JOINT COMBINED DISCLOSURE STATEMENT AND PLAN OF LIQUIDATION OF MICHIGAN SPORTING GOODS DISTRIBUTORS, INC. AND THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS

UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF MICHIGAN

In re:

MICHIGAN SPORTING GOODS DISTRIBUTORS, INC.,

Debtor.

Chapter 11

Bankruptcy Case No.: 17-00612-jtg Hon. John T. Gregg

/

JOINT COMBINED DISCLOSURE STATEMENT AND PLAN OF LIQUIDATION OF MICHIGAN SPORTING GOODS DISTRIBUTORS, INC. AND THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS

Stephen Grow

Elisabeth M. Von Eitzen

R. Michael Azzi

WARNER NORCROSS & JUDD LLP

111 Lyon Street, NW, Suite 900 Grand Rapids, Michigan 49503 (616) 752-2418

Counsel to Debtor and Debtor in Possession

Jonathan S. Green Marc N. Swanson

MILLER CANFIELD PADDOCK AND STONE P.L.C.

150 West Jefferson, Suite 2500

Detroit, Michigan 48226

(313) 498-7997

and

Cathy Hershcopf Robert Winning COOLEY LLP

1114 Avenue of the Americas New York, New York 10016 (212) 479-6000

Counsel for Official Committee of Unsecured Creditors

Dated July 17, 2017

1

NOTICE

THE DISCLOSURE PROVISIONS CONTAINED IN THIS JOINT COMBINED DISCLOSURE STATEMENT AND PLAN OF LIQUIDATION (PLAN AND DISCLOSURE STATEMENT) HAVE BEEN PROVISIONALLY APPROVED BY THE BANKRUPTCY COURT AS CONTAINING “ADEQUATE INFORMATION” PURSUANT 11 U.S.C. §1125(b) FOR USE IN CONNECTION WITH SOLICITATION OF ACCEPTANCES OR REJECTIONS OF THE JOINT PLAN. PLEASE READ THIS JOINT PLAN AND DISCLOSURE STATEMENT CAREFULLY. THIS DOCUMENT CONTAINS INFORMATION THAT WILL INFORM YOUR DECISION TO ACCEPT OR REJECT THE PLAN OF LIQUIDATION WHICH IS DESCRIBED IN THIS COMBINED DOCUMENT.

DEBTOR AND THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS BELIEVE THAT ACCEPTANCE OF THE JOINT PLAN IS IN THE BEST INTEREST OF DEBTOR AND ITS CREDITORS AND PROVIDES THE HIGHEST AND MOST EXPEDITIOUS RECOVERIES TO HOLDERS OF ALLOWED CLAIMS AGAINST DEBTOR.

NO PERSON IS AUTHORIZED BY DEBTOR OR THE COMMITTEE IN CONNECTION WITH THE JOINT PLAN AND DISCLOSURE STATEMENT OR THE SOLICITATION OF VOTES THEREON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION ON BEHALF OF DEBTOR OR THE COMMITTEE OTHER THAN AS CONTAINED IN THIS DOCUMENT AND THE EXHIBITS ANNEXED HERETO OR INCORPORATED HEREIN BY REFERENCE OR REFERRED TO HEREIN, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MAY NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY DEBTOR OR THE COMMITTEE.

THERE HAS BEEN NO INDEPENDENT AUDIT OF THE FINANCIAL INFORMATION CONTAINED IN THIS JOINT PLAN AND DISCLOSURE STATEMENT. EXCEPT AS EXPRESSLY INDICATED HEREIN, THIS JOINT PLAN AND DISCLOSURE STATEMENT WAS COMPILED FROM INFORMATION OBTAINED FROM NUMEROUS SOURCES BELIEVED TO BE ACCURATE TO THE BEST OF DEBTOR’S KNOWLEDGE, INFORMATION AND BELIEF. NO GOVERNMENTAL AUTHORITY HAS PASSED ON, CONFIRMED OR DETERMINED THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED HEREIN.

NOTHING IN THIS JOINT PLAN AND DISCLOSURE STATEMENT SHOULD BE CONSTRUED AS AN ADMISSION OF ANY FACT OR LIABILITY BY ANY PARTY, OR BE ADMISSIBLE IN ANY PROCEEDING INVOLVING DEBTOR OR ANY OTHER PARTY.

2

I. SUMMARY OF CONFIRMATION PROCEDURES

This Joint Plan and Disclosure Statement is intended to provide Debtor’s creditors and equity holders with adequate information to enable them to make informed judgments concerning Debtor’s plans to liquidate its assets and distribute the proceeds thereof. The Joint Plan and Disclosure Statement contains the exclusive and final statement of the rights of Debtor, its creditors, equity holders and other interested parties, and sets forth what (if anything) each of those groups will receive and how and when they will receive it.

You are urged to read the Joint Plan and Disclosure Statement in its entirety in order to determine what rights you may have to vote on or object to Debtor’s plans to liquidate and how the Joint Plan and Disclosure Statement may affect or impair your rights. If the Bankruptcy Court confirms the Joint Plan and Disclosure Statement, it will become binding on Debtor, all creditors, equity holders, and other interested parties.

The following materials are included with this Joint Plan and Disclosure Statement:

1. A copy of the Scheduling Order that establishes: (a) the date by which objections to confirmation of the Joint Plan and Disclosure Statement must be served and filed, (b) the date by which all votes with respect to the Joint Plan and Disclosure Statement must be cast, (c) the date of the hearing in the Bankruptcy Court to consider confirmation of the Joint Plan and Disclosure Statement, and (d) other relevant information;

2. A Ballot for holders of Claims to vote with respect to the Joint Plan and Disclosure Statement.

The Bankruptcy Court has scheduled a hearing to consider final approval of the disclosure statement and confirmation of the Joint Plan for at a.m. (the “Confirmation Hearing”). Holders of claims and interests, as well as other parties in interest, may attend this hearing. Objections to confirmation of the Joint Plan and Disclosure Statement, if any, must be in writing and filed with the Bankruptcy Court so as to be received no later than .

Creditors whose claims are impaired have the right to vote to accept or reject the Joint Plan. Generally speaking, a claim or interest is impaired if the legal, contractual, or equitable rights of the holder of the claim or interest is altered by the Joint Plan. A class of creditors accepts the Joint Plan when creditors holding two-thirds in amount of such class and more than one-half in number of the claims in such class who actually cast their ballots votes to accept the Joint Plan. In this case, the Joint Plan contains two classes of claims and one class of interests. The Joint Plan and Disclosure Statement impairs holders of Class 2 Claims and Class 3 Interests. Votes will be solicited from Class 2 only.

All Ballots must be completed in full and signed to be counted in the tabulation of ballots and must be received no later than _ by:

3

Michigan Sporting Goods Distributors, Inc. Ballot Processing c/o Rust Consulting/Omni Bankruptcy

5955 DeSoto Ave., Suite 100 Woodland Hills, CA 91367

II. DEFINITIONS AND CONSTRUCTION OF TERMS

2.1 Definitions; Interpretation; Application of Definitions and Rules of Construction. For purposes of this Joint Plan and Disclosure Statement, a term used but not defined in the Joint Plan and Disclosure Statement, which is also used in the Bankruptcy Code, will have the meaning ascribed to that term in the Bankruptcy Code. Wherever from the context it appears appropriate, each term stated include both the singular and the plural, and pronouns include the masculine, feminine, and neuter, regardless of how stated. Unless otherwise specified, all section, schedule, or exhibit references in the Joint Plan and Disclosure Statement are to the respective Section in, Schedule to, or Exhibit to, this Joint Plan and Disclosure Statement. The rules of construction contained in Section 102 of the Bankruptcy Code apply to the construction of the Joint Plan and Disclosure Statement.

2.2 “Administrative Expense Claim” means a Claim that is Allowed under Section 503(b) of the Bankruptcy Code that is entitled to priority under Section 507(a)(1) of the Bankruptcy Code, including, without limitation, (a) any actual and necessary costs and expenses of preserving the Estate or administering the Chapter 11 Case as authorized and approved by a Final Order, (b) any actual and necessary costs and expenses incurred in the ordinary course of Debtor’s business subsequent to the Petition Date, unless otherwise determined by a Final Order,

(c) fees and expenses of Professionals Allowed pursuant to an order entered under Sections 327, 328, 330, 331, or 503 of the Bankruptcy Code, and (d) all fees and charges assessed against the Estate pursuant to 28 U.S.C. § 1930.

2.3 “Allowed” means, with reference to any Claim (a) a Claim that has been listed by Debtor in its Schedules and (i) is not listed as disputed, contingent, or unliquidated, and (ii) is not a Claim as to which a proof of claim has been filed; (b) a Claim as to which a timely proof of Claim has been filed as of the Bar Date and either (i) no objection thereto, or application to estimate, equitably subordinate, or otherwise limit recovery, has been made on or before any applicable deadline, or (ii) if an objection thereto, or application to estimate, equitably subordinate or otherwise limit recovery, has been interposed, the extent to which such Claim has been allowed (whether in whole or in part) by a Final Order; or (c) any Claim allowed under the Joint Plan and Disclosure Statement or pursuant to the Confirmation Order.

2.4 “Avoidance Actions” means Causes of Action of Debtor or the Estate arising under Sections 502, 510, 541, 544, 545, 547, 548, 549, 550, and 553 of the Bankruptcy Code, or under related state or federal statutes and common law, including fraudulent transfer laws, whether or not litigation is commenced to prosecute such Causes of Action.

4

2.5 “Ballot” means the form distributed to each holder of an impaired Claim entitled to vote on the Joint Plan on which an acceptance or rejection of the Joint Plan and Disclosure Statement is indicated.

2.6 “Bankruptcy Code” means title 11 of the United States Code, as amended from time to time, as applicable to the Chapter 11 Case.

2.7 “Bankruptcy Court” means the United States Bankruptcy Court for the Western District of Michigan having jurisdiction over the Chapter 11 Case and, to the extent of any reference under 28 U.S.C. § 157, the unit of such District Court under 28 U.S.C. § 151.

2.8 “Bankruptcy Rules” means the Federal Rules of Bankruptcy Procedure and any local rules of the Bankruptcy Court.

2.9 “Bar Date Order” means the Order Establishing Bar Dates for Filing Claims and Approving the Form and Manner of Notice entered by the Bankruptcy Court on March 31, 2017 [Dkt. No. 319].

2.10 “Bar Date(s)” means the dates established by the Bar Date Order for filing Claims against Debtor, which are the deadlines by which Persons asserting a Claim against Debtor or its property must file a proof of claim or be forever barred from asserting a Claim against Debtor or its property and from voting on the Joint Plan and Disclosure Statement and/or sharing in distributions hereunder.

2.11 “Business Day” means any day other than a Saturday, Sunday, or legal holiday, as such term is defined in Bankruptcy Rule 9006.

.

2.12 “Cash” means lawful currency of the United States of America (including cashier’s checks drawn on a bank insured by the Federal Deposit Insurance Corporation, certified checks and money orders).

2.13 “Causes of Action” means any and all actions, causes of action, liabilities, obligations, rights, suits, debts, sums of money, damages, judgments, Claims, or proceedings to recover money or property and demands whatsoever, whether known or unknown, in law, equity, or otherwise.

2.14 “Chapter 11 Case” means the bankruptcy case filed as case no. 17-612-jtg under Chapter 11 of the Bankruptcy Code pending in the Bankruptcy Court.

2.15 “Claim” means a claim against a Person or its property, whether or not asserted, as defined in Section 101(5) of the Bankruptcy Code.

2.16 “Class” means a category of Persons holding Claims which are substantially similar in nature to the Claims of other holders in such Class, as designated in Section 7 of the Joint Plan and Disclosure Statement.

5

2.17 “Confirmation Date” means the date on which the Clerk of the Bankruptcy Court enters the Confirmation Order on the docket.

2.18 “Confirmation Hearing” means the hearing held by the Bankruptcy Court to consider confirmation of the Joint Plan and Disclosure Statement pursuant to Section 1129 of the Bankruptcy Code, as such hearing may be adjourned or continued from time to time.

2.19 “Confirmation Order” means the order of the Bankruptcy Court, in form and substance reasonably satisfactory to the Debtor and Creditors’ Committee, confirming the Joint Plan and Disclosure Statement pursuant to the provisions of the Bankruptcy Code.

2.20 “Consultant” means a joint venture of Tiger Capital Group, LLC and Great American Group, LLC.

2.21 “Consulting Agreement” means that certain Consulting Agreement, dated as of February 13, 2017, by and between Debtor and Consultant (as amended from time to time).

2.22 “Consulting Agreement Approval Order” means the Final Order (I) Authorizing the Debtor to Assume the Consulting Agreement with Tiger Capital Group, LLC and Great American Group, LLC, (II) Authorizing and Approving Store Closing Sales Free and Clear of All Liens, Claims and Encumbrances, and (III) Granting Related Relief [Dkt. No. 272] entered by the Bankruptcy Court on March 20, 2017.

2.23 “Contingent or Unliquidated Claim” means any Claim for which a proof of claim has been filed with the Bankruptcy Court prior to the Bar Date (a) which was not filed in a sum certain, or which has not accrued and is dependent upon a future event that has not occurred or may never occur, and (b) which has not been Allowed.

2.24 “Creditors’ Committee” means the official committee of unsecured creditors appointed in the Chapter 11 Case pursuant to Section 1102 of the Bankruptcy Code.

2.25 “Debtor” means Michigan Sporting Goods Distributors, Inc.

2.26 “Directors and Officers” means each and every of Debtor’s past and present officers, directors, shareholders, members, managers, partners, and principals, and each of their respective affiliates, agents, employees, successors, and predecessors-in-interest, advisors, accountants, attorneys, representatives, and assigns.

2.27 “Disclosure Statement” means the disclosure statement provisions in the Joint Plan and Disclosure Statement, including, without limitation, all exhibits and schedules to the Joint Plan and Disclosure Statement, in the form approved by the Bankruptcy Court pursuant to Section 1125 of the Bankruptcy Code.

2.28 “Disputed” means, with respect to Claims, any such Claim: (a) if no proof of claim relating to such Claim has been filed, that is listed in the Schedules as unliquidated, disputed, or contingent; or (b) if a proof of claim relating to such Claim has been filed with the

6

Bankruptcy Court prior to the Bar Date, as to which Debtor or any other party-in-interest has interposed a timely objection or request for estimation, or have sought to equitably subordinate or otherwise limit recovery in accordance with the Bankruptcy Code and the Bankruptcy Rules, or which is otherwise disputed by Debtor or other party-in-interest, in accordance with applicable law, which objection, request for estimation, action to limit recovery, or dispute has not been withdrawn or determined by a Final Order; or (c) which is a Contingent or Unliquidated Claim.

2.29 “Disputed Claim Amount” means the amount set forth in the proof of claim filed with the Bankruptcy Court prior to the Bar Date relating to a Claim that is Disputed or an amount estimated pursuant to an order of the Bankruptcy Court in respect of a Claim that is Disputed in accordance with Section 502(c) of the Bankruptcy Code and Bankruptcy Rule 3018.

2.30 “Distribution Date” means the date that is the later of (a) 90 days from the Effective Date, or if such date is not a Business day, the next succeeding business day; or (b) ten days after all Administrative Expenses, post-confirmation expenses and consulting fees, and U.S. Trustee quarterly fees are paid in full or if such date is not a Business day, the next succeeding Business Day.

2.31 “Effective Date” means the day following the date the Confirmation Order becomes a Final Order, or if such date is not a Business Day, the next succeeding Business Day. Within five (5) Business Days after the Effective Date, Debtor shall file a notice of the occurrence of the Effective Date with the Bankruptcy Court.

2.32 “Estate” means the estate created in the Chapter 11 Case pursuant to Section 541 of the Bankruptcy Code.

2.33 “Equitable Interest” means: (a) all issued, unissued, authorized, or outstanding common or preferred shares of Michigan Sporting Goods Distributors, Inc.; (b) all rights (including unpaid dividends) arising from common or preferred shares of Michigan Sporting Goods Distributors, Inc.; and (c) all legal, equitable, or contractual rights of any Person to acquire or receive any common or preferred shares of Debtor.

2.34 “Estate Assets” means, after giving effect to the payments to occur on the Effective Date, all of the property of Debtor’s Estate.

2.35 “Final Decree” means the decree contemplated by Bankruptcy Rule 3022.

2.36 “Final Order” means an order or judgment of the Bankruptcy Court that has not been stayed within 10 days from the date the Bankruptcy Court entered the order or judgment.

2.37 “Holder” means a Holder of a Claim or Equitable Interest, as applicable.

2.38 “Impaired” has the meaning as defined in section 1124 of the Bankruptcy Code.

2.39 “Insurance Policies” means Debtor’s General Liability & Property Policy (Secura Insurance Company (“Secura”), #CP3130296), Automobile Policy (Secura #A3130297),

7

Worker’s Compensation Policy (Secura #WC3130298), Directors & Officers Policy (Traveler’s Insurance #105502036), and Cyber Liability Policy (Traveler’s Insurance #106183923).

2.40 “Joint Plan” means the liquidating plan provisions of this Joint Plan and Disclosure Statement and all related exhibits, supplements, appendices, and schedules, either in its present form or as the same may be altered, amended, or modified from time to time.

2.41 “Person” means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated association or organization, governmental agency or political subdivision thereof.

2.42 “Petition Date” means February 14, 2017, the date upon which Debtor filed its voluntary Chapter 11 petition with the Bankruptcy Court pursuant to the Bankruptcy Code.

2.43 “Priority Claims” means any and all Claims (or portions thereof), if any, entitled to priority under Section 507(a) of the Bankruptcy Code other than Administrative Expense Claims.

2.44 “Priority Non-Tax Claim” means a Claim entitled to priority under section 507(a) of the Bankruptcy Code other than an Administrative Expense Claim or a Priority Tax Claim.

2.45 “Priority Tax Claim” means a Claim against Debtor that is of a kind specified in section 507(a)(8) of the Bankruptcy Code.

2.46 “Professionals” means those Persons (a) employed pursuant to an order of the Bankruptcy Court in accordance with Sections 327 or 1103 of the Bankruptcy Code and to be compensated for services pursuant to Sections 327, 328, 329, 330, and 331 of the Bankruptcy Code, or (b) for which compensation and reimbursement has been or may be allowed by the Bankruptcy Court pursuant to Section 503 of the Bankruptcy Code.

2.47 “Pro Rata” means a proportionate share, so that the ratio of the consideration distributed on account of an Allowed Claim in a Class to the amount of such Allowed Claim is the same as the ratio of the amount of the consideration distributed on account of all Allowed Claims in such Class to the amount of all Allowed Claims in such Class.

2.48 “Record Date” means the date for determining the identity of Holders of Allowed Claims entitled to Distributions under this Plan. If no other date is established as the Record Date in the Confirmation Order, then the Record Date will be the Confirmation Date.

2.49 “Record Holder” means the Holder of a Claim as of the Record Date.

2.50 “Schedules” means the schedules of assets and liabilities, the list of holders of interests, and the statements of financial affairs filed by Debtor under Section 521 of the Bankruptcy Code and Bankruptcy Rule 1007, as such schedules, lists, and statements have been or may be supplemented or amended from time to time.

8

2.51 “Secured Claim” means any Claim which is secured by a valid lien on Estate Assets to the extent of the value of such Estate Assets, as determined in accordance with Section 506(a) of the Bankruptcy Code, or, in the event that such Claim is subject to setoff under Section 553 of the Bankruptcy Code, to the extent of such setoff.

2.52 “Unimpaired” has the meaning as defined in section 1124 of the Bankruptcy

Code.

2.53 “Unsecured Claim” means a Claim that is not a Secured Claim or that is not entitled to priority of payment under Section 507 of the Bankruptcy Code.

2.54 “Unsecured Creditors’ Fund” means all Cash proceeds to be used for payment of distributions to Allowed Unsecured Claims in Class 2.

III. BACKGROUND AND HISTORY

The following background and history is provided and disclosed by Debtor alone. The Committee has no independent knowledge of the accuracy or completeness of many of the descriptions and statements contained in this Section III or in Section IV.

A. Debtor’s Business

Founded in 1946, Debtor was a retail sporting goods chain headquartered in Grand Rapids, Michigan, offering a broad range of sporting and outdoor products, including apparel and sporting equipment from Nike, Under Armor, Burton, K2 Sports, Columbia, and Adidas. As of the Petition Date, Debtor employed over 1,300 full and part-time associates and operated 68 stores throughout the Midwest. Debtor’s distribution center and corporate offices were located at 3070 Shaffer Avenue, Grand Rapids, Michigan, 49512.1

Four individuals served as an officer or director of the company: (1) Bruce Ullery (President, Chief Executive Officer, and Board Member); (2) Rob Summerfield (Executive Vice President, Chief Financial Officer, Treasurer, Secretary, and Board Member); (3) Dan Winchester (Executive Vice President, Chief Operating Officer, and Board Member); and (4) James Minton (Chairman of the Board). Messrs. Ullery, Summerfield, and Winchester received salary compensation for their employment with Debtor, but were not compensated for their roles as directors.

Debtor’s operations generated over $170 million in annual revenues. As of February 14, 2017, Debtor’s preliminary consolidated financial statements reflected approximately $78 million in assets, including inventory valued at approximately $60 million. As of February 14, 2017, Debtor recorded in FYE2016, sales of approximately $174.6 million, net losses, before taxes, of approximately $5.4 million.

Wells Fargo Bank (“Wells”) was Debtor’s lender under an Amended and Restated Credit Agreement, dated as of August 26, 2010 (as amended from time to time, the “ABL Credit

1 Debtor operated retail stores in Iowa, Illinois, Indiana, Michigan, Missouri, Ohio, and Wisconsin.

9

Agreement”), providing up to $75,000,000 million in aggregate loans under an asset-based revolving credit facility (the “ABL Loan”). The ABL Credit Agreement provided for a varying interest rate based upon the excess availability under the ABL Loan. Availability under the ABL Loan was limited by a borrowing base calculation. Debtor’s obligations to Wells under the ABL Credit Agreement were secured by a first-priority security interest in and lien on substantially all of Debtor’s assets. As of the Petition Date, Debtors had drawn approximately $49,350,000 in principal on the ABL Loan.

In the ordinary course of business, Debtor ordered and purchased inventory from vendors and suppliers on standard industry credit terms. As of the Petition Date, Debtor owed approximately $27.6 million in trade and other unsecured obligations to vendors, suppliers, and other ordinary course contractors. Debtor owned no real estate, but rather leased all of its retail store locations, its distribution center, and its corporate office. Debtor’s lease obligations (excluding CAM, insurance, and taxes) totaled approximately $1,200,000 per month.

B. Circumstances Leading to this Filing

Debtor’s business operations, like many of its peers in the sporting goods retail space, were impacted by adverse business trends, including the rapid migration of sales from traditional brick and mortar retailers to online resellers, the expansion of competing distribution channels and specialty retailers, and changing consumer preferences.

Over the past several years, in response to these and other marketplace pressures, MC Sports made substantial investments in its store portfolio, opening new stores and remodeling, expanding or relocating existing stores, and evolving, in many cases, from smaller athletic stores to larger full-line stores that offer a full range of sports and outdoor products. In the fall of 2016, in a continuing effort to improve Debtor’s financial performance, Debtor engaged Berkeley Research Group (“BRG”) to evaluate Debtor’s inventory management processes and develop strategies to improve and optimize inventory turns and margins, to rationalize Debtor’s store base, and explore additional cost savings initiatives and efficiencies.

Weak “Black Friday” and holiday sales, however, resulted in further impairment of Debtor’s liquidity and as a result, Debtor and its professionals entered into negotiations with an ad hoc committee of trade vendors and other key creditor constituencies, including its landlords, for financial concessions, all with a view to addressing Debtor’s liquidity restraints and reaching a consensual and out-of-court financial restructuring.

Notwithstanding the good faith attempts of the ad hoc committee and other creditor stakeholders, however, Debtor was ultimately unable to finalize a comprehensive and workable restructuring plan, leading to the filing of this bankruptcy case. Debtor, in consultation with BRG and in its carefully considered business judgment, determined it was in its best interest, as well as its creditors, to commence with an immediate liquidation of Debtor’s business.

C. The Bankruptcy Proceedings.

10

On February 14, 2017, Debtor filed a chapter 11 bankruptcy petition in the United States Bankruptcy Court for the Western District of Michigan. Debtor retained the Consultant to conduct the liquidation of the existing inventory in its stores, as well as all furniture, trade fixtures, and equipment in its stores, distribution center, and corporate headquarters. Consultant, which has extensive expertise in conducting retail store closing sales, was one of only a very few companies that was capable of conducting a liquidation of the scope and magnitude of Debtor’s business, and represented the best opportunity to maximize recovery for Debtor’s creditors.

Debtor has completed the liquidation of its business operations, carefully managing expenses throughout the process. As described below, Debtor anticipates all allowed administrative expenses to be paid in full, and anticipates an aggregate approximate recovery of

$400,000 for unsecured creditors.

Debtor and the Creditors’ Committee believe the Joint Plan represents the best approach for creditors to maximize recovery, given the available assets and lack of any material other sources of recoveries for the Estate.

IV. SUMMARY OF DEBTOR’S POST-PETITION OPERATIONS AND ASSETS

A. Post-petition Operating Results.

As noted above, with the assistance of its Consultant, over the course of these bankruptcy proceedings, Debtor has sold and otherwise liquidated substantially all of Debtor’s assets. Attached as Exhibit A is a current cash flow statement that reflects collections and expenditures to date, accrued and unpaid administrative expenses (consisting substantially of unpaid professional fees and expenses), and projected administrative expenses. The liquidation of substantially all of Debtor’s assets concluded in May 2017, with total gross collections (including from sale of inventory, augment inventory supplied by Consultant of which Debtor received a percentage of the sales, and furniture, fixtures and equipment) of approximately

$88,827,000.00. Debtor actively managed the costs, inventory, and sale process in consultation with the Consultant throughout the process.

During the liquidation, Debtor worked to efficiently manage not only its stores, but also its corporate and distribution center operations. Further, Debtor actively marketed its remaining assets—including its intellectual property and a class action claim it possessed—to further maximize proceeds to creditors. As operations wound down, employees were necessarily terminated, leases rejected, and operations continually reduced as appropriate. For the past several weeks, Debtor has operated with five employees, with those employees critical to the ordinary and efficient wind down of the business. A summary of the Debtor’s Assets projected to be available for distribution to creditors is set forth below.

B. Summary of Estate Assets available for payment of Administrative Expenses, Post- Confirmation Expenses, and distribution to creditors:

11

1. Cash: As of the Effective Date, all Cash will be available for distribution pursuant to the Joint Plan. The Cash available for distribution pursuant to the Joint Plan is estimated to be $2,392,000.00. This estimate does not include any Professional Fee Holdback as set forth in Section VI.C.

2. Intellectual Property Sale: Debtor has filed a motion to sell its intellectual property. The net proceeds from the intellectual property sale will be available for distribution pursuant to the Joint Plan. The purchase price for the intellectual property is $76,102.00.

3. Vehicles: On the Confirmation Date, Mr. Ullery will pay the difference between the CarMax cash value and the secured debt on the vehicle to the Estate to retain the Vehicle. The estimated equity in the vehicle is $4,050.35. Debtor will continue to make the car payments to the secured creditor until the Joint Plan is confirmed.

4. Payment Card Interchange Fee Settlement: A lawsuit was filed against Visa/Mastercard (see In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation | MDL No. 1720) to resolve allegations as to whether “Visa, Mastercard, and their respective member banks violated the law by setting interchange fees and then made and enforced rules that prohibited merchants from steering customers to other payment methods, resulting in merchants paying excessive fees to accept Visa and MasterCard cards.” (https://www.paymentcardsettlement.com). Debtor is managing a bidding process with potential purchasers for its claim against Visa and MasterCard. Debtor will be filing a motion with the Bankruptcy Court for approval of this sale, with a projected sale price of at least $150,000.00.

5. Remaining Personal Property. Debtor still has minimal office equipment and other miscellaneous personal property. Debtor will continue to try to sell the remaining personal property. All net proceeds will be paid into the Estate. To the extent any such equipment and personal property cannot be sold, Debtor will abandon it.

V. VOTING RIGHTS AND PLAN CONFIRMATION

A. Voting Procedures

Under the Bankruptcy Code, the only Classes that are entitled to vote to accept or reject the Joint Plan are any Class of Claims, or Equitable Interests, that are impaired under the Joint Plan. Accordingly, any Class of Claims or Equitable Interests that are not impaired are not entitled to vote on the Joint Plan.

Creditors that hold Claims in more than one impaired Class are entitled to vote separately in each Class. Such a creditor will receive a separate Ballot for all of its Claims in each Class (in

12

accordance with the records of the clerk of the Bankruptcy Court) and should complete and sign each Ballot separately. A creditor who asserts a Claim in more than one Class and who has not been provided with sufficient Ballots may photocopy the ballot received and file multiple Ballots.

Votes on the Joint Plan will be counted only with respect to Claims: (a) that are listed on Debtor’s Schedules of Assets and Liabilities other than as disputed, contingent, or unliquidated; or (b) for which a proof of claim was filed on or before the Bar Date set by the Bankruptcy Court for the filing of proofs of claim (except for certain claims expressly excluded from that bar date or which are allowed by Court order). However, any vote by a holder of a Claim will not be counted if such Claim has been disallowed or is the subject of an unresolved objection, absent an order of the Bankruptcy Court allowing such Claim for voting purposes pursuant to 11 U.S.C. § 502 and Bankruptcy Rule 3018.

Voting on the Joint Plan by each holder of a Claim or interest in an impaired Class is important. After carefully reviewing this combined Disclosure Statement and Joint Plan, each holder of such a claim or interest should vote on the enclosed Ballot either to accept or to reject the Joint Plan, and then return the Ballot by mail to Michigan Sporting Goods Distributors, Inc. Ballot Processing, c/o Rust Consulting/Omni Bankruptcy, 5955 DeSoto Ave., Suite 100, Woodland Hills, CA 91367, by the deadline established by the Bankruptcy Court.

Any Ballot that does not appropriately indicate acceptance or rejection of the Joint Plan will not be counted. A Ballot that is not received by the deadline will not be counted. If a Ballot is damaged, lost, or missing, a replacement ballot may be obtained by sending a written request to Michigan Sporting Goods Distributors, Inc. Ballot Processing, c/o Rust Consulting/Omni Bankruptcy, 5955 DeSoto Ave., Suite 100, Woodland Hills, CA 91367.

B. Acceptance.

The Bankruptcy Code defines acceptance of a plan by an impaired class of claims as acceptance by the holders of at least two-thirds in dollar amount, and more than one-half in number, of the claims of that class which actually cast ballots. The Bankruptcy Code defines acceptance of a plan by an impaired class of equity interests as acceptance by holders of at least two-thirds in number of the equity interests of that class that actually cast ballots. If no creditor or interest holder in an impaired class votes, then that class has not accepted the Joint Plan.

C. Confirmation

11 U.S.C. § 1129(a) establishes conditions for the confirmation of a plan. These conditions are too numerous and detailed to be fully explained here. Parties are encouraged to seek independent legal counsel to answer any questions concerning the Chapter 11 process. Among the several conditions for confirmation of a plan under 11 U.S.C. § 1129(a) are these:

1. Each class of impaired creditors and interests must accept the Joint Plan, as described in Section V.B. above.

13

2. Either each holder of a claim or interest in a class must accept the Joint Plan, or the Joint Plan must provide at least as much value as would be received upon liquidation under Chapter 7 of the Bankruptcy Code.

D. Modification

Debtor reserves the right to modify or withdraw the Joint Plan at any time before confirmation.

E. Estimation of Claims for Voting Purposes.

Debtor may at any time request the Bankruptcy Court to estimate any contingent, unliquidated, or disputed Claim pursuant to section 502(c) of the Bankruptcy Code for any reason or purpose, including for purposes of voting on the Joint Plan.

F. Designation of Votes.

Debtor reserves all of its rights under section 1126(e) of the Bankruptcy Code to request the Bankruptcy Court to designate any vote to accept or reject the Joint Plan that was not made in good faith.

G. Best Interests Test and Liquidation Analysis

Section 1129(a)(7) of the Bankruptcy Code requires that each holder of an impaired claim or interest either (a) accept the Joint Plan or (b) receive or retain under the Joint Plan property of a value, as of the Effective Date, that is not less that the value such holder would receive if Debtor were liquidated under Chapter 7 of the Bankruptcy Code. Because substantially all of Debtor’s assets have already been liquidated to cash, the value of any distributions if Debtor’s Chapter 11 Case were converted to a case under Chapter 7 would be less than the value of distributions under the Joint Plan because conversion to Chapter 7 would require the appointment of a Chapter 7 trustee, and, in turn, such trustee’s likely retention of new professionals. The addition of new professionals would mean additional costs to the Estate, as well as delay in time compared to the distributions under the Joint Plan. Additionally, a Chapter 7 trustee would be entitled to statutory fees relating to distributions of the already monetized Estate Assets made to creditors. Furthermore, the Professional Holdback set forth in Section

VI.C would not be available in a Chapter 7 liquidation. As a result, Debtor and the Creditors’ Committee believe that the Estate will have less money to distribute in a hypothetical Chapter 7 liquidation than Debtor will distribute under the Joint Plan. Accordingly, Debtor and the Creditors’ Committee believe that the “best interests” test of Bankruptcy Code Section 1129 is satisfied.

H. Feasibility

The Bankruptcy Code requires that confirmation of a plan is not likely to be followed by liquidation or the need for further financial reorganization. Because distributions will be made

14

only to the extent of existing Estate Assets, Debtor and the Creditors’ Committee believe the Joint Plan is feasible.

I. No Unfair Discrimination

A chapter 11 plan “does not discriminate unfairly” if (a) the legal rights of a non- accepting class are treated in a manner that is consistent with the treatment of other classes whose legal rights are similar to the legal rights of the non-accepting class, and (b) no class receives payments in excess of that which it is legally entitled to receive for its claims or interests. Debtor and the Creditors’ Committee believe that under the Joint Plan all impaired classes of claims and interests are treated in a manner that is consistent with the treatment of other classes of claims and interests that are similarly situated, if any, and no class of claims or interests will receive payments or property with an aggregate value greater than the aggregate value of the allowed claims and allowed interests in such class. Accordingly, the Joint Plan and Disclosure Statement does not discriminate unfairly as to any impaired class of claims or interests.

J. Cramdown

If all applicable requirements for Confirmation of the Joint Plan are met as set forth in section 1129(a)(1) through (13) of the Bankruptcy Code except subsection (8) thereof, Debtor may request that the Bankruptcy Court confirm the Joint Plan pursuant to section 1129(b) of the Bankruptcy Code, notwithstanding the requirements of section 1129(a)(8), on the bases that the Joint Plan is fair and equitable, and does not discriminate unfairly with respect to each Class of Claims or Equitable Interests that is Impaired under, and has not accepted, the Joint Plan.

K. Conditions Precedent to Effectiveness and Waiver.

The Joint Plan will not become effective unless and until the following conditions have been satisfied or waived: (a) the Confirmation Order, in form and substance reasonably acceptable to Debtor and the Creditors’ Committee, must have been entered by the Bankruptcy Court on or prior to October 1, 2017, and must have become a Final Order; and (b) all actions, other documents, and agreements necessary to implement the Joint Plan must have been effected or executed and delivered. Upon the written consent of Debtor and the Creditors’ Committee, one or more of the conditions precedent to effectiveness of the Joint Plan may be waived.

L. Effect of confirmation

If the Joint Plan is confirmed by the Bankruptcy Court, its terms are binding on Debtor, creditors, shareholders, and other parties in interest, regardless of whether they have voted on or accepted the Joint Plan. Claims and Equitable Interests will not be discharged.

M. Continuation of Bankruptcy, Injunction or Stays.

Entry of the Confirmation Order will act as a permanent injunction against any Person commencing or continuing any action, employment of process, or act to collect, offset, or

15

recover any Claim or Causes of Action satisfied, released, or discharged under the Joint Plan to the fullest extent authorized or provided by the Bankruptcy Code.

N. Post-confirmation Responsibilities

Upon Confirmation of the Joint Plan, Debtor will have the responsibility of complying with all provisions of the confirmed Joint Plan. If Debtor fails to comply with any Joint Plan provision, any aggrieved creditor wishing to enforce its rights under the Joint Plan may file a motion for the appropriate relief with the Bankruptcy Court.

VI. TREATMENT OF ALLOWED ADMINISTRATIVE EXPENSE CLAIMS AND PRIORITY TAX CLAIMS

Pursuant to Section 1123(a)(1) of the Bankruptcy Code, Administrative Expense Claims and Priority Tax Claims against Debtor are not classified for the purposes of voting on or receiving distributions under the Joint Plan. All such Claims are instead treated separately upon the terms set forth in this Section VI.

A. Administrative Expense Claims.

All Administrative Expense Claims, except for Professional fees, have been or will be paid in full, in Cash, in such amounts as (i) are incurred in the ordinary course of business by Debtor pursuant to the normal business terms between the parties, (ii) are Allowed by the Bankruptcy Court upon the later of the Effective Date, the date upon which there is a Final Order allowing such Administrative Expense Claim if such claims were Disputed, or any other date specified in such order or this Joint Plan, (iii) are allowed pursuant to any settlement reached or Order entered pursuant to the provisions of 11 U.S.C. §1114, or (iv) may be agreed upon between the holder of such Administrative Expense Claim and Debtor. Administrative Expense Claims will include undisputed costs incurred in the operation of Debtor’s businesses after the Petition Date and fees due to the United States Trustee pursuant to 28 U.S.C. § 1930.

B. Administrative Expense Bar.

Debtor has paid all known Administrative Expense Claims, with the exception of Professional fees and fees due the United States Trustee. Debtor will continue to pay the Administrative Expense Claims identified in the attached Exhibit B as they become due. If a Claimant believes it has an Administrative Expense Claim (other than Professional fees) that has not been paid, is not listed in Exhibit B, or a Claimant believes the amount previously paid or set forth in Exhibit B is inaccurate, then that Claimant must file a motion to allow its Administrative Expense Claim no later than thirty (30) days after the Confirmation Date. If a motion is not timely filed, then that Claimant is forever barred from seeking an Administrative Expense Claim or from disputing the amounts set forth in Exhibit B. Notwithstanding the foregoing, the United States Trustee is not required to file a motion to receive any quarterly fees due nor is there a deadline for the United States Trustee to demand payment of any quarterly fees.

C. Professional Fees and the Professional Fee Holdback.

16

Professionals seeking compensation for services rendered or reimbursement of expenses incurred through and including the Confirmation Date under Sections 503(b)(2), 503(b)(3), 503(b)(4), or 503(b)(5) of the Bankruptcy Code, (a) must file their respective final applications for allowances of compensation for services rendered and reimbursement of expenses incurred through the Confirmation Date no later than thirty (30) days after the Effective Date, and (b) the fees and expenses will be paid in such amounts as are allowed by the Bankruptcy Court on the later of the Effective Date or the date such Administrative Expense Claim becomes an Allowed Administrative Expense Claim. For the avoidance of doubt, in accordance with the terms of the Consulting Agreement Approval Order, Consultant shall not have any obligation to file any such application.

If the available Cash for the Unsecured Creditors’ Fund is not at least $400,000.00, then the following professionals have agreed to discount up to 10% of their allowed fees on a pro rata basis to the extent of any shortfall between the available Cash and $400,000.00: Warner Norcross & Judd LLP; Cooley LLP; Miller, Canfield, Paddock and Stone, PLC; Berkeley Research Group, LLC; Consultant; and Province, Inc. (collectively, the “Professionals Subject to Holdback”). Consultant’s fees for this purpose shall be deemed to consist solely of the Merchandise Fee (as defined in the Consulting Agreement) and the maximum amount by which such Merchandise Fee may be discounted pursuant hereto is $106,368.45. By way of illustration, if $300,000.00 is available for the Unsecured Creditors’ Fund (after payment of or accruing for all Administrative Expense Claims, Professional Fees, and Class 1 Claims), the Professionals Subject to Holdback will rebate for the benefit of the Unsecured Creditors’ Fund, on a pro rata basis, the lesser of (i) 10% of each of their allowed fees or (ii) an aggregate of

$100,000.00. If, however, there is $400,000 available Cash for the Unsecured Creditors’ Fund, then the Professionals Subject to Holdback will have no rebate obligation.

D. Priority Tax Claims.

Any Allowed Priority Tax Claim entitled to priority under section 507(a)(8) is being paid in full as of the Effective Date or as soon as practically possible thereafter.

VII. CLASSIFICATION AND TREATMENT OF UNSECURED CLAIMS AND EQUITABLE INTERESTS

All holders of Claims against Debtor and the Estate, other than Administrative Expense Claims and Priority Tax Claims, are divided into the Classes for all purposes, including voting on, confirmation of, and distribution pursuant to the Joint Plan. An Allowed Claim will be entitled to the treatment accorded to it in a particular class. The treatment with respect to each Class of Claims and Equitable Interests provided for in the Joint Plan is in full and complete satisfaction, release, and discharge of such Claims and Equitable Interests.

Nothing in this section constitutes an admission as to the nature, validity, or amount of the Claims or Equitable Interests in each of the Classes designated in the Joint Plan. Debtor is entitled to object to all Claims except for those (i) that have been allowed by a Final Order entered by the Bankruptcy Court prior to the Effective Date, or (ii) those that are Allowed by the

17

express terms of the Joint Plan. Unless extended by the Bankruptcy Court, the deadline for objecting to Claims is (30) days after the Effective Date or if a Claim is filed after the Effective Date, thirty (30) days from the date a Claim is filed. Except as otherwise provided in the Joint Plan, no distributions will be made with respect to any portion of a Claim unless and until any objection to such Claim has been settled, withdrawn, or overruled pursuant to a Final Order of the Bankruptcy Court. On and after the Effective Date, Debtor, in consultation with the Creditors’ Committee, will have the authority to compromise, settle, otherwise resolve, or withdraw any objections to Claims without approval of the Bankruptcy Court.

A. Class 1 - Priority Non-Tax Claims.

1. Class Description. Class 1 consists of all Priority Non-Tax Claims against Debtor arising under section 507(a)(2) through (7) of the Bankruptcy Code. This includes 503 employees of Debtor who have not received Debtor’s matching portion of its 401(k) matching program. Debtor matched 25% of employees’ contributions, up to 6% of such employees’ salary, with Debtor’s contribution fully vesting after 6 years in accordance with Debtor’s 401(k) vesting schedule. Debtor suspended its 401(k) matching program effective January 1, 2017. Debtor has not funded the matching contribution for 2016, which totals approximately $150,000.00. All other Allowed Priority Non-Tax Claims will be nominal because most priority wage claims have previously been paid.

2. Treatment. Unless a different treatment is agreed upon by the parties that does not conflict with the Joint Plan or the Bankruptcy Code, each Priority Non-Tax Claim will be unimpaired under the Joint Plan and will be paid in full on the Effective Date or as soon as practically possible thereafter.

3. Impairment and Voting. Class 1 is unimpaired by the Joint Plan. Consequently, no holder of an Allowed Priority Non-Tax Claim is entitled to vote to accept or reject the Joint Plan.

B. Class 2 – General Unsecured Claims.

1. Class Description. Class 2 consists of all Allowed Unsecured Claims.

2. Treatment. Unless a different treatment is agreed upon by the Holder that does not conflict with the Joint Plan or the Bankruptcy Code, each Holder of an Allowed Unsecured Claim will receive (i) upon the Effective Date, a release from any liability under Avoidance Actions; plus (ii) upon the later of the Distribution Date or the date on which all other Allowed Administrative Expense Claims and Class 1 Claims have been paid in full, a Pro Rata share of the Unsecured Creditors’ Fund.

3. Impairment and Voting. Class 2 Claims are Impaired and are entitled to vote to accept or reject the Joint Plan.

18

C. Class 3 – Equitable Interests.

1. Class Description. Class 3 consists of all equity interests in Debtor.

2. Treatment. All interests will be cancelled. Class 3 interests will not receive any distribution under the Joint Plan on account of such Equitable Interests.

3. Impairment and Voting. Class 3 Equitable Interests are Impaired. Each holder of an Equitable Interest is conclusively presumed to have voted to reject the Joint Plan and accordingly, is not entitled to accept or reject the Joint Plan.

VIII. TREATMENT OF EXECUTORY CONTRACTS AND LEASES

Any executory contracts or unexpired leases (other than Insurance Policies) which (a) have not expired by their own terms on or prior to the Confirmation Date, (b) have not been assumed, assumed and assigned, or rejected with the approval of the Bankruptcy Court on or prior to the Effective Date or (c) are not the subject of a motion to assume or reject the same which is pending at the time of the Confirmation Date, will be deemed rejected by Debtor on the Confirmation Date, and the entry of the Confirmation Order by the Bankruptcy Court will constitute approval of such rejections pursuant to sections 365(a) and 1123 of the Bankruptcy Code.

To the extent Debtor has an interest in personal property that is subject to a rejected lease or executory contract, upon the Effective Date Debtor abandons such property, without the need for any court order or hearing, effective as of the Confirmation Date. Any disputes or objections to such abandonment will be resolved by the Bankruptcy Court.

Claims arising out of the rejection of any executory contract or unexpired lease pursuant to the Joint Plan must be filed with the Bankruptcy Court no later than thirty (30) days after the Confirmation Date. Any Claim not filed within such time period is forever barred. Debtor has the right to object to any Claim arising out of the rejection of an executory contract or unexpired lease.

Claims arising out of the rejection of executory contracts and unexpired leases will, pursuant to section 502(g) of the Bankruptcy Code, be Impaired and treated as Class 2 Unsecured Claims.

IX. IMPLEMENTATION OF PLAN AND DISTRIBUTION OF UNSECURED CREDITORS FUND

A. Retention of Mr. Ullery and Post-Confirmation Professionals.

19

Debtor will retain Mr. Bruce Ullery as an employee post-confirmation to continue to assist Debtor in liquidating and monetizing the remaining Estate Assets and to manage the final wind down of Debtor’s affairs and administer the terms of this Joint Plan. Mr. Ullery is uniquely suited to the task given his long history with Debtor and experience in retail sector. Debtor will pay Mr. Ullery $5,000.00 per month. Further, Mr. Ullery may retain individuals on an hourly basis, including former employees of Debtor, to assist Debtor in completing discreet tasks (for example, completing tax returns, IRS for 5500, trustee reports, etc.). Debtor is further authorized to employ such professionals, including BRG and Warner Norcross & Judd LLP, on a post- confirmation basis to assist Debtor in carrying out the terms of the Joint Plan and to prepare any reports, projections, or other information required under this Joint Plan or to close this Estate. Post-confirmation consulting fees and professional fees may be paid without further order of the Court. These expenses will be paid or reserved for out of the Estate Assets, subject to the Creditors’ Committee consent which shall not be unreasonably withheld, prior to distribution to Class 2 claimants.

B. Retention of Post-Confirmation Distribution Agent.

Debtor is further authorized to retain a distribution agent to distribute the proceeds in the Unsecured Creditors’ Fund to the Class 2 claimants (the “Distribution Agent”). The Distribution Agent will be Rust Consulting/Omni Bankruptcy (“Rust Omni”). Rust Omni is already engaged as Debtor’s claims and balloting agent pursuant to an order of the Bankruptcy Court dated March 8, 2017. Rust Omni is, therefore, a “disinterested person” within the meaning of 11 U.S.C. 101(14). As claims agent, Rust Omni has received and recorded proofs of claim filed in this case and is therefore well suited to act as Distribution Agent under the Plan.

The Distribution Agent will have the power and duty: (i) to make distributions to Class 2 Allowed Claims pursuant to the Joint Plan and orders of the Bankruptcy Court; and (ii) to issue checks, to receive, collect, deposit, and distribute any funds that are in the Unsecured Creditors’ Fund. To this effect, the Distribution Agent will coordinate the opening of bank accounts, order checks, build a distribution database, generate a pro forma distribution report approved by Debtor, print checks and the accompanying letter, scan checks, apply postage and mail the checks, handle any returned checks, and prepare monthly bank reconciliations and reporting as needed. The Distribution Agent will not have the power or duty to object to Claims. The Distribution Agent is not bonded. Any bank account the Distribution Agent opens and maintains to deposit Estate Assets will be FDIC insured, although the money deposited in the account may exceed the applicable FDIC insurance limits from time to time.

The Distribution Agent will neither have nor assume any individual, personal, or corporate duty, obligation, or other liability of Debtor merely by reason of its service in the capacity of the Distribution Agent. The Distribution Agent will be paid $3,000.00 from the Unsecured Creditors’ Fund for the Distribution Agent’s fees and expenses. The Distribution Agent may pay all expenses associated with the administration and distribution of the Unsecured Creditors’ Fund proceeds upon receipt of an invoice and without the need for further Bankruptcy Court authorization. If the need arises whereby the Distribution Agent needs to be replaced for any reason, Debtor will select and appoint a successor Distribution Agent in consultation with and the consent of the Creditors’ Committee.

20

C. Distributions under the Joint Plan.

On the Distribution Date or as soon as practically possible thereafter, the Distribution Agent must distribute the Unsecured Creditors’ Fund to the Class 2 claimants. Subject to Bankruptcy Rule 9010, all distributions under the Joint Plan to be made by the Distribution Agent must be mailed to the address as listed on the Holder’s proof of claim or if no proof of claim was filed, as listed on the Schedules, unless Debtor has been notified in writing of a change of address before the Distribution Date. Any payment made by the Distribution Agent pursuant to the Joint Plan will be made by check drawn on a domestic bank; provided, however, that the Distribution Agent is not obligated to make any Cash payment under the Joint Plan unless the payment exceeds ten dollars ($10) nor is the holder entitled to receive such payment unless the payment exceeds ten dollars ($10). Whenever any payment of a fraction of a cent would otherwise be called for, the actual payment will reflect a rounding of such fraction to the nearest whole cent (rounding down in the case of .50 or less and rounding up in the case of more than .50).

All Distributions on Allowed Claims will be made to the Record Holders of such Claims. As of the close of business on the Record Date, the Claims register maintained for the Bankruptcy Case will be deemed closed, and there will be no further change in the Record Holder of any Claim. Debtor will have authority, but no obligation, to recognize any transfer of any Claim occurring after the Record Date. Debtor and the Distribution Agent will be entitled to recognize and deal for all purposes under this Plan with the Record Holders as of the Record Date. Notwithstanding the foregoing, the Claims register is not deemed closed as to Holders of rejection claims who properly and timely file an Allowed Claim pursuant to Section VIII of this Joint Plan.

The following amounts will revert to the Pro Bono Program of the Bankruptcy Section of the Federal Bar Association for the Western District of Michigan and will not be distributed pursuant to the Joint Plan: (a) distributions under the Joint Plan that are unclaimed for a period of six months after the date of such distribution, or (b) distributions where, after reasonable effort, the Distribution Agent is unable to locate the Person entitled to such distribution, or (c) distributions to Holders of Claims whose Pro Rata share is ten dollars ($10) or less.

X. AVOIDANCE ACTIONS AND/OR PREFERENTIAL TRANSFER AND OTHER ACTIONS

Debtor—in consultation with BRG, the Creditors’ Committee, and its professionals— analyzed potential avoidance actions and determined that no sufficient value existed to pursue any such recoveries. Debtor has reviewed its records and concluded that there are no fraudulent transfer or avoidance actions to pursue, other than potential preference actions. As described in detail below, however, after analyzing the payments Debtor made in the 90 days preceding the bankruptcy filing, Debtor and the Creditors’ Committee have concluded that there is not a significant likelihood that net preference recoveries would result in any material distribution to Creditors in Class 2, and that the pursuit of preferences would significantly delay distributions and result in frustrating litigation for many of Debtor’s smaller vendors. Accordingly, upon the

21

Effective Date, Debtor, the Creditors’ Committee, or any Person acting by or through Debtor or the Creditors’ Committee, will waive and release all Persons from any Avoidance Actions and further covenant not to sue upon such Avoidance Actions.

A. An Overview—What is a Preference?

Generally speaking, subject to certain statutory defenses, the Bankruptcy Code permits a debtor to avoid or recover a payment from a creditor if the payment was made (1) to or for the benefit of a creditor; (2) for or on account of an antecedent debt owed by Debtor to the creditor before the payment was made; (3) while Debtor was insolvent (and Debtor is presumed insolvent in the 90 days preceding bankruptcy) (4) within 90 days before the petition date; and (5) and enabled the creditor to receive more than it would have if Debtor liquidated under Chapter 7 of the Bankruptcy Code.

Payments a creditor received during the 90-day preference window are not avoidable, however, if a creditor can show that the payments were made in accordance with ordinary business terms, either on a subjective basis (compared to the transaction history between Debtor and creditor) or on an objective basis (compared to accepted industry standards).

A creditor may also avoid liability for a preference if the creditor gave new value in the form of new goods or services after the alleged preference payment was received. For example, if the creditor received a $5,000 payment from Debtor within the 90 day preference period, but the creditor subsequently shipped an additional $4,000 worth of goods to Debtor, the creditor can effectively offset the $4,000 worth of goods (i.e., “new value”) against the $5,000 payment, with a net preference exposure of $1,000. A creditor can rely on one or more of these defenses to payments it received during the preference period.

B. An Analysis of Payments Debtor Made During the 90-Day Preference Period

Debtor paid approximately $20 million to creditors during the 90-day preference period, excluding payments to Wells Fargo, Debtor’s secured lender and employees. In the ordinary course, Debtor paid vendors and creditors by Automated Clearing House (“ACH”) transfer, or check. Of the $20 million paid during the preference period, Debtor made approximately $7.5 million in payments through ACH transfers, with the remaining $12.5 million by check. Exhibit C sets forth all payments made via ACH transfer. Exhibit D sets forth all payments made via check.

1. Debtor’s ACH Payments

Based on Debtor’s analysis, none of the ACH payments constitute preferences. The approximately $7.5 million in ACH payments can be summarized as follows:

22

As a preliminary matter, Debtor notes that with the exception of its trade vendors (as discussed in more detail below) and certain landlords, Debtor was current on all its financial obligations as of the Petition Date. During the 90-day preference period, Debtor paid all “non-trade” creditors in the ordinary course of business, and continued to receive services from those creditors that provided them.

For example, all Tax Payments were remitted to the appropriate taxing authorities on a monthly, bi-weekly, or weekly basis, consistent with applicable law and Debtor’s established business practices. Bank Fees were remitted on a weekly or daily basis consistent with the contracts governing them. Debtor’s 401(k) Fees were remitted to MassMutual on a biweekly basis in accordance with its administrator contract. BCBS Fees were remitted to Blue Cross on a weekly basis in accordance with the Administrative Services Contract governing Debtor’s self- funded medical plan, with the BCBS Fees comprising administrative fees as well as payments to fund Debtor’s medical benefit obligations as a self-insured company. Further, Debtor paid the Pre-Petition Professional Fees as it received invoices consistent with industry practice. Finally, the Service Payments above were remitted consistent with standard payment terms for services rendered.

2. Debtor’s Check Payments

The remaining $12.5 million in payments can be summarized as follows:

Based on Debtor’s analysis, the Rent Payments, Service Payments, and Other Expenses are not preference payments. As noted above, Debtor was current on all financial obligations in the ordinary course of business except for Vendor Payments and rent payments to a limited number of landlords. This included the Service Payments, Other Expenses, and the majority of the Rent Payments. The Rent Payments were paid on a monthly basis to Debtor’s landlords for its corporate office, distribution center, and retail stores. In addition to the ordinary course defense, Debtor received new value following each rent payment based on its continued

23

occupancy of these premises. The Service Payments were similarly current at the time of filing, with Debtor generally receiving new value from its various service providers after each payment, given the ongoing service relationship between the parties. As for the Other Expenses, as noted above, many of these payments constituted priority claims (e.g., tax payments) or were small payments to creditors that would not be cost effective to pursue.

Debtor does not believe that the Vendor Payments are likely to represent any material recovery, either. Payments made to Debtor’s top 10 creditors comprise approximately $3.5 million of the total payments made to trade vendors during the 90-day preference period. As set forth in Schedule C, after applying the new value defense to these payments, and without regard to other statutory defenses, the maximum preference exposure totals approximately $700,000.

As to the ordinary course defense, Debtor evaluated payments made to the top 10 creditors during the 21-month period prior to the to the 90-day preference period. Debtor evaluated the time frame payments were made on invoices during the preference period as compared to the historical 21-month period. Based on Debtor’s analysis, substantially all the payments during the preference period fell within the general payment terms and payment time frames that existed during the preceding 12 months. Accordingly, Debtor believes that the ordinary course defense would be applicable to substantially all payment recipients and estimate the net value of the preference claims to be de minimis.

Even assuming certain payments may constitute preference payments—either to a top 10 creditor or more broadly to any creditor that received a payment during the 90-day preference period—Debtor believes any net recovery of such payments would be minimal. Retaining professionals to pursue these claims would require paying a percentage of the recovery amount—likely at least 30 percent of the gross recovery—and as set forth above, the applicable defenses leave little potential preference exposure to pursue. Further, any such efforts would take a significant amount of time to complete—likely more than two years—significantly delaying the wind down of Debtor’s estate and distribution to creditors. The pursuit of preferences would also likely result in claims being brought against many of Debtor’s smaller vendors, for who defending against such a suit could be a considerable burden.

C. An Analysis of Payments Debtor Made During the 90-Day Preference Period to Creditors’ Committee Members

There are seven creditors that comprise the members of the Unsecured Creditor’s Committee: (1) Nike USA, Inc.; (2) Under Armour, Inc.; (3) Columbia Sportswear; (4) The Burton Corporation; (5) Indian Industries (d/b/a Escalade Sports); (6) Wilson Sporting Goods Co.; and (7) GGP Limited Partnership.

Debtor analyzed payments made to these creditors during the 90-day preference period. Three of the creditors—Columbia Sportswear, The Burton Corporation, and Escalade Sports— did not receive any payments during this time period. As set forth above and in Exhibit E, while Nike USA, Inc. and Under Armour, Inc. received payments during the preference period, Debtor’s analysis indicates that the new value defense was a complete defense to Nike USA, Inc.’s potential preference exposure, and left Under Armour, Inc. with approximately $200,000

24

in exposure—with payments to Under Armour constituting payments in the ordinary course. Wilson Sporting Goods received $38,755.50 of payments during the preference period, but net of new value Debtor received from Wilson Sporting Goods, this amount is reduced to $8,301.90. Furthermore, the payments Debtor made to Wilson during the preference period were consistent with the ordinary course as compared to the 21-month period predating the preference period. Finally, GGP received payments, but as a landlord, those payments were in the ordinary course of business and in exchange for new value in the form of Debtor’s continued occupancy in the stores Debtor leased from GGP.

Accordingly, Debtor believes that, given the applicable new value and ordinary course of business defense, coupled with the general costs and uncertainties inherent in any recovery efforts, a waiver and release of all preference claims is in the best interests of the creditors in this case.

As noted above, four of the seven Creditors’ Committee’s members received payments during the 90-day preference period. The Creditors’ Committee unanimously supports and proposes this Joint Plan, including the three Creditors’ Committee members that did not receive any payments during the 90-day preference period.

XI. RELEASES

A. Analysis of and Release of Claims against Officers and Directors

Debtor does not believe there is any cognizable claim against any officer or director of Debtor. None of these individuals received payments outside of the ordinary course of Debtor’s business, nor does Debtor believe any of these individuals engaged in conduct that would give rise to a claim against them. Debtor also notes that releases of directors and officers are common, and there is no claim that Debtor is aware of that would warrant not providing such a release here. The Creditor’s Committee is not aware of any cognizable claim against any officer or director of Debtor, and supports the global settlement embodied in this Joint Plan, including the releases granted to Debtor’s directors and officers.

Accordingly, upon the Effective Date:

(a) Debtor, along with any Person acting for, derivatively, on behalf of, or claiming through them, including the Creditors’ Committee appointed in the Bankruptcy Case, and any trustee or examiner whether appointed in the Bankruptcy Case or any subsequent case, for themselves and their respective past and present officers, directors, shareholders, partners, principals, members, managers, subsidiaries, parent companies, Affiliates, agents, employees, successors and predecessors-in-interest, advisors, accountants, attorneys, representatives, and assigns (“Releasing Parties”) irrevocably and unconditionally forever releases, acquits and forever discharges each of the Directors and Officers (and their properties) of and from any and all past, present and future legal actions, choses in action, causes of action, rights, demands, suits, claims, liabilities, encumbrances, lawsuits, adverse consequences, amounts paid

25

in settlement, costs, fees, damages, debts, deficiencies, diminution in value, disbursements, expenses, losses and other obligations of any kind, character or nature whatsoever, whether in law, equity or otherwise (including, without limitation, those arising under Chapter 5 of the Bankruptcy Code and applicable non-bankruptcy law, and interest or other costs, penalties, legal, accounting and other professional fees and expenses, and incidental, consequential and punitive damages payable to third parties), whether known or unknown, fixed or contingent, direct, indirect, or derivative, asserted or unasserted, foreseen or unforeseen, suspected or unsuspected, now existing, heretofore existing or which may heretofore accrue (collectively, a “Charge”) against any of the Directors and Officers, whether held in a personal or representative capacity occurring from the beginning of time to and including the date of the release including, but not limited to, in any way, directly or indirectly arising out of, connected with or relating to any or all of Debtors, their estates or the Bankruptcy Case (collectively, the “Released Matters”).

(b) The Releasing Parties, and each of them, further covenant and agree that neither they, nor any of them, will assert, initiate, institute, prosecute, participate in or maintain, or will instigate, abet or encourage any other person or entity to assert, initiate, institute, prosecute, participate in or maintain, any Charge, currently or in the future, against the Directors and Officers, or any of them, with respect to any of the Released Matters.

(c) In addition to, and without in any way limiting the scope of, Section

XI.A.a above, each Releasing Party severally agrees that such Releasing Party will not commence, assert, maintain, continue, or pursue any claim, demand, or cause of action of any type or nature that such Releasing Party may have, claim to have, or assert to have, of any type or nature, (including any such claims, demands, and causes of action that have not been discharged that may hereafter accrue or arise or which they may in the future acquire in any way) against any Person, that seeks damages, contribution, indemnity, right of set off, or any other economic benefit or recovery with respect to in any way, directly or indirectly, arising out of, connected with, or relating to Debtor and its Estate and the Bankruptcy Case, if such claim, demand, or cause of action (a “Resulting Claim”) would result in any liability or an indemnity or any payment obligation of any type or nature on the part of any of the Directors and Officers (or a good faith claim, demand, action, or proceeding for such liability, indemnity, or payment obligation), unless such Releasing Party executed an indemnity in favor of, and in form and substance satisfactory to, the Directors and Officers, as applicable, for payment (not collection) of any liability, payment obligations, and costs (including, without limitation, advancement of attorneys’ and other litigation advisory fees and expenses) that may be incurred in connection with such Resulting Claim.

B. Release of Claims against Consultant, Warner Norcross & Judd LLP, and Berkeley Research Group

26

Debtor does not believe there is any cognizable claim against Consultant, Warner Norcross & Judd LLP, or Berkeley Research Group (collectively, the “Debtor’s Professionals”). None of the Debtor’s Professionals received payments outside of the ordinary course of Debtor’s business, nor does Debtor believe any of these individuals engaged in conduct that would give rise to a claim against them. Debtor also notes that Debtor’s Professionals have agreed to rebate for the benefit of the Unsecured Creditors’ Fund the holdback as set forth in Section VI.C of this Joint Plan. In consideration of the holdback agreement, a release as to the Debtor’s Professionals is appropriate here.

Accordingly, upon the Effective Date:

(a) Upon the Effective Date, the Releasing Parties hereby irrevocably and unconditionally forever releases, acquits, and forever discharges the Debtor’s Professionals, and each of their respective members, attorneys, agents, advisors, and representatives, of and from any and all Charges arising on or before the Effective Date, which such Releasing Parties ever had, now have or hereafter may have for, upon or by reason of any matter, cause or thing whatsoever, whether held in a personal or representative capacity occurring from the beginning of time to and including the date of the release including, but not limited to, in any way, directly or indirectly arising out of, connected with or relating to the Released Matters.

(b) The Releasing Parties, and each of them, further covenant and agree that neither they, nor any of them, will assert, initiate, institute, prosecute, participate in or maintain, or will instigate, abet or encourage any other person or entity to assert, initiate, institute, prosecute, participate in or maintain, any Charge, currently or in the future, against the Debtor’s Professionals, or any of them, with respect to any of the Released Matters.

(c) In addition to, and without in any way limiting the scope of, Section

XI.B.a above, each Releasing Party severally agrees that such Releasing Party will not commence, assert, maintain, continue or pursue a Resulting Claim that would result in any liability or an indemnity or any payment obligation of any type or nature on the part of any of the Debtor’s Professionals (or a good faith claim, demand, action, or proceeding for such liability, indemnity, or payment obligation), unless such Releasing Party executed an indemnity in favor of, and in form and substance satisfactory to, the Debtor’s Professionals, as applicable, for payment (not collection) of any liability, payment obligations, and costs (including, without limitation, advancement of attorneys’ and other litigation advisory fees and expenses) that may be incurred in connection with such Resulting Claim.

C. Release of Claims against Creditors’ Committee

27

Debtor does not believe there is any cognizable claim against the Creditors’ Committee. Debtor also notes that the attorneys and financial advisor for the Creditors’ Committee have agreed to rebate for the benefit of the Unsecured Creditors’ Fund the holdback as set forth in Section VI.C of this Joint Plan. In consideration of the holdback agreement, a release as to the Creditors’ Committee its attorneys, and advisors is appropriate here.

Accordingly, upon the Effective Date:

(a) Debtor, along with any Person acting for, derivatively, on behalf of, or claiming through them, including any trustee or examiner whether appointed in the Bankruptcy Case or any subsequent case, for themselves and their respective past and present officers, directors, shareholders, partners, principals, members, managers, subsidiaries, parent companies, Affiliates, agents, employees, successors and predecessors-in-interest, advisors, accountants, attorneys, representatives, and assigns (collectively, the “Committee Releasing Parties”), hereby irrevocably and unconditionally forever releases, acquits and forever discharges the Creditors’ Committee, and each of its members, attorneys, agents, advisors, and representatives, of and from any and all Charges arising on or before the Effective Date, which such Committee Releasing Parties ever had, now has or hereafter may have for, upon or by reason of any matter, cause or thing whatsoever, whether held in a personal or representative capacity occurring from the beginning of time to and including the date of the release including, but not limited to, in any way, directly or indirectly arising out of, connected with or relating to the Released Matters.

(b) The Committee Releasing Parties, and each of them, further covenant and agree that neither they, nor any of them, will assert, initiate, institute, prosecute, participate in or maintain, or will instigate, abet or encourage any other person or entity to assert, initiate, institute, prosecute, participate in or maintain, any Charge, currently or in the future, against the Creditors’ Committee, or any of them, with respect to any of the Released Matters.

(c) In addition to, and without in any way limiting the scope of, Section

XI.C.a above, each Committee Releasing Party severally agrees that such Releasing Party will not commence, assert, maintain, continue or pursue a Resulting Claim that would result in any liability or an indemnity or any payment obligation of any type or nature on the part of any of the Creditors’ Committee (or a good faith claim, demand, action, or proceeding for such liability, indemnity, or payment obligation), unless such Releasing Party executed an indemnity in favor of, and in form and substance satisfactory to, the Creditors’ Committee, as applicable, for payment (not collection) of any liability, payment obligations, and costs (including, without limitation, advancement of attorneys’ and other litigation advisory fees and expenses) that may be incurred in connection with such Resulting Claim.

28

XII. REVESTING OF ASSETS UPON CONVERSION

Upon the occurrence of a conversion of the Chapter 11 Case to a case under Chapter 7 of the Bankruptcy Code, all property of Debtor, including but not limited to property acquired subsequent to the commencement of this case and subsequent to the Effective Date of the Joint Plan, will revest in the Estate. The intention of this revesting provision is that the Chapter 7 bankruptcy estate, in the event of such conversion, will consist of all property of Debtor as of the date of conversion, as if the date of conversion constituted the “commencement of the case” under Section 541 of the Bankruptcy Code. Nothing contained in this Section XII, however, will in any manner affect any distributions that may have been made by Debtor or the Distribution Agent as provided for in the Joint Plan prior to such conversion of the Chapter 11 Case.

XIII. DISSOLUTION

The Creditors’ Committee is automatically dissolved within 10 Business Days after the distribution to Class 2 Holders has been made, unless the Court orders otherwise, and all of Creditors’ Committee members, Professionals, and agents will be deemed released of their duties, responsibilities, and obligations, and will be without further duties, responsibilities, and authority in connection with Debtor or the Bankruptcy Case. The Creditors’ Committee post- confirmation professional fees may be paid or reserved for out of the Estate Assets, subject to the Debtor’s consent which shall not be unreasonably withheld, prior to distribution to Class 2 claimants.

Debtor is authorized to dissolve Debtor after entry of the Final Decree, and to take such actions, or file such documents, reasonably necessary to effectuate the dissolution. Notwithstanding the foregoing, Debtor may not dissolve until all post-confirmation reports and US Trustee quarterly fees are paid in full. Further, nothing in this section or the Joint Plan requires Debtor to dissolve.

XIV. RETENTION OF JURISDICTION

The Bankruptcy Court has exclusive jurisdiction of all matters arising out of, and related to, the Chapter 11 Case and the Joint Plan and for the purposes of, Sections 105(a) and 1142 of the Bankruptcy Code and for, among other things, the following purposes:

1. To hear and determine any and all objections to the allowance of any Claims or any controversies as to the classification of any Claims or to liquidate or estimate any Disputed Claim, provided that only Debtor or the Creditors’ Committee may file objections to Claims;

2. To hear and determine any and all applications by Professionals for compensation and reimbursement of expenses;

3. To enforce the provisions of the Joint Plan;

29

4. To correct any defect, cure any omission, or reconcile any inconsistency in the Joint Plan or in the Confirmation Order, as may be necessary to carry out the purpose and the intent of the Joint Plan;

5. To determine any Claim or liability to a governmental unit which may be asserted as a result of the transactions contemplated by the Joint Plan;

6. To hear and determine matters concerning state, local, and federal taxes in accordance with Sections 346, 505 and 1146 of the Bankruptcy Code;

7. To authorize sales of estate property pursuant to Section 363 of the Bankruptcy Code;

8. To determine such other matters as may be provided for in the Confirmation Order, that may be necessary to implement any provision of the Plan, or as may be authorized under the provisions of the Bankruptcy Code;

9. To hear and determine any and all controversies as to the distribution of the Estate Assets; and

10. To enter a Final Decree.

After all rights, duties, and obligations of Debtor and/or the Distribution Agent have been satisfied or waived under the Joint Plan, Debtor may file a motion for entry of a Final Decree.

XV. CORPORATE ACTION

Debtor is authorized to execute, deliver, file, or record such contracts, instruments, releases, and other agreements or documents and take such actions as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Joint Plan. All terms of the Joint Plan may be put into effect and carried out without further action by Debtor’s shareholders or Directors and Officers.

XVI. MISCELLANEOUS PROVISIONS

A. Exculpation.

Neither Debtor or the Creditors’ Committee nor any of their respective members, officers, directors, employees, advisors, agents, or Professionals have or will incur any liability to any Holder of a Claim for any act or omission in connection with, related to, or arising out of the Chapter 11 Case, the preparation or formulation of the Joint Plan, the pursuit of confirmation of the Joint Plan, the consummation of the Joint Plan, or the administration of the Joint Plan, except for willful misconduct or gross negligence, and, in all respects, Debtor, the Creditors’ Committee, and each of their respective members, officers, directors, employees, advisors, agents, and Professionals are entitled to rely upon the advice of counsel with respect to their duties and responsibilities under the Joint Plan; provided, however, that nothing in the Joint Plan

30

releases or exculpates such parties with respect to their respective obligations or covenants arising pursuant to the Joint Plan.

B. Amendment or Modification of the Joint Plan.

Alterations, amendments, or modifications of the Joint Plan may be proposed in writing by Debtor or the Creditors’ Committee at any time before or after the Confirmation Date and before substantial consummation by Debtor, provided that the Joint Plan, as altered, amended, or modified, satisfies the requirements of Sections 1122 and 1123 of the Bankruptcy Code and the Bankruptcy Court, after notice and a hearing, confirms the Joint Plan, as altered, amended, or modified, under Section 1129 of the Bankruptcy Code. Any Holder of a Claim that has accepted the Joint Plan will be deemed to have accepted the Joint Plan, as altered, amended, or modified, if the proposed alteration, amendment, or modification does not materially and adversely change the treatment of the Claim of such Holder. Debtor, without notice to Holders of Claims insofar as it does not materially and adversely affect the interests of any such holders, correct any defect or omission in the Joint Plan and any exhibit hereto or in any Joint Plan Document.

C. Revocation or Withdrawal of the Joint Plan.

Debtor, with the consent of the Creditors’ Committee, reserves the right to revoke or withdraw the Joint Plan prior to the Confirmation Date. If, until such approval, Debtor revokes or withdraws the Joint Plan prior to the Confirmation Date, then the Joint Plan is null and void. In such event, nothing contained in the Joint Plan will prejudice in any manner the rights of Debtor or any Person in any further proceedings involving Debtor.

D. Preservation of Debtor’s Affirmative Claims.

Except as otherwise provided in the Joint Plan, the allowance of any pre-petition Claim, the resolution of any Claim dispute, or the payment of such Claims will not, absent an express contrary ruling by the Bankruptcy Court, operate as a bar, by application of the principles of res judicata or collateral estoppel, to the recovery of pre-petition Claims or the exercise of any right of setoff held by Debtor with respect to the Claims held by the affected Claimants. To the extent such right of setoff is not resolved in the Claim objection process, any affected Claimant will retain its right of offset of mutual claims as provided in section 553 of the Bankruptcy Code.

E. Binding Effect.

The rights, duties, and obligations of any Person named or referred to in the Joint Plan is binding upon, and inures to the benefit of, the successors and assigns of such Person.

F. Governing Law.

Except to the extent the Bankruptcy Code, Bankruptcy Rules, or other federal law is applicable, or to the extent the Joint Plan provides otherwise, the rights and obligations arising under the Joint Plan will be governed by, and construed and enforced in accordance with, the laws of the State of Michigan, without giving effect to the principles of conflicts of law of such jurisdiction.

31

G. Withholding and Reporting Requirements.

In connection with the consummation of the Joint Plan, Debtor will comply with all withholding and reporting requirements imposed by any federal, state, local, or foreign taxing authority and all distributions under the Joint Plan will be subject to any such withholding and reporting requirements. Debtor may request tax information from creditors prior to making a distribution (including the completion of the appropriate Form W-8 or Form W-9, as applicable) and if a creditor fails to furnish such information within a reasonable time period specified by Debtor, their distribution may be treated as unclaimed under Section IX.C. Debtor may withhold from amounts distributable pursuant to the Joint Plan all amounts, determined in the sole and reasonable discretion of Debtor, required to be withheld by any law, regulation, rule, ruling, directive, or other governmental requirement.

H. Disclaimer Regarding Tax Consequences.

Tax consequences to creditors and interest holders may result from confirmation of the Joint Plan. Each Holder of a Claim or Equitable Interest should seek professional tax advice. DEBTOR AND THE CREDITORS’ COMMITTEE ASSUME NO RESPONSIBILITY FOR THE TAX EFFECT THAT CONSUMMATION OF THE JOINT PLAN WILL HAVE ON ANY GIVEN HOLDER OF A CLAIM OR EQUITABLE INTEREST. HOLDERS OF CLAIMS OR EQUITABLE INTERESTS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AND ATTORNEYS CONCERNING THE FEDERAL, STATE, LOCAL, AND FOREIGN TAX CONSEQUENCES OF THE JOINT PLAN TO THEIR INDIVIDUAL SITUATION.

I. United States Trustee Fees.

All fees payable pursuant to 28 U.S.C. § 1930(a)(6) must be paid on the Effective Date.

All fees payable pursuant to 28 U.S.C. § 1930(a)(6) after the Effective Date shall be paid on a quarterly basis until the Chapter 11 case is closed, converted, or dismissed. Debtor is liable for the payment of all quarterly fees due pursuant to 28 U.S.C. § 1930(a)(6) after the Effective Date.

Debtor shall provide the United States Trustee with post-confirmation quarterly reports that shall include all of their respective disbursements for that quarter. The Bankruptcy Court will retain jurisdiction to decide any post-confirmation dispute concerning the United States Trustee quarterly fees.

J. Headings.

Headings are used in the Joint Plan for convenience and reference only, and do not constitute a part of the Joint Plan for any other purpose.

K. Creditors’ Remedies Post-Confirmation.

32

After the Joint Plan is confirmed, Debtor has the responsibility of complying with all the provisions of the Joint Plan. In addition, the Distribution Agent has the responsibility of complying with Section IX of the Joint Plan. If Debtor or the Distribution Agent do not comply with the terms of the Joint Plan as applicable to each of them, any aggrieved creditor, including the Creditors’ Committee, who wishes to enforce its rights under the Joint Plan may file a motion with the Bankruptcy Court for whatever relief is appropriate.

L. Inconsistency.

In the event of any inconsistency between the Joint Plan and the Disclosure Statement or any other instrument or document created or executed pursuant to the Joint Plan, the Joint Plan will govern.

Dated: July 17, 2017 MICHIGAN SPORTING GOODS DISTRIBUTORS, INC.

By: /s/ Bruce Ullery BRUCE ULLERY

Its: President

Dated: July 17, 2017

THE UNSECURED CREDITORS’ COMMITTEE

By: /s/ Robert Winning ROBERT WINNING

Its: Counsel

Dated: July 17, 2017 WARNER NORCROSS & JUDD LLP

By: /s/ Stephen B. Grow Stephen B. Grow (P39622) Elisabeth M. Von Eitzen (P70183)

R. Michael Azzi (P74508) 111 Lyon St. NW Suite 900 Grand Rapids, MI 49503 (616) 752-2000 sgrow@wnj.com evoneitzen@wnj.com mazzi@wnj.com

16048702-9

33

Case:17-00612-jtg Doc #:489-1 Filed: 07/17/17 Page 1 of 1

EXHIBIT A DRAFT - FOR ILLUSTRATIVE PURPOSES ONLY (SUBJECT TO REVISIONS)

MC Sports