Sample Press Release

A company that has just filed its voluntary Chapter 11 petition will want to set the tone and content of the market discourse about its filing as much as possible. An initial press release—issued simultaneously with the filing of the petition—is not only required for reporting companies with public debt or equity securities, but is also an excellent first step in the company's efforts to stabilize its business and prevent overreaction to the filing by customers, suppliers, landlords, and other parties. Press releases can be and usually are drafted by crisis public relations firms. This sample press release is based on the one issued at the commencement of the Stuart Entertainment bankruptcy, filed in Delaware in August 1999. Stuart was particularly concerned with assuring its many customers and vendors that the Chapter 11 restructuring was going to strengthen the company's financial position, and a description of the prebankruptcy restructuring agreement Stuart reached with certain of its largest creditors was included to bolster that impression.

STUART ENTERTAINMENT FILES REORGANIZATION
PETITION

COUNCIL BLUFFS, Iowa; August 16, 1999 _ Stuart Entertainment, Inc. d/b/a Bingo King (OTC Bulletin Board: STUA) ("Stuart" or the "Company") filed a petition for relief under Chapter 11 of the Bankruptcy Code (the "Chapter 11 Case") in the United States Bankruptcy Court for the District of Delaware on August 13, 1999, in order to effect the Restructuring Agreement (the "Agreement"), dated May 21, 1999, between certain holders (the "Noteholders") of its $100 million 12 ½% Senior Subordinated Notes due 2004 (the "Notes") and Stuart. As previously announced, Stuart did not make the May 15 interest payment with respect to the Notes. Under the Agreement, however, the Noteholders have agreed to refrain from taking any action to enforce the Notes or the obligations of Stuart.

Under the Agreement, upon effectiveness of the Plan of Reorganization (the "Plan"), the holders of the Notes will receive, pro-rata, 100% of the common stock to be authorized under Stuart's amended and restated Certificate of Incorporation to be filed with the Delaware Secretary of State after the Bankruptcy Court approves the Plan ("New Common Stock"), subject to dilution of up to approximately 10% on a fully-diluted basis by shares reserved for issuance under options to be issued to Stuart's executive management. The existing equity holders of Stuart will have their shares cancelled and, subject to approval by the Bankruptcy Court, will receive a pro-rata portion of $150,000 in cash.

Executive Guide to Corporate Bankruptcy

Joseph M. Valandra, Chairman and Chief Executive Officer of the Company, said: "The filing of the Plan of Reorganization is a crucial next step in the revitalization of the Company. We are confident that with the support of a majority of our Noteholders, we can emerge quickly from Chapter 11. As reorganized, the Company will be financially stronger and will continue to compete vigorously in all of our markets. This process will protect the continuing interests of our customers, suppliers and employees in the viability of the Company's business."

Under the Plan, all persons who hold, together with all affiliates of such persons, $500,000 or less in principal amount of Notes will receive a cash payment equal to 25% of such Noteholder's allowed claim in lieu of New Common Stock, unless such Noteholder elects to receive New Common stock. Stuart may fund up to $3 million of such cash payments ("Company Funding"), with the remainder of the funding to be supplied by the largest holder of the Notes in accordance with a standby funding commitment. Under such commitment, the Noteholder providing the funding will receive, in exchange for any such funding actually provided, an allowed claim as a Noteholder, thereby entitling such holder to an additional pro-rata distribution of New Common Stock under the Plan.

The Agreement also provides for certain key executive officers of Stuart to receive vested options to purchase up to 4% of the outstanding New Common Stock, and performance based incentive options to purchase up to 6% of the outstanding New Common Stock as of the Effective Date of the Plan on a fully diluted basis. These percentages are subject to increase based on the amount of Company Funding, and the accretive effect of such funding, in accordance with a formula set forth in the Plan.

Additionally, under the Agreement, the Noteholders have agreed to support the payment of all trade claims in the ordinary course of Stuart's business. As a result, Stuart's trade creditors will not be impaired or negatively impacted by the contemplated restructuring. As part of the initial hearings in Delaware, the Bankruptcy Court approved a debtor-in-possession senior secured revolving credit facility for Stuart in an amount of $20 million, which will be increased to $30 million upon final approval of the financing facility. The Bankruptcy Court also approved Stuart's request to pay key trade and vendor claims that arose before the bankruptcy petition was filed.

Mr. Valandra went on to say: "We are pleased that the Noteholders have agreed with the Company to support the full payment of our trade creditors under normal credit terms. This allows the Company to continue our business on a normal basis and displays confidence in the ongoing operational and financial performance of the Company."

The Plan is subject to numerous conditions, and no assurance can be given that the consensual restructuring provided for in the Agreement and

Sample Press Release

the Plan or any other consensual restructuring will be finalized or that any completed restructuring will not be on terms materially different from those contained in the Agreement and the Plan.

Stuart is a worldwide leader in the manufacture of bingo paper, pulltabs and related electronic gaming equipment and supplies, with locations in the United States, Canada and Mexico. Its subsidiaries include Bazaar & Novelty, Canada's largest supplier of bingo paper and related supplies, and Video King, a major supplier of fixed base electronic gaming systems.

Information provided herein by Stuart may contain "forward-looking" information, as that term is defined by the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). These cautionary statements are being made in accordance with the provisions of the PSLRA. Stuart cautions investors that any forward-looking statements made by Stuart are not guarantees of future performance and that actual results may differ materially from those in the forward-looking statements as a result of various factors, including but not limited to risks or uncertainties detailed in Stuart's filing with the Securities and Exchange Commission. Stuart undertakes no obligation to publicly update or revise any forward-looking statements.