EX-2.01 3 file002.htm THIRD AMENDED JOINT PLAN OF REORGANIZATION

Exhibit 2.01

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

In re: ) Case No. 05-41108-399
)
FALCON PRODUCTS, INC., a ) JOINTLY ADMINISTERED UNDER
Delaware corporation, et al., ) CHAPTER 11
)
) PLAN CONFIRMATION HEARING:
--------------------------
Debtors. )
) Response Due: September 26, 2005
) Hearing Date: October 6, 2005
) Hearing Time: 10:00 a.m.
) Location: Thomas F. Eagleton
) U.S. Courthouse
) 111 South Tenth Street
) Fifth Floor North
) St. Louis, MO 63102
)
) DEBTORS' THIRD AMENDED JOINT
) CHAPTER 11 PLAN OF REORGANIZATION
(OCTOBER 3, 2005)

This Plan of Reorganization is proposed by Falcon Products,
Inc., Epic Furniture Group, Inc.,(1) The Falcon Companies International, Inc.,
Falcon Holdings, Inc., Howe Furniture Corporation, Johnson Industries, Inc.,
Madison Furniture Industries, Inc., Sellers & Josephson, Inc., and Shelby
Williams Industries, Inc., debtors in the above-captioned chapter 11 cases
(collectively, the "Debtors"), and by OCM POF II and Whippoorwill as
co-proponents (collectively, the "Co-Proponents").(2) The Debtors, who filed
voluntary petitions under chapter 11 of the Code on January 31, 2005, have
continued to operate their businesses in the ordinary course as Debtors in
Possession. On February 3, 2005, the Bankruptcy Court entered an order
authorizing the joint administration of the Debtors' chapter 11 cases.

This Plan is the Debtors' Third Amended Joint Chapter 11 Plan
of Reorganization (October 3, 2005) (the "Plan"). This Plan provides for the
preservation of the Debtors' businesses through a comprehensive reorganization
and debt recapitalization. Under this Plan, the Claims of Creditors will be
either Reinstated, paid in Cash, either in full or in part, by Cash payments
from the Debtors' estates from financing that will become available on the
Effective Date (including proceeds from the Rights Offering), or satisfied
through the distribution of net proceeds, if any, of the Audit Committee Report
Retained Rights of Action and the Committee's Avoiding Power Causes of Action on
the terms set forth herein, or through issuance of equity interests in
Reorganized Falcon, and, in the case of Holders of Class 6C Claims and Holders
of Interests, such Claims and Interests will be discharged without receiving or
retaining any distributions under this Plan.

-----------------------
(1) With the exception of Epic, all of the Debtors are wholly-owned and are
direct or indirect subsidiaries of Falcon. Falcon owns 80% of Epic, and the
remaining 20% interest is owned by three individuals who also comprise
Epic's management team.

(2) Unless otherwise defined herein, the definitions of the capitalized terms
herein are as set forth in Article I.A hereof.

The Debtors also have transmitted the Disclosure Statement To
Accompany Debtors' Second Amended Joint Chapter 11 Plan of Reorganization
(August 29, 2005) (the "Disclosure Statement"). The Disclosure Statement was
approved by the Bankruptcy Court. The Disclosure Statement discusses the
Debtors' history, businesses, properties, and results of operations and contains
a summary and discussion of this Plan. Holders of Claims and Interests and
parties to executory contracts and unexpired leases are encouraged to read the
Disclosure Statement. No solicitation materials, other than the Disclosure
Statement and related materials transmitted therewith and approved for
solicitation purposes by the Bankruptcy Court, have been authorized for use in
soliciting acceptances or rejections of this Plan. In the event that there are
any inconsistencies between this Plan and the description of the Plan set forth
in the Disclosure Statement, the terms of this Plan shall control.

DEFINITIONS AND RULES OF CONSTRUCTION
-------------------------------------

A. DEFINITIONS.

In addition to such other terms as are defined elsewhere in
this Plan, the following terms (which appear in this Plan as capitalized terms)
have the following meanings as used in this Plan:

"ACCEPTABLE DEPOSITORY" means: (a) Wells Fargo Bank, N.A.; or
(b) such other depository bank as the Reorganized Debtors may select.

"ADMINISTRATIVE CLAIM" means an unsecured Claim for any cost
or expense of administration of the Cases allowable under section 330, 331,
503(b), or 507(a)(1) of the Code, including, without limitation, any actual and
necessary post-petition expenses of preserving the Estates of the Debtors, any
actual and necessary post-petition expenses of operating the business of the
Debtors in Possession, all compensation or reimbursement of expenses, to the
extent

allowed by the Bankruptcy Court under section 330, 331, or 503 of the Code, and
any fees or charges assessed against the Estates of the Debtors under section
1930 of title 28 of the United States Code.

"ADMINISTRATIVE CLAIMS BAR DATE" means the last date or dates
fixed by this Plan or the Bankruptcy Court for filing proofs or requests for
payment of certain Administrative Claims pursuant to Article III.A.1.b of this
Plan, Rule 3003(c)(3) of the Bankruptcy Rules, or any order of the Bankruptcy
Court.

"ADMINISTRATIVE TAX CLAIM" means an unsecured Claim held by a
governmental unit for taxes (and for interest and penalties related to such
taxes), for any tax year or period, all or any portion of which occurs or falls
within the period from and including the Petition Date through and including the
Effective Date, which is subject to Code sections 503(b)(1)(B) and (C).

"ADMINISTRATIVE TRANSACTIONS" means contracts, leases and
other agreements and stipulations entered into by the Debtors in Possession on
or after the Petition Date pursuant to Code section 363(c)(1), or pursuant to
Final Order.

"AGREED CLASS 6A CLAIM" means an Electing Holder's Class 6A
Claim in an amount (x) agreed to by such Electing Holder and the Debtors or, if
the parties cannot agree, then (y) determined by an order of the Bankruptcy
Court pursuant to Article VI.D hereof, which order may be obtained on an
expedited basis, and shall not have to be a Final Order.

"ALL NOTICES LIST" means the list of Persons who have,
following the Effective Date, Filed a request to be included on the All Notices
List. For a period of 30 days following the service of the Notice of Effective
Date under Article V.E.3, the All Notices List also shall include those Persons
who, prior to the Effective Date, had filed and served on Reorganization

Counsel a request for notice pursuant to the Standing Order; thereafter, those
Persons who have not, after the Effective Date, Filed a request that they be
continued on the All Notices List shall be deleted from the All Notices List.

"ALLOWED CLAIM" means a Claim to the extent that:

(a) Such Claim is an Administrative Claim and: (i) a
request for payment or Final Fee Application for such
Claim is timely Filed under Article III.A.1.b.i or
Article III.A.1.b.ii, whichever is applicable, or is
deemed timely Filed by Final Order; and (ii) the
Claim is allowed as set forth in Article III.A.1.a;
or

(b) Such Claim is an Administrative Tax Claim and: (i) a
motion is timely Filed under Article III.A.1.b.iii,
or is deemed timely Filed by Final Order; and (ii)
the Claim is allowed as set forth in Article
III.A.1.a; or

(c) Such Claim is a Priority Tax Claim, or a Claim that
if allowed would be a Class 1A through Class 6C
Claim, and a proof of such Claim is timely Filed or
is deemed timely Filed by Final Order, or under Code
section 1111(a); and

(i) neither the Reorganized Debtors nor any other
party in interest with standing Files and
serves on the Holder of such Claim an
objection to the Claim by the applicable
Objection Deadline set forth in Article
VI.A.1, and the Claim is not otherwise a
Disputed Claim; or

(ii) the Claim is allowed (and only to the extent
allowed) by Final Order or agreement between
the Holder of the Claim and: (A) the

Debtors, if such agreement is entered into
before the Effective Date and is approved by
Final Order; or (B) the Reorganized Debtors,
if such agreement is entered into after the
Effective Date, and is authorized by Final
Order or as set forth in Article V.E.2; or

(iii) if the "variance" of the amount of such Claim
as Scheduled by the Debtors and the amount of
such Claim as indicated on a corresponding
proof of Claim is zero or is a negative
number, and the Claim is not listed in the
Schedules as a Disputed Claim, a contingent
Claim, or an unliquidated Claim, then the
Claim will be allowed in the amount set forth
in a timely Filed proof of Claim, or as
Scheduled if no proof of Claim has been Filed;
or

(d) such Claim is deemed to be an Allowed Claim in
accordance with this Plan.

"ALLOWED _______ CLAIM" means an Allowed Claim of a particular
type or Class.

"AMENDED TERM A LOAN AGREEMENT" means the modified loan
agreement, in a form acceptable to the Term A Loan Agent in its sole and
absolute discretion, that the Term A Secured Lenders shall enter into with the
Reorganized Debtors on the Effective Date, for the $70 million obligation, less
any payment of Excess Plan Funding Proceeds, if any, that shall be due and owing
to the Term A Secured Lenders.

"AMENDMENT NO. 1" means Amendment No. 1 to the Fleet
Revolver/Term Loan A Agreement, dated as of January 19, 2005.

"AUDIT COMMITTEE REPORT RETAINED RIGHTS OF ACTION" refers to
all of the retained rights, claims, rights of action, causes of action,
defenses, and counterclaims accruing to the Debtors or their Estates on the
basis of, relating to, or arising from the information, conclusions, and
recommendations set forth in the "Audit Committee Report" dated June 20, 2005,
which Audit Committee Report was prepared by Bryan Cave LLP, for an independent
audit committee of the Debtors' Board of Directors which commenced an
investigation in October 2004 into certain accounting matters that were raised
by the Debtors' previous external auditors.

"AUDIT COMMITTEE REPORT RETAINED RIGHTS OF ACTION LITIGATION
PROCEEDS" means the net proceeds, if any, that the Reorganized Debtors shall
collect from prosecuting the Audit Committee Report Retained Rights of Action,
which net proceeds shall be deposited into a segregated escrow account
maintained by the Reorganized Debtors until such net proceeds are disbursed Pro
Rata to Holders of Allowed Class 6A Claims, as described in Article III.B.7
hereof.

"AVOIDING POWER CAUSES OF ACTION" refers to any and all
avoiding powers arising under Code sections 502(d), 506, 544, 545, 547, 548,
549, 550, 553, and 558, all Claims against any Person, and all defenses to
Claims.

"BACKSTOP AGREEMENT" means the formal backstop commitment to
be executed by and among the Debtors and the Backstop Parties, pursuant to which
(x) subject to the satisfaction of all conditions precedent set forth in the
Backstop Agreement, the Backstop Parties shall have irrevocably committed to
purchase, at the Subscription Purchase Price, all Rights Offering Shares that
were not subscribed for in the Rights Offering by Eligible Class 6A Claimholders
and (y) the Debtors shall have agreed to pay the Backstop Parties on the
Effective

Date a Cash fee equal to 2% of the Rights Offering Amount, which shall be Filed
at least five days prior to the hearing on the Disclosure Statement.

"BACKSTOP PARTIES" refers to OCM POF III, OCM POF IIIA, and
Whippoorwill.

"BALLOT" means the ballot used to: (1) vote to accept or
reject this Plan; and (2) for Class 6A Claim Holders who are not Noteholders, to
select whether or not to opt out of assigning to the Creditor Trust their
Individual Creditor Claims.

"BANKRUPTCY COURT" means the United States Bankruptcy Court
for the Eastern District of Missouri (Eastern Division), or, if such court
ceases to exercise jurisdiction over the Cases, such court or adjunct thereof
that exercises jurisdiction over the Cases in lieu of the United States
Bankruptcy Court for the Eastern District of Missouri (Eastern Division).

"BANKRUPTCY RULES" means, collectively, the: (a) Federal Rules
of Bankruptcy Procedure; and (b) the Local Rules of the Bankruptcy Court, as
applicable from time to time in the Cases.

"BENEFICIAL OWNERSHIP", and all expressions and terms
correlative and analogous thereto, have the meaning ascribed thereto in Rule
13d-3 of the Exchange Act.

"BNY" refers to the Bank of New York, which is the Indenture
Trustee for the Noteholders.

"BUSINESS DAY" means any day that is not a Saturday, Sunday,
or "legal holiday" as defined in Bankruptcy Rule 9006(a).

"CASES" means the 9 cases under chapter 11 of the Code
commenced by the Debtors on the Petition Date.

"CASH" means cash or cash equivalents.

"CLAIM" has the meaning in Code section 101(5) and, except as
otherwise provided in the context, means a Claim against the Debtors or the
Estates.

"CLAIMS BAR DATE" means the deadlines for filing a proof of
Claim as set forth in the "Order Granting Debtors' Motion For Order Establishing
Procedures And Deadlines For Filing Proofs Of Claims By All Creditors,
Establishing Enforcement Mechanisms For Failure To Comply Therewith, And
Approving Form And Scope Of Notice Thereof", entered by the Bankruptcy Court on
March 10, 2005.

"CLASS" means one of the classes of Claims or Interests
established under Article II pursuant to Code section 1122.

"CLASS 6A SHARE" means an amount equal to a fraction, the
numerator of which is the amount of such Eligible Class 6A Claimholder's Agreed
Class 6A Claim and the denominator of which is $135 million.

"CLOSING" or "CLOSED" or "CLOSE" means the date by which the
transactions described in Articles V.D.1 and under any necessary Plan Document
are completed.

"CODE" means the Bankruptcy Reform Act of 1978 as codified in
title 11 of the United States Code, as in effect on the date hereof.

"COMMITTEE" means the Official Unsecured Creditors' Committee
appointed by the U.S. Trustee in the Cases, as reconstituted from time to time
by the U.S. Trustee.

"COMMITTEE'S ADVERSARY PROCEEDING" refers to the adversary
proceeding styled Official Committee of Unsecured Creditors v. DDJ Capital
Management, LLC et. al., pending as Adversary Case No. 05-04144, which the
Committee commenced on June 2, 2005 against the Term A Secured Lenders and Term
B Secured Lenders.

"COMMITTEE'S AVOIDING POWER CAUSES OF ACTION" means the
Committee's Fraudulent Transfer Actions and the Committee's Preference Actions.

"COMMITTEE'S AVOIDING POWER CAUSES OF ACTION LITIGATION
PROCEEDS" means the net proceeds, if any, that the Creditor Trust shall collect
from prosecuting the Committee's Avoiding Power Causes of Action, in accordance
the Joint Prosecution and Cooperation Agreement, until such net proceeds are
disbursed to the Creditor Trust Beneficiaries, as described in Article III.B.7
hereof.

"COMMITTEE'S FRAUDULENT TRANSFER ACTIONS" refers specifically
to those Avoiding Power Causes of Action initially arising under Code sections
548 and 550, and to actions that may be brought under Code section 544 by
asserting the rights of individual Creditors, under applicable state laws, in
order to recover constructively or intentionally fraudulent transfers made by
the Debtors, but excluding any such actions that may exist or may be brought
against Oaktree, OCM POF II, OCM POF III, OCM POF IIIA, Whippoorwill,
Whippoorwill Associates, Inc., the Term A Secured Lenders, the Term B Secured
Lenders, any past or present agent under the Term A Loan Agreement, any past or
present agent under the Term B Loan Agreement, any past Term A Secured Lenders,
any past lenders under the Term B Loan Agreement, or any of such entities'
respective affiliates, agents or representatives.

"COMMITTEE'S FRAUDULENT TRANSFER ACTIONS LITIGATION PROCEEDS"
means the net proceeds, if any, that the Creditor Trust shall collect from
prosecuting the Committee's Fraudulent Transfer Actions which net proceeds shall
be deposited into a segregated escrow account maintained by the Creditor Trust
until such proceeds are disbursed to the Creditor Trust Beneficiaries, as
described in Article III.B.7 hereof.

"COMMITTEE'S PREFERENCE ACTIONS" refers specifically to those
Avoiding Power Causes of Action arising under Code section 547 and 550 excluding
any such actions that may exist or may be brought against Oaktree, OCM POF II,
OCM POF III, OCM POF IIIA, Whippoorwill, Whippoorwill Associates, Inc., the Term
A Secured Lenders, the Term B Secured Lenders, any past or present agent under
the Term A Loan Agreement, any past or present agent under the Term B Loan
Agreement, any past Term A Secured Lenders, any past lenders under the Term B
Loan Agreement, or any of such entities' respective affiliates, agents or
representatives.

"COMMITTEE'S PREFERENCE ACTIONS LITIGATION PROCEEDS" means the
net proceeds, if any, that the Creditor Trust shall collect from prosecuting the
Committee's Preference Actions, which net proceeds shall be disbursed to the
Creditor Trust Beneficiaries, as described in Article III.B.7 hereof.

"CONFIRMATION" means the date of entry of the Confirmation
Order.

"CONFIRMATION DATE" means the date on which Confirmation
occurs.

"CONFIRMATION HEARING" means the hearing held pursuant to
Bankruptcy Rule 3020(b)(2) at which the Bankruptcy Court considers confirmation
of this Plan, as may be adjourned from time to time.

"CONFIRMATION ORDER" means the order of the Bankruptcy Court
confirming this Plan under Code section 1129.

"CRAMDOWN PLAN" means this Plan if confirmed by the Bankruptcy
Court pursuant to Code section 1129(b).

"CREDITOR" has the meaning in Code section 101(10).

"CREDITOR TRUST" means the trust to be formed under the Plan
pursuant to the Creditor Trust Agreement for the benefit of the Holders of
Allowed Claims in Class 6A, subject to the limitations on OCM POF II's and
Whippoorwill's right to participate in the Creditor Trust's proceeds, which
limitations are set forth in Article III.B.7 hereof.

"CREDITOR TRUST AGREEMENT" means the Trust Agreement which
establishes the Creditor Trust.

"CREDITOR TRUST ASSETS" means those assets to be transferred
or issued to the Creditor Trust consisting of the following, which, upon deposit
into the Creditor Trust, shall be free and clear of any lien that might
otherwise have existed in favor of any Person: (a) the Creditor Trust Litigation
Fund; (b) the Committee's Avoiding Power Causes of Action; and (c) the
Individual Creditor Clams which are assigned by such Creditors to the Creditor
Trust.

"CREDITOR TRUST BENEFICIARIES" means the beneficiaries of the
Creditor Trust, and include Holders of Allowed Claims in Class 6A, subject to
the limitations on OCM POF II's and Whippoorwill's right to participate in the
Creditor Trust's proceeds, which limitations are set forth in Article III.B.7
hereof.

"CREDITOR TRUST LITIGATION FUND" means that $200,000 in Cash
which the Reorganized Debtors will loan to the Creditor Trust on the Effective
Date for the sole purpose of prosecuting the Committee's Avoiding Power Causes
of Action, which will thereafter be supplemented by the Committee's Fraudulent
Transfer Actions Litigation Proceeds and the Committee's Preference Actions
Litigation Proceeds, if any.

"DALTON" refers to Dalton Investments, LLC, and the funds and
accounts managed by Dalton.

"DDJ" refers to DDJ Capital Management, LLC.

"DEBTORS" means the following entities in existence on the
Petition Date:

----------------------------------------------------------- --------------------------------------------------
Falcon Products, Inc., a Delaware corporation Howe Furniture Corporation, a New York
("Falcon"); Case No. 05-41108-399 corporation ("Howe");
Case No. 05-41123-399
----------------------------------------------------------- --------------------------------------------------
Epic Furniture Group, Inc., a Delaware corporation Shelby Williams Industries, Inc., a Delaware
("Epic"); corporation
Case No. 05-41128-399 ("Shelby Williams");
Case No. 05-41126-399
----------------------------------------------------------- --------------------------------------------------
Sellers & Josephson, Inc., a New Jersey corporation Madison Furniture Industries, Inc., a
("S&J"); Mississippi corporation;
Case No. 05-41119-399 ("Madison Furniture");
Case No. 05-41127-399
----------------------------------------------------------- --------------------------------------------------
Falcon Holdings, Inc., a Missouri corporation ("Falcon Johnson Industries, Inc., an Illinois
Holdings"); corporation ("Johnson Industries"); Case No.
Case No. 05-41124-399 05-41121-399
----------------------------------------------------------- --------------------------------------------------
The Falcon Companies
International, Inc., a Missouri corporation;
("Falcon Companies International");
Case No. 05-41122-399
----------------------------------------------------------- --------------------------------------------------

"DEBTORS IN POSSESSION" means the Debtors when acting in their
capacity as debtors in possession prior to the Effective Date.

"DIP AGENT" means DDJ, in its capacity as administrative agent
and collateral agent for the DIP Lenders under the DIP Facility Agreement and
the documents ancillary thereto.

"DIP FACILITY" means the debtor in possession secured
financing facility provided to the Debtors by the DIP Lenders pursuant to the
DIP Facility Agreement and agreements related thereto as authorized by the
Bankruptcy Court in accordance with the terms and conditions set forth in the
DIP Financing Order.

"DIP FACILITY AGREEMENT" refers to that certain "Post Petition
Credit Agreement" dated as of February 4, 2005, among the Debtors in Possession,
the DIP Agent and the DIP Lenders, as same may be amended, modified, or
supplemented from time to time.

"DIP FACILITY CLAIMS" means all superpriority administrative
claims of the DIP Agent and the DIP Lenders arising under or pursuant to the DIP
Facility, which Claims shall be deemed to be Allowed Claims.

"DIP FINANCING ORDER" means that certain "Final Order Pursuant
to Sections 361, 363 and 364 of the Bankruptcy Code and Rule 3001 of the Federal
Rules of Bankruptcy Procedure (i) Authorizing Debtors to Obtain Post-Petition
Financing, Granting Senior Liens and Priority Administrative Expense Status,
Modifying the Automatic Stay, Authorizing Debtors to Enter into Agreements with
DDJ Capital Management LLC, as Agent for Itself and Certain Other Lenders, (ii)
Authorizing Debtors to Pay in Full Certain Secured Claims of Fleet Capital
Corporation, as Agent for Itself and Certain Other Lenders and (iii) Authorizing
Use of Cash Collateral and Grant of Adequate Protection," dated February 28,
2005.
"DIP LENDERS" means the lenders from time to time party to the
DIP Facility Agreement.

"DISBURSING AGENT" means the Reorganized Debtors for purposes
of distributions to be made to Holders of Allowed Claims under the Plan, other
than distributions of the Committee's Avoiding Power Causes of Action Litigation
Proceeds. The Trustee of the Creditor Trust shall serve as the Disbursing Agent
for distributions of the Committee's Avoiding Power Causes of Action Litigation
Proceeds in accordance with Article III.B.7 hereof.

"DISCLOSURE STATEMENT" means the "Disclosure Statement To
Accompany Debtors' Second Amended Joint Chapter 11 Plan Of Reorganization
(August 29, 2005)",

including all exhibits thereto, as such Disclosure Statement may be amended,
modified, or superseded, and that is approved pursuant to Code section 1125.

"DISPUTED CLAIM" means any Claim that is not an Allowed Claim
or is otherwise disputed.

"EFFECTIVE DATE" means the Business Day on which this Plan
becomes effective pursuant to Article VII.B of this Plan; provided, however,
that if any stay or injunction against enforcement or execution of the
Confirmation Order is issued prior to the date that would otherwise be the
Effective Date, the Effective Date shall be the first Business Day after all
such stays or injunctions are no longer in effect.

"EFFECTIVE DATE INDEBTEDNESS" means the total outstanding
indebtedness of the Reorganized Debtors on the Effective Date, including the
Post-Confirmation Term B Secured Loan, taking account of estimates of drawdowns
under the Exit Facility on or following the Effective Date to pay fees and
expenses of the Debtors incurred prior to the Effective Date in connection with
this Plan and the Disclosure Statement, the reorganization and recapitalization
contemplated pursuant to this Plan and the Disclosure Statement, and the
application of the Rights Offering proceeds and the Post-Confirmation Term B
Secured Loan proceeds.

"EFFECTIVE DATE SHARES OUTSTANDING" means the 2000 shares of
New Common Stock which shall be issued and outstanding on the Effective Date
after giving effect to the distributions of New Common Stock pursuant to this
Plan and the Rights Offering, which shares shall be subject to dilution by the
Management Incentive Plan.

"ELECTING HOLDER" means each Eligible Class 6A Claimholder who
delivers to the Debtors a completed and executed Subscription Rights Election
Form and duly executed

Shareholders' Agreement, along with five stock powers executed in blank in the
form of Exhibit "A" to the Shareholders' Agreement, by the Voting Deadline.

"ELIGIBLE CLASS 6A CLAIMHOLDER" means each Person that is a
Class 6A Claim Holder as of the Subscription Rights Record Date that is an
"accredited investor" (as such term is defined in Regulation D under the
Securities Act) on the date the Subscription Rights Election Form is executed by
such Class 6A Claim Holder, and on the Effective Date.

"EPIC INTEREST" means an equity security of Epic, as defined
in Code section 101(16).

"ESTATES" means the Estates created in the Cases on the
Petition Date pursuant to Code section 541.

"ESTIMATED AMOUNT" means, with respect to any Claim that the
Debtors dispute, or is unliquidated or contingent, the amount of such Claim as
estimated under Article VI.D.

"EXCESS PLAN FUNDING PROCEEDS" means, as of the Effective
Date, the excess, if any, of: without duplication, the sum of (i) proceeds from
the Rights Offering, plus (ii) proceeds from the Post-Confirmation Term B
Secured Loan, plus (iii) availability under the Exit Facility (after taking into
consideration any draws and the issuance of any letters of credit thereunder),
plus (iv) unrestricted Cash balances previously securing letters of credit or
insurance obligations, minus (v) amounts required to pay in full all DIP
Facility Claims, minus (vi) transaction fees relating to the Debtors' Cases,
including any outstanding professional fees, minus (vii) amounts payable under
this Plan, including, but not limited to, any priority Claim amounts, cure
amounts to be paid upon assumption of certain executory contacts being assumed
pursuant to this Plan, and default interest, minus (viii) insurance premiums for
tail coverage, over $20.5 million.

"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

"EXIT FACILITY" means a new revolving credit facility of the
Reorganized Debtors in the amount of $30 million (the availability of which will
be subject to a formula to be included in the Exit Facility agreement), which
will take effect on the Effective Date that will include the terms and
conditions set forth in Article V.C.1 and be used to, among other things, for
general corporate purposes, which document shall be Filed at least five days
prior to the Confirmation Hearing.

"FALCON INTEREST" means an equity security of Falcon, as
defined in Code section 101(16).

"FILED", "FILES", OR "FILING" means properly filed with the
Bankruptcy Court in the Cases, as reflected on the official docket of the
Bankruptcy Court, and served on the Debtors, the Committee, and the parties
entitled to notice as described in the Standing Order or the All Notices List,
whichever is applicable.

"FINAL FEE APPLICATION" has the meaning set forth in Article
III.A.1.b.ii.

"FINAL ORDER" means an order or judgment of the Bankruptcy
Court, as entered on its docket, which has not been reversed, stayed, modified,
or amended, that is in full force and effect, and as to which: (a) the time to
appeal or seek certiorari has expired and no appeal or petition for certiorari
has been timely Filed; or (b) any appeal that has been or may be taken or any
petition for certiorari that has been or may be Filed has been resolved by the
highest court (or any other tribunal having appellate jurisdiction over the
order or judgment) to which the order or judgment was appealed or from which
certiorari was sought.

"FLEET" refers to Fleet Capital Corporation, the prepetition
agent for the Term A Secured Lenders, the Term Component Loan Lenders, and the
Debtors' prepetition revolving loan lender.

"FLEET REVOLVER/TERM A LOAN AGREEMENT" refers to the "Second
Amended and Restated Loan and Security Agreement," which agreement was entered
into by and between Falcon, Shelby Williams, Epic, and S&J, as borrowers, and
the other Debtors, as guarantors, on the one hand, and Fleet individually and in
its capacity as agent for the Term Component Loan Lenders, and Term A Secured
Lenders, on the other hand, as such agreement has been amended and restated from
time to time, including by Amendment No. 1, and as amended or supplemented by
the Fleet Stipulated Cash Collateral Order and the DIP Financing Order. The
Fleet Revolver/Term A Loan Agreement provided for an up to $95 million total
credit facility, consisting of a: (i) $25 million revolving credit facility with
Fleet; (ii) $3 million non-amortizing term component loan with the Term
Component Loan Lenders; and (iii) $70 million non-amortizing term loan with the
Term A Secured Lenders.

"FLEET STIPULATED CASH COLLATERAL ORDER" refers to the
"Stipulated Final Order Authorizing Debtors to: (A) Use Cash Collateral; (B)
Grant Certain Liens And Provide Security And Other Relief To Fleet Capital
Corporation, As Agent; And (C) Grant Relief From The Automatic Stay", dated
March 1, 2005.

"FLEET REVOLVER CLAIMS" means the prepetition and postpetition
Claims of Fleet arising under the Fleet Revolver/Term A Loan Agreement.

"GENERAL UNSECURED CLAIM" means any Claim against any Debtor
that is not an Administrative Claim, Administrative Tax Claim, Other Priority
Claim, Priority Tax Claim, or Secured Claim.

"HOLDER" means a person or entity which holds a Claim or
Interest, and, with respect to the Notes, means the Beneficial Owner or any
authorized signatory who has completed

and executed a Ballot or on whose behalf a Master Ballot has been completed and
executed in accordance with the Voting Instructions.

"INDIVIDUAL CREDITOR CLAIMS" refers to any and all causes of
action, if any, held individually by Class 6A Claim Holders arising in
connection with the overstatement of revenues, overstatement of inventory value,
and other misconduct outlined in the Audit Committee Report, including deepening
insolvency, to the extent such Creditors have standing to bring such actions.

"INSURANCE-COVERED CLAIM" means any Claim against any Debtor
that is a General Unsecured Claim, to the extent such Claim is covered by the
Insurance Policies.

"INSURANCE POLICIES" means the insurance policies of the
Debtors that were in effect on or before the Petition Date.

"INTEREST" means an equity security of the Debtors, as defined
in Code section 101(16).

"JOINT PROSECUTION AND COOPERATION AGREEMENT" refers to an
agreement whereby: (a) the Creditor Trust and the Reorganized Debtors will agree
to coordinate, cooperate, and communicate with each other regarding the
Reorganized Debtors' prosecution of objections to Claims, on the one hand, and
the Creditor Trusts' prosecution of the Committee's Avoiding Power Causes of
Action, on the other hand; and (b) in pursuing any Individual Creditor Claims,
the Creditor Trust will cooperate and communicate with the Reorganized Debtors,
the Term A Loan Agent, Oaktree, and Whippoorwill in connection with any similar
or related actions that the Reorganized Debtors, the Term A Loan Agent, Oaktree,
Whippoorwill and their affiliates may bring. For the avoidance of doubt, the
Reorganized Debtors shall not have any right or entitlement under the Joint
Prosecution and Cooperation Agreement to influence or compromise

the Creditor Trust's unfettered right to commence, prosecute, defend against,
recover on account of, or settle any of the Committee' Avoiding Power Causes of
Action.

"JUNIOR CONVERTIBLE DEBENTURES" means the outstanding 12%
Junior Subordinated Convertible Debentures due 2010.

"JUNIOR CONVERTIBLE DEBENTURE HOLDERS" means the Holders of
the Junior Convertible Debentures.

"MANAGEMENT INCENTIVE PLAN" has the meaning set forth in
Article V.D.3.

"MASTER BALLOTS" means the Ballots accompanying the Disclosure
Statement, distributed to Nominees or Holders of record of the Notes to record
the votes, if any, of the Beneficial Holders of the Notes in accordance with the
Voting Instructions.

"NEW COMMON STOCK" means the newly issued common stock of
Reorganized Falcon, having a par value of $.01 per share.

"NOMINEE" means a person, partnership, broker, dealer,
commercial bank, trust company, clearing agency or organization, savings and
loan custodian, trustee, receiver or other organization in whose name a security
is registered, and who is thereby the record Holder of such security, although
another party is the Beneficial Owner of such security.

"NOTEHOLDERS" refers to the Holders of the Notes.

"NOTEHOLDER CLAIMS" means the Claims of the Noteholders.

"NOTES" refers to the $100 million of unsecured 11 3/8% Series
B Senior Subordinated Notes due 2009, which Falcon issued on June 17,1999,
pursuant to the Notes Indenture.

"NOTES INDENTURE" means the Indenture, dated as of June 17,
1999, and supplemented on June 8, 1999 and May 30, 2003, with Falcon, as issuer,
and Falcon Holdings,

Howe, Johnson Industries, and SY Acquisition, Inc., Shelby Williams, S&J,
Madison Furniture, Epic, and the Falcon Companies International, as guarantors,
pursuant to which the unsecured 11 3/8% Series B Senior Subordinated Notes due
2009 were issued.

"NOTICE OF EFFECTIVE DATE" means the notice to be mailed by
the Reorganized Debtors to the Persons on the All Notices List and all known
Holders of Claims and Interests pursuant to Article VII.B notifying them of: (a)
the entry of the Confirmation Order; (b) the occurrence of the Effective Date;
(c) the treatment of executory contracts and unexpired leases as provided under
this Plan, and the bar dates for Claims relating to executory contracts and
unexpired leases; (d) the Administrative Claims Bar Date; (e) the bar date for
Administrative Tax Claims under Subarticle III.A.1.b.iii; (f) the deadline for
Final Fee Applications under Subarticle III.A.1.b.ii; (g) the name and address
of the Reorganized Debtors; and (h) the procedures for inclusion on the All
Notices List; and (i) and any other material events, deadlines, or procedures
relating to the implementation of this Plan.

"OAKTREE" means Oaktree Capital Management, LLC.

"OBJECTION DEADLINE" means the dates established for objecting
to Claims under Article VI.C.

"OCM POF II" means OCM Principal Opportunities Fund II, L.P.

"OCM POF III" means OCM Principal Opportunities Fund III, L.P.

"OCM POF IIIA" means OCM Principal Opportunities Fund IIIA,
L.P.

"OLD FALCON COMMON STOCK" means common stock, $0.01 par value,
of Falcon issued and outstanding immediately before the Effective Date.

"OTHER PRIORITY CLAIM" means a Claim entitled to priority
under Code sections 507(a)(3),(4),(5), and/or (6).

"OTHER SECURED CLAIMS" means all Secured Claims against the
Debtors, including Secured Tax Claims, but does not include Claims held by Fleet
or any of the Term Component Loan Lenders, the Term A Secured Lenders, or the
Term B Secured Lenders. Each of the Other Secured Claims that is an Allowed
Other Secured Claim shall be considered in its own Class and be subject to
treatment as set forth in Article III.B.5

"PERSON" has the meaning set forth in section 101(41) of the
Code, and herein means any individual, corporation, partnership, but does not
include a governmental unit, except under certain circumstances as set forth in
section 101(41) of the Code.

"PETITION DATE" means January 31, 2005.

"PLAN" means this Plan of Reorganization, either in its
present form or as it may be modified from time to time.

"PLAN DOCUMENTS" means those documents necessary to effectuate
the Confirmed Plan, including, but not limited to, the Amended Term A Loan
Agreement discussed in Article III.B.3, the Class 6B Election Form discussed in
Article III.B.8, the Exit Facility discussed in Article V.C.1, the
Post-Confirmation Term B Secured Loan Agreement discussed in Article V.C.2, the
Backstop Agreement and the Shareholders' Agreement discussed Article V.C.4, the
Management Incentive Plan discussed in Article V.D.3, the Subscription Rights
Election Form, the Creditor Trust Agreement discussed in Article V.B.2, and any
related documents.

"POST-CONFIRMATION TERM B SECURED LENDERS" means OCM POF II,
OCM POF III, OCM POF IIIA, Whippoorwill and Dalton.

"POST-EFFECTIVE DATE CLAIMS" means: (a) the actual and
necessary costs and expenses, including wages, salaries, fees, and
payroll-related taxes, incurred by the Reorganized

Debtors on or after the Effective Date to administer the Estates; (b) any sales
taxes, personal property taxes, real property taxes, or other taxes for which
the Estates are responsible under this Plan and which accrued on or after the
Effective Date; and (c) all fees under 28 U.S.C. ss. 1930(a)(6) which accrue
during and after the calendar quarter in which the Effective Date occurs that
are payable pursuant to Article IX.A.

"POST-CONFIRMATION TERM B SECURED LOAN" means the $20 million
secured loan that the Reorganized Debtors shall receive from the
Post-Confirmation Term B Secured Lenders on the Effective Date.

"PRE-PETITION WARRANTS" means all warrants, options,
derivative securities, or any other contract rights to purchase or acquire Old
Falcon Common Stock at any time.

"PRIORITY TAX CLAIM" means a Claim entitled to priority under
Code section 507(a)(8).

"PROFESSIONAL PERSON" means: (a) a Person retained or to be
compensated pursuant to Code sections 327, 328, 330, 331, 503(b)(2), and/or
1103; or (b) an accountant, attorney, appraiser, or other professional employed
by the Reorganized Debtors on or after the Effective Date.

"PRO RATA" means proportionate, so that, for example, the
ratio of the consideration distributed on account of an Allowed Claim to the
amount of the Allowed Claim is the same as the ratio of the consideration
distributed on account of all Allowed Claims in such Class to the amount of all
Allowed Claims in that Class.

"REINSTATED" means that, at the option of the Debtors, (i) the
legal, equitable, and contractual rights to which a Holder of a Claim or
Interest is entitled shall be left unaltered, so that such Claim or Interest
shall be left unimpaired in accordance with section 1124 of the Code,

or (ii) notwithstanding any contractual provision or applicable law that
entitles the Holder of such Claim or Interest to demand or receive accelerated
payment of such Claim or Interest after the occurrence of a default: (a) any
such default that occurred before or after the Petition Date, other than a
default of a kind specified in section 365(b)(2) of the Code, shall be cured
and, in connection with such cure, past due interest shall be paid at the
non-default contract rate; (b) the maturity of such Claim or Interest such be
reinstated as such maturity existed before such default; (c) the Holder of such
Claim or Interest shall be compensated for any damages incurred as a result of
any reasonable reliance by such Holder on such contractual provision or such
applicable law; and (d) and the legal, equitable, or contractual rights to which
such Claim or Interest entitles the Holder of such Claim or Interest shall not
otherwise be altered.

"REORGANIZATION COUNSEL" means Stutman, Treister & Glatt
Professional Corporation or its successors.

"REORGANIZED DEBTORS" means the Debtors, or any successors
thereto by merger, consolidation, acquisition, or otherwise, on and after the
Effective Date, including all of the Debtors' non-debtor subsidiaries, and
excluding Epic, which will be merged into Reorganized Falcon under this Plan.

"REORGANIZED FALCON" means Falcon, or any successor thereto by
merger, consolidation, or otherwise, on and after the Effective Date, and Epic,
which will be merged into Reorganized Falcon under this Plan.

"RESERVED RIGHTS OF ACTION" refers to and includes any and all
rights, claims, rights of action, causes of action, defenses, and counterclaims
accruing to the Debtors or their Estates, including, but not limited to, the
Avoiding Power Causes of Action and the Audit

Committee Report Retained Rights of Action, but excluding the Committee's
Avoiding Power Causes of Action.

"RIGHTS OFFERING" has the meaning set forth in Article V.C.4.

"RIGHTS OFFERING AMOUNT" means the aggregate consideration for
the Rights Offering, which will be equal to $30.0 million.

"RIGHTS OFFERING ENTERPRISE VALUE" means, for the purposes of
the Rights Offering only, the value of the Reorganized Debtors on the Effective
Date, which has been fixed at $145 million.

"RIGHTS OFFERING EQUITY VALUE" means (x) the Rights Offering
Enterprise Value minus (y) the Effective Date Indebtedness plus (z) Cash on the
Effective Date after giving effect to the transactions contemplated under this
Plan.

"RIGHTS OFFERING FUNDING DATE" means the proposed date on
which the Electing Holders shall be required to pay to the Debtors the purchase
price for the Rights Offering Shares, which shall be not less than three
Business Days prior to the proposed Effective Date.

"RIGHTS OFFERING SHARES" means the total number of shares of
New Common Stock to be issued pursuant to the Rights Offering, which shall be
equal to (x) the Rights Offering Amount divided by (y) the Subscription Purchase
Price, which shares shall be subject to dilution by the Management Incentive
Plan.
"SCHEDULED" means set forth on the Schedules.

"SCHEDULES" means the Schedules of Assets and Liabilities
filed by the Debtors on March 7, 2005, as the same have been or may be amended
from time to time before the Effective Date.

"SECURED CLAIM" means any Claim, including interest, fees,
costs, and charges to the extent allowable pursuant to Code section 506(b) and
this Plan, that is secured by a valid and unavoidable lien on property in which
the Estates have an interest, or that is subject to recoupment or setoff under
Code section 553, to the extent of the value of the claimholder's interest in
the Estates' interest in such property, or to the extent of the amount subject
to recoupment or setoff, as applicable, as determined under Code sections 506,
553, and/or 1129(b)(2)(A)(i)(II), as applicable.

"SECURED TAX CLAIM" means any Claim of a governmental unit for
taxes which, by operation of applicable non-bankruptcy law, is a Secured Claim.

"SECURITIES ACT" refers to the Securities Act of 1933, as
amended.

"SHAREHOLDERS' AGREEMENT" means the agreement that all those
entitled to receive shares of New Common Stock under this Plan, and all
purchasers of New Common Stock pursuant to the Rights Offering shall be required
to execute prior to receiving their shares. A copy of the Shareholders'
Agreement shall be Filed with the Court at least five days prior to the hearing
on the Disclosure Statement.

"STANDING ORDER" means the "Standing Order #1 Establishing
Notice And Motion Procedures" entered in the Cases on February 4, 2005.

"SUBSCRIPTION PURCHASE PRICE" means the price per share of New
Common Stock to be purchased in the Rights Offering which shall be equal to (x)
the Rights Offering Equity Value divided by (y) the Effective Date Shares
Outstanding.

"SUBSCRIPTION RIGHTS ELECTION FORM" means the form used to
elect participation in the Rights Offering, which shall be Filed at least five
days prior to the hearing on the Disclosure Statement.

"SUBSCRIPTION RIGHTS RECORD DATE" means the date upon which
persons in Class 6A must have Claims to be eligible to participate in the Rights
Offering, which date shall be the date on which the order approving the
Disclosure Statement is entered on the Bankruptcy Court's docket.

"SUBSCRIPTION SHARE" of any Electing Holder means a number of
Rights Offering Shares equal to the product of (x) such Electing Holder's Class
6A Share and (y) the Rights Offering Shares; provided, however, that if the
number of Rights Offering Shares constituting such Subscription Share is (A)
less than one Rights Offering Share, such Subscription Share shall be rounded
down to zero, and (B) at least one Rights Offering Share, such Subscription
Share shall be rounded up or down to the nearest whole share (with any fraction
equal to or greater than one half being rounded up); provided, further, that if
such number Rights Offering Shares shall have been rounded up to the nearest
whole share and such Electing Holder shall have failed to fund its Additional
Purchase Price (defined in Article V.C.4 below) as and when required in
accordance with the terms of this Plan, such number of Rights Offering Shares
shall be rounded down to the nearest whole share.

"TERM A LOAN" refers to the $70 million non-amortizing term
loan that the Debtors obtained pursuant to the Term A Loan Agreement.

"TERM A LOAN AGREEMENT" refers to that portion of the Fleet
Revolver/Term A Loan Agreement pursuant to which the Debtors obtained the $70
million non-amortizing Term A Loan from the Term A Secured Lenders.

"TERM A LOAN AGENT" means DDJ, in its capacity as successor
agent under the Term A Loan Agreement.

"TERM A SECURED LENDERS" refers to the lenders under the Term
A Loan Agreement.

"TERM A SECURED LENDERS' CLAIMS" means the prepetition and
postpetition Claims of the Term A Secured Lenders for principal and interest
arising under the Term A Loan Agreement, which Claims shall be deemed Allowed
Claims in the aggregate amount of $70 million, plus default interest in the
amount of 1% from November 15, 2004 to the Effective Date, plus contract
interest and other charges provided for under the Term A Loan Agreement from the
Petition Date to the Effective Date, less payments made thereon after the
Petition Date.

"TERM B LOAN AGREEMENT" refers to the "Loan and Securities
Purchase Agreement," dated October 6, 2004, as amended and restated from time to
time, between Falcon, Shelby Williams, Epic, and S&J, as borrowers, and the
other Debtors, as guarantors, on the one hand, and the Term B Secured Lenders,
on the other hand, pursuant to which the Debtors issued $45.7 million in Senior
Secured Notes due 2007.

"TERM B SECURED LENDERS" refers to OCM POF II, Whippoorwill
and Dalton, as successors to the original prepetition lenders under the Term B
Loan Agreement.

"TERM B SECURED LENDERS' CLAIMS" means the prepetition and
postpetition Claims of the Term B Secured Lenders arising under the Term B Loan
Agreement, which Claims shall be deemed Allowed Claims in the aggregate amount
of $45.7 million.

"TERM B SECURED LENDERS' SHARES" means the total number of
shares of New Common Stock to be issued to the Term B Secured Lenders on account
of the Term B Secured Lenders' Claims, which shall be equal to (w) the Effective
Date Shares Outstanding minus (x) the Rights Offering Shares, which shares shall
be subject to dilution by the Management Incentive Plan.

"TERM COMPONENT LOAN AGREEMENT" refers to Amendment No. 1 as
that portion of the Fleet Revolver/Term A Loan Agreement pursuant to which the
Debtors obtained the $3 million non-amortizing term component loans from the
Term Component Loan Lenders.

"TERM COMPONENT LOAN AGENT" means the agent under the Term
Component Loan Agreement.

"TERM COMPONENT LOAN LENDERS" refers to the lenders under the
Term Component Loan Agreement.

"TERM COMPONENT LOAN LENDERS' CLAIMS" means the prepetition
and postpetition Claims of the Term Component Loan Lenders for principal and
interest arising under the Term Component Loan Agreement.

"TRUSTEE OF THE CREDITOR TRUST" means the trustee of the
Creditor Trust having the powers and responsibilities set forth in the Creditor
Trust Agreement or any of his or her successors appointed pursuant to the
Creditor Trust Agreement.

"U.S. TRUSTEE" means the Office of the United States Trustee.

"VOTING DEADLINE" means the deadline specified in the
Disclosure Statement, the Ballot or related documents approved by the Bankruptcy
Court for: (1) submitting Ballots to accept or reject this Plan in accordance
with section 1126 of the Code; (2) with respect to the Class 6A Claimholders,
indicating an interest in participating in the Rights Offering pursuant to the
Subscription Rights Election Form included therewith; and (3) submitting a Class
6B Election Form.

"VOTING INSTRUCTIONS" means the instructions for voting to
accept or reject this Plan contained in the section of the Disclosure Statement
titled: "Voting and Confirmation

Procedures" and specified in the Ballots and the Master Ballots, as approved by
the Bankruptcy Court.

"WHIPPOORWILL" means Whippoorwill Associates, Inc., as agent
for its various discretionary funds and accounts.

B. INTERPRETATION, RULES OF CONSTRUCTION, COMPUTATION OF TIME.

1. DEFINED TERMS.

Any term used in this Plan that is not defined in this Plan,
but that is used in the Code or Bankruptcy Rules, has the meaning assigned to
that term in the Code or Bankruptcy Rules, as applicable, unless the context
requires otherwise.

A reference to or use of a definition from another document
shall not effect the assumption of any executory contract, nor is the reference
to or use of the definition subject to whether such document is still in effect
or is subject to breach, default, or rejection.

2. RULES OF INTERPRETATION.

For purposes of this Plan:

(a) Whenever from the context it is appropriate, each
term, whether stated in the singular or the plural,
shall include both the singular and the plural.

(b) Except as otherwise provided in the context, any
reference to an existing document or exhibit Filed or
to be Filed with the Bankruptcy Court means such
document or exhibit as it may have been or may be
amended, modified, or supplemented through and
including the Confirmation Date.

(c) Except as otherwise provided in the context: (i) all
references to Articles, Subarticles, Paragraphs,
Subparagraphs, and Exhibits are references to
Articles, Subarticles, Paragraphs, Subparagraphs, and
Exhibits of or to this Plan; and (ii) any reference
to an Article, Subarticle, Paragraph, or

Subparagraph includes all component Articles,
Subarticles, Paragraphs, and Subparagraphs of the
referenced Article, Subarticle, Paragraph, or
Subparagraph.

(d) The words "herein," "hereof," "hereto," "hereunder"
and others of similar import refer to this Plan in
its entirety rather than to only a particular portion
of this Plan.

(e) Captions and headings to Articles, Subarticles,
Paragraphs, and Subparagraphs, are inserted for
convenience of reference only and are not intended to
be a part of or to affect the interpretation of this
Plan.

(f) Wherever the terms of the Confirmation Order or this
Plan contain a specific clause regarding a particular
provision, such specific clause shall control over
any general provision; provided, however, that the
whole of each of the Confirmation Order and this Plan
shall be taken together to give effect to every part
thereof, if reasonably practicable.

(g) To the extent that there is any conflict between the
Confirmation Order, this Plan, or the Plan Documents,
the following order of priority shall apply: first,
the Confirmation Order; second, this Plan; third, the
Plan Documents.

(h) The rules of construction set forth in Code section
102 shall apply.

3. TIME PERIODS.

In computing any period of time prescribed or allowed by this
Plan, the provisions of Bankruptcy Rule 9006(a) shall apply.

If any act under this Plan is required to be made or performed
on a date that is not a Business Day, then the performance of such act may be
completed on the next succeeding Business Day, but shall be deemed to have been
completed as of the required date.

4. ROUNDING.

Unless the context otherwise provides, and subject to the
prescribed rounding in the definition of Subscription Share, in accordance with
standard mathematical rules, any dollar amount shall be rounded up or down to
the nearest whole dollar, and every fraction of a share of stock shall be
rounded up or down, except as otherwise provided herein.

5. EXHIBITS.

All Exhibits to this Plan are incorporated into and are a part
of this Plan as if set forth in full therein.

II.

DESIGNATION AND VOTING OF CLASSES OF CLAIMS AND INTERESTS
---------------------------------------------------------

The following is a designation of the Classes of Claims and
Interests under this Plan. In accordance with Code section 1123(a)(1),
Administrative Claims, Administrative Tax Claims, and Priority Tax Claims have
not been classified. A Claim or Interest is classified in a particular Class
only to the extent that the Claim or Interest qualifies within the description
of that Class and is classified in a different Class to the extent that any
remainder of the Claim or Interest qualifies in a different Class.

A. SECURED CLAIMS.

1. FLEET REVOLVER CLAIM (CLASS 1A).

Class 1A consists of the Allowed Fleet Revolver Claims. The
Holders of Class 1A Claims are not entitled to vote on this Plan.

2. TERM COMPONENT LOAN LENDER CLAIMS (CLASS 1B).

Class 1B consists of the Allowed Secured Claims of the Term
Component Loan Lenders. Holders of Class 1B Claims are not entitled to vote on
this Plan.

3. TERM A LENDER SECURED CLAIMS (CLASS 2).

Class 2 consists of the Allowed Secured Claims of the Term A
Secured Lenders. Holders of Class 2 Claims are entitled to vote on this Plan.

4. TERM B LENDER SECURED CLAIMS (CLASS 3).

Class 3 consists of the Allowed Secured Claims of the Term B
Secured Lenders. Holders of Class 3 Claims are entitled to vote on this Plan.

5. OTHER SECURED CLAIMS (CLASS 4).

Class 4 consists of the Allowed Other Secured Claims. To the
extent that there are two or more Holders of Allowed Other Secured Claims, each
Holder shall be separately classified in Classes 4A, 4B, et seq. Holders of
Class 4 Claims are not entitled to vote on this Plan.

B. UNSECURED CLAIMS.

1. OTHER PRIORITY CLAIMS (CLASS 5).

Class 5 consists of the Allowed Other Priority Claims. Holders
of Class 5 Claims are not entitled to vote on this Plan.

2. GENERAL UNSECURED CLAIMS, INCLUDING THE NOTEHOLDERS' CLAIMS
(CLASS 6A).

Class 6A consists of the General Unsecured Claims, other than
Class 6C Claims, and includes the General Unsecured Claims of landlords to the
Debtors, non-Debtor parties to rejected executory contracts and unexpired
leases, the Noteholders, certain members of Class 6B, and other general trade
creditors. Holders of Class 6A Claims are entitled to vote on this Plan.

3. INSURANCE-COVERED CLAIMS (CLASS 6B).

Class 6B consists of the General Unsecured Claims that are
Insurance-Covered Claims. In the event the Holder of a Class 6B Claim elects the
treatment set forth in subparagraph (b) of Article III.B.8 hereof, and thereby
retains its Class 6A Claim, if any, each such Holder shall have the same voting
rights as all other Class 6A Claim Holders on account of such retained Class 6A
Claim.

4. CLAIMS OF JUNIOR CONVERTIBLE DEBENTURE HOLDERS (CLASS 6C).

Class 6C consists of the Claims of the Junior Convertible
Debenture Holders. Holders of Class 6C Claims are not
entitled to vote on this Plan.

C. INTERESTS.

1. OUTSTANDING FALCON INTEREST HOLDERS, INCLUDING HOLDERS OF
OLD FALCON COMMON STOCK AND PRE-PETITION WARRANTS
(CLASS 7A).

Class 7A consists of Falcon Interests, which include Holders
of Old Falcon Common Stock and Pre-Petition Warrants. Holders of Class 7A Falcon
Interests are not entitled to vote on this Plan.

2. OUTSTANDING EPIC INTEREST HOLDERS (CLASS 7B).

Class 7B consists of Epic Interest Holders. Holders of Class
7B Epic Interests are not entitled to vote on this Plan.

III.

TREATMENT OF CLASSES OF CLAIMS AND INTERESTS
--------------------------------------------

A. UNCLASSIFIED CLAIMS.

1. ADMINISTRATIVE CLAIMS AND ADMINISTRATIVE TAX CLAIMS.

a. GENERAL.

Subject to Article III.A.1.b and III.A.3, as soon as
practicable after the later of: (a) the Effective Date; and (b) the date on
which such Claim becomes an Allowed

Administrative Claim or Allowed Administrative Tax Claim, the Reorganized
Debtors shall pay to each Holder of such Allowed Administrative Claim or Allowed
Administrative Tax Claim, on account of and in full satisfaction of such Allowed
Administrative Claim or Allowed Administrative Tax Claim, Cash equal to the
amount of such Allowed Administrative Claim or Allowed Administrative Tax Claim,
unless the Holder agrees to other treatment of such Claim. Except as to
Administrative Claims subject to a Final Fee Application, an Administrative
Claim shall be an Allowed Administrative Claim in the amount set forth in the
request for payment on the last date to timely File an objection to such Claim,
if no objection is timely Filed, or if an objection is timely Filed, on the date
that such objection is resolved by Final Order, and in the amount determined by
Final Order.

b. BAR DATES.

i. GENERAL PROVISIONS.

Except as previously ordered by the Bankruptcy Court, requests
for payment of Administrative Claims that were incurred on or after September 1,
2005 but on or before the Effective Date, other than Administrative Tax Claims
as provided in Article III.A.1.b.iii, and Claims that are the subject of Final
Fee Applications as provided in Article III.A.1.b.ii, must be Filed no later
than 30 days after the mailing of the Notice of Effective Date. Any objection to
a request for payment of an Administrative Claim must be Filed by the applicable
Objection Deadline provided under Articles VI.A.1. Pursuant to a separate order,
the Bankruptcy Court has already set a bar date of September 30, 2005, for
Administrative Claims, other than Administrative Tax Claims and Claims that are
the subject of Final Fee Applications, arising after the Petition Date but on or
before August 31, 2005.

Holders of Administrative Claims (including Professional
Persons requesting compensation or reimbursement of expenses) that are required
to File a request for payment of

an Administrative Claim or Final Fee Application, and that do not File such a
request or Final Fee Application by the applicable bar date, shall be forever
barred from asserting such Claims against the Debtors, the Committee, the
Creditor Trust, the Reorganized Debtors, any of their respective properties and
any of their current or former employees, officers, members, directors, agents,
or representatives, any Professional Persons employed by any of them, or
recipients of distributions from the Estates in respect of Allowed Claims,
including Allowed Administrative Claims.

Notwithstanding the Administrative Bar Date, or any other
provision of this Plan, the Reorganized Debtors shall pay in full in Cash any
obligations under an Administrative Transaction that has not been breached,
terminated, or fully performed as of the Effective Date, Administrative Claim
for salary, wages, benefits, or expense reimbursements to an employee of the
Debtors, regardless of whether a request for payment has been Filed, when and as
such Claim becomes due and owing in the normal course of business.

ii. PROFESSIONAL PERSONS.

All Professional Persons or other Persons requesting
compensation or reimbursement of expenses under Code sections 327, 328, 330,
331, 503(b)(2), and/or 1103 for services rendered before the Effective Date,
shall File an application for final allowance of compensation and reimbursement
of expenses incurred from the Petition Date through Confirmation ("Final Fee
Application") no later than 30 days after the Effective Date, or such other date
ordered by the Bankruptcy Court after notice and a hearing on an application to
extend such deadline Filed by a Professional Person. The Reorganized Debtors
shall prepare an appropriate notice of the hearing on all timely Filed Final Fee
Applications, and obtain from the Bankruptcy Court a hearing date for such Final
Fee Applications, and a date on which all objections to Final Fee Applications
must be Filed. Notice of such Final Fee Applications, the

hearing date, and the last date to object shall be Filed and also served by the
Reorganized Debtors on the Persons on the All Notices List and all Professional
Persons who timely File Final Fee Applications. Administrative Claims subject to
a Final Fee Application shall be Allowed Administrative Claims only to the
extent provided by Final Order of the Bankruptcy Court.

Any reasonable fees and expenses incurred by Professional
Persons after the Effective Date, shall be paid by the Reorganized Debtors
without further notice and a hearing by the Bankruptcy Court.

iii. ADMINISTRATIVE TAX CLAIMS.

Administrative Tax Claims shall be Allowed Administrative Tax
Claims only if: (a) within the later of: (i) 30 days after the Effective Date;
and (ii) 120 days after the filing of the tax return for such taxes, the Holder
of such Claim Files a motion requesting payment of such Administrative Tax
Claim; and (b) such Claim is allowed by Final Order.

iv. DIP FACILITY CLAIMS.

On the Effective Date, the DIP Facility Claims shall be paid
in full in Cash. The DIP Facility Claims shall be
deemed to be Allowed Claims.

2. PRIORITY TAX CLAIMS.

Except as otherwise agreed to by the Debtors or the
Reorganized Debtors and the applicable taxing authority, the Reorganized Debtors
shall pay to each Holder of an Allowed Priority Tax Claim deferred Cash
payments, over a period not exceeding six years from the date of assessment of
such Allowed Priority Tax Claim, in an aggregate amount equal to the amount of
such Allowed Priority Tax Claim, plus interest from the Effective Date on the
unpaid portion of such Allowed Priority Tax Claim (without penalty of any kind)
at the rate prescribed below. The payment of each such Allowed Priority Tax
Claim shall be made in equal quarterly installments with the first installment
due on the latest of: (i) the Effective Date, (ii) 30 calendar

days after the date on which an Order allowing such Allowed Priority Tax Claim
becomes a final order and (iii) such other date or time as may be agreed to by
the Holder of such Allowed Priority Tax Claim and the Debtors or the Reorganized
Debtors. Each installment shall include simple, fixed interest accruing on and
after the Effective Date on the unpaid portion of such Allowed Priority Tax
Claim, without penalty of any kind, at the rate of interest in effect on the
Effective Date under Internal Revenue Code section 6621(a)(2) with respect to
underpaid taxes; provided, however, that the Reorganized Debtors shall have the
right from time to time to pay any Priority Tax Claim, or any remaining balance
of such Claim, in part or in full on or after the Effective Date, without
premium or penalty of any kind.

3. PRIOR BAR DATES.

Nothing in Article III.A shall constitute a waiver of any
applicable bar date or deadline for seeking payment of Administrative Claims,
Administrative Tax Claims, Priority Tax Claims, or any other Claims. Any Holder
of any Administrative Claims that is required to File a request for payment of
such Administrative Claim and does not File and properly serve such a request by
the applicable bar date shall be forever barred from asserting any such
Administrative Claims against the Debtors, the Reorganized Debtors, their
estates, or their property, or the Creditor Trust.

B. CLASSIFIED CLAIMS AND INTERESTS.

As required by the Code, this Plan places Claims and Interests
into various Classes according to their right to priority and other relative
rights. This Plan specifies whether each Class of Claims or Interests is
impaired or unimpaired, and this Plan sets forth the treatment each Class will
receive.

1. CLASS 1A (FLEET REVOLVER CLAIMS).

Class 1A is unimpaired under this Plan. During the pendency of
the Cases, all Fleet Revolver Claims were paid in full, in Cash, and such Claims
are hereby discharged.

2. CLASS 1B (TERM COMPONENT LOAN LENDERS' CLAIMS).

Class 1B is unimpaired under this Plan. During the pendency of
the Cases, all Term Component Loan Claims were paid in full, in Cash, and such
Claims are hereby discharged.

3. CLASS 2 (TERM A SECURED LENDERS' CLAIMS).

Class 2 is impaired under this Plan. The Term A Secured
Lenders will receive the following treatment: (a) the default interest at the
rate of 1% per annum, for the period from November 15, 2004 through the
Effective Date, shall be paid on the Effective Date; (b) the Excess Plan Funding
Proceeds, if any, shall be paid on the Effective Date; and (c) the obligation
under the Term A Loan Agreement in the amount of $70 million, less any payment
of Excess Plan Funding Proceeds, if any, shall be Reinstated on amended terms,
as set forth in the Amended Term A Loan Agreement.

4. CLASS 3 (TERM B SECURED LENDERS' CLAIMS).

Class 3 is impaired under this Plan. On, or as soon as
practicable after, the Effective Date, in full satisfaction of the Term B
Secured Lenders' Claims, each Term B Secured Lender shall receive its Pro Rata
share of the Term B Secured Lenders' Shares.

5. CLASS 4 (OTHER SECURED CLAIMS).

Class 4 is unimpaired under this Plan. Unless the Holders of
such Allowed Class 4 Claims and the Debtors agree to a different treatment, each
Allowed Class 4 Claim shall be Reinstated.

6. CLASS 5 (OTHER PRIORITY CLAIMS).

Class 5 is unimpaired under this Plan. Unless the Holders of
such Allowed Class 5 Claims and the Debtors agree to a different treatment, each
Holder of such Allowed Class 5 Claim shall receive one of the following
alternative treatments, at the election of the Debtors:

(a) to the extent then due and owing on the Effective
Date, such Claim shall be paid in full in Cash by the
Reorganized Debtors on the Effective Date;

(b) to the extent not due and owing on the Effective
Date, such Claim shall be paid in full in Cash by the
Reorganized Debtors when and as such Claim becomes
due and owing in the normal course of business.

7. CLASS 6A (GENERAL UNSECURED CLAIMS, INCLUDING THE NOTEHOLDERS'
CLAIMS).

Class 6A is impaired under this Plan. On account of their
Allowed Class 6A Claims, the Creditor Trust Beneficiaries, except OCM POF II and
Whippoorwill, or any fund or account controlled by Oaktree or Whippoorwill
Associates, Inc., other than with respect to Claims purchased by such parties on
or after August 29, 2005, shall receive from the Creditor Trust Assets their Pro
Rata share of the Committee's Preference Action Litigation Proceeds, if any, and
the first $1.0 million of the Committee's Fraudulent Transfer Action Litigation
Proceeds collected, if any. Any of the Committee's Fraudulent Transfer Action
Litigation Proceeds in excess of $1.0 million, if any, shall be distributed to
all Creditor Trust Beneficiaries, including OCM POF II and Whippoorwill on a Pro
Rata basis.

In addition, all Allowed Class 6A Claim Holders shall receive
from the Reorganized Debtors the Audit Committee Report Retained Rights of
Action Litigation

Proceeds, if any, as follows: (a) the first $4.0 million of the Audit Committee
Report Retained Rights of Action Litigation Proceeds that the Reorganized
Debtors collect, if any, shall be distributed Pro Rata to all Holders of Allowed
Class 6A Claims except OCM POF II and Whippoorwill, or any fund or account
controlled by Oaktree or Whippoorwill Associates, Inc., other than with respect
to Claims purchased by such parties on or after August 29, 2005, and (b) all
Audit Committee Report Retained Rights of Action Litigation Proceeds in excess
of $4.0 million shall be distributed Pro Rata to all Holders of Allowed Class 6A
Claims, including OCM POF II and Whippoorwill. The Reorganized Debtors shall
confer with the Creditor Trust Monitoring Committee (as defined in Article V.B.1
hereof), regarding any major developments in the prosecution of the Audit
Committee Report Retained Rights of Action.

Each Class 6A Claim Holder who is not a Noteholder shall have
the option, by marking a box on the Ballot, to opt out of assigning to the
Creditor Trust their Individual Creditor Claims. Unless the individual Class 6A
Claim Holder (other than a Noteholder), opts out of transferring its Individual
Creditor Claims, such Claims shall automatically be transferred to the Creditor
Trust. Each Class 6A Claim Holder who is a Noteholder is deemed to have opted
out of the assignment of its Individual Creditor Claims to the Creditor Trust
and may contact the Trustee for the Creditor Trust and execute appropriate
assignment agreements if such Creditor elects to assign its Individual Creditor
Claims to the Creditor Trust at a later date.

The Creditor Trust shall pursue the Individual Creditor Claims
on behalf of all those Class 6A Claim Holders who either do not opt out of
assigning such Claims to the Creditor Trust, in the case of Class 6A Claim
Holders who are not Noteholders, or who assign such Claims to the Creditor
Trust, in the case of Class 6A Claim Holders who are Noteholders;

provided, however, that such litigation shall not be funded with any of the
proceeds of the Creditor Trust Litigation Fund or any of the other Creditor
Trust Assets.

Eligible Class 6A Claimholders shall also have the right to
participate in the Rights Offering, subject to the conditions set forth in the
Plan and the Subscription Rights Election Form, although such participation will
not be on account of such Holders' Class 6A Claims.

8. CLASS 6B (INSURANCE-COVERED CLAIMS).

Class 6B is impaired under this Plan. Holders of Allowed Class
6B Claims shall be entitled to elect one of the following alternative
treatments:

(a) be permitted to proceed to final judgment in
non-Bankruptcy Court, which shall be satisfied only
from the proceeds of the Insurance Policies;
provided, however, that such Holder of an Allowed
Class 6B Claim waives any Class 6A Claim; or

(b) have any Allowed Class 6B Claim determined by the
Bankruptcy Court, except, in the case of personal
injury tort or wrongful death Claims, by the district
court of the United States in accordance with 28
U.S.C ss. 157(b)(5), which Claims shall be paid out
of the proceeds of the Insurance Policies. To the
extent that the Insurance Policies do not fully cover
an Allowed Class 6B Claim, any excess shall be
treated as an Allowed Class 6A Claim.

Each Class 6B Claim Holder will receive a "Class 6B Election
Form" on which each Holder will be able to elect how its Class 6B Claim should
be treated under this Plan. The Class 6B Election Form shall be Filed at least
five days prior to the hearing on the Disclosure Statement. Those Class 6B Claim
Holders who fail to elect a treatment by submitting a Class 6B

Election Form by the Voting Deadline shall be deemed to have elected the
treatment described in subsection (b) of the paragraph above.

9. CLASS 6C (JUNIOR CONVERTIBLE DEBENTURE HOLDERS).

Class 6C is impaired under this Plan. On the Effective Date,
the Junior Convertible Debentures shall be cancelled and the Holders of Allowed
Class 6C Claims shall not receive or retain any distributions under this Plan
because the contractual subordination provisions that apply to these Claims will
be enforced.

10. CLASS 7A (FALCON INTEREST HOLDERS).

Class 7A is impaired under this Plan. On the Effective Date,
the Class 7A Falcon Interests shall be cancelled and the Holders of Allowed
Class 7A Falcon Interests shall not receive or retain any distributions under
this Plan.

11. CLASS 7B (EPIC INTEREST HOLDERS).

Class 7B is impaired under this Plan. On the Effective Date,
the Epic Interest shall be cancelled and the Holders of Epic Interests shall not
receive or retain any distributions under this Plan.

IV.

TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
-----------------------------------------------------

A. REJECTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES.

1. GENERALLY.

As of the Effective Date, the following executory contracts
and unexpired leases shall be rejected to the extent, if any, that they
constitute executory contracts or unexpired leases of the Debtors, including any
remaining obligations of the Debtors under any executory contract or unexpired
lease assigned by the Debtors prior to the Petition Date: (a) each executory
contract or unexpired lease of the Debtors that: (i) has not been previously
assumed, assumed and

assigned, or rejected by Final Order; (ii) is not the subject of a motion
pending on the Effective Date to assume or to assume and assign; or (iii) is not
assumed and assigned under Article IV.B; (b) each contract or lease of the
Debtors that has expired by its own terms before the Confirmation Date; (c) any
purchase orders executed or issued by the Debtors before the Petition Date which
have not been previously performed, assumed and assigned, or terminated; (d) any
contract providing for support, guaranty, contribution, indemnity, and similar
obligations; and (e) the executory contracts and unexpired leases listed on
Exhibit "A", which will be Filed at least five days prior to the hearing on the
Disclosure Statement and may be amended through the date that is ten days prior
to the Confirmation Hearing, on notice Filed by the Debtors and served on the
parties affected by such amendments. To the extent that an executory contract or
unexpired lease has previously been rejected by the Debtors pursuant to an order
of the Bankruptcy Court, such rejection shall not be affected by this Plan. The
assumption or rejection of any contracts or leases pursuant to the provisions of
this Article IV shall be only to the extent that such assumed or rejected
contracts or leases constitute executory contracts and unexpired leases within
the meaning of section 365 of the Code. The listing of a contract or lease by
category above, or on Exhibit "A" shall not constitute an admission by the
Debtors, the Estates, or the Reorganized Debtors that such contract or lease is
an executory contract or unexpired lease, or that the Debtors or the Estates
have any liability thereunder, nor shall such listing, the absence of an
objection thereto, or Confirmation constitute a finding or determination that
any such contract or lease is an executory contract or unexpired lease.

2. APPROVAL OF REJECTION.

The Confirmation Order shall constitute an order of the
Bankruptcy Court approving the rejection of the executory contracts and
unexpired leases as provided for under this Plan pursuant to Code sections 365
and 1123(b)(2). If an executory contract previously has been

rejected, or is hereby rejected, under which the Debtors are a licensor of
intellectual property (as defined in Code section 101(35A)), the licensee under
such contract shall retain and may exercise its rights and remedies under Code
section 365(n); provided, however, that nothing in this Plan, or any Exhibits to
this Plan, shall constitute an admission by the Debtors, the Estates or the
Reorganized Debtors that any Debtor is a licensor of intellectual property, or
that Code sections 101(35A) or 365(n) apply to any such contract.

3. OBJECTIONS TO REJECTION.

Any party in interest wishing to object to the rejection of an
executory contract or unexpired lease identified for rejection, as provided
under this Plan, shall File and serve on the parties listed in Article IX.Q
hereof, any objection by the same deadline and in the same manner established
for filing objections to Confirmation, unless the executory contract or
unexpired lease is the subject of an amendment to Exhibit "A", in which case the
deadline is the date that is the earlier of: (a) 20 days after the date of such
amendment; or (b) the day that is five days before the Confirmation Hearing.
Failure to File and serve any such objection by the applicable deadline shall
constitute consent to the rejection.

4. BAR DATE FOR CLAIMS.

Any Claim by any party to an executory contract or unexpired
lease rejected hereunder, shall be classified in Class 6A; provided, however,
that: (a) any Claim arising from rejection of an executory contract or unexpired
lease which has not been barred by a prior order of the Bankruptcy Court, shall
be forever barred and shall not be enforceable unless a proof of Claim is Filed
within 30 days after the mailing of the Notice of Effective Date; and (b)
nothing in Article IV.A shall constitute a waiver of the Claims Bar Date, if
applicable.

B. ASSUMPTION AND ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND
UNEXPIRED LEASES.

1. GENERALLY.

Except as otherwise provided in this Plan, or in any Final
Order, on the Effective Date, pursuant to Code section 365, each of the
executory contracts and unexpired leases designated for assumption or assumption
and assignment and listed on Exhibit "B", which shall be Filed at least five
days prior to the hearing on the Disclosure Statement and may be amended through
the date that is ten days prior to the Confirmation Hearing, by notice Filed by
the Debtors and served on the parties affected by such amendment, shall be
assumed by the Debtors in Possession, or assumed and assigned to the assignee
set forth on Exhibit "B".

Each executory contract and unexpired lease identified for
assumption and assignment, shall be assumed and assigned, only to the extent, if
any, that it constitutes an executory contract or unexpired lease on the
Effective Date. The listing of a contract or lease by category above, or on
Exhibit "B", does not constitute an admission by the Debtors or the Reorganized
Debtors in that (i) such matter is an executory contract or unexpired lease
within the meaning of section 365 of the Code, (ii) the Debtors must assume such
matter in order to continue to receive or retain rights, benefits, or
performance thereunder or that any Claim under such matter must be paid or
default cured if it is not an executory contract or unexpired lease, or (iii)
such matter is a valid contract or lease. Any contract or lease assumed pursuant
to this Plan shall be assumed as previously amended or otherwise modified by the
parties thereto, whether before or after the Petition Date.

Any executory contract or unexpired lease that the Debtors
assume or assume and assign shall be deemed to be a permitted assignment
notwithstanding a provision in such contract or lease requiring consent of the
nondebtor party to such contract or lease.

The Debtors shall list on Exhibit "B" those assumed or assumed
and assigned unexpired leases in which the Debtors propose to grant (and have
perfected) a security interest, mortgage, or other lien. Any nondebtor party to
such contract or unexpired lease who does not File an objection pursuant to
Article IV.B.3 shall be deemed to have consented affirmatively and
unconditionally to both (a) the grant of a security interest, mortgage, or other
lien in such lease and (b) the recording or other act to perfect such security
interest, mortgage, or other lien, and shall thereafter be forever prohibited
and barred from objecting to any such encumbrance.

The execution and recording of any memorandum of lease
relating to any unexpired lease listed on Exhibit "B" is hereby exempt from any
law or requirement requiring lessor consent or joinder, whether express or
otherwise, to such execution or recordation. The Reorganized Debtors, or any
agent or representative of the foregoing, hereby are authorized to serve upon
all filing and recording officers a notice, in connection with the execution,
filing and recording of any memoranda of lease (whether recorded or unrecorded)
in accordance with this Plan, to evidence and implement this paragraph. The
appropriate state or local government filing and recording officers are hereby
directed to accept for filing or recording any and all memoranda of lease to be
executed, Filed and recorded in accordance with this Plan and the exhibits
thereto, without need for lessor consent or joinder to such execution or
recordation, and without the presentation of any affidavits, instruments, or
returns otherwise required for recording, other than the Confirmation Order. The
Bankruptcy Court retains jurisdiction to enforce the foregoing direction, by
contempt proceedings or otherwise.

2. APPROVAL OF ASSUMPTION AND ASSUMPTION AND ASSIGNMENT.

The Confirmation Order shall constitute an order of the
Bankruptcy Court approving assumption and assumption and assignment of the
executory contracts and unexpired

leases, as provided for under this Plan, pursuant to Code section 365, as of the
Effective Date, to the extent such contracts or leases are executory contracts
or unexpired leases.

3. OBJECTIONS TO ASSUMPTION OR ASSUMPTION AND ASSIGNMENT.

Any party in interest wishing to object to the assumption or
assumption and assignment of an executory contract or unexpired lease, or the
encumbrance of such assumed or assumed and assigned unexpired lease, shall File
and serve on the parties listed in Article IX.Q hereof, any objection to such
assumption or assumption and assignment and/or encumbrance by the same deadline
and in the same manner established for filing objections to Confirmation, unless
the encumbrance of such executory contract or unexpired leases is the subject of
an amendment to Exhibit "B", in which case the deadline is the date that is the
earlier of: (a) 20 days after the date of such amendment; or (b) five days
before the Confirmation Hearing. Failure to File and serve any such objection by
the applicable deadline shall constitute consent to the assumption or assumption
and assignment, consent to the encumbrance of such assumed or assumed and
assigned unexpired leases, an acknowledgment that there are no defaults or cure
amounts due under the executory contract or unexpired lease identified for
assumption or assumption and assignment, except as set forth in Exhibit "B", and
that adequate assurance of future performance in connection with the proposed
assumption or assumption and assignment has been provided.

If an objection to assumption or assumption and assignment of
an executory contract or unexpired lease is timely Filed and: (a) a Final Order
is entered determining that the executory contract or unexpired lease cannot be
assumed or assigned; or (b) if the Debtors (before the Effective Date) or the
Reorganized Debtors (after the Effective Date) give notice to the other party to
such executory contract or unexpired lease stating that assumption of such
contract or lease is not in the best interests of the Estates or the Reorganized
Debtors in light of

the objection, then the contract or lease shall automatically thereupon be
deemed to have been included on Exhibit "A", and rejected pursuant to Article
IV.A.

If the rejection of an executory contract or unexpired lease
pursuant to Article IV.A gives rise to an Allowed Claim, such Claim shall be
classified in Class 6A; provided, however, that any Claim arising from such
rejection which has not been barred by a prior order of the Bankruptcy Court
shall be forever barred and shall not be enforceable unless a proof of Claim is
Filed within 30 days after the mailing of notice referred to in Article IV.A.

Nothing in Article IV.B shall constitute a waiver of any other
applicable bar date.

4. PAYMENTS RELATED TO ASSUMPTION AND ASSUMPTION AND ASSIGNMENT.

Any monetary defaults, including Claims for actual pecuniary
losses, under each executory contract and unexpired lease to be assumed or
assumed and assigned under this Plan, shall be satisfied, pursuant to Code
section 365(b)(1), by payment of the cure amount, if any as set forth in Exhibit
"B" (or as otherwise agreed by the Reorganized Debtors and the parties to such
executory contract or unexpired lease or as provided in a Final Order, if a
timely objection is Filed to the assumption or assumption and assignment), and
shall be paid on or as soon as practicable after the Effective Date by the
Reorganized Debtors. In the case of a dispute with respect to such cure amount
set forth in a timely Filed objection to the assumption or assumption and
assignment, the Reorganized Debtors shall pay such cure amount on or as soon as
practicable after entry of a Final Order resolving the dispute, and approving
the assumption or assumption and assignment.

C. CONTRACTS ENTERED INTO ON OR AFTER THE PETITION DATE.

All rights under Administrative Transactions that have not
been breached, terminated, or fully performed in accordance with their terms on
or before the Effective Date, shall remain in full force and effect for the
benefit of and as against the Estates. Any requests for

the payment of Claims arising under any Administrative Transaction that has been
breached, terminated, or fully performed as of the Effective Date shall be Filed
within the time period established in Article III.A for the Filing of
Administrative Claims.

GENERAL PROVISIONS FOR EXECUTION AND
IMPLEMENTATION OF THE PLAN
--------------------------

A. GENERAL PROVISIONS.

1. SUBSTANTIVE CONSOLIDATION OF THE DEBTORS.

On the Effective Date, the Debtors' Estates shall be
substantively consolidated for all purposes, including allowance of Claims and
distributions under this Plan, as follows: (i) the assets and liabilities of
each of the Debtors shall be deemed to be the assets and liabilities of all of
the Debtors; (ii) all guarantees by any of the Debtors of the obligations of any
other Debtor existing prior to the Effective Date (regardless whether such
guaranty is secured, unsecured, liquidated, unliquidated, contingent, or
disputed) shall be deemed eliminated so that any Claim against any Debtor and
any guaranty thereof executed by any other Debtor shall be deemed to be a single
obligation of the consolidated Debtors; (iii) any joint liability (including but
not limited to joint and several liability) of any of the Debtors shall be
deemed to be a single obligation of the consolidated Debtors; (iv) each and
every Proof of Claim Filed or to be Filed in the Cases shall be deemed Filed
against the consolidated Debtors and shall be deemed a single Claim against and
obligation of the consolidated Debtors; and (v) the Debtors' intercompany Claims
(which are Claims of one Debtor against another Debtor) shall be eliminated, and
Interests shall be treated as provided in this Plan.

2. LIMITATION OF LIABILITY AND RELEASE BY DEBTORS AND ESTATES OF
ESTATE AGENTS, LENDERS, AND THE BACKSTOP PARTIES.

None of the Estates, the Debtors, the Reorganized Debtors, the
Co-Proponents, the Backstop Parties, the DIP Agent, the DIP Lenders, the Term A
Loan Agent and any predecessors-in-interest, the Term A Secured Lenders and any
predecessors-in-interest, the agent under the Term B Loan Agreement and any
predecessor-in-interest, the Term B Secured Lenders and any
predecessors-in-interest, the agent under the Post-Confirmation Term B Loan
Agreement and any predecessor-in-interest, the Post-Confirmation Term B Secured
Lenders, Oaktree, Whippoorwill Associates, Inc., or the Committee, nor any of
their employees, officers, members, directors, agents, shareholders, or
representatives, nor any professional persons employed or formerly employed by
any of them, shall be liable for violation of any applicable law, rule, or
regulation governing solicitation of acceptance or rejection of a plan or the
offer, issuance, sale or purchase of securities, on account of the solicitation
of acceptance or rejection of this Plan or participation in the offer, issuance,
sale, or purchase of a security, offered or sold under this Plan.

As of the Effective Date, in consideration for the
obligations, modifications of rights and accommodations of the Co-Proponents,
the Backstop Parties, the DIP Agent, the DIP Lenders, the Term A Loan Agent, the
Term A Secured Lenders, the Post-Confirmation Term B Secured Lenders, Oaktree,
Whippoorwill Associates, Inc., and the Term B Secured Lenders under this Plan,
the Debtors, their Estates and the Reorganized Debtors, on their own behalf and
on behalf of their Affiliates (as that term is defined in section 101(2) of the
Bankruptcy Code), (collectively, the "Debtor Releasors"), shall be deemed to
forever release, waive and discharge any and all Claims, demands, debts,
liabilities, obligations, actions, causes of action, suits, sums of money,
accounts, reckonings, covenants, contracts, controversies, agreements, promises
and

rights whatsoever, whenever arising, whether known or unknown, suspected or
unsuspected, contingent or fixed, liquidated or unliquidated, matured or
unmatured, in law, equity, bankruptcy or otherwise, based upon, arising out of,
relating to, by reason of, or in connection with, in whole or in part, any act
or omission, transaction, occurrence, fact or matter from the beginning of time
to the Effective Date, including, without limitation, in any way relating to the
Debtors, any Affiliate of the Debtors, the Debtors' Estates, the Cases, this
Plan, the DIP Facility, the Committee's Adversary Proceeding, or any other
matter which any of the Debtor Releasors or any person or entity claiming by,
from, through, or under any of the Debtor Releasors ever had, now has, or
hereafter can, shall, or may have against the Co-Proponents, the Backstop
Parties, the DIP Agent, the DIP Lenders, the Term A Loan Agent and any
predecessors-in-interest, the Term A Secured Lenders and any
predecessors-in-interest, the agent under the Term B Loan Agreement and any
predecessor-in-interest, the Term B Secured Lenders and any
predecessors-in-interest, the agent under the Post-Confirmation Term B Loan
Agreement and any predecessor-in-interest, the Post-Confirmation Term B Secured
Lenders, Oaktree, Whippoorwill Associates, Inc., or the Term B Secured Lenders
and any predecessors-in-interest, their Affiliates, and any of their respective
employees, officers, members, directors, agents, shareholders, or
representatives, or any professional persons employed or formerly employed by
any of them.

3. VESTING OF ASSETS.

On and after the Effective Date, all assets of the Debtors and
the Estates, tangible and intangible, wherever located, including without
limitation all of the Reserved Rights of Action, and all books and records of
the Debtors shall be vested or revested, as appropriate, in the Reorganized
Debtors, subject to the provisions of this Plan; provided, however, that any
asset transfer to the Reorganized Debtors shall not eliminate or abrogate any
obligation of the Reorganized Debtors or the Debtors under this Plan.

B. CREATION OF THE CREDITOR TRUST.

1. THE TRUSTEE OF THE CREDITOR TRUST.

On the Effective Date, the Creditor Trust will be formed.
Prior to the Effective Date, the Committee, with the approval of the Backstop
Parties, shall select and negotiate the compensation for the Trustee of the
Creditor Trust. First Capital Alliance, Jordan Capital, and ASM Capital
(collectively, the "Three Individual Creditors"), shall have the right to
consent to the Trustee selected, which consent shall not be withheld
unreasonably. The Committee will advise the Backstop Parties and the Three
Individual Creditors of its Trustee of the Creditor Trust selection at least
five days prior to the Confirmation Hearing. If the Three Individual Creditors
do not consent to the Trustee selected by the Committee prior to the
Confirmation Hearing (including, for among other reasons, the terms of
compensation negotiated or potential conflicts of interest), the Bankruptcy
Court shall determine whether they have withheld their consent reasonably at the
Confirmation Hearing unless the parties otherwise agree. The successor to the
Trustee of the Creditor Trust, if any, shall be appointed as provided in the
Creditor Trust Agreement. From time to time after the Effective Date, the
Trustee of the Creditor Trust may employ, engage the services of, and compensate
other persons (which may include employees, temporary employees, or independent
contractors) and professional persons (which may include Professional Persons),
reasonably necessary to assist the Trustee of the Creditor Trust in performing
his or her duties under the Creditor Trust Agreement and this Plan, without the
necessity of further authorization or allowance of fees and expenses by the
Court. The Creditor Trust Agreement shall also provide for a monitoring
committee (the "Creditor Trust Monitoring Committee"), which shall continue to
have standing to be heard by the Bankruptcy Court following the Effective Date,
consisting of two persons to be appointed prior to the Effective Date: one
person to be selected

by the Committee, and a second person to be selected by the Three Individual
Creditors. Members of the Monitoring Committee shall not be compensated by the
Creditor Trust, the Debtors, or the Reorganized Debtors.

The Trustee of the Creditor Trust shall have the following
powers and duties: (i) to distribute all Cash in the Creditor Trust to the
Creditor Trust Beneficiaries in accordance with the terms of the Plan and the
Creditor Trust Agreement; (ii) to retain advisors to assist him or her with
complying with his or her duties pursuant to the terms of the Plan and the
Creditor Trust Agreement; (iii) to invest all Cash in the Creditor Trust pending
distributions to the Creditor Trust Beneficiaries in accordance with the terms
of the Plan and the Creditor Trust Agreement; (iv) to bring the Individual
Creditor Claims held by the Creditor Trust for the benefit of Creditor Trust
Beneficiaries, but which litigation shall not be funded with any of the proceeds
of the Creditor Trust Litigation Fund or any of the other Creditor Trust Assets;
and (v) to bring the Committee's Avoiding Power Causes of Action. The Trustee of
the Creditor Trust shall from time to time confer with the Creditor Trust
Monitoring Committee regarding major developments in the prosecution of such
actions.

2. THE CREDITOR TRUST.

On the Effective Date, or as soon as possible thereafter, the
Reorganized Debtors and the Estates shall transfer the Creditor Trust Assets to
the Creditor Trust. The Debtors' Estates shall continue to own the Committee's
Avoiding Power Causes of Action until the Effective Date. The Committee's
Avoiding Power Causes of Action shall be deemed to be assigned to the Creditor
Trust on the Effective Date. The first $200,000 of the Committee's Avoiding
Power Causes of Action Litigation Proceeds collected shall be used to repay the
cost of the Creditor Trust Litigation Fund to the Reorganized Debtors, with the
balance being earmarked for prosecuting the remaining Committee's Avoiding Power
Causes of Action Litigation Proceeds and for distribution to the Creditor Trust
Beneficiaries on the terms set forth herein.

The Creditor Trust shall maintain a separate bank account for the purpose of
holding the Committee's Fraudulent Transfer Litigation Proceeds. At the
conclusion of the prosecution of the Committee's Avoiding Power Causes of
Action, the Trustee of the Creditor Trust shall use any unused funds for the
purpose of making distributions to the Creditor Trust Beneficiaries in
accordance with the terms of the Plan and the Creditor Trust Agreement. The
Creditor's Trust Agreement shall govern the Creditor Trust, and, to the extent
any terms herein differ from the Trust Agreement, the Creditor Trust Agreement
shall govern. The Debtors will file the Creditor Trust Agreement at least five
days prior to the Confirmation Hearing.

A transfer to the Creditor Trust for the benefit of Creditor
Trust Beneficiaries shall be treated for all purposes of the Internal Revenue
Code as a transfer to Creditor Trust Beneficiaries (for example, Internal
Revenue Code sections 61(a)(12), 483, 1001, 1012, and 1274) to the extent that
the Creditor Trust Beneficiaries are beneficiaries of the Creditor Trust. The
Creditor Trust Beneficiaries shall be treated as the grantors of the Creditor
Trust for all purposes of the Internal Revenue Code, and shall be deemed owners
of the Creditor Trust. For purposes of the Internal Revenue Code, the Creditor
Trust shall be treated as a liquidating trust as such term is defined in Treas.
Regs. Section 301.7701-4(d). The Trustee of the Creditor Trust shall file
federal income tax returns for the Creditor Trust as a grantor trust pursuant to
section 1.674-4(a) of the Income Tax Regulations. The Reorganized Debtors shall
determine the fair market value of all assets and property transferred to the
Creditor Trust, and the Trustee of the Creditor Trust and the Creditor Trust
Beneficiaries shall consistently use the fair market values so established for
all federal income tax purposes.

C. BUSINESS ENTITY AND FINANCIAL RESTRUCTURING.

1. EXIT FACILITY.

No later than the Effective Date, the Reorganized Debtors
shall enter into the Exit Facility, pursuant to which a revolving loan
commitment of $30 million (the availability of which shall be subject to certain
availability formulas) shall then be available to the Reorganized Debtors for
borrowing. The Exit Facility lender(s) and all material terms and conditions of
the Exit Facility shall be set forth in the Plan Documents. The funds from the
Exit Facility will be used, among other things, for general corporate purposes,
and to pay Allowed Claims as required under this Plan. As provided for in the
Plan Documents, the Exit Facility, the obligations under the Amended Term A Loan
Agreement, and the Post-Confirmation Term B Secured Loan will be secured by
valid, perfected liens on all assets of the Reorganized Debtors having the
priority provided for in the respective Plan Documents.

2. AMENDED TERM A SECURED LOAN.

On or about the Effective Date, the Reorganized Debtors shall
enter into the Amended Term A Loan Agreement, pursuant to which the $70 million
obligation under the Term A Loan Agreement, less any payment of Excess Plan
Funding Proceeds, if any, shall be Reinstated on amended terms, as set forth in
the Amended Term A Loan Agreement. As set forth in the Plan Documents, the
obligations under the Amended Term A Loan Agreement shall be deemed secured by
the liens on all of the Reorganized Debtors' assets, subject only to the liens
securing the Exit Facility, and as may otherwise be provided for in the Amended
Term A Loan Agreement. A copy of the Amended Term A Loan Agreement shall be
Filed at least five days prior to the Confirmation Hearing.

3. POST-CONFIRMATION TERM B SECURED LOAN.

On or about the Effective Date, the Reorganized Debtors will
enter into an agreement (the "Post-Confirmation Term B Secured Loan Agreement"),
with the Post-Confirmation Term B Secured Lenders, pursuant to which the
Reorganized Debtors shall borrow $20.0 million. The Debtors will File a copy of
the Post-Confirmation Term B Secured Loan Agreement with the Bankruptcy Court at
least five days prior to the Confirmation Hearing. The proceeds from the
Post-Confirmation Term B Secured Loan will be used, among other things, to pay
off the DIP Facility Claims and to pay certain Allowed Claims as required under
the Plan, as well as for general corporate purposes. As set forth in the Plan
Documents, the obligations under the Post-Confirmation Term B Secured Loan
Agreement will be deemed secured by the liens on all of the Reorganized Debtors'
assets, subject only to the liens securing the Exit Facility and the Amended
Term A Loan Agreement, and as may otherwise be provided for in the
Post-Confirmation Term B Secured Loan Agreement.

4. THE RIGHTS OFFERING.

Prior to the Effective Date, the Debtors shall conduct a
rights offering entitling each Electing Holder to purchase its Subscription
Shares of the Rights Offering Shares for a per share price equal to the
Subscription Purchase Price (the "Rights Offering"). Pursuant to the Backstop
Agreement, the Backstop Parties have agreed to purchase at the Subscription
Purchase Price all Rights Offering Shares that were not purchased in the Rights
Offering by Eligible Class 6A Claimholders. The Rights Offering shall be
conducted in accordance with this Article V.C.4.

As part of the Ballot, each Holder of a Class 6A Claim shall
receive a Subscription Rights Election Form, an execution copy of the
Shareholders' Agreement and five stock powers in the form of Exhibit "A" to the
Shareholders' Agreement. Each Eligible

Class 6A Claimholder may indicate its interest in purchasing pursuant to the
Rights Offering all, but not less than all, of its Subscription Share by (1)
completing and executing its Subscription Rights Election Form, which will
indicate its commitment to purchase its Subscription Share for a purchase price
equal to the product of (x) its Class 6A Share and (y) the Rights Offering
Amount, and (2) returning such Subscription Rights Election Form together with a
duly executed Shareholders' Agreement and five stock powers in the form of
Exhibit "A" to the Shareholders' Agreement executed in blank to the Debtors by
the Voting Deadline.

Following receipt by the Debtors of a completed and executed
Subscription Rights Election Form, a duly executed Shareholders' Agreement and
five stock powers in the form of Exhibit "A" to the Shareholders' Agreement
executed in blank from an Electing Holder, the Debtors and such Electing Holder
shall determine such Electing Holder's Agreed Class 6A Claim.

Not less than two Business Days prior to the Rights Offering
Funding Date, the Debtors shall deliver to the Electing Holders entitled to
participate in the Rights Offering a notice (the "Funding Notice") which sets
forth (1) the proposed Effective Date and (2) the Rights Offering Funding Date.
On or prior to the Rights Offering Funding Date, each Electing Holder shall pay
to the Debtors by transfer of immediately available funds an amount equal to the
product of (x) its Class 6A Share and (y) the Rights Offering Amount, such
payment to be made in accordance with the instructions set forth in the Funding
Notice.

The payments made in accordance with participation in the
Rights Offering shall be deposited and held by the Debtors in a trust account,
escrow account, or similar segregated account or accounts, which shall be
separate and apart from the Debtors' general operating funds and any other funds
subject to any cash collateral arrangements, and which segregated account or

accounts will be maintained for the purpose of holding the money for
administration of the Rights Offering until the Effective Date.

On the Effective Date, the Debtors shall determine the
Subscription Share of each Electing Holder. If the Subscription Share of an
Electing Holder shall have been rounded to zero in accordance with the
definition of Subscription Share, the Purchase Price shall be refunded to such
Electing Holder as soon as practicable after such determination is made. If the
Subscription Share of an Electing Holder is at least one Rights Offering Share
but not a whole number of Rights Offering Shares then (1) if such Subscription
Share shall have been rounded up to the nearest whole share in accordance with
the definition of Subscription Share, within two Business Days following notice
from Reorganized Falcon that such Subscription Share was so rounded, such
Electing Holder shall pay to Reorganized Falcon in accordance with the
instructions set forth in such notice an amount equal to (x) the fraction of a
share so rounded up multiplied by (y) the Subscription Purchase Price (such
amount, the "Additional Purchase Price") and (2) if such Subscription Share
shall have been rounded down to the nearest whole share in accordance with the
definition of Subscription Share, a portion of the Purchase Price equal to (x)
the fraction of a share so rounded down multiplied by (y) the Subscription
Purchase Price shall be refunded to such Electing Holder as soon as practicable
after such determination is made.

Thereafter, the funds deposited with the Debtors on account of
the Rights Offering that are not refunded shall be released from such segregated
accounts to the Reorganized Debtors, and, subject to the terms of the
Shareholders' Agreement, the Rights Offering Shares shall be distributed.

Each Electing Holder that fails to pay the purchase price for
its Subscription Shares in full on the Rights Offering Funding Date shall no
longer be entitled to participate in the Rights Offering and shall no longer be
deemed to be an Electing Holder.

On the Effective Date, subject to satisfaction of all other
conditions to the Effective Date, the Backstop Parties shall purchase at the
Subscription Purchase Price all Rights Offering Shares that were not purchased
in the Rights Offering by Eligible Class 6A Claimholders. The Rights Offering
and all material terms and conditions of the Rights Offering shall be set forth
in the Plan Documents, which will be Filed with the Court at least five days
prior to the hearing on the Disclosure Statement.

5. SOURCES OF CASH FOR PLAN DISTRIBUTION.

All Cash necessary for the Reorganized Debtors to make
payments under this Plan shall be obtained from: (a) existing Cash balances; (b)
the operating cash flows from the Debtors and the Reorganized Debtors; (c) the
proceeds from the borrowings under the Post-Confirmation Term B Secured Loan;
(d) the proceeds from the borrowings under the Exit Facility; (e) the net
proceeds of the Rights Offering; (f) the Committee's Avoiding Power Causes of
Action Litigation Proceeds; and (g) the Audit Committee Report Retained Rights
of Action Litigation Proceeds.

D. REQUIRED TRANSACTIONS.

1. THE REORGANIZED DEBTORS.

On or as soon as reasonably practicable after the Effective
Date:
a. Reorganized Falcon shall issue the New Common Stock;
and

b. The Reorganized Debtors shall amend and restate their
respective certificates of incorporation (the
"Restated Certificates"), and their existing by-laws,
to the extent necessary.

As of the Closing and immediately thereafter, the authorized
capital stock of Reorganized Falcon will consist solely of 100,000 shares of New
Common Stock, of which the Effective Date Shares Outstanding shall be issued and
outstanding. As of the Closing and immediately thereafter, all of the
outstanding shares of Reorganized Falcon's capital stock shall be duly
authorized, validly issued, fully paid and nonassessable.

At the Closing, in furtherance of this Plan, Epic shall be
merged with and into Reorganized Falcon, without the need for any action by its
directors or stockholders, and in accordance with applicable nonbankruptcy law,
the shares of capital stock in Epic shall be cancelled, Epic shall cease to
exist, and Reorganized Falcon shall continue as the surviving company.

On the Effective Date, the Reorganized Debtors will own their
assets free and clear of liens, Claims, and encumbrances, except for the Exit
Facility liens, if any, and liens maintained by the Post-Confirmation Term B
Secured Lenders, and Class 2 and 4 Claim Holders, if any.

On and after the Effective Date, the business and affairs of
Reorganized Falcon will be managed by and under the direction of Reorganized
Falcon's board of directors, which will then appoint the other Reorganized
Debtors' boards of directors in accordance with such Reorganized Debtors'
respective organizational documents.

Subject to any requirement of Bankruptcy Court approval,
pursuant to Code section 1129(a)(5), the Debtors will disclose, on or prior to
the Confirmation Date, the identity and affiliations of any Persons proposed to
serve on the initial board of directors of Reorganized Falcon in the Statement
of Officers and Directors. On the Effective Date, the classification and

composition of the board of directors shall be consistent with Reorganized
Falcon's Restated Certificate.

Reorganized Falcon is authorized and shall prepare, execute,
and deliver to the secretary of state of the State of Delaware the certificate
of merger (the "Certificate of Merger") relating to Epic.

Prior to Closing, the Reorganized Debtors shall authorize:

(a) the filing under the laws of the States of Delaware,
New Jersey, Missouri, New York, Mississippi, and
Illinois, of the Restated Certificates, which
Restated Certificates shall be in full force and
effect under the laws of the respective States as of
the Closing; and

(b) any certificates and other documents necessary and
desirable under Delaware, New Jersey, Missouri, New
York, Mississippi, and Illinois law to effect the
foregoing.

2. REORGANIZED FALCON.

Prior to Closing, Reorganized Falcon shall authorize:

(a) the issuance of New Common Stock to Holders of Class
3 Claims; and

(b) the filing under the laws of the State of Delaware of
the Certificate of Merger, which Certificate of
Merger shall be in full force and effect under the
laws of the State of Delaware as of the Closing.

3. THE MANAGEMENT INCENTIVE PLAN.

On the Effective Date, the Reorganized Debtors shall adopt and
implement a "Management Incentive Plan" to provide designated members of senior
management of the Reorganized Debtors with: (i) options to purchase up to a
number of shares of New Common Stock equal to 7.5% of the outstanding New Common
Stock on the Effective Date (calculated on

a fully-diluted basis, taking account of the issuance of the Effective Date
Shares Outstanding and the options issuable under the Management Incentive
Plan), which options shall have an exercise price based upon the Rights Offering
Equity Value of the Reorganized Debtors; and (ii) options to purchase up to a
number of shares of New Common Stock equal to 2.5% of the outstanding New Common
Stock on the Effective Date (calculated on a fully-diluted basis, taking account
of the issuance of the Effective Date Shares Outstanding and the options
issuable under the Management Incentive Plan), which options shall have a
exercise price based upon an enterprise value of the Reorganized Debtors of $200
million. The terms and conditions of the Management Incentive Plan shall be set
forth in the Plan Documents which shall be Filed five days prior to the
Confirmation Hearing. The Management Incentive Plan shall not be subject to
dilution by the Rights Offering.

E. POWERS OF THE REORGANIZED DEBTORS.

1. POWERS OF THE REORGANIZED DEBTORS.

The Reorganized Debtors shall have all the powers and duties
set forth in this Plan, the Restated Certificate, and under applicable law.
Except with respect to the Committee's Avoiding Power Causes of Action, the
Reorganized Debtors shall become, on the Effective Date of this Plan, the
exclusive representative of the Estates under Code sections 1123(b)(3)(B) and
1129(a)(5), and applicable provisions under the Delaware General Corporations
Law. Subject to the provisions of this Plan, but notwithstanding whether they
are set forth in the Disclosure Statement or this Plan, on and after the
Effective Date, the Estates shall retain and the Reorganized Debtors may enforce
any and all rights, Claims, causes of action, powers, privileges, licenses, and
franchises of the Debtors or the Estates, including all rights regarding tax
determinations under Code section 505, all causes of action arising under this
Plan and the Code, and all Reserved Rights of Action but excluding the
Committee's Avoiding Power Causes

of Action; provided, however, that the Estates may not retain or enforce any
Claim or right that is waived, relinquished, released, compromised, or settled,
or assigned to the Creditor Trust, in accordance with the express provisions of
this Plan.

The Reorganized Debtors shall have the authority to pay any
Post-Effective Date Claims in the ordinary course of business.

2. AUTHORITY TO COMPROMISE CLAIMS AND DEFENSES; OFFSET.

Subject to the Creditor Trust's right to object to the
allowability of Class 6A Claims only, as set forth in Article VI.A hereof, the
Reorganized Debtors may, in their sole and absolute discretion, settle and
compromise as appropriate, without further order of the Bankruptcy Court, any
and all (a) Reserved Rights of Action, and (b) Claims. The Estates may, but
shall not be required to, set off or recoup against any Claim and the
distributions to be made pursuant to this Plan in respect of such Claim, any
counterclaims, setoffs, or recoupments of any nature whatsoever that the Estates
may have against the Holder of the Claim, but neither the failure to do so nor
the allowance of any Claim shall constitute a waiver or release by the Estates
or the Reorganized Debtors of any such Claim, cause of action, setoff, or
recoupment.

3. NOTICE OF EFFECTIVE DATE.

As soon as practicable following the occurrence of the
Effective Date, and, in any event, no later than 30 days after the Effective
Date, the Reorganized Debtors shall serve the Notice of Effective Date on the
Persons on the All Notices List, and on all Holders of Claims and Interests.

4. COMPLIANCE WITH TAX REQUIREMENTS.

The Reorganized Debtors shall prepare and file any necessary
tax returns with respect to, and shall pay all taxes due from, the Debtors in
Possession or the Estates, and all taxes imposed on any gains, interest,
earnings, or other income on assets of the Estates. To the extent

applicable, the Reorganized Debtors shall comply with all tax withholding and
reporting requirements imposed by any governmental unit, and all distributions
pursuant to this Plan shall be subject to such applicable withholding and
reporting requirements. In addition, to the extent required by applicable law,
reported distributions from such reserves shall include all interest and
investment income, if any, attributable to the Cash or property being
distributed net of taxes which are, or are estimated to be, due and payable
thereon.

5. CASE CLOSING.

After: (a) the payment in full of all Allowed Administrative
Claims, Allowed Administrative Tax Claims, and Allowed Priority Tax Claims, and
the disallowance by Final Order of all other Administrative Claims,
Administrative Tax Claims, and Priority Tax Claims; and (b) the disallowance or
allowance of all Class 1A through 6B Claims, the Reorganized Debtors shall seek
an order closing the Cases, under Code section 350.

F. 1146(c) EXEMPTION.

In accordance with Code section 1146(c), the making, delivery,
filing or recording of any mortgages, deeds of trust, leasehold mortgages,
leases (whether recorded or unrecorded) and/or the various instruments and
documents of transfer as specified in or contemplated by this Plan
(collectively, "Instruments of Transfer") and/or the exhibits thereto are hereby
exempt from taxation under any law imposing a recording tax, stamp tax, transfer
tax or any similar tax. The Reorganized Debtors, or any agent or representative
thereof, are hereby authorized to serve upon all filing and recording officers a
notice in connection with the filing and recording of any such Instruments of
Transfer in accordance with this Plan, to evidence and implement this paragraph.
The appropriate state or local government filing and recording officers are
hereby directed to accept for filing or recording all Instruments of Transfer or
other documents of transfer to be filed and recorded in accordance with this
Plan and the exhibits thereto, without payment of any

such tax or government assessment, and without the presentation of any
affidavits, instruments, or returns otherwise required for recording, other than
this Confirmation Order. The Bankruptcy Court retains jurisdiction to enforce
the foregoing direction, by contempt proceedings or otherwise.

G. RETENTION OF JURISDICTION.

On and after the Effective Date, the Bankruptcy Court will
retain all jurisdiction as is legally permissible, including for the following
purposes:

(a) To enforce the provisions, purposes, and intent of
this Plan and the Confirmation Order, and to resolve
any and all disputes regarding the operation and
interpretation of this Plan and the Confirmation
Order.

(b) To determine the allowance, classification, or
priority of any Claims and to estimate Class 4, 5,
6A, 6B, and 6C Claims, upon objection or motion by
the Reorganized Debtors, or other parties in interest
with standing to bring such objection or proceeding.

(c) To determine the extent, validity, and/or priority of
any lien asserted against property of the Debtors or
the Estates or property abandoned or transferred by
the Debtors or the Estates.

(d) To take such actions and issue such orders as are
appropriate to: (i) enforce and execute this Plan,
the Confirmation Order, and any Final Order; (ii) the
implementation, execution, performance, and
consummation of this Plan, the Confirmation Order,
and all matters referred to in this Plan and the
Confirmation Order, and any and all matters relating
to the Creditor Trust; and (iii) determine all
matters that

may be pending before the Bankruptcy Court in the
Cases on or before the Effective Date.

(e) To determine any and all applications for allowance
of compensation and reimbursement of expenses of
Professional Persons and to determine any other
requests for payment of Administrative Claims.

(f) To determine matters relating to the collection,
liquidation, and realization upon property of the
Debtors or the Estates.

(g) To the extent provided in Article V.E.2, to authorize
and approve or disapprove any settlements or
compromises of Claims, causes of action, defenses, or
controversies asserted by or against the Estates or
the Debtors, and the sale, lease, or other
disposition of property of the Estates or the
Debtors.

(h) To determine, as is necessary or appropriate under
Code section 505 or otherwise, matters relating to
tax returns filed or to be filed on behalf of the
Debtors, the Estates, or the Reorganized Debtors for
all periods through the end of the fiscal year in
which the Cases are closed, including the
determination of the amount of basis, depreciation,
net operating losses, or other tax attributes of the
Debtors, the Estates, or the Reorganized Debtors.

(i) To implement the provisions of this Plan and to enter
orders in aid of Confirmation, including orders to:
(i) recover property of the Debtors, the Estates or
the Reorganized Debtors; (ii) determine causes of
action that may be asserted by or against the
Estates, the Reorganized Debtors,

Professional Persons, or the Committee; (iii)
determine whether property is property of the Estates
or of the Reorganized Debtors; (iv) protect the
assets of the Estates and the Reorganized Debtors
from Creditor action; and (v) enter orders enabling
Persons to perform acts necessary for consummation of
this Plan.

(j) To enter such orders as may be appropriate in the
event the Confirmation Order is for any reason
stayed, revoked, modified, rescinded or vacated.

(k) To adjudicate all adversary proceedings and contested
matters in which the Debtors, the Committee, the
Estates, or the Reorganized Debtors are a party in
interest, including the Reserved Rights of Action and
other causes of action.

(l) To adjudicate all proceedings, complaints, adversary
proceedings and contested matters in which the
Creditor Trust or the Creditor Trust Beneficiaries
are a party in interest, including the Committee's
Avoiding Power Causes of Action, the Individual
Creditor Claims, and other causes of action;

(m) To determine all applications, motions, adversary
proceedings, contested matters, and any other
litigated matters arising in or under, or related to,
the Cases whether before, on, or after the Effective
Date.

(n) To modify this Plan and to confirm a modified plan
consistent with the Code and the Bankruptcy Rules.

(o) To issue injunctions, provide declaratory relief,
take such other legal or equitable actions, or issue
such other orders as may be necessary or

appropriate to restrain interference with this Plan,
the Estates or its property, the Reorganized Debtors,
Professional Persons, the Committee, or the
Confirmation Order.

(p) To enter an order closing the Cases.

H. DEBTORS' PRESERVATION OF RIGHTS OF ACTION AND DEFENSES.

Except to the extent such rights, claims, causes of action,
defenses, and counterclaims are expressly and specifically released in
connection with this Plan or in any settlement agreement approved during the
Cases, (i) any and all Reserved Rights of Action shall remain assets of and vest
in the Reorganized Debtors, and the Committee's Avoiding Power Causes of Action
shall vest in the Creditor Trust, whether or not litigation relating thereto is
pending on the Effective Date, and whether or not any such Reserved Rights of
Action or the Committee's Avoiding Power Causes of Action have been Scheduled or
otherwise listed or referred to in this Plan, the Disclosure Statement, or any
other document filed with the Bankruptcy Court, and (ii) neither the Debtors nor
the Reorganized Debtors nor the Creditor Trust, waive, relinquish, or abandon
(nor shall they be estopped or otherwise precluded from asserting) any Reserved
Rights of Action that constitute property of the Debtors' Estates or any of the
Committee's Avoiding Power Causes of Action: (a) whether or not such Reserved
Rights of Action or the Committee's Avoiding Power Causes of Action have been
listed or referred to in the Schedules, this Plan, the Disclosure Statement, or
any other document filed with the Bankruptcy Court, (b) whether or not such
Reserved Rights of Action or the Committee's Avoiding Power Causes of Action are
currently known to the Debtors, and (c) whether or not a defendant in any
litigation relating to such Reserved Rights of Action or the Committee's
Avoiding Power Causes of Action filed a proof of Claim in the Cases, filed a
notice of appearance or any other pleading or notice in the Cases, voted for or
against this Plan, or

received or retained any consideration under this Plan. Without in any manner
limiting the scope of the foregoing, notwithstanding any otherwise applicable
principle of law or equity, including, without limitation, any principles of
judicial estoppel, res judicata, collateral estoppel, issue preclusion, or any
similar doctrine, the failure to list, disclose, describe, identify, or refer to
any Reserved Rights of Action, or potential Reserved Rights of Action in the
Debtors' Schedules or the Committee's Avoiding Power Causes of Action, this
Plan, the Disclosure Statement, or any other document filed with the Bankruptcy
Court shall in no manner waive, eliminate, modify, release, or alter the
Reorganized Debtors' right to commence, prosecute, defend against, settle, and
realize upon any Reserved Rights of Action, or the Creditor Trust's right to
commence, prosecute, defend against, settle, and realize upon any of the
Committee's Avoiding Power Causes of Action, that any of the Debtors or the
Reorganized Debtors have or may have as of the Confirmation Date. The
Reorganized Debtors may commence, prosecute, defend against, recover on account
of, and settle all Reserved Rights of Action in its sole discretion in
accordance with what is in the best interests, and for the benefit, of the
Reorganized Debtors. The Creditor Trust may commence, prosecute, defend against,
settle, and recover on account of all of the Committee's Avoiding Power Causes
of Action in its sole discretion, and in accordance with what is in the best
interests, and for the benefit, of the Creditor Trust and the Creditor Trust
Beneficiaries.

I. MODIFICATION AND WITHDRAWAL.

At any time prior to Confirmation of this Plan, the Debtors
may supplement, amend, modify, withdraw or revoke this Plan. After Confirmation
of this Plan, the Debtors or the Reorganized Debtors may: (i) apply to the
Bankruptcy Court, pursuant to section 1127 of the Code, to modify this Plan, and
(ii) apply to the Bankruptcy Court to remedy defects or omissions in this Plan
or to reconcile inconsistencies in this Plan.

In the event that any impaired Class of Claims or Falcon
Interests shall fail to accept this Plan in accordance with section 1129(a)(8)
of the Code, the Debtors (i) may request that the Bankruptcy Court confirm this
Plan in accordance with section 1129(b) of the Code, and (ii) in accordance with
Article V.I may modify this Plan in accordance with section 1127(a) of the Code.

VI.

PROVISIONS REGARDING ALLOWANCE,
OBJECTION AND DISTRIBUTION
--------------------------

A. PROVISIONS REGARDING ALLOWANCE AND OBJECTION DEADLINES.

Notwithstanding any other provision in this Plan: (a) no
Holder of a Claim shall receive or retain property of the Debtors in excess of
the allowed amount of its Claim; and (b) no provision of this Plan shall
increase or expand the amount or scope of any lien or Claim. The Creditor Trust
shall have the right to object to the allowability of Class 6A Claims only, in
its sole discretion.

1. ADMINISTRATIVE CLAIMS.

Any objection to an Administrative Claim, other than an
Administrative Claim subject to a Final Fee Application, shall be Filed and also
served upon the Holder of such Claim no later than the first day that is the
later of: (a) the date that is 90 days after the Effective Date; (b) the date
that is 60 days after the request for payment is Filed; and (c) such extended
date as may be fixed by the Bankruptcy Court on motion Filed by the Reorganized
Debtors and also served on the Holder of the Claim and the Persons on the All
Notices List, including the Committee Counsel; provided, however, that the
foregoing shall not prohibit: (x) objections to late-Filed Administrative Claims
or objections to amendments to Administrative Claims;

(y) raising new objections based upon newly discovered facts if a timely
objection has been Filed; or (z) seeking reconsideration of any Administrative
Claim that has been allowed.

2. FINAL FEE APPLICATIONS.

Any objection to an Administrative Claim subject to a Final
Fee Application shall be Filed and also served upon the Holder of such Claim no
later than the date set by the Bankruptcy Court.

3. ADMINISTRATIVE TAX CLAIMS.

Any objection to an Administrative Tax Claim shall be Filed
and also served upon the Holder of such Claim no later than the first day that
is the later of: (a) the date that is 180 days after the Effective Date; (b) the
date that is 30 days after the motion regarding such Claim is Filed under
Article III.A.1.b.iii; and (c) such extended date as may be fixed by the
Bankruptcy Court on motion Filed by the Reorganized Debtors and also served on
the Holder of the Claim and the Persons on the All Notices List; provided,
however, that the foregoing shall not prohibit: (x) objections to late-Filed
Administrative Tax Claims or to amendments to Administrative Tax Claims; (y)
raising new objections based upon newly discovered facts if a timely objection
has been Filed; or (z) seeking reconsideration of any Administrative Tax Claim
that has been allowed.

4. PRIORITY TAX CLAIMS AND CLASS 4 THROUGH 6B CLAIMS.

Any objection to a Priority Tax Claim, or a Class 4 through 6B
Claim shall be Filed and also served upon the Holder of such Claim, no later
than the first day that is the later of: (a) the date that is 90 days after the
Effective Date; and (b) such extended date as may be fixed by the Bankruptcy
Court, for cause shown, on motion Filed by the Reorganized Debtors and also
served on the Holder of the Claim and the Persons on the All Notices List;
provided, however, that the foregoing shall not prohibit: (x) objections to
late-Filed Claims or to

amendments to Claims; (y) raising new objections based upon newly discovered
facts if a timely objection has been Filed; or (z) seeking reconsideration of
any Claim that has been allowed.

B. DISPUTED CLAIMS.

No distributions and no payments will be made with respect to
all or any portion of a Disputed Claim until such
Claim is an Allowed Claim.

C. RESERVES FOR CLAIMS.

1. ADMINISTRATIVE CLAIMS AND ADMINISTRATIVE TAX CLAIMS.

Prior to making any distributions on Allowed Administrative
Claims and Allowed Administrative Tax Claims, the Reorganized Debtors shall
establish a Cash reserve for all Disputed Administrative Claims and Disputed
Administrative Tax Claims. The reserve for an Administrative Claim or an
Administrative Tax Claim shall be based upon the Administrative Claim or the
Administrative Tax Claim being in the amount set forth on the books and records
of the Debtors unless and until a motion is Filed pursuant to Article
III.A.1.b.iii at which time the reserved amount shall be modified so that it is
the amount set forth in the motion Filed pursuant to Article III.A.1.b.iii.

2. OTHER PRIORITY CLAIMS.

Prior to making any distribution on Allowed Other Priority
Claims, the Reorganized Debtors shall establish a Cash reserve for all Disputed
Other Priority Claims. The reserve for an Other Priority Claim shall be based
upon the Other Priority Claim being in the amount of the Other Priority Claim
set forth in the proof of Claim, or if no proof of Claim has been Filed, the
Scheduled amount set forth for the Other Priority Claim if it is shown on the
Schedules as being noncontingent, liquidated and undisputed.

3. PRIORITY TAX CLAIMS.

Prior to making any distributions on Allowed Priority Tax
Claims, the Reorganized Debtors shall establish a Cash reserve for all Disputed
Priority Tax Claims. The reserve for a Priority Tax Claim shall be based upon
the Priority Tax Claim being in the amount of the Priority Tax Claim set forth
in the proof of Claim, or if no proof of Claim has been Filed, the Scheduled
amount set forth for the Priority Tax Claim if it is shown on the Schedules as
being noncontingent, liquidated and undisputed. The amount actually reserved
shall be equal to the Reorganized Debtors 's obligations, pursuant to Article
III.A.2 hereof, to make installment payments on account of such Priority Tax
Claim during the one-year period following the Effective Date.

4. CLASS 6A CLAIMS.

The Reorganized Debtors shall establish a Cash reserve for all
Disputed Class 6A Claims relating to the Audit Committee Report Retained Rights
of Action Litigation Proceeds, but such reserves shall only be established from
any such proceeds collected, if any. The reserve for such Claims shall be based
upon the Claim being in the lower of: (a) the amount of the Claim set forth in
the proof of Claim, or if no proof of Claim has been Filed, the Scheduled amount
set forth for a Class 6A Claim if it is shown on the Schedules as being
noncontingent, liquidated and undisputed; and (b) the Estimated Amount of such
Claim for distribution purposes, as determined by the Bankruptcy Court.

D. ESTIMATION OF CLASS 5, 6A, AND 6B CLAIMS.

After the Effective Date, the Reorganized Debtors may commence
such actions and proceedings in the Bankruptcy Court, to the extent permitted by
the Code and applicable law, as are appropriate to estimate any Disputed Class 5
or 6A Claim, or that portion of a Class 6B Claim that the Holder elects to be
treated as a Class 6A Claim (i.e. that portion not fully

covered by the Insurance Policies). The estimation of all or a portion of a
Class 6B Claim shall not determine whether such Claim is covered by the
Insurance Policies or the amount, if any, to be paid out of the proceeds of the
Insurance Policies.

The "Estimated Amount" with respect to such Claim shall be the
amount established by Bankruptcy Court order under Code section 502(c). If the
Bankruptcy Court estimates a Disputed Class 5, 6A or 6B Claim, then the amount
so estimated shall set the maximum amount that can be allowed thereafter for the
Disputed Class 5 or 6A Claim, or that portion of a Class 6B Claim that the
Holder elects to be treated as a Class 6A Claim (i.e. that portion not fully
covered by the Insurance Policies); provided, however, that nothing herein shall
limit the ability of the Bankruptcy Court to allow the Disputed Class 5, 6A, or
6B Claim for an amount less than the Estimated Amount.

Motions to estimate the amount of any Agreed 6A Claim may be
set for hearing on an expedited basis. Subject to the availability of the Court,
motions to estimate the amount of any Agreed 6A Claim may be set for hearing on
three calendar days notice and any objections to such motions must be Filed one
day prior to the hearing.

E. PROCEDURES FOR DISTRIBUTIONS.

The Reorganized Debtors shall serve as the Disbursing Agent
for all distributions to be made to Holders of Allowed Claims under this Plan,
other than the distribution of the Creditor Trust Assets. The Trustee of the
Creditor Trust shall serve as the Disbursing Agent for distributions of the
Creditor Trust Assets, in accordance with Article III.B.7 hereof.
Notwithstanding the provisions of Article VI.E.2 of this Plan regarding the
cancellation of the Notes Indenture, the Notes Indenture shall continue in
effect to permit BNY to receive distributions on behalf of the Noteholders and
to make distributions pursuant to the Plan on account of the Notes. The
Disbursing Agent may employ one or more sub agents on such terms

and conditions as it may agree in its discretion, and the Disbursing Agent shall
not be required to provide any bond in connection with the making of any
distributions pursuant to this Plan.

1. DATES OF DISTRIBUTION.

Except in Article VI.E, any distribution required to be made
on the Effective Date shall be deemed timely if made as soon as practicable
after such date and, in any event, within thirty (30) days after such date. Any
distribution required to be made upon a Disputed Claim becoming an Allowed Claim
and no longer being a Disputed Claim shall be deemed timely if made as soon as
practicable thereafter. So long as there are sufficient proceeds to distribute,
and after reserving funds for Disputed Claims, at least once a year the
Disbursing Agent, in its sole and absolute discretion, shall make distributions
of the Audit Committee Report Retained Rights of Action Litigation Proceeds and
the Committee's Fraudulent Transfer Actions Litigation Proceeds until all such
proceeds are collected and distributed.

2. OLD INSTRUMENTS AND SECURITIES.

a. SURRENDER AND CANCELLATION OF INSTRUMENTS AND
SECURITIES.

Except as otherwise provided herein, as a condition to
receiving any distribution pursuant to this Plan, each Person holding any note
or other instrument or security (collectively "Instruments or Securities" and
individually an "Instrument or Security") evidencing an existing Claim against a
Debtor must surrender such Instrument or Security to the Reorganized Debtors,
together with such additional information or documentation which the Reorganized
Debtors may require.

b. RIGHTS OF PERSONS HOLDING OLD INSTRUMENTS AND
SECURITIES.

Except as otherwise provided herein, as of the Effective Date,
and whether or not surrendered by the Holder thereof, all existing Old Falcon
Common Stock, Notes, the Notes Indenture, Junior Convertible Debentures, and all
other Instruments and Securities evidencing

any Claims or Interests shall be deemed automatically cancelled and deemed void
and of no further force or effect, without any further action on the part of any
person, and any Claims or Interests under or evidenced by such Old Falcon Common
Stock, Notes, Junior Convertible Debentures or other Instruments or Securities
shall be deemed discharged. Notwithstanding the foregoing, the Notes Indenture
shall continue in effect solely for the purposes of: (i) allowing BNY to make
the distributions to be made on account of Noteholders' Allowed Claims under the
Plan; and (ii) permitting BNY to maintain its rights to recover its fees and
expenses under the Notes Indenture. All options to purchase any stock of Falcon,
including the Pre-Petition Warrants, shall be deemed rejected, cancelled and
terminated as of the Petition Date.

c. CANCELLATION OF LIENS.

Except as otherwise provided in this Plan, any lien securing
any Secured Claim, other than the liens securing the Term A Secured Lenders'
Claims, shall be deemed released and discharged, and the Person holding such
Secured Claim shall be authorized and directed to release any collateral or
other property of the Debtors (including, without limitation, any cash
collateral) held by such Person and to take such actions as may be requested by
the Reorganized Debtors to evidence the release of such lien, including, without
limitation, the execution, delivery and filing or recording of such releases as
may be requested by the Reorganized Debtors at the sole expense of the
Reorganized Debtors.

3. INTEREST.

To the extent practicable, the respective Disbursing Agent
shall keep all funds of the Reorganized Debtors and the Creditor Trust Assets in
interest bearing instruments or accounts.

Nothing in this Article shall affect any Claim, position, or
right by the Holder of any Claim that the allowed amount of the Claim should
include interest accruing prior to the

Petition Date, but no Claim shall be allowed for interest for periods after the
Petition Date, or after the Confirmation Date, except as provided in this Plan.

4. DE MINIMIS DISTRIBUTIONS AND FRACTIONAL SHARES.

a. CASH DISTRIBUTIONS.

No Cash payment of less than ten dollars ($10) shall be made
by the Disbursing Agent to any Holder of Claims unless a request therefor is
made in writing to the Disbursing Agent. Whenever payment of a fraction of a
cent would otherwise be called for, the actual payment shall reflect a rounding
down of such fraction to the nearest whole dollar. Any Cash that is not
distributed as a consequence of this section shall, after the last distribution
on account of Allowed Claims in the applicable Class, be treated as "Unclaimed
Property" under this Plan.

b. NEW COMMON STOCK DISTRIBUTIONS.

Neither the Debtors, nor the Reorganized Debtors will have any
obligations to make distributions of New Common Stock to Holders who would be
entitled to receive less than one full share of New Common Stock. If a Holder of
an Allowed Class 3 Claim is entitled to receive a distribution of a fraction of
a share of New Common Stock then: (i) if the Holder is entitled to a
distribution of less than one full share of New Common Stock, Reorganized Falcon
shall issue to such Holder one whole share, or (ii) if the Holder is entitled to
at least one full share of New Common Stock, Reorganized Falcon shall issue to
such Holder the number of shares rounded up or down to the nearest whole share.
Any securities or other property that is not distributed as a consequence of
this section shall, after the last distribution on account of Allowed Claims in
the applicable Class, be treated as "Unclaimed Property" under this Plan.

5. MANNER OF PAYMENT UNDER THE PLAN.

Cash payments made pursuant to this Plan shall be in United
States currency by checks drawn on an Acceptable Depository or by wire transfer
from an Acceptable Depository, at the Disbursing Agent's option.

6. DELIVERY OF DISTRIBUTIONS.

Except as provided in Article VI.E.7 with respect to Unclaimed
Property, notices and distributions to Holders of Allowed Claims and Allowed
Administrative Claims shall be distributed by mail as follows: (1) with respect
to each Holder of an Allowed Claim that has Filed a proof of Claim, at the
address for such Holder as maintained by the official claims agent for the
Debtors; (2) with respect to each Holder of an Allowed Claim that has not Filed
a proof of Claim, at the address reflected on the Schedules filed by the
Debtors, provided, however, that if the Debtors or the Reorganized Debtors have
received a written notice of a change of address for such Holder, the address
set forth in such notice shall be used; or (3) with respect to each Holder of an
Allowed Administrative Claim, at such address as the Holder may specify in
writing.

7. UNDELIVERABLE DISTRIBUTIONS.

If the distribution of Cash or New Common Stock to the Holder
of any Allowed Claim or Allowed Administrative Claim is returned to the
Disbursing Agent as undeliverable (any such distribution being hereinafter
referred to as "Unclaimed Property"), no further distribution shall be made to
such Holder unless and until the Disbursing Agent is notified in writing of such
Holder's then current address. Subject to the remainder of this Article VI.E.7,
Unclaimed Property shall remain in the possession of the Disbursing Agent
pursuant to this Article VI.E.8, and shall be set aside (in the case of New
Common Stock) or held in a segregated interest bearing account (as to Cash
Unclaimed Property) to be maintained by the Disbursing

Agent until such time as the subject distribution becomes deliverable. Nothing
contained in this Plan shall require the Disbursing Agent or any other Person to
attempt to locate such Person.

8. DISPOSITION OF UNCLAIMED PROPERTY.

If the Person entitled thereto notifies the Disbursing Agent
of such Person's Claim to the distribution of Unclaimed Property within six
months following the Effective Date, the Unclaimed Property distributable to
such Person, together with any interest or dividends earned thereon, shall be
paid or distributed to such Person as soon as is practicable. Any Holder of an
Allowed Claim or Allowed Administrative Claim that does not assert a claim in
writing for Unclaimed Property held by the Disbursing Agent within six months
after the Effective Date shall no longer have any Claim to or interest in such
Unclaimed Property, and shall be forever barred from receiving any distributions
under this Plan or otherwise from the Disbursing Agent. In such cases any
property held for distribution on account of such Claims or Administrative
Claims by the Disbursing Agent shall be retained by the Reorganized Debtors as
follows: pursuant to Code section 347(b), any undistributed Cash shall be the
property of the Reorganized Debtors, any undistributed New Common Stock shall be
the property of the Reorganized Debtors (and may be cancelled by the Reorganized
Debtors, free from any restrictions thereon, and such undistributed Cash or
securities shall not be subject to the unclaimed property or escheat laws of any
State or other governmental unit.

F. RECORD DATE.

On the Effective Date, the transfer ledgers for the Notes and
Old Falcon Common Stock shall be closed, and there shall be no further changes
in the Holders of record of such securities. Unless written notice of an
assignment executed by both the assignor and assignee is provided to the
Disbursing Agent and, in the case of Notes only, to the respective indenture
trustee, the Disbursing Agent and the respective indenture trustee shall not
recognize any transfer

of the Notes or Old Falcon Common Stock occurring after the Effective Date, but
shall instead be entitled to recognize and deal for all purposes with only those
Holders of record as of the close of business on the Effective Date.
Distributions to Noteholders under the Plan, if any, shall be made to those
entities who are Noteholders as of the Effective Date.

VII.

CONFIRMATION AND EFFECTIVE DATE
-------------------------------

A. CONDITIONS PRECEDENT TO CONFIRMATION.

The following are conditions precedent (each, a "Confirmation
Condition Precedent") to Confirmation of this Plan:

1. The Bankruptcy Court shall have entered the
Confirmation Order.

2. The Estates shall have sufficient Cash, or sufficient
committed funds, so as to pay in full the
Administrative Claims, Administrative Tax Claims,
Priority Tax Claims, DIP Facility Claims, and Other
Priority Claims.

3. The Backstop Parties shall have duly and validly
executed and delivered the Backstop Agreement.

4. The three defined benefit pension plans maintained by
the Debtors, consisting of the (i) Shelby Williams
Industries, Inc. Employees' Pension Plan, (ii) Falcon
Products, Inc. Retirement Plan, and (iii) Sellers &
Josephson, Inc. Employees' Pension Plan, shall be
terminated by agreement between the administrator of
each of the plans and the Pension Benefit Guaranty
Corporation (or, if termination is contested, by
final order of the appropriate U.S. District Court)
in accordance with the pension plan termination
provisions of the Employee Retirement Income Security
Act of 1974.

5. The Bankruptcy Court shall have entered a Final Order
modifying, in a form acceptable to the Backstop
Parties, in their sole and absolute discretion, or

terminating the Agreement Between Shelby Williams
Industries, Inc. and United Food and Commercial
Workers International Union And Its Local 272 (T),
dated November 27, 2003 to November 21, 2005.

Any and all of the conditions precedent to Confirmation set
forth above may be waived by the Backstop Parties, in their sole and absolute
discretion, at any time prior to Confirmation.

B. CONDITIONS PRECEDENT TO PLAN EFFECTIVENESS.

The following shall be conditions precedent to the
effectiveness of this Plan and the occurrence of the Effective Date:

1. All of the conditions in Article VII.A have been
satisfied or waived.

2. The Exit Facility lender shall have duly and validly
executed and delivered the Exit Facility agreements
and the Exit Facility shall have closed and be in
full force and effect.

3. The loan transaction contemplated by the Amended Term
A Loan Agreement shall have closed and be in full
force and effect.

4. The Post-Confirmation Term B Secured Loan shall have
closed and be in full force and effect.

5. The new board of directors of Reorganized Falcon
shall have been appointed as set forth in this Plan
and shall have agreed to serve.

6. The Confirmation Order shall have become a Final
Order, unless such condition shall have been waived
by the Backstop Parties in their sole and absolute
discretion.

7. All agreements and instruments contemplated by, or to
be entered into pursuant to, this Plan, including,
without limitation, each of the Plan Documents

necessary for consummation of this Plan, shall have
been duly and validly executed and delivered by the
parties thereto and all conditions to their
effectiveness shall have been satisfied or waived,
and have closed, where applicable.

8. The Rights Offering shall have closed.

9. The Backstop Parties shall have confirmed in writing
to the Debtors that all of the Plan Documents are in
a form satisfactory to the Backstop Parties, in their
sole and absolute discretion.

If the Effective Date does not occur by February 4, 2006, then
the results set forth in Article VII.C below shall
apply.

C. NON-OCCURRENCE OF EFFECTIVE DATE.

If for any reason the Effective Date does not occur, then:

1. The Confirmation Order shall be deemed vacated;

2. All bar dates and deadlines established by this Plan
or the Confirmation Order shall be deemed vacated;

3. The Cases shall continue as if Confirmation had not
occurred;

4. This Plan shall be of no further force and effect;

5. The Debtors and the Estates shall be placed in the
same position as if Confirmation had not occurred;
and

6. Neither this Plan, the Disclosure Statement, nor any
pleadings Filed in connection with the approval
thereof shall constitute an admission of any fact or
legal position or a waiver of any legal rights held
by any party prior to Confirmation.

Notwithstanding the above, the failure of the Effective Date
to occur, and the consequences thereof as set forth above, shall not affect the
validity of any order entered in the Cases, other than the Confirmation Order.

VIII.

EFFECT OF CONFIRMATION AND INJUNCTION
-------------------------------------

A. DISCHARGE.

Except as otherwise specifically provided in this Plan or in
the Confirmation Order, pursuant to section 1141(d) of the Code, the
distributions and rights that are provided in this Plan shall be in complete
satisfaction, discharge and release, effective as of the Effective Date, of all
Claims, including any interest or penalties accrued on such Claims from and
after the Petition Date, whether known or unknown, against liabilities of, liens
on, obligations of, rights against and Interests in the Debtors, or any of their
assets or properties, regardless of whether any property shall have been
distributed or retained pursuant to this Plan on account of such Claims, rights
and Interests, including but not limited to, Claims and Interests that arose
before the Confirmation Date, including all debts of the kind specified in
sections 502(g), 502(h) and 502(i) of the Code, in each case whether or not (a)
a proof of Claim or interest based upon such Claim, debt, right or Interest is
Filed or deemed Filed under section 501 of the Code; (b) a Claim or Interest
based upon such Claim, debt, right or Interest is allowed under section 502 of
the Code, or (c) the Holder of such a Claim, debt, right, or Interest accepted
this Plan. The Confirmation Order shall constitute a determination of the
discharge of all of the Claims against and Interests in the Debtors, subject to
the occurrence of the Effective Date.

B. INJUNCTION.

Except as otherwise expressly provided in this Plan, the
documents executed pursuant to this Plan, or the Confirmation Order, on and
after the Effective Date, all Persons and Entities who have held, currently
hold, or may hold a debt, Claim, or Interest discharged pursuant to the terms of
this Plan (including but not limited to States and other governmental units, and
any State official, employee, or other entity acting in an individual or
official capacity

on behalf of any State or other governmental units) shall be permanently
enjoined from: (a) taking any of the following actions on account of any such
discharged debt, Claim, or Interest: (1) commencing or continuing in any manner
any action or other proceeding against the Debtors, the Reorganized Debtors,
their successors, or their property; (2) enforcing, attaching, executing,
collecting, or recovering in any manner any judgment, award, decree, or order
against the Debtors, the Reorganized Debtors, their successors, or their
property; (3) creating, perfecting, or enforcing any lien or encumbrance against
the Debtors, the Reorganized Debtors, their successors, or their property; (4)
asserting any set off, right of subrogation, or recoupment of any kind against
any obligation due the Debtors, the Reorganized Debtors, their successors, or
their property; and (5) commencing or continuing any action, in any manner, in
any place that does not comply with or is inconsistent with the provisions of
this Plan; and (b) taking any of the following actions on account of any Claims
or Reserved Rights of Action that are revested in, or transferred to, the
Reorganized Debtors as of the Effective Date or under this Plan (to the extent
one or more Debtors' Estates held such Claim or rights of action or held the
right to assert such Claim or right of action after the Petition Date)
commencing or continuing in any manner any action or other proceeding of any
kind to recover on or otherwise with respect to such Claims or rights of action.
Any person or entity injured by any willful violation of such injunction shall
recover actual damages, including costs and attorneys' fees, and, in appropriate
circumstances, may recover punitive damages from the willful violator.

IX.

MISCELLANEOUS
-------------
A. U.S. TRUSTEE FEES.

Any unpaid fees due under 28 U.S.C. ss. 1930(a)(6) to the U.S.
Trustee from the Petition Date through the calendar quarter prior to the
calendar quarter in which the Effective

Date occurs, shall be paid on the Effective Date. Commencing with the calendar
quarter in which the Effective Date occurs, and the Reorganized Debtors shall
comply with such U.S. Trustee reporting requirements and payment of quarterly
fees in such amounts as are required to be paid under 28 U.S.C. ss. 1930(a)(6).

B. RESTRUCTURING EXPENSES.

On the Effective Date, the Reorganized Debtors shall pay the
reasonable attorneys' fees and expenses and reasonable fees and expenses of the
financial advisor of the Backstop Parties, the Term B Secured Lenders, and the
Post-Confirmation Term B Secured Lenders without further order of the Bankruptcy
Court.

C. GENERAL AUTHORITY.

The Reorganized Debtors shall execute such documents, and take
such other actions, as are necessary to effectuate the transactions provided for
in this Plan.

D. DISSOLUTION OF COMMITTEE.

On the Effective Date, the Committee shall be deemed disbanded
and its members shall be released and discharged from all rights and duties
arising from, or related to, the Cases.

E. SUCCESSORS AND ASSIGNS.

The rights, benefits, and obligations of any Person named or
referred to in this Plan are binding on, and will inure to the benefit of, any
permitted heirs, executors, administrators, successors, or assigns of such
Person, including any successor to the Estates or the Reorganized Debtors.

F. BINDING EFFECT.

This Plan and all rights, duties and obligations thereunder
shall be binding upon and inure to the benefit of the Debtors, the Reorganized
Debtors, Holders of Claims, Holders of Interests, and their respective
successors and assigns.

G. GOVERNING LAW.

Unless a rule of law or procedure is supplied by federal law
(including the Code and Bankruptcy Rules), or by an express choice of law
provision in any agreement, contract, document, or instrument provided for or
executed in connection with this Plan, the rights and obligations arising under
this Plan and any agreement, contract, document, or instrument provided for or
executed in connection with this Plan, shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without giving
effect to the principles of conflict of laws thereof.

H. NO ADMISSION.

Except as specifically provided in this Plan, nothing
contained in this Plan or the Disclosure Statement shall be deemed or construed
in any way as an admission by the Debtors or the Estates with respect to any
matter set forth in this Plan or the Disclosure Statement, including the amount
or allowability of any Claim, or the value of any property of the Estates.

I. PAYMENT DATES.

Whenever any payment or distribution to be made under this
Plan shall be due on a day other than a Business Day, such payment or
distribution shall instead be made, without interest, on the immediately
following Business Day.

J. HEADINGS.

The headings used in this Plan are inserted for convenience
only and neither constitutes a portion of this Plan nor in any manner affects
the construction of the provisions of this Plan.

K. OTHER DOCUMENTS AND ACTIONS.

The Reorganized Debtors may execute such other documents and
take such other actions as may be necessary or appropriate to effectuate the
transactions contemplated under this Plan.

L. SEVERABILITY OF PLAN PROVISIONS.

If, prior to the Confirmation Date, any term or provision of
this Plan is held by the Bankruptcy Court to be illegal, impermissible, invalid,
void or unenforceable, or otherwise to constitute grounds for denying
confirmation of this Plan, the Bankruptcy Court shall, with the consent of the
Debtors, have the power to interpret, modify or delete such term or provision
(or portions thereof) to make it valid or enforceable to the maximum extent
practicable, consistent with the original purpose of the term or provision held
to be invalid, void or unenforceable, and such term or provision shall then be
operative as interpreted, modified or deleted. Notwithstanding any such
interpretation, modification or deletion, the remainder of the terms and
provisions of this Plan shall in no way be affected, impaired or invalidated by
such interpretation, modification or deletion.

M. NO WAIVER.

The failure of the Debtors or any other Person to object to
any Claim for purposes of voting shall not be deemed a waiver of the Debtors' or
the Reorganized Debtors' or the Creditor Trust's right to object to or examine
such Claim, in whole or in part.

N. EXEMPTION FROM SECURITIES LAWS.

All of the New Common Stock distributed pursuant to this Plan
to Holders of Allowed Class 3 Claims are entitled to the benefits and exemptions
provided by section 1145 of the Code. All of the Rights Offering Shares,
including those issued to the Backstop Parties, if necessary, will be issued
pursuant to the exemption from the registration requirements of the

Securities Act provided by Section 4(2) thereof and/or the private placement
exemption under Regulation D under the Securities Act, and not the exemptions
provided by section 1145 of the Code. Accordingly, the Backstop Parties and any
Electing Holders who purchase Rights Offering Shares will be issued "restricted"
shares, such that the resale of such Rights Offering Shares, and, if applicable,
the Backstop Parties, will have to be registered or will have to qualify for a
separate exemption.

O. POST-CONFIRMATION STATUS REPORT.

Within 180 days following the entry of the Confirmation Order,
the Debtors or the Reorganized Debtors and the Trustee of the Creditor Trust
shall each File a separate status report with the Bankruptcy Court explaining
what progress has been made toward consummation of the confirmed Plan. The
status report shall be served on All Notice List. Unless otherwise ordered,
further status reports shall be Filed every 180 days and served on the same
entities.

P. FINAL DECREE.

Once the Estates have been fully administered, as referred to
in Bankruptcy Rule 3022, the Reorganized Debtors or another party, as the
Bankruptcy Court shall designate in the Confirmation Order, shall File a motion
with the Bankruptcy Court to obtain a final decree to close the Cases.

Q. NOTICE TO CERTAIN PARTIES

All notices and documents to be effective for the following
parties shall be in writing (including by facsimile transmission) and, unless
otherwise expressly provided herein, shall be deemed to have been duly given or
made when actually delivered or, in the case of notice by facsimile
transmission, when received and telephonically confirmed, addressed as follows:

IF TO THE REORGANIZED DEBTORS Stutman, Treister & Glatt, Professional
Corporation
1901 Avenue of the Stars, 12th Fl.
Los Angeles, California 90067-6013
Attn: Robert A. Greenfield

IF TO BACKSTOP PARTIES Oaktree Capital Management, LLC
333 South Grand Avenue, 28th Fl.
Los Angeles, California 90071
Attn: Jordon L. Kruse

Whippoorwill Associates, Inc.
11 Martine Avenue, 11th Fl.
White Plains, New York 10606
Attn: Steven K. Gendal

with copies to:
---------------

Milbank, Tweed, Hadley & McCloy LLP
601 South Figueroa Street, 30th Fl.
Los Angeles, California 90017
Attn: Paul S. Aronzon

IF TO DDJ CAPITAL Akin Gump Strauss Hauer & Field LLP
MANAGEMENT, LLC: 590 Madison Avenue
New York, New York 10022
Attn: Michael Stamer

IF TO OFFICE OF THE Office of United States Trustee
U.S. TRUSTEE: 111 South 10th Street, Rm 6.353
St. Louis, Missouri
63102 Attn: Leonora Long

CONFIRMATION REQUEST
--------------------

The Debtors, OCM POF II and Whippoorwill, as Co-Proponents of
this Plan, hereby request confirmation of this Plan as a Cramdown Plan with
respect to any impaired Class that does not accept this Plan or is deemed to
have rejected this Plan.

PLAN PROPOSED BY:

FALCON PRODUCTS, INC., A DELAWARE
CORPORATION, for itself and for its affiliated
Debtors and Debtors In Possession.

By: /s/ John S. Sumner, Jr.
-----------------------------------------------------
John S. Sumner, Jr., President

OCM PRINCIPAL OPPORTUNITIES FUND II, L.P.,

By: Oaktree Capital Management, LLC, its general partner

By: /s/ Stephen A. Kaplan
-----------------------------------------------
Stephen A. Kaplan, Principal

By: /s/ Jordon L. Krus
-----------------------------------------------
Jordon L. Kruse, Vice President

WHIPPOORWILL ASSOCIATES, INC., as
agent for certain discretionary funds and accounts.

By: /s/ David Strumwasser
-----------------------------------------------------
David Strumwasser, Principal

PLAN PRESENTED BY:

By: /s/ Robert A. Greenfield
----------------------------------------------------
ROBERT A. GREENFIELD (Cal. state bar no. 39648)
rgreenfield@stutman.com
-----------------------
EVE H. KARASIK (Cal. State bar no. 155356)
ekarasik@stutman.com
--------------------
MARINA FINEMAN (Cal. state bar no. 193065)
mfineman@stutman.com
--------------------
ANDREW M. PARLEN (Cal. state bar no. 230429)
aparlen@stutman.com, Members of
-------------------
STUTMAN, TREISTER & GLATT
PROFESSIONAL CORPORATION
1901 Avenue of the Stars, 12th Floor
Los Angeles, CA 90067
Telephone (310) 228-5641
Fax (310) 228-5788

By: /s/ Mark V. Bossi
---------------------------------------
MARK V. BOSSI (E.D. Mo. no. 2675)
mbossi@thompsoncoburn.com
-------------------------
BRIAN W. HOCKETT (E.D. Mo. no. 498697)
bhockett@thompsoncoburn.com
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THOMPSON & COBURN LLP
One US Bank Plaza
St. Louis, MO 63101

Reorganization Counsel for the
Debtors and Debtors In Possession

TABLE OF CONTENTS

PAGE(S)
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I. DEFINITIONS AND RULES OF CONSTRUCTION..........................................................................3

A. Definitions.....................................................................................3

B. Interpretation, Rules Of Construction, Computation Of Time.....................................30

1. Defined Terms.........................................................................30

2. Rules Of Interpretation...............................................................30

3. Time Periods..........................................................................31

4. Rounding..............................................................................32

5. Exhibits..............................................................................32

II. DESIGNATION AND VOTING OF CLASSES OF CLAIMS AND INTERESTS....................................................32

A. Secured Claims.................................................................................32

1. Fleet Revolver Claim (Class 1A).......................................................32

2. Term Component Loan Lender Claims (Class 1B)..........................................33

3. Term A Lender Secured Claims (Class 2)................................................33

4. Term B Lender Secured Claims (Class 3)................................................33

5. Other Secured Claims (Class 4)........................................................33

B. Unsecured Claims...............................................................................33

1. Other Priority Claims (Class 5).......................................................33

2. General Unsecured Claims, Including The Noteholders' Claims (Class 6A)................33

3. Insurance-Covered Claims (Class 6B)...................................................34

4. Claims Of Junior Convertible Debenture Holders (Class 6C).............................34

C. Interests......................................................................................34

1. Outstanding Falcon Interest Holders, Including Holders Of Old Falcon Common Stock And
Pre-Petition Warrants (Class 7A)......................................................34

2. Outstanding Epic Interest Holders (Class 7B)..........................................34

III. TREATMENT OF CLASSES OF CLAIMS AND INTERESTS................................................................34

A. Unclassified Claims............................................................................34

1. Administrative Claims And Administrative Tax Claims...................................34

a. General......................................................................34

b. Bar Dates....................................................................35

2. Priority Tax Claims...................................................................37

3. Prior Bar Dates.......................................................................38

B. Classified Claims And Interests................................................................38

1. Class 1A (Fleet Revolver Claims)......................................................39

2. Class 1B (Term Component Loan Lenders' Claims)........................................39

3. Class 2 (Term A Secured Lenders' Claims)..............................................39

4. Class 3 (Term B Secured Lenders' Claims)..............................................39

5. Class 4 (Other Secured Claims)........................................................39

6. Class 5 (Other Priority Claims).......................................................40

7. Class 6A (General Unsecured Claims, Including The Noteholders' Claims)................40

8. Class 6B (Insurance-Covered Claims)...................................................42

9. Class 6C (Junior Convertible Debenture Holders).......................................43

10. Class 7A (Falcon Interest Holders)....................................................43

11. Class 7B (Epic Interest Holders)......................................................43

IV. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES........................................................43

A. Rejection Of Executory Contracts And Unexpired Leases..........................................43

1. Generally.............................................................................43

2. Approval Of Rejection.................................................................44

3. Objections To Rejection...............................................................45

4. Bar Date For Claims...................................................................45

B. Assumption And Assumption And Assignment Of Executory Contracts And Unexpired Leases...........46

1. Generally.............................................................................46

2. Approval Of Assumption And Assumption And Assignment..................................47

3. Objections To Assumption Or Assumption And Assignment.................................48

4. Payments Related To Assumption And Assumption And Assignment..........................49

C. Contracts Entered Into On Or After The Petition Date...........................................49

V. GENERAL PROVISIONS FOR EXECUTION AND IMPLEMENTATION OF THE PLAN...............................................50

A. General Provisions.............................................................................50

1. Substantive Consolidation Of The Debtors..............................................50

2. Limitation of Liability and Release by Debtors and Estates
of Estate Agents, Lenders, And the Backstop Parties...................................51

3. Vesting Of Assets.....................................................................52

B. Creation Of The Creditor Trust.................................................................53

1. The Trustee of the Creditor Trust.....................................................53

2. The Creditor Trust....................................................................54

C. Business Entity And Financial Restructuring....................................................56

1. Exit Facility.........................................................................56

2. Amended Term A Secured Loan...........................................................56

3. Post-Confirmation Term B Secured Loan.................................................57

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4. The Rights Offering...................................................................57

5. Sources of Cash for Plan Distribution.................................................60

D. Required Transactions..........................................................................60

1. The Reorganized Debtors...............................................................60

2. Reorganized Falcon....................................................................62

3. The Management Incentive Plan.........................................................62

E. Powers Of The Reorganized Debtors..............................................................63

1. Powers Of The Reorganized Debtors.....................................................63

2. Authority To Compromise Claims And Defenses; Offset...................................64

3. Notice Of Effective Date..............................................................64

4. Compliance With Tax Requirements......................................................64

5. Case Closing..........................................................................65

F. 1146(c) Exemption..............................................................................65

G. Retention Of Jurisdiction......................................................................66

H. Debtors' Preservation of Rights of Action and Defenses.........................................69

I. Modification And Withdrawal....................................................................70

VI. PROVISIONS REGARDING ALLOWANCE, OBJECTION AND DISTRIBUTION..................................................71

A. Provisions Regarding Allowance And Objection Deadlines.........................................71

1. Administrative Claims.................................................................71

2. Final Fee Applications................................................................72

3. Administrative Tax Claims.............................................................72

4. Priority Tax Claims And Class 4 Through 6B Claims.....................................72

B. Disputed Claims................................................................................73

C. Reserves For Claims............................................................................73

1. Administrative Claims And Administrative Tax Claims...................................73

2. Other Priority Claims.................................................................73

3. Priority Tax Claims...................................................................74

4. Class 6A Claims.......................................................................74

D. Estimation Of Class 5, 6A, and 6B Claims.......................................................74

E. Procedures For Distributions...................................................................75

1. Dates of Distribution.................................................................76

2. Old Instruments And Securities........................................................76

a. Surrender and Cancellation of Instruments and Securities.....................76

b. Rights of Persons Holding Old Instruments and Securities.....................76

c. Cancellation of Liens........................................................77

3. Interest..............................................................................77

4. De Minimis Distributions And Fractional Shares........................................78

a. Cash Distributions...........................................................78

b. New Common Stock Distributions...............................................78

5. Manner Of Payment Under The Plan......................................................79

6. Delivery Of Distributions.............................................................79

7. Undeliverable Distributions...........................................................79

8. Disposition of Unclaimed Property.....................................................80

F. Record Date....................................................................................80

VII. CONFIRMATION AND EFFECTIVE DATE.............................................................................81

A. Conditions Precedent To Confirmation...........................................................81

B. Conditions Precedent To Plan Effectiveness.....................................................82

C. Non-Occurrence Of Effective Date...............................................................83

VIII. EFFECT OF CONFIRMATION AND INJUNCTION......................................................................84

A. Discharge......................................................................................84

B. Injunction.....................................................................................84

IX. MISCELLANEOUS................................................................................................85

A. U.S. Trustee Fees..............................................................................85

B. Restructuring Expenses.........................................................................86

C. General Authority..............................................................................86

D. Dissolution Of Committee.......................................................................86

E. Successors And Assigns.........................................................................86

F. Binding Effect.................................................................................86

G. Governing Law..................................................................................87

H. No Admission...................................................................................87

I. Payment Dates..................................................................................87

J. Headings.......................................................................................87

K. Other Documents and Actions....................................................................88

L. Severability of Plan Provisions................................................................88

M. No Waiver......................................................................................88

N. Exemption from Securities Laws.................................................................88

O. Post-Confirmation Status Report................................................................89

P. Final Decree...................................................................................89

Q. Notice to Certain Parties......................................................................89

X. CONFIRMATION REQUEST..........................................................................................92