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EXHIBIT 2.3
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF FLORIDA
(FT. LAUDERDALE DIVISION)
In re ) CHAPTER 11
)
SUBSTANCE ABUSE TECHNOLOGIES, INC., ) Case No. 97-25669-BKC-RBR
)
Debtor. )
)
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ORDER CONFIRMING CHAPTER 11 PLAN
OF REORGANIZATION OF
SUBSTANCE ABUSE TECHNOLOGIES, INC.
THIS CAUSE came before the Court in Fort Lauderdale on May 13, 1998 at
1:30 p.m. and on May 20, 1998 at 9:30 a.m. to consider confirmation of the Third
Amended Joint Plan of Reorganization, as modified by the Second Modification to
the Third Amended Joint Plan of Reorganization dated May 20, 1998 (the
"Modification") (together, the "Plan") proposed by Substance Abuse Technologies,
Inc. (the "debtor" or "SAT") and the debtor-in-possession lender, Steven A.
Cohen and S.A.C. Capital Associates, LLC (collectively, "Lender" or "S.A.C.";
together, the "proponents"). The Court, having considered the Plan, the evidence
presented, the arguments and representation of counsel, and the Objections filed
by the Office of the United States Trustee, the Securities Exchange Commission,
Frank Musolino and Lee Rosen and various interest holders (collectively, the
"objections"), hereby makes the following findings of fact and conclusions of
law.
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FINDINGS OF FACT AND CONCLUSIONS OF LAW
A. The Plan and Disclosure Statement(1) were properly served upon all
creditors and parties in interest pursuant to the Bankruptcy Rules and the
Court's March 31, 1998 Order (I) Approving Disclosure Statement; (II) Setting
Hearing on Confirmation of Plan; (III) Setting Hearing on Fee Application; (IV)
Setting Various Deadlines; and (IV) Describing Plan Proponents' Obligations.
B. The Plan has been accepted in writing by more than two-thirds in
amount and one-half in number of the Creditors in all impaired classes, except
for Class 9 (Interest Holders). Class 9 receives no distribution under the Plan,
and is therefore deemed to vote against the Plan.
C. The provisions of Chapter 11 of the Code have been complied with and
the Plan has been proposed in good faith and not by any means forbidden by law.
D. With respect to each impaired class of claims or interests, each
holder of a claim or interest has accepted the Plan, or will receive or retain
under the Plan on account of such claim or interest property of a value, as of
the Effective Date of the Plan, that is not less than the amount that such
holder would receive or retain if the Debtor were liquidated under Chapter 7 of
the Bankruptcy Code on such date. The Plan does not discriminate unfairly, and
is fair and equitable, with respect to each class of claims or interests that
are impaired under the Plan, and has not accepted the Plan.
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(1) Unless otherwise defined, any capitalized terms herein shall have the same
meaning ascribed to them in the Definition section of the Plan.
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E. All payments made or promised by the Proponents or by a person
issuing securities or acquiring property under the Plan or by any other person
for services or for costs and expenses in, or in connection with, the Plan and
incident to the case, have been fully disclosed to the Court and are reasonable,
or, if to be fixed after confirmation of the Plan, will be subject to approval
of the Court.
F. The identity, qualifications, and affiliations of the persons who
are to be directors or officers of the Debtor, after the confirmation of the
Plan, have been fully disclosed, and the appointment of such persons to such
offices, or their continuance therein, is equitable and consistent with the
interests of the creditors and equity security holders and with public policy.
G. The identity of any insider that will be employed or retained by the
Debtor and the nature of the compensation to such insider has been adequately
disclosed.
H. There is no governmental agency with jurisdiction, after
confirmation of the Plan, over the rates of the Debtor.
I. Under the terms of the Plan, all allowed priority claims and secured
claims will be paid in full on the Effective Date.
J. With respect to the class of unsecured claims, the holder of any
claim that is junior to the claims of such class will not receive or retain
under the Plan on account of such junior claim or interest any property.
K. With respect to the Class 9 Equity Holders, no holder of any
interest that is junior to the interests of such class will receive or retain
under the Plan any property on account of such junior interest.
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L. At least one class of claims impaired under the Plan has accepted
the Plan, not including acceptance of the Plan by any insiders.
M. All fees payable under Section 1930 of Title 28 have been paid and
the Plan provides for the payment of all such fees on the Effective Date of the
Plan.
N. Debtor has no retirement plan, and Debtor therefore has no
obligation to provide such benefits.
O. The Plan does not discriminate unfairly, and is fair and equitable,
with respect to each class of claims or interests that is impaired under and has
not accepted the Plan.
P. The confirmation of the Plan is not likely to be followed by the
liquidation, or the need for further financial reorganization, of the Debtor or
any successor to the Debtor under the Plan.
Q. S.A.C. has acknowledged that all conditions to effectiveness set
forth in Article IX, Section 9.2 of the Plan and in the Commitment Letter
attached to the Plan have been either satisfied or waived.
R. The Proponents have solicited acceptance of the Plan in good faith
and in compliance with the applicable provisions of Chapter 11.
S. The Proponents have participated in good faith and in compliance
with the applicable provisions of Chapter 11 in the offer and issuance of
securities of the Reorganized Debtor under the Plan of the Reorganization.
T. The rejection of executory contracts pursuant to the Plan is in the
best interests of the Debtor's estate and its creditors.
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IT IS THEREFORE ORDERED AND ADJUDGED that:
1. The Plan be and hereby is CONFIRMED and APPROVED in all
respects.
2. The Debtor shall pay the United States Trustee the
appropriate sum required pursuant to 28 U.S.C. Section 1930(a)(6) within ten
(10) days after the entry of this order for pre-confirmation periods and
simultaneously provide to the United States Trustee an appropriate affidavit
indicating the cash disbursements for the relevant period; and the Reorganized
Debtor shall further pay the United States Trustee the appropriate sum required
pursuant to 28 U.S.C. Section 1930(a)(6) for post-confirmation periods within
the time period set forth in 28 U.S.C. Section 1930(a)(6), until the earlier of
the closing of this case by the issuance of a Final Decree by the Court, or upon
the entry of an Order by this Court dismissing this case or converting this case
to another chapter under the United States Bankruptcy Code, and the party
responsible for paying the post-confirmation United States Trustee fees shall
provide the United States Trustee upon the payment of each post-confirmation
payment an appropriate affidavit indicating all the cash disbursements for the
relevant period.
3. The Debtor is named as disbursing agent in accordance with
the Terms of the Plan without additional compensation and the requirement of any
bond is hereby waived. The Exit Financing Funds to be used to pay Allowed Claims
under the Plan shall be deposited in a separate account (the "Distribution
Account") for the sole purpose of making such payments until all Allowed Claims
have been paid in accordance with the Plan.
4. The Debtor is DIRECTED to make the Initial Distribution
under the Plan in accordance with the terms thereof. No payments due under the
Plan (other than ordinary
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course of business payments) shall be paid until the Debtor has fully funded the
Distribution Account. Counsel to the Debtor shall mail the Initial Distribution
checks to creditors.
5. Counsel to the Debtor shall, not later than sixty (60) days
after this Order becomes final, file a Final Report of Estate and Motion for
Final Decree Closing Case on the Court approved local form. Failure to timely
file the Final Report of Estate and Motion for Final Decree Closing Case will
result in the imposition of sanctions against the Debtor's counsel, which may
include the return of attorney's fees.
6. Any and all executory contracts not heretofore assumed by
the Debtor by order of the Court be and hereby are REJECTED. Any party to a
contract rejected pursuant to this Order with a claim for rejection damages may
file a claim within thirty (30) days from entry of this Order and serve a copy
on the Debtor's counsel. The Debtor shall have thirty (30) days from receipt
thereof to file an objection to such claim.
7. The Debtor shall, as the Reorganized Debtor, continue to
exist after the Effective Date as a separate corporate entity, with all of the
powers of a corporation under applicable law and without prejudice to any right
to alter or terminate its existence (whether by merger or otherwise), and except
as otherwise provided in the Plan or any contract, instrument or other agreement
or document created in connection with the Plan, on the Effective Date, all
property of the estate, including all claims and causes of action, including
without limitation, all derivative claims, and any property acquired by the
Debtor or the Reorganized Debtor under or in connection with the Plan, shall
revest in the Reorganized Debtor free and clear of all Claims, liens, charges,
other encumbrances and Equity Interests of holders thereof.
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8. On and after the Effective Date, the Reorganized Debtor may
operate its business and may use, acquire and dispose of property and compromise
or settle any Claims or Equity Interests, without supervision or approval by the
Bankruptcy Court and free of any restrictions of the Bankruptcy Code or
Bankruptcy Rules, other than restrictions expressly imposed by the Plan or the
Confirmation Order.
9. As of the Effective Date, the adoption of the Amended
Articles and Amended Regulations or other or similar constituent documents for
the Reorganized Debtor; the initial selection of directors and officers for the
Reorganized Debtor; the distribution of Cash and issuance and distribution of
the New Common Stock; the adoption, execution, delivery and implementation of
all contracts, leases, instruments, releases and other agreements related to or
contemplated by the Plan; the adoption, execution and implementation of
employment, retirement and indemnification agreements, incentive compensation
programs, retirement income plans, welfare benefit plans and other employee
plans and related agreements; and the other matters provided for under or in
furtherance of the Plan involving corporate action to be taken by or required of
the Debtor or the Reorganized Debtor shall be deemed to have occurred and be
effective as provided herein, and shall be AUTHORIZED and APPROVED in all
respects without further order of the Bankruptcy Court or any requirement of
further action by shareholders or directors of the Debtor or the Reorganized
Debtor, and with like effect as if such actions had been taken by unanimous
action of the shareholders and directors of the Debtor or the Reorganized
Debtor, as applicable.
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10. As of the Effective Date, the term of each of the officers
and directors of the Debtor not continuing in office shall TERMINATE pursuant to
the Plan without any further action by the shareholders or directors of the
Debtor or the Reorganized Debtor.
11. As of the Effective Date, the articles of incorporation
and bylaws of the Reorganized Debtor shall be amended and restated substantially
in the forms of the Amended Articles and Amended Bylaws. The Amended Articles
shall, among other things: (a) prohibit the issuance of non-voting equity
securities, to the extent required by section 1123(a) of the Bankruptcy Code,
and (b) authorize the issuance of the New Common Stock and such other acts as
may be necessary to effectuate the Plan. After the Effective Date, the
Reorganized Debtor may amend and restate the Amended Articles and Amended Bylaws
as permitted by applicable nonbankruptcy law and the Stockholder Agreement.
12. Effective upon the Effective Date, all equity interests in
the Debtor are terminated.
13. All creditors and equity holders with Allowed Claims
and/or Interests in the Debtor are hereby ENJOINED from commencing or continuing
any derivative action(s) of or on behalf of the Debtor.
14. Debtor and Reorganized Debtor be and hereby are AUTHORIZED
and DIRECTED to borrow the Exit Financing Funds and are further AUTHORIZED and
DIRECTED to execute any and all documents necessary to effectuate the Exit
Financing and no further approvals shall be necessary.
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15. The Lender is directed to deliver the Exit Financing Funds
to the Debtor within twenty days of the date of entry of this Order.
16. The issuance, transfer or exchange of a security, or the
making, delivery or recording of a note or an instrument of transfer in
connection with the Exit Financing or the Plan shall not be taxed under any law
imposing a stamp tax or similar tax pursuant to 11 U.S.C. Section 1146.
17. Creditors who vote in favor of the Plan be and hereby are
deemed to approve the Exit Financing.
18. Debtor and the Reorganized Debtor be and hereby are
authorized to execute any necessary organizational documents without further
Court or shareholder approval.
19. The Reorganized Debtor's board of directors, which shall
consist of Robert M. Stutman, David L. Dorff, Steven A. Cohen, Steven C. Jackson
and Donald Cohen, be and hereby is APPROVED effective on the Effective Date
without further approval of the Debtor's shareholders or creditors.
20. Debtor shall serve a conformed copy of this Order and the
Modification upon the office of the United States Trustee, all creditors, equity
holders and counsel of record, and other parties in interest.
21. The Objections have all been resolved by the Modification
to the Plan and, to the extent not resolved, are OVERRULED.
22. The Court shall retain jurisdiction as set out in sections
12.1.a, 1.b, 1.c, 1.d, 1.e, 1.f, 1.h, 1.j and 1.l of the Plan, and with the
following sections deleted:
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1.g Provision is DELETED IN ITS ENTIRETY;
1.i Provision is DELETED IN ITS ENTIRETY;
1.j Provision is DELETED IN ITS ENTIRETY;
23. The Court will conduct a post-confirmation status
conference on July 28, 1998 at 9:30 A.M., in Courtroom 308, U.S. Courthouse, 299
East Broward Boulevard, Fort Lauderdale, Florida to determine (i) whether the
Debtor has complied with the provisions of this Order, and (ii) whether the
disbursing agent and the Plan Proponents have timely filed the Required Final
Report of Estate and Motion For Final Decree Closing Case. At the status
conference, the Court will consider the propriety of dismissal or conversion to
Chapter 7, and/or the imposition of sanctions against the Debtor and/or the
Debtor's disbursing agent for failure to timely file the Final Report of Estate
and Motion for Final Decree Closing Case for failure to comply with the
provisions of this Order.
DONE and ORDERED in Fort Lauderdale, Southern District of Florida, this
26th day of May, 1998.
/s/ HONORABLE RAYMOND B. RAY
UNITED STATES BANKRUPTCY JUDGE
Copies to:
Linda G. Worton, Esq.
Office of the U.S. Trustee
(Attorney Worton is directed, pursuant to Local Rule 202(C)(11), to serve
conformed copies of this Order pursuant to paragraph 20 hereof, and to file a
Certificate of Service with the Court confirming such service.)
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