auction, Velo shall evaluate Qualified Bids and, with the consent of the First Lien Agent, identify the Qualified Bid that is, in Velo s reasonable business judgment, the highest or otherwise best bid (the Starting Bid ). No later than one business day prior to the date of the Auction, Velo shall notify the Stalking Horse Plan Sponsor as to which Qualified Bid is the Starting Bid. Velo shall distribute copies of the Starting Bid to each Qualified Bidder who has submitted a Qualified Bid and counsel for the Committee. H. No Qualified Bids. If no Qualified Bids are received by the Bid Deadline, the Auction shall not occur, the Stalking Horse Plan Sponsor Agreement shall be deemed the Successful Bid (as defined herein) and, subject to Velo s termination rights under the Stalking Horse Plan Sponsor Agreement, Velo shall immediately pursue entry of an order by the Bankruptcy Court approving its entry into the Stalking Horse Plan Sponsor Agreement. I. Representations and Warranties. Each bidder shall be deemed to acknowledge and represent that it has had an opportunity to inspect and examine the Business, and to conduct any and all due diligence regarding Velo, the applicable Debtors, and the Business prior to making its offer, that it relied solely upon its own independent review, investigation, and/or inspection of any documents in making its bid, and that it did not rely upon any written or oral statements, representations, promises, warranties, or guaranties whatsoever, whether express, implied, by operation of law, or otherwise, regarding the Debtors, Velo, or the Business, or the completeness of any information provided in connection therewith or the Auction, except as expressly stated in these Bidding Procedures or, as to the Successful Bidder, in its own Modified Agreement. 5
Pg 11 of 17 J. Auction. If one or more Qualified Bids are received by the Bid Deadline, Velo shall conduct the Auction. The Auction shall commence at 1000 a.m. prevailing Eastern Time on July 31, 2012 at the offices of Dechert LLP, 1095 Avenue of the Americas, New York, New York 10036, or at such later time or other place as Velo shall timely notify the Stalking Horse Plan Sponsor and all other Qualified Bidders following consultation with advisors for Velo, the First Lien Agent, and the Committee. The Auction shall be conducted in accordance with the following procedures (the Auction Procedures ) (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) the Auction shall be conducted openly; only the Qualified Bidders, including the Stalking Horse Plan Sponsor, shall be entitled to bid at the Auction; the Qualified Bidders, including the Stalking Horse Plan Sponsor, shall appear in person or through duly-authorized representatives at the Auction; only such authorized representatives of each of the Qualified Bidders, the Stalking Horse Plan Sponsor, Velo, the First Lien Agent, their respective advisors, the lender parties to the Agreed Protocol, Committee members, and the advisors to the Committee shall be permitted to attend the Auction; bidding at the Auction shall begin at the Starting Bid; subsequent bids at the Auction, including any bids by the Stalking Horse Plan Sponsor, shall be made in minimum increments of $500,000, which may be reduced to $250,000 in Velo s discretion, and after consultation with the Committee, at the Auction; each Qualified Bidder shall be informed of the terms of the previous bids; the bidding shall be transcribed to ensure an accurate recording of the bidding at the Auction; each Qualified Bidder shall be required to confirm on the record at the Auction that it has not engaged in any collusion with respect to the bidding; absent irregularities in the conduct of the Auction, the Bankruptcy Court shall not consider bids made after the Auction is closed; and the Auction shall be governed by such other Auction Procedures as may be announced by Velo, after consultation with its advisors and the 6
Pg 12 of 17 K. Acceptance of the Successful Bid. Committee, and with the consent of the First Lien Agent, from time to time on the record at the Auction; provided, however, that any such other Auction Procedures shall not be inconsistent with any order of the Bankruptcy Court. The Auction shall continue in one or more rounds until there is only one offer that Velo, in exercise of its reasonable business judgment, after consulting with its advisors and with the consent of the First Lien Agent, shall identify as the highest or otherwise best bid (the Successful Bid ). The Qualified Bidder having submitted the Successful Bid shall be deemed the Successful Bidder. Thereafter, Velo and the Successful Bidder shall, as soon as commercially reasonable and practicable, complete and sign all agreements, contracts, instruments, or other documents evidencing and containing the terms upon which the Successful Bid was made. Velo shall present the results of the Auction to the Bankruptcy Court at the Designation Hearing, at which certain findings shall be sought from the Bankruptcy Court regarding the Auction, including, among other things, that (i) the Auction was conducted and the Successful Bidder was selected in accordance with these Bidding Procedures, (ii) the Auction was fair in substance and procedure, (iii) the Successful Bid was a Qualified Bid as defined in these Bidding Procedures, and (iv) consummation of the Modified Agreement contemplated by the Successful Bid will provide the highest or otherwise best value for the Business and is in the best interests of creditors. If an Auction is held, Velo shall be deemed to have accepted a Qualified Bid only when such bid is declared the Successful Bid at the Auction and definitive documentation has been executed in respect thereof. Such acceptance is conditioned upon approval by the Bankruptcy Court of the Successful Bid and the entry of an order approving such Successful Bid. L. Designation Hearing. The Designation Hearing to consider approval of Velo s entry into the Modified Agreement with the Successful Bidder (or to approve the Stalking Horse Plan Sponsor Agreement if no Auction is necessary) shall take place on August 7, 2012 at 1100 a.m. prevailing Eastern Time, or as soon thereafter as counsel may be heard, before the Honorable Martin Glenn, United States Bankruptcy Judge, United States Bankruptcy Court for the Southern District of New York, One Bowling Green, Courtroom No. 501, New York, New York 10004. The Designation Hearing may be continued to a later date by Velo by sending notice prior to, or making an announcement at, the Designation Hearing. No further notice of any such continuance shall be required to be provided to any party. At the Designation Hearing, Velo shall present the Successful Bid to the Bankruptcy Court for approval. 7
Pg 13 of 17 M. Designation of Back-Up Bidder. If an Auction is conducted, the party with the second highest or otherwise best Qualified Bid, as determined by Velo in the exercise of its reasonable business judgment, in consultation with its advisors and the Committee, and with the consent of the First Lien Agent, shall be required to serve as a back-up bidder (the Back-Up Bidder ) and keep such bid (the Back-Up Bid ) open and irrevocable until the earlier of 500 p.m. prevailing Eastern Time on the date that is (i) 15 days after the date of the Designation Hearing (the Outside Back-Up Date ) or (ii) the closing of the Modified Agreement with the Successful Bidder. If for any reason the Successful Bidder fails to enter into the plan sponsor agreement deemed by Velo to be the Successful Bid, then Velo shall be authorized, but not required, to enter into the plan sponsor agreement constituting the Back-Up Bid as soon as is commercially reasonable without further order of the Bankruptcy Court upon at least twenty-four (24) hours advance notice, which notice shall be filed with the Bankruptcy Court. Any defaulting Successful Bidder s Good Faith Deposit shall be forfeited to Velo, and Velo specifically reserves the right to seek all available damages from any defaulting Successful Bidder. N. Return of Good Faith Deposit. The Good Faith Deposit of the Successful Bidder shall be applied as a credit against the purchase price of the Successful Bid. The Good Faith Deposit of the Back-Up Bidder shall be refunded without interest no more than 15 days after the earlier of the Outside Back-Up Date or the closing of Successful Bid (unless, at that time, Velo enters into the plan sponsor agreement submitted by the Back-Up Bidder, in which case such Good Faith Deposit shall be applied as specified in the preceding sentence). The Good Faith Deposits of all other Qualified Bidders shall be refunded without interest no later than three business days after the Designation Hearing. A Good Faith Deposit shall be non-refundable if a Qualified Bidder is the Successful Bidder and fails to consummate the Successful Bid (other than as a result of a breach by Velo). O. Reservation of Rights. Velo shall retain all rights to any of its assets that are not subject to a bid accepted by Velo and approved by the Bankruptcy Court at the Designation Hearing. 8
Pg 14 of 17 Exhibit 2 Proposed Form of Notice of Auction and Designation Hearing
Pg 15 of 17 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------X In re Chapter 11 VELO HOLDINGS INC., et al., Case No. 12-11384 (MG) Debtors. 1 Jointly Administered ---------------------------------------------------------------X NOTICE OFAUCTION AND DESIGNATION HEARING PLEASE TAKE NOTICE that, on April 2, 2012, the above-captioned debtors and debtors in possession (collectively, the Debtors ) filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code (the Bankruptcy Code ) in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court ). 2 PLEASE TAKE FURTHER NOTICE that, on May 15, 2012, Debtor Velo Holdings Inc. ( Velo ) filed a motion (the Motion ) [Docket No. 141], for entry of an order (a) establishing the Bidding Procedures 3 in connection with the Auction to determine the plan sponsor that submits the highest or otherwise best offer to acquire the New Equity Interest pursuant to the Plan, (b) approving the form and manner of this Notice of Auction and Designation Hearing, and (c) setting a date for the Designation Hearing to approve the designation of a plan sponsor that submits the highest or otherwise best offer for the New Equity Interest and authorize Velo to enter into an agreement with such plan sponsor. PLEASE TAKE FURTHER NOTICE that, on May, 2012, the Bankruptcy Court entered an order (the Bidding Procedures Order ) [Docket No. ] approving the Bidding Procedures, attached hereto. All interested bidders should carefully read the Bidding Procedures and the Bidding Procedures Order. To the extent that there are any inconsistencies between this notice and the Bidding Procedures, the Bidding Procedures shall govern. 1 2 3 The Debtors in these chapter 11 cases along with the last four digits of their respective federal tax identification numbers are Velo Holdings Inc. (3155), V2V Holdings LLC (8801), Coverdell & Company, Inc. (4660), V2V Corp. (0857), LN, Inc. (8759), FYI Direct Inc. (2491), Vertrue LLC (6882), Idaptive Marketing LLC (3362), My Choice Medical Holdings, Inc. (5870), Adaptive Marketing LLC (6882), Interactive Media Group (USA) Ltd. (1016), Brand Magnet, Inc. (8978), Neverblue Communications, Inc. (7832), Interactive Media Consolidated Inc. (0774), and FreeScore, LLC (3513). FreeScore, LLC filed its voluntary petition for relief on May 4, 2012 and its chapter 11 case was jointly administered with the above-captioned cases by order of this Court dated May 29, 2012 [Docket No. 198]. Capitalized terms used but not otherwise defined herein shall be ascribed the meanings provided in the Bidding Procedures Order.
Pg 16 of 17 PLEASE TAKE FURTHER NOTICE that, if Velo receives competing Qualified Bids in accordance with the terms of the Bidding Procedures, Velo shall conduct an Auction at 1000 a.m. prevailing Eastern Time on July 31, 2012 at the offices Dechert LLP, 1095 Avenue of the Americas, New York, New York 10036, or during such later time or at such other place as Velo shall determine in accordance with the Bidding Procedures. PLEASE TAKE FURTHER NOTICE that the Designation Hearing to, among other things, approve Velo s entry into a plan sponsor agreement with the Stalking Horse Plan Sponsor or other Successful Bidder determined at Auction to have submitted the highest or otherwise best bid will be held on August 7, 2012 at 1100 a.m. prevailing Eastern Time before the Honorable Martin Glenn, United States Bankruptcy Judge, United States Bankruptcy Court for the Southern District of New York, One Bowling Green, Courtroom No. 501, New York, New York 10004, or at such other time as the Bankruptcy Court may determine. The Designation Hearing may be adjourned from time to time without further notice to creditors or parties in interest other than by announcement of the adjournment in open court on the date scheduled for the Designation Hearing. PLEASE TAKE FURTHER NOTICE that objections, if any, to the relief requested in the Motion must (a) be in writing; (b) state with particularity the legal and factual basis for the objection and the specific grounds therefor; (c) comply with the Federal Rules of Bankruptcy Procedure, the Local Bankruptcy Rules for the Southern District of New York, and any orders of the Bankruptcy Court; and (d) be filed with the Bankruptcy Court and served upon the following parties so as to be actually received by 300 p.m. prevailing Eastern Time on August 2, 2012 (the Objection Deadline ) (a) the Chambers of the Honorable Martin Glenn, One Bowling Green, New York, New York 10004; (b) Dechert LLP, Attorneys for the Debtors, 1095 Avenue of the Americas, New York, New York 10036 Attn Michael J. Sage, Shmuel Vasser, and Davin J. Hall; (c) Office of the United States Trustee, 33 Whitehall Street, New York, New York 10004, Attn Paul Schwartzberg; (d) Willkie Farr & Gallagher LLP, Attorneys for the Postpetition Facility Agent and First Lien Facility Agent, 787 Seventh Avenue, New York, New York 10019, Attn Margot B. Schonholtz and Ana M. Alfonso; (e) Sidley Austin LLP, Attorneys for the Second Lien Facility Agent, 787 Seventh Avenue, New York, New York 10019, Attn James P. Seery, Jr. and Lee S. Attansio; and (f) Cooley LLP, Attorneys for the Official Committee of Unsecured Creditors, 1114 Avenue of the Americas, New York, New York 10036, Attn Jeffrey L. Cohen. PLEASE TAKE FURTHER NOTICE that this Notice of Auction and Designation Hearing, and the Designation Hearing, are subject to the full terms and conditions of the Motion, the Bidding Procedures Order, and the Bidding Procedures, which shall control in the event of any conflict. A copy of the Motion, Bidding Procedures, and Bidding Procedures Order may be obtained (a) via PACER, (b) at http//dm.epiq11.com/veloholdings, (c) by contacting Janet Bollinger at janet.bollinger@dechert.com, or (d) by request made to the Debtors noticing agent, Epiq Bankruptcy Solutions LLC Velo Holdings Inc. Claims Processing c/o Epiq Bankruptcy Solutions, LLC FDR Station, P.O. Box 5015 New York, New York, 10150-5015 2
Pg 17 of 17 Consequences of Failing to Timely File and Serve an Objection to the Designation of a Plan Sponsor ANY PARTY OR ENTITY THAT FAILS TO TIMELY FILE AND SERVE AN OBJECTION TO VELO S ENTRY INTO A PLAN SPONSOR AGREEMENT WITH THE STALKING HORSE PLAN SPONSOR OR OTHER SUCCESSFUL BIDDER DETERMINED AT AUCTION ON OR BEFORE THE OBJECTION DEADLINE IN ACCORDANCE WITH THE BIDDING PROCEDURES ORDER SHALL BE FOREVER BARRED FROM ASSERTING ANY OBJECTION TO VELO S ENTRY INTO SUCH AGREEMENT. VELO ENCOURAGES ALL PARTIES TO CAREFULLY REVIEW THE BIDDING PROCEDURES ATTACHED TO THE BIDDING PROCEDURES ORDER, AS WELL AS ALL TERMS AND CONDITIONS OF THE MOTION, THE STALKING HORSE PLAN SPONSOR AGREEMENT, AND THE BIDDING PROCEDURES ORDER. Dated, 2012 Michael J. Sage Shmuel Vasser Davin J. Hall DECHERT LLP 1095 Avenue of the Americas New York, New York 10036 Telephone (212) 698-3500 Facsimile (212) 698-3599 E-mail michael.sage@dechert.com shmuel.vasser@dechert.com davin.hall@dechert.com Proposed Attorneys for the Debtors and Debtors in Possession 3