Exhibit 2.4
Christopher R. Kaup, Esq. (014820)
TIFFANY & BOSCO, P.A.
1850 North Central Avenue
Fifth Floor
Phoenix, Arizona, 85004
Attorneys for Debtors and
Debtors-in-Possession
UNITED STATES BANKRUPTCY COURT
DISTRICT OF ARIZONA
In re: | Chapter 11 Proceedings
|
E-BIZ ENTERPRISES, INC., | Case Nos. 01-11843-ECF CGC and
a Nevada corporation, | 01-11844-ECF-CGC
Debtor. |
- ----------------------------------------| (Jointly Administered)
|
In re: | IMMATERIAL MODIFICATIONS
| TO AMENDED JOINT PLAN OF
JONES BUSINESS SYSTEMS, INC., | REORGANIZATION AND
a Texas corporation, | MEMORANDUM OF LAW IN
Debtor. | SUPPORT OF IMMATERIAL
- ----------------------------------------| MODIFICATIONS
E-Biz Enterprises, Inc. and Jones Business Systems, Inc., the Debtors and
Debtors-in-Possession in the abovecaptioned Bankruptcy Cases (collectively, the
"Debtors") hereby submit, pursuant to 11 U.S.C.ss.1127(a), these Immaterial
Modifications to the Amended Joint Plan of Reorganization (the "Plan") filed on
or about January 24, 2002 by the Debtors.
The Debtors have negotiated with the Official Unsecured Creditors'
Committee (the "Committee") regarding the treatment of allowed unsecured claims
in Class 8 of the Plan and the treatment of the allowed secured claim of The
Canopy Group ("Canopy") in Class 1 of the Plan. The Debtors, the Committee and
Canopy have agreed to certain modifications to the Plan, which do not negatively
affect any creditors or parties-in-interest other than Canopy. Canopy, through
the execution of this document by its attorney, has agreed to the modifications
set forth in detail below. These Immaterial Modifications are supported by the
Memorandum of Law set forth herein.
The Plan is, hereby, modified to provide as follows:
(1) Treatment of Allowed Unsecured Claims in Class 8
(a) Each holder of an allowed unsecured claim shall receive equal
quarterly payments, beginning on the date which is three months after the
Effective Date of the Plan, over a period of two years which aggregate 7% of
each such holder's allowed claim;
(b) The securities in Securities Pool A to be distributed to the
holders of allowed unsecured claims in Class 8 shall consist of: (i) 660,000
shares of the Reorganized Debtor's common stock (defined in the Plan as "New
EBIZ Common Stock"); and (ii) 220,000 warrants to purchase the common stock of
the Reorganized Debtor (defined in the Plan as "New I EBIZ Warrants"). The terms
of those warrants shall provide for a two-year exercise period and a strike or
exercise price of $0.65 per share.
(2) TREATMENT OF ALLOWED SECURED CLAIM OF CANOPY IN CLASS 1
(a) The payments of principal and interest to Canopy that are to begin
on November 1, 2002, shall be made quarterly and shall be reduced by $30,000.00
per quarter from the amount set forth in the Plan until such time as the
payments to the holders of allowed claims I in Class 8 have been completed. That
is, during the two-year payout to Class 8, the quarterly payments to Canopy
shall be $129,090.00 (the currently pending Plan provides for monthly payments
to Canopy equal to $53,030.00 ($159,090.00 every three months)).
(b) Upon completion of the Class 8 payments to unsecured creditors,
Canopy shall receive regular monthly payments equal to $53,030.00 (the amount
provided in the currently pending Plan based upon a seven-year amortization).
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(c) The Debtors, on behalf of their respective Bankruptcy Estates and
their successors and assigns, including the Reorganized Debtor, release and
waive all claims and causes of action against Canopy about which they have
knowledge or which they may obtain knowledge, including objections to Canopy's
Claims.
(3) Warrants to Transition Management Team
The terms of the New EBIZ Warrants to be issued to the Transition
Management Team, as that term is defined in the Plan, pursuant to Article III(A)
& (C) of the Plan, are modified to provide an exercise period of one year. The
exercise price of those warrants shall remain at $0.65, as set forth in the
Plan.
(4) Modifications to Specific Articles of the Plan
Articles VI(A)(1)(B) & (2), VII(E)(1)(a) & (h) and XV of the Plan are,
hereby, modified and amended in such a manner so as to give full effect to the
immaterial modification set forth above.
MEMORANDUM OF LAW
IN SUPPORT OF IMMATERIAL MODIFICATIONS
I. INTRODUCTION
Section 1127 of the Bankruptcy Code provides that the proponent of a Plan
may modify that Plan at any time before confirmation provided only that the
Plan, as modified, meets the requirements of 11 U.S.C.ss.ss.1122 and 1123. The
Debtors are the proponents of the Plan.
The immaterial modifications made by the Debtors in this case do not in any
way change the Plan so as to destroy or impair in any way its full compliance
with Sections 1122 and 1123 of the Code. These modifications simply increase the
amount of cash distributions to the holders of unsecured claims and provide for
distribution of additional shares of common stock and better warrant terns to
such creditors. The modifications, with the full consent of Canopy, also change
the terms of repayment to Canopy so as to facilitate the additional amounts to
be paid to the
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holders of allowed unsecured claims as a result of these modifications and the
release of claims and causes of action the Bankruptcy Estate may hold against
Canopy. The Debtors believe that no such claims or causes of action exist.
Canopy required that waiver and release as a condition to making the concessions
on the terms of repayment of its allowed secured claim that are necessary in
order for the Reorganized Debtor to be able to perform on the additional
obligations to holders of allowed claims in Class 8. Finally, the modifications
extend the term of the warrants to be issued to the Transition Management Team.
Except for the modifications made to the treatment accorded to the Class 1
allowed secured claim of Canopy, to which Canopy has consented in exchange for
the release and waiver referenced above, no creditors or parties-in-interest are
negatively affected by the Immaterial Modifications made by the Debtors to the
Plan.
II. THE MODIFICATIONS COMPLY WITH SECTIONS 1122 AND 1123 AND NO FURTHER NOTICE
IS REQUIRED BY THE BANKRUPTCY CODE AND RULES
First, the modifications set forth above do not adversely change the
treatment of any creditor or the interest of any equity security holder, which
has not consented to these modifications. Second, the Plan, as modified,
satisfies each of the required elements 11 U.S.C.ss.1123(a).
Third, the Plan, itself, contemplates that there may be modifications. In
Article XVI, the Plan provides that: "the Debtor may propose amendments or
modifications in accordance with 11 U.S.C. ss.1127(a)" prior to confirmation of
the Plan. Thus, the Immaterial Modifications to the Plan made by the Debtors
herein are consistent with the notice previously given to all creditors and
parties-in-interest.
Section 1127(a) of the Code provides that the proponent of a Chapter 11
Plan desiring to modify that plan may do so. The Historical and Revision Notes
make it clear that compliance
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noticing provision is not necessary if the modifications are so minor as not to
require additional disclosure:
Subsection (c) requires the proponent of a modification to
comply with the disclosure provisions of section 1125. Of
course, if the modification were sufficiently minor, the
court might determine that additional disclosure was not
required under the circumstances.
Rule 3019, Fed.R.Bankr.P. (adopted after ss. 1127 was in place) addresses
the application of 11 U.S.C. ss. 1127 and follows the Historical Note in that it
EXPRESSLY AUTHORIZES the court to proceed without renoticing creditors or other
parties-in-interest. It states:
In a chapter 9 or chapter 11 case, after a plan has been
accepted and BEFORE ITS CONFIRMATION, the proponent may file
a modification of the plan. If the court finds after hearing
on notice to the TRUSTEE, ANY COMMITTEE APPOINTED UNDER THE
CODE and any other entity designated by the court THAT THE
PROPOSED MODIFICATION DOES NOT ADVERSELY CHANGE THE
TREATMENT OF THE CLAIM of any creditor or the interest of
any equity security holder who has not accepted in writing
the modification, it shall be deemed accepted by all
creditors and equity security holders who have previously
accepted the plan.
(emphasis supplied).
III. CONCLUSION
The Immaterial Modifications to the Plan, set forth herein, do not
adversely affect any I creditor or party-in-interest except for Canopy, which
has consented to these modifications. No further noticing of the Immaterial
Modifications or the Plan, as modified, is necessary. Accordingly, the Court
should confirm the Plan, as so modified.
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RESPECTFULLY SUBMITTED this 3rd day of April, 2002.
TIFFANY & BOSCO, P.A.
BY /s/ C.K. #014820
-------------------------------------
Christopher R. Kaup, Esq.
1850 North Central Avenue
Suite 500
Phoenix, Arizona, 85004
Counsel for the Debtors
AGREED AND APPROVED:
/s/ R. David Grant
- ------------------------------
R. David Grant, Esq.
Counsel for The Canopy Group
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