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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): DECEMBER 7, 1999
TRITEAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-28660 33-0548924
(Commission File No.) (IRS Employer Identification No.)
c/o COOLEY GODWARD LLP
4365 EXECUTIVE DRIVE, SUITE 1100
SAN DIEGO, CA 92121-2128
ATTN: FREDERICK T. MUTO, ESQ.
(Address of principal executive offices and zip code)
Registrant's counsel's telephone number, including area code: (858) 550-6000
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ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
On December 7, 1999, an order confirming a Plan of Liquidation
for TriTeal Corporation (the "Company") was entered by the United States
Bankruptcy Court for the Southern District of California, Case No. 99-03494-B11.
That Plan provides for a liquidation of TriTeal's assets and the distribution of
those assets, first to creditors, and then to stockholders. The Plan of
Liquidation provides for payment in the following order: secured claims; claims
entitled to priority by the Bankruptcy Code; general unsecured claims; indemnity
claims of officers, directors and employees; and, to the extent that funds
remain from liquidation, to stockholders pro rata. The Plan of Liquidation does
not provide for the issuance of further shares. Information as to the assets and
liabilities of the Company is set forth in its Disclosure Statement and Plan of
Liquidation filed with the bankruptcy court. Copies of those documents are
attached hereto as Exhibits 2.1 and 2.2.
On January 12, 2000, the Company issued a press release
concerning court approval of the Company's Plan of Liquidation under its Chapter
11 Bankruptcy filing. Further detail regarding the statement is provided in the
Company's press release relating to this event, a copy of which is attached
hereto as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) EXHIBITS.
2.1 Amended Disclosure Statement to Debtor in
Possession's Plan of Liquidation dated August 27,
1999.
2.2 Debtor in Possession's Amended Plan of Liquidation
dated August 27, 1999.
99.1 Press Release of TriTeal Corporation dated January
12, 2000.
2.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TRITEAL CORPORATION
Dated: January 11, 2000 By: /s/ Jeffrey G. Black
---------------------------------
Jeffrey G. Black
Bankruptcy Court Appointed
Responsible Person
3.
JEFFRY A. DAVIS (Bar No. 098895)
TROY ZANDER (Bar No. 167823)
KARLA A. LYON (Bar No. 185602)
GRAY CARY WARE & FREIDENRICH LLP
401 B Street, Suite 1700
San Diego, California 92101-4297
Telephone: 619-699-2810
Facsimile: 619-236-1048
Attorneys for
Debtor and Debtor in Possession
TriTeal Corporation
UNITED STATES BANKRUPTCY COURT
Southern District of California
In re CASE NO. 99-03494
TRITEAL CORPORATION, a AMENDED DISCLOSURE STATEMENT TO
Delaware corporation, DEBTOR IN POSSESSION'S PLAN OF
LIQUIDATION DATED AUGUST 27, 1999
Debtor and
Debtor in Possession. Date: October 15, 1999
Time: 10:00 a.m.
Tax I.D. No. 33-0548924 Dept: 4
Judge: Peter W. Bowie
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TABLE OF CONTENTS
Page
I. INTRODUCTION.............................................................1
A. The Purpose of this Document........................................2
II. CONFIRMATION OF THE PLAN.................................................5
A. No Vote Is Necessary Under Debtor's Plan............................5
B. Confirmation Hearing................................................6
III. DEBTOR'S BACKGROUND AND BUSINESS OPERATIONS..............................6
A. Description of the Debtor...........................................6
B. History and Events Contributing to the Filing.......................7
C. Securities Litigation...............................................8
1. Financial Restatements.........................................8
2. The Securities Litigation......................................9
3. SEC Investigation.............................................10
D. Indemnity Claims...................................................11
E. Post-Petition Events...............................................11
F. Debtor's Current Assets/Liabilities and Operations.................12
IV. THE DEBTOR'S PLAN OF REORGANIZATION.....................................12
A. General Overview of the Plan.......................................12
B. Unclassified Claims................................................13
1. Administrative Expenses.......................................13
2. Priority Tax Claims...........................................14
C. Classification and Treatment of Claims and Interests................15
1. Class 1.......................................................15
2. Class 2.......................................................16
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TABLE OF CONTENTS
(continued)
Page
3. Class 3.......................................................16
4. Class 4.......................................................17
5. Class 5.......................................................18
D. Means for Effectuating the Plan....................................18
1. Liquidation...................................................18
2. Responsible Person............................................19
E. Risk Factors.......................................................19
F. Miscellaneous Provisions of the Plan...............................20
1. Assumption or Rejection of Unexpired Leases
and Executory Contracts.......................................20
2. Objections to Claims or Interests.............................20
3. Resolution of Disputes........................................21
4. Settlement of Claims and Disputes.............................21
5. Compensation and Reimbursement of Professionals...............22
6. Payment of Fees Owed to the U.S. Trustee and
Clerk's Office................................................22
7. Retention of Jurisdiction.....................................23
8. Default Under the Plan........................................23
G. Tax Consequences of the Plan.......................................23
V. LIQUIDATION ANALYSIS....................................................24
A. Introduction.......................................................24
1. Liquidation Analysis..........................................24
VI. MODIFICATION OF THE PLAN................................................26
VII. EFFECT OF CONFIRMATION OF PLAN..........................................26
VIII. LIMITATION OF LIABILITY.................................................26
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TABLE OF CONTENTS
(continued)
Page
IX. POST-CONFIRMATION CONVERSION OR DISMISSAL...............................28
A. Final Decree.......................................................29
X. CONCLUSION AND RECOMMENDATION...........................................29
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I.
INTRODUCTION
TriTeal Corporation, a Delaware corporation ("TriTeal" or the
"Debtor"), is the debtor in this chapter 11 bankruptcy case. On April 2, 1999,
TriTeal commenced a bankruptcy case by filing a petition under chapter 11 of the
United States Bankruptcy Code (the "Bankruptcy Code"), 11 U.S.C. ss. 101, ET
SEQ. Chapter 11 allows the debtor, and under some circumstances creditors and
other parties in interest, to propose a plan of reorganization. A plan of
reorganization may provide for the debtor to reorganize its affairs and continue
to operate, or to liquidate, or a combination of both. The Debtor is the party
proposing the Plan of Liquidation (the "Plan") sent to you in the same envelope
as this disclosure statement document.
The Debtor's management, in consultation with retained advisors and
consultants, has determined that the Debtor will not be able to operate
profitably in the foreseeable future. Therefore, in accordance with its
fiduciary duties to creditors and shareholders, the Debtor's board of directors
determined that it was in the best interest of those parties to liquidate the
Debtor and distribute the proceeds of that liquidation to the parties legally
entitled to those proceeds. The Debtor has chosen to liquidate through chapter
11 rather than liquidating under state law because the Debtor believes this
method is more efficient, is quicker, is likely to be less expensive, and
provides for greater certainty than dissolution under state law. The Debtor's
Plan of Liquidation provides for FULL PAYMENT TO ALL CREDITORS upon the
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Effective Date. At the same time, most of the Debtor's remaining CASH WILL BE
DISTRIBUTED PRO RATA TO THE DEBTOR'S SHAREHOLDERS. The remainder of the Debtor's
assets will continue to be liquidated, with a final distribution to shareholders
upon completion of the liquidation. The liquidation rights of creditors and
shareholders under state and federal law will be implemented by the Plan.
A. THE PURPOSE OF THIS DOCUMENT
The Bankruptcy Code requires that any party filing a plan of
reorganization also prepare and file with the bankruptcy court (the "Bankruptcy
Court") a "disclosure statement," describing the proposed plan and providing
creditors and parties in interest with information about the debtor. THE
DOCUMENT YOU ARE READING IS THE DISCLOSURE STATEMENT FOR THE ENCLOSED PLAN OF
LIQUIDATION FILED BY THE DEBTOR.(1)
The Bankruptcy Code requires a disclosure statement to contain
"adequate information." In other words, the Disclosure Statement must contain
information of a kind and in sufficient detail to enable the parties who are
affected by the Plan to intelligently vote for or against the Plan or object to
the Plan. Although creditors and shareholders of the Debtor will not have an
opportunity to vote to accept or reject the Plan since their liquidation rights
are unimpaired by the Plan, this Disclosure Statement has been provided to
inform creditors, shareholders and the Bankruptcy Court of the Debtor's
background, the events
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(1) Unless otherwise noted, all defined terms in this Disclosure Statement have
the same meaning as in the Plan.
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leading to the filing of this Chapter 11 Case and particulars concerning the
Plan.
The Bankruptcy Court has reviewed this Disclosure Statement. The
Bankruptcy Court has determined that this Disclosure Statement contains adequate
information and may be sent to you in connection with the Debtor's Plan. This
Disclosure Statement summarizes the Plan, and provides information relating to
the Plan and the process the Bankruptcy Court follows in determining whether or
not to confirm the Plan.
THE INFORMATION CONTAINED HEREIN HAS BEEN SUBMITTED BY THE MANAGEMENT
OF THE DEBTOR, UNLESS SPECIFICALLY STATED TO BE FROM OTHER SOURCES. THE DEBTOR
HAS AUTHORIZED NO REPRESENTATIONS CONCERNING IT OR ITS FINANCIAL AFFAIRS, OTHER
THAN THOSE SET FORTH HEREIN.
YOU MAY NOT RELY UPON THIS DISCLOSURE STATEMENT FOR ANY PURPOSE OTHER
THAN IN CONNECTION WITH THE PLAN. NOTHING CONTAINED IN THE PLAN OR DISCLOSURE
STATEMENT SHALL CONSTITUTE AN ADMISSION OF ANY FACT OR LIABILITY BY ANY PARTY OR
BE ADMISSIBLE IN ANY PROCEEDING INVOLVING THE DEBTOR OR ANY OTHER PARTY.
EXCEPT AS MAY BE SET FORTH HEREIN, THE BANKRUPTCY COURT HAS NOT
APPROVED ANY REPRESENTATIONS CONCERNING THE DEBTOR OR THE VALUE OF ITS ASSETS.
THE DEBTOR HAS NOT AUTHORIZED ANY REPRESENTATIONS OR INDUCEMENT TO SECURE
ACCEPTANCE OR REJECTION OF THE PLAN OTHER THAN AS CONTAINED HEREIN AND APPROVED
BY THE BANKRUPTCY COURT.
THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
U.S. SECURITIES & EXCHANGE COMMISSION NOR HAS
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THE COMMISSION PASSED ON THE ACCURACY OF THE STATEMENTS CONTAINED HEREIN.
THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE AS OF
THE DATE HEREOF, UNLESS ANOTHER DATE IS SPECIFIED HEREIN. NEITHER DELIVERY OF
THIS DISCLOSURE STATEMENT NOR ANY EXCHANGE OF RIGHTS MADE IN CONNECTION WITH
THIS DISCLOSURE STATEMENT AND PLAN SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH HEREIN SINCE
THE DATE THE DISCLOSURE STATEMENT WAS PREPARED.
ALTHOUGH THE MANAGEMENT OF THE DEBTOR BELIEVES THAT THE CONTENTS OF
THIS DISCLOSURE STATEMENT ARE COMPLETE AND ACCURATE TO THE BEST OF ITS
KNOWLEDGE, INFORMATION AND BELIEF, THE DEBTOR AND ITS MANAGEMENT ARE UNABLE TO
WARRANT OR REPRESENT THAT THE INFORMATION CONTAINED HEREIN IS WITHOUT ANY
INACCURACY. ANY STATEMENTS REGARDING PROJECTED AMOUNTS OF CLAIMS AND DIVIDENDS
ARE ESTIMATES BASED UPON CURRENTLY AVAILABLE INFORMATION AND ARE NOT A
REPRESENTATION THAT SUCH AMOUNTS WILL ULTIMATELY PROVE CORRECT.
THE DEBTOR BELIEVES THAT THE TREATMENT OF CREDITORS AND SHAREHOLDERS
UNDER THE PLAN WILL RESULT IN A GREATER RECOVERY FOR THOSE PARTIES THAN THAT
WHICH IS LIKELY TO BE ACHIEVED UNDER DIRECTION OF A TRUSTEE IN A CASE UNDER
CHAPTER 7 OF THE BANKRUPTCY CODE. ACCORDINGLY, THE DEBTOR BELIEVES THAT
CONFIRMATION OF THE PLAN IS IN THE BEST INTEREST OF CREDITORS AND SHAREHOLDERS.
THE BANKRUPTCY COURT HAS NOT YET CONFIRMED THE PLAN DESCRIBED IN THIS
DISCLOSURE STATEMENT. IN OTHER WORDS, THE TERMS OF THE PLAN ARE NOT YET BINDING
ON ANYONE. HOWEVER, IF THE BANKRUPTCY COURT LATER CONFIRMS THE PLAN, THEN THE
PLAN WILL BE BINDING ON ALL CREDITORS AND INTEREST HOLDERS IN THIS CASE.
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II.
CONFIRMATION OF THE PLAN
Generally, under the Bankruptcy Code, all creditors and interest
holders whose claims are impaired vote to accept or reject a plan of
reorganization. ("Impaired" generally means "changing or altering the legal or
equitable rights of such creditor"). The Bankruptcy Court will then determine
whether each class has accepted the plan by the requisite statutory majority. If
all classes vote to accept the plan, the plan will be confirmed if the
Bankruptcy Court determines the plan meets certain legal requirements. SEE,
GENERALLY, Bankruptcy Code ss. 1129(a).
A. NO VOTE IS NECESSARY UNDER DEBTOR'S PLAN.
As a matter of bankruptcy law, only the members of those classes whose
claims or interests are impaired under a plan or reorganization are entitled to
vote for acceptance or rejection of the plan. Since no Classes are impaired
under the Debtor's Plan, no Class is eligible to vote on the Plan.
Pursuant to Bankruptcy Code section 1126(f), an unimpaired class and
each holder of a claim or interest in that class are deemed to have accepted the
plan, and those creditors or interest holders do not vote on the plan. Under the
Plan, all Classes are unimpaired and, accordingly, all Classes are deemed to
have accepted the Plan under this provision.
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Pursuant to Bankruptcy Code section 1126(g), if the holders of claims
or interests in a given class receive or retain nothing under the Plan, that
class is deemed not to have accepted the plan. Under the Debtor's Plan, there
are no such Classes. Therefore, no Class is deemed to have rejected the Plan
under this provision.
B. CONFIRMATION HEARING.
The Bankruptcy Court will hold a hearing with respect to confirmation
of the Plan to determine whether the Plan meets the requirements of Bankruptcy
Code section 1129(a), including the requirement that the Plan has been proposed
in good faith and is feasible. THE TIME, PLACE AND DATE OF THE HEARING ON
CONFIRMATION AND THE DATE BY WHICH OBJECTIONS TO CONFIRMATION MUST BE FILED AND
SERVED ARE SPECIFIED IN THE NOTICE OF HEARING THAT ACCOMPANIES THIS DISCLOSURE
STATEMENT.
III.
DEBTOR'S BACKGROUND AND BUSINESS OPERATIONS.
A. DESCRIPTION OF THE DEBTOR.
The Debtor is a Delaware corporation which developed, marketed and
supported open systems-based, mission-critical desktop systems software and
integrated applications that enable multi-platform deployment of client/server
applications throughout an enterprise. The Debtor was originally founded as a
California corporation in January 1993, but later reincorporated as a Delaware
corporation in connection with its initial public offering. The Debtor commenced
operations in April 1993 and released its first product in May 1993. The
Debtor's stock was traded on the NASDAQ national market under the symbol TEAL
until it was delisted in June 1998. The Debtor's business operations were
headquartered at 2011 Palomar Airport Road, Suite 200, Carlsbad, California
92009. It formerly had offices in a number of locations, including New York,
Texas, Colorado, Massachusetts, the Netherlands, and the United Kingdom.
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The company's products are based, in part, on certain technologies
licensed from Hewlett-Packard, the Open Group (formerly the Open Software
Foundation), SPYRUS and other technology vendors. The Debtor introduced its
flagship product, the TriTeal Enterprise Desktop ("TED"), in August 1995. The
Debtor's revenues have historically been derived from two principal sources (i)
license fees for the use of the Debtor's software products, and (ii) maintenance
agreements and software development contract revenues.
The Debtor has two authorized classes of stock. The Debtor currently
has authorized 5,000,000 shares of preferred stock at $.001 par value, none of
which have been issued. The Debtor currently has authorized 30,000,000 shares of
common stock at a par value of $.001. Shares issued and outstanding totaled
11,532,990 as of December 31, 1998.
B. HISTORY AND EVENTS CONTRIBUTING TO THE FILING.
The Debtor was incorporated in 1993 for the purpose of providing
enterprise desktop solutions. TriTeal enjoyed relatively successful operations
from 1993 through 1996. In March 1997, TriTeal's board of directors decided to
bring in additional management assistance. David Chen was hired in July 1997 as
president and chief operating officer, but stepped down in December 1997, along
with the chief financial officer, Art Budman. Also, two of the founders, Oran
Thomas and Greg White, left the company at this time. In February 1998, the
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board of directors decided to retain a team from Regent Pacific Management
Corporation ("Regent Pacific"), a management consulting firm, to provide a
management and strategic direction. The board of directors chose Regent Pacific
because of its specialization in turnarounds and interim management.
At the time Regent Pacific was retained, TriTeal had many serious
issues to confront, including an SEC investigation, the defense of a class
action lawsuit, a NASDAQ investigation, a dispute with its master reseller over
delinquent payments and performance issues.
TriTeal, with the assistance of Regent Pacific, addressed these issues
by reducing its workforce by 40%, consolidating facilities into one building,
releasing unaudited restated financial results, settlement of the class action
lawsuit, establishing a new directors' and officers' liability policy, hiring
KPMG as investment bankers, concluding negotiations with the landlord to
terminate a prospective lease, and contacting prospective buyers and strategic
partners.
In mid-1998, TriTeal retained KPMG to locate a buyer for the company.
KPMG analyzed TriTeal's technology, products, markets, customers, and user
benefits and developed a list of potential strategic partners and buyers. More
than 40 firms were contacted. Unfortunately, no offers were received. In light
of the continuing losses, the decision was made to further reduce the number of
employees and liquidate the company.
C. SECURITIES LITIGATION.
1. FINANCIAL RESTATEMENTS. During December 1997, the Debtor became
aware of information indicating that there may have been certain errors and
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irregularities that could affect the timing and dollar amount of certain
previously reported revenues and related operating results. Special counsel was
engaged to perform a review of such potential errors and irregularities. Based
on the results of this review, and additional work performed by the Debtor's
independent auditors and the Debtor, and following consultation with outside
counsel to the Debtor, the Debtor restated its quarterly and annual financial
statements for the fiscal years ended March 31, 1997 and 1996 and the quarters
ended June 30 and September 30, 1997. These restatements reflected a material
adverse change in reported revenues, net income (loss), stockholders' equity,
total assets and working capital for all periods restated, except that the
results of operations for the quarters ended September 30, 1997 and 1996 were
favorably impacted. As part of the restatements, the Debtor reversed sales
transactions aggregating approximately $17,000,000 in revenue, of which
approximately $3,700,000 was recognized in subsequent restated periods. In
addition, as a result of the reviews performed, the independent auditors
withdrew their audit opinions with respect to the fiscal 1997 and 1996 financial
statements. The Debtor does not anticipate that any of the remaining restated
revenues will be recognized in future periods.
2. THE SECURITIES LITIGATION. On November 7, 1997, a number of class
action complaints were filed against the Debtor and certain of its officers,
directors and two of the Debtor's underwriters (the "Securities Litigation").
These complaints were brought on behalf of a purported class of investors in the
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Debtor's common stock. The complaints alleged, among other things, that the
defendants misrepresented or failed to disclose to investors material facts
concerning the Debtor and its business, operations, revenues and prospects, and
that certain of the defendants improperly sold shares of common stock of the
Debtor at prices that were artificially inflated as a result of these alleged
nondisclosures or misrepresentations. The complaints also alleged violations of
the Federal securities law.
On March 22, 1999, the United States District Court for the Southern
District of California approved a settlement of the Securities Litigation. The
Securities Litigation was settled for a total amount of $12,000,000. TriTeal
paid $10,000,000, its portion of the settlement, pre-petition. The remaining
$2,000,000 was satisfied through insurance coverage.
3. SEC INVESTIGATION. On January 20, 1998, the Debtor initiated
contact with the Enforcement Division of the Securities and Exchange Commission
("Enforcement Division") to make voluntary disclosure to the Securities and
Exchange Commission ("SEC") and to apprise the Enforcement Division of
information indicating that there may have been certain errors and
irregularities that could affect the timing and dollar amount of certain
previously reported revenues and related operating results. A meeting with the
Enforcement Division was held on January 22, 1998. By letter dated March 9,
1998, the Debtor was notified by the SEC that it had commenced a formal
investigation of the Debtor. The SEC issued a subpoena for various documents
relating to the Debtor's finances, financial controls and restatement of
revenues. The Debtor and senior management officials have provided and are
continuing to provide the relevant documents and information and intend to
cooperate fully with the SEC.
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D. INDEMNITY CLAIMS.
The Debtor may have indemnification obligations to its former
officers, directors and employees pursuant to the Debtor's bylaws,
indemnification agreements, and under section 28.02 of the California Labor Code
and section 145 of the Delaware Corporations Code, depending on the outcome of
the SEC investigation. The indemnity claimants who have filed claims against the
Debtor with the Bankruptcy Court are Robert D. Ruhe, Armando Viteri, Gregory J.
White, James R. Arnett, Oran M. Thomas, Rand R. Shulman, Ronald B. Hegli,
Jeffrey Witous, and Arthur Budman. It is possible, but not anticipated, that the
indemnity obligations may exceed the Debtor's remaining assets after payments to
Classes 1, 2, 3(a) and 3(b), but until the SEC completes its investigation, the
Debtor cannot estimate these claims. The SEC has not yet informed the Debtor as
to the outcome of its investigation, so the Debtor cannot determine precisely
what the full extent of its indemnity obligations, if any, may be to its former
officers, directors and employees.
E. POST-PETITION EVENTS.
SALE OF LICENSES. On or about May 25, 1999, the Debtor sold a license
for the VUE Source Code for Internal Development and Support to AT&T for
$150,000. On or about June 30, 1999, the Debtor sold a license for the TED
Source Code for Internal Development and Support to Morgan Stanley for $150,000.
The Debtor is presently negotiating a sale to J.P. Morgan of a TED Source
Code for Internal Development and Support.
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F. DEBTOR'S CURRENT ASSETS/LIABILITIES AND OPERATIONS.
The Debtor has assets totaling $6,358,592.60 and estimated liabilities
totaling $2,594,872.24. In addition, as stated above, a number of the Debtor's
former officers and directors have filed proofs of claims for indemnity arising
out of the ongoing SEC investigation. The total amount of such Indemnity Claims
is unliquidated and, therefore, unknown. As of June 30, 1999, the Debtor's
assets consist of: (1) checking, savings and other accounts with financial
institutions in the amount of $5,777,042.05; (2) security deposits in the amount
of $441,601.74, (3) accounts receivable in the amount of $6,383.11; (4) patents,
copyrights and other intellectual property (value unknown); (5) office
equipment, furnishings and supplies in the amount of $7,500.00; and (6) other
assets valued at $126,065.70.
IV.
THE DEBTOR'S PLAN OF REORGANIZATION.
A. GENERAL OVERVIEW OF THE PLAN.
The following is a brief description of significant provisions of the
Plan. This summary is not a substitute for a full and complete reading of the
Plan. The Plan, if confirmed, will be binding upon the Debtor and all holders of
claims and interests. Any statements regarding projected amounts of claims and
dividends are estimates of the Debtor based upon currently available information
and are not a representation that such amounts will ultimately prove correct.
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The Plan provides for the liquidation of the Debtor's assets. Holders
of allowed claims will receive cash in full satisfaction of their claims. No
claim shall be paid an amount in excess of the amount allowed by the Bankruptcy
Court.
The implementation of the Plan will be effected by Jeffrey Black as
the Debtor's court-appointed responsible officer. Mr. Black has served as
Controller of the Debtor since September 1996. Mr. Black will liquidate the
remaining assets and make all distributions required or permitted by the Plan.
The Debtor will continue to possess all of the rights, powers, and duties of a
trustee under the Bankruptcy Code.
As required by the Bankruptcy Code, the Plan classifies claims and
interests in various classes according to their right to priority. The Plan
states whether each class of claims or interests is impaired or unimpaired. The
Plan provides the treatment each class will receive.
The Effective Date of the Plan is the eleventh (11th) Business Day
after the date the Confirmation Order is entered, unless the Debtor elects an
earlier Effective Date.
B. UNCLASSIFIED CLAIMS.
Bankruptcy Code section 1123(a)(1) provides that a plan should
classify all claims other than claims of the kind specified in sections
507(a)(1), 507(a)(2) and 507(a)(8). As such, the Debtor has not classified the
following claims:
1. ADMINISTRATIVE EXPENSES. Administrative expenses are claims for
professional fees, expenses of administering the Debtor's Chapter 11 Case and
any fees or charges assessed against the Estate under chapter 123 of title 28 of
the United States Code which are allowed under sections 503(b) and 507(a)(1) of
the Bankruptcy Code. The Bankruptcy Code requires that all administrative
expenses be paid on the Effective Date, unless a particular claimant agrees to a
different treatment under the Plan.
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Total administrative expenses are anticipated to be approximately
$300,000-$400,000. The Debtor's general bankruptcy counsel, Gray Cary Ware &
Freidenrich LLP, received a pre-petition retainer of $88,471. The Debtor's
special corporate counsel, Cooley Godward, LLP, received a pre-petition retainer
of $50,000. Neither Gray Cary Ware & Freidenrich nor Cooley Godward have agreed
to limit their fees to the pre-petition retainers, and may incur fees and costs
in excess of the retainer in connection with confirmation of the Plan. The
Debtor is also paying on a current basis, pursuant to the court order, the
attorneys' fees for counsel to various alleged indemnified officers, directors
and employees, up to a total of $150,000.
In addition, it may be necessary for the Debtor to retain
accountants to provide year-end financial statements and tax return work. The
cost of those services is estimated to be $15,000.
2. PRIORITY TAX CLAIMS. Priority tax claims include the Allowed
Claims of governmental units that are entitled to priority under Bankruptcy Code
section 507(a)(8) (certain claims of taxing authorities). The Debtor has
scheduled such claims as totaling $3,525.08. Except to the extent that the
holder has agreed to different treatment of such Claim, each holder of an
allowed Priority Tax Claim shall be paid in Cash the allowed amount of such
Claim, plus Plan Interest, on the later of the Effective Date or ten (10) days
after an order approving such Claim becomes a Final Order.
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C. CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS.
1. CLASS 1.
a. CLASSIFICATION. Class 1 consists of any Secured Claims which
are Allowed Claims. Each Secured Claim will be separately classified under Class
1 as Class 1(a), 1(b), etc.
(a) Class 1(a) -- EOP Operating Limited Partnership
("EOP"). EOP was the Debtor's landlord on a facility lease located at 17 New
England Executive Park, Burlington, MA 01803. Burlington holds a security
deposit in the amount of $20,308.00.
(b) Class 1(b) -- PT Carlsbad Associates ("Carlsbad").
Carlsbad was the Debtor's landlord on three facility leases located at 2011
Palomar Airport Road, No. 200, Nos. 201/203, and No. 300, Carlsbad, CA 92009.
Carlsbad holds a security deposit in the amount of $213,547.27.
(c) Class 1(c) -- Fairborn Morris. Fairborn Morris was
the Debtor's landlord on a facility lease located at Unit 8, Shaftesbury Court,
Slough, United Kingdom. Fairborn Morris holds a security deposit in the amount
of $19,400.23.
b. TREATMENT. Each Class 1 claim shall be paid in full in
accordance with the terms of the agreements between the Debtor and the holder of
such Class 1 Claim, but only up to the amount of such holder's security deposit.
Any portion of such holder's claim which exceeds the security deposit shall be
treated and paid as a Class 3 Claim. Each holder of a Class 1 Claim will be
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entitled to retain any lien, security interest or collateral securing such Claim
until that holder's Class 1 Claim is paid in full. Unless a material prepayment
penalty would be incurred, the Debtor will pay all Class 1 Claims in full on the
Effective Date. If a material prepayment penalty would be incurred, the Debtor
will pay such Claim in accordance with the agreements between the Debtor and the
Class 1 Claim holder. Class 1 is unimpaired.
2. CLASS 2.
a. CLASSIFICATION. Class 2 consists of Claims for wages or
vacation pay accrued and owing as of the Petition Date entitled to priority
pursuant to Bankruptcy Code section 507(a)(3). The Debtor believes no Class 2
Claims exist. Class 2 is unimpaired.
b. TREATMENT. Except to the extent that the holder has agreed to
a different treatment of such Claim, each holder of an allowed Class 2 Claim
shall be paid in Cash the allowed amount of such Claim, plus Plan Interest, on
the later of the Effective Date or ten (10) days after an order allowing such
Claim becomes a Final Order.
3. CLASS 3.
a. CLASSIFICATION. Class 3 consists of all Unsecured Claims of
the Debtor not entitled to priority under the Bankruptcy Code. As set forth in
its Schedule of Liabilities, the Debtor estimates Class 3 Claims total
$2,038,091.66, including contingent, disputed and unliquidated Claims, but not
/////
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<PAGE>
including claims for indemnity which may be filed by the Debtor's former
officers, directors and employees. Class 3 is unimpaired.
(1) CLASS 3(A) consists of all Class 3 Claims held by
Claimants who filed a proof of claim prior to the Claims Bar Date.
(2) CLASS 3(B) consists of all Class 3 Claims held by
Claimants who filed a proof of claim after the Claims Bar Date, but prior to
Confirmation.
b. TREATMENT. Except to the extent that the holder has agreed to
a different treatment of such Claim, each holder of an allowed Class 3(a) or
3(b) Claim shall be paid in Cash the allowed amount of such Claim, plus Plan
Interest, on the later of the Effective Date or ten (10) days after an order
approving such Claim becomes a Final Order. Class 3(a) Claims will have priority
over Class 3(b) Claims.
4. CLASS 4.
a. CLASSIFICATION. Class 4 consists of all holders of Indemnity
Claims which have become Allowed Claims. As discussed above, the Debtor does not
know the amount of its liability, if any, on Indemnity Claims at this time.
Class 4 is unimpaired.
b. TREATMENT. Each holder of an allowed Class 4 Claim shall be
paid in Cash the allowed amount of such Claim, plus Plan Interest, on the later
of the Effective Date or ten (10) days after an order approving such Claim
becomes a Final Order and after payment to the unclassified classes and Classes
1, 2, 3(a) and 3(b).
/////
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<PAGE>
5. CLASS 5.
a. CLASSIFICATION. Class 5 consists of all holders of Interests
as reflected in the Debtor's books and records as of 30 days prior to the
Effective Date. Class 5 is unimpaired.
b. TREATMENT. Each holder of an allowed Class 5 Claim will be
entitled to a Pro Rata distribution of all remaining Cash of the Estate after
payments to the unclassified classes, and Classes 1, 2, 3(a), 3(b) and 4. Upon
the Effective Date, seventy-five percent (75%) of the Cash remaining in the
Estate after payment to the unclassified classes and Classes 1, 2, 3(a), 3(b)
and 4, and funding the Contested Claims Reserves, shall be distributed Pro Rata
to holders of Allowed Class 5 Interests. However, Class 5 Claims will not be
entitled to a distribution until each Class 4 Claim has become an Allowed Claim,
Disallowed Claim, has been provided for in full within the Contested Claims
Reserves by an agreement between the Debtor and the Indemnity Claimant or
estimated for purposes of distribution by an order of the Bankruptcy Court.
After all the Debtor's assets are liquidated into Cash and all other classes
have been paid in accordance with the Plan, each holder of a Class 5 Claim will
be paid a Pro Rata distribution of the remaining Cash.
D. MEANS FOR EFFECTUATING THE PLAN.
1. LIQUIDATION.
All assets of the Debtor's bankruptcy Estate shall be liquidated
into Cash by the Debtor. As to any asset or group of assets with a fair market
value of less than $50,000, the Debtor may use such reasonable means for the
liquidation of its assets as it may, in its discretion, determine, without the
necessity of a court order or notice to parties in interest. The sale of any
assets or group of assets with a fair market value of $50,000 or more shall be
subject to approval of the Bankruptcy Court after notice to holders of Contested
Claims, Class 4 Claims and Class 5 Interests who have requested such notice by
written request to the Debtor's counsel.
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<PAGE>
2. RESPONSIBLE PERSON.
The implementation of the Plan will be effected by Jeffrey Black as
the Debtor's court-appointed responsible officer. Jeffrey Black will liquidate
the remaining assets and make all distributions required or permitted by the
Plan. The Debtor will retain all of the rights, powers, and duties of a trustee
under the Bankruptcy Code.
E. RISK FACTORS.
The contents of this Disclosure Statement are based upon the best
information available to the Debtor at the time this Disclosure Statement was
initially filed with the Bankruptcy Court. The Debtor reserves the right to
revise the information contained herein as more accurate information becomes
available. In addition, the listing of a particular claim for a specific amount
in this Disclosure Statement is not an admission by the Debtor as to either
liability or amount, and the Debtor reserves the right to object to any and all
claims in accordance with the Plan.
Because the Plan provides for liquidation of the Debtor's assets,
there is a risk that the sale of certain scheduled assets will result in less
than the scheduled values. The Debtor believes, however, that since most of its
assets consist of cash and deposit accounts, such risk will be minimal.
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<PAGE>
F. MISCELLANEOUS PROVISIONS OF THE PLAN.
1. ASSUMPTION OR REJECTION OF UNEXPIRED LEASES AND EXECUTORY
CONTRACTS.
Pursuant to the Plan, all executory contracts and unexpired leases of
the Debtor entered into prior to the Petition Date that are not expressly
assumed by the Debtor pursuant to an application filed by the Debtor on or prior
to the Confirmation Date shall be deemed to have been rejected by the Debtor on
the Confirmation Date. Each entity that is a party to an executory contract or
unexpired lease rejected pursuant to the Plan, and only such entity, shall file
with the Bankruptcy Court and serve on the Debtor's counsel, a proof of claim
relative to such rejection Claim prior to Confirmation or be forever barred from
asserting any such Claim or receiving any payment on account of such Claim. Any
Allowed Claims arising out of the rejection of an executory contract or lease
will be classified as a Class 3(a) Claim.
2. OBJECTIONS TO CLAIMS OR INTERESTS.
An objection to a Claim may be filed at any time prior to the
Effective Date, unless the Bankruptcy Court, upon request, extends such period.
Such extension may be granted without notice to the affected claimants. Filing,
service, and prosecution of such objections shall be subject to and in
accordance with the Federal Rules of Bankruptcy Procedures and appropriate local
rules and procedures. The Debtor will segregate and hold all distributions
otherwise payable on account of any Claim subject to objection. Claims as to
which an objection has been filed will be paid when a Final Order is entered by
the Bankruptcy Court allowing it. No undetermined Claim or Interest shall
receive a distribution unless and until it becomes an Allowed Claim or Interest.
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<PAGE>
3. RESOLUTION OF DISPUTES.
Disputes regarding the validity or amount of Claims shall be resolved
pursuant to the procedures established by the Bankruptcy Court, the Plan, the
Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, and other applicable
law, and such resolution shall not be a condition precedent to consummation of
the Plan.
4. SETTLEMENT OF CLAIMS AND DISPUTES.
Subject to the notice procedures set forth in this section, the Debtor
is authorized to (i) enter into binding compromises and to settle and liquidate
any cause of action of the Debtor, (ii) sell the remaining assets of the Debtor
as described in section IV(D)(1), and/or (iii) abandon property of the Estate
which the Debtor determines to be burdensome or of inconsequential benefit to
the Estate. The Debtor shall mail written notice of any such compromise,
disposition or abandonment to those parties who have filed, after the
Confirmation Date, a written request that all notices be mailed to them. If the
Debtor does not receive any written notice of an objection and demand for a
hearing on the compromise, disposition or abandonment within fifteen (15) days
of the mailing of such notice, the Debtor shall submit an order to the
Bankruptcy Court for its approval. Upon Final Order of the Bankruptcy Court, the
compromise, disposition or abandonment shall be effective, final and binding on
all parties in interest. If timely notice of an objection to the compromise,
disposition or abandonment is received by the Debtor, the Debtor shall (i)
withdraw the proposed compromise, disposition or abandonment wherein it will be
without force and effect, or (ii) move for the approval of the compromise,
disposition or abandonment by the Bankruptcy Court on notice to all parties who
have filed, after the Confirmation Date, a written request that all notices be
mailed to them.
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<PAGE>
5. COMPENSATION AND REIMBURSEMENT OF PROFESSIONALS.
All professionals retained by the Debtor shall be entitled to payment
of their post-confirmation fees and reimbursement of expenses on a monthly
basis. Professionals shall mail or deliver a detailed statement of unpaid fees
and expenses to the Responsible Person and counsel to the Debtor. If there is no
objection to the requested fees and expenses within ten (10) days of mailing or
delivery of the detailed statement of unpaid fees and expenses, the Responsible
Person shall pay the requested amount in full. If any party objects to a portion
of the fees or expenses submitted by any professional, the Debtor shall pay the
undisputed portion of such fees and expenses and shall reserve monies in the
amount of the disputed fees and expenses pending resolution of said objection by
(i) agreement between the professional requesting such fees and expenses and the
disputing party, or (ii) resolution of the disputed amount by the Bankruptcy
Court pursuant to a Final Order. Professionals shall not otherwise be required
to file applications for Bankruptcy Court approval of post-confirmation fees and
expenses.
6. PAYMENT OF FEES OWED TO THE U.S. TRUSTEE AND CLERK'S OFFICE.
Fees payable under 28 U.S.C. ss. 1930 will have been paid by the date
of the hearing on confirmation of the Plan. The Responsible Person will continue
with the payment of quarterly fees as required, after the Confirmation Date.
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<PAGE>
7. RETENTION OF JURISDICTION.
Under the Plan, the Bankruptcy Court will retain jurisdiction over the
Chapter 11 Case after the Confirmation Date to the fullest extent permitted
under 28 U.S.C. ss. 1334.
8. DEFAULT UNDER THE PLAN.
The Plan provides that if an event of default occurs and is not cured
within 30 days of the date written notice of the missed payment under the Plan
is provided to the Debtor, the injunction provided under the Plan shall be
dissolved and creditors will be free to pursue any and all non-bankruptcy law
rights and remedies against the Debtor or any other party liable for such debt.
G. TAX CONSEQUENCES OF THE PLAN.
ANY PERSON CONCERNED WITH THE TAX CONSEQUENCES TO THEM OF THE PLAN
SHOULD CONSULT WITH HIS/HER OWN ACCOUNTANTS, ATTORNEYS, AND/OR ADVISORS TO
DETERMINE HOW THE PLAN MAY AFFECT HIS/HER TAX LIABILITY. The Debtor does not
anticipate any adverse tax consequences to it as a result of its performance
under the Plan.
/////
/////
/////
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<PAGE>
V.
LIQUIDATION ANALYSIS.
A. INTRODUCTION.
In order to confirm a plan of reorganization, the court must find that
the Plan provides for a distribution to any creditor voting not to accept the
Plan that such creditor will receive at least as much under the Plan as that
creditor would receive in a Chapter 7 liquidation. Although not required because
all creditors and Interest holders are deemed to accept the Plan, the Debtor
provides the following liquidation analysis.
1. LIQUIDATION ANALYSIS.
The Debtor's estimate of the liquidation value of its assets
is as follows:
DESCRIPTION OF ASSETS BOOK VALUE LIQUIDATION VALUE
- --------------------- ------------- -----------------
Cash 2) $5,777,042.05 $5,777,042.05
Security deposits $441,601.74 $441,601.74
Accounts receivable $6,383.11 $6,383.11
Intellectual property unknown unknown
Office equipment, equipment
and supplies $7,500 $7,500
Other assets $126,065.70 $126,065.70
Total $6,358,592.60 $6,358,592.60
Based upon a liquidation value of $6,358,592.60, distribution of
the proceeds of liquidation (without Plan Interest) would be as follows under
the Plan and in a Chapter 7 liquidation.
- --------------------
(2) As reflected in Debtor's Debtor-In-Possession Monthly Operating Report for
the month of June, 1999.
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<PAGE>
CLAIMS CHAPTER 11 CHAPTER 7
- ------ ------------- -------------
Administrative expenses (3) $300,000.00 $500,000.00
Priority tax claims (4) $3,525.08 $3,525.08
Class 1(a) Burlington Holding $20,308.00 $20,308.00
Class 1(b) PT Carlsbad Assoc. $213,547.27 $213,547.27
Class 1(c) Thread Needle $19,400.23 $19,400.23
Class 2 Priority Wage Claims $0.00 $0.00
Class 3(a) and 3(b) Unsecured Claims (5) $2,038,091.66 $2,038,091.66
Class 4 Indemnity Claims unknown unknown
Class 5 Interest Holders $3,763,720.36 $3,563,720.36
As set forth above, liquidation under Chapter 7 and through the
Plan are similar except that in a Chapter 7 case the Chapter 7 trustee would be
entitled to a fee of in excess of $200,000. This fee is based on the statutory
allowance set forth in section 326 of the Bankruptcy Code. All other expenses
would be approximately the same. Accordingly, while all classes of Claims will
be paid in full under both the Plan and Chapter 7, shareholders will receive a
greater distribution under the Plan than they would in a Chapter 7 case.
- --------------------
(3) Estimated actual amount is subject to court approval. For Chapter 11
includes amounts payable to Responsible Person. For Chapter 7 includes
trustee's statutory fees.
(4) Estimates based on Debtor's Amended Schedule of Liabilities.
(5) Estimates based on Debtor's Amended Schedule of Liabilities, without any
reserve for potential indemnity claims under Class 4.
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<PAGE>
VI.
MODIFICATION OF THE PLAN.
The Debtor may modify the Plan at any time prior to the conclusion of
the hearing on confirmation of the Plan. However, the Bankruptcy Court may
require a new disclosure statement and/or reballoting on the Plan if such
modification is sought. The Debtor may also seek to modify the Plan at any time
after confirmation so long as the Plan has not been substantially consummated
and if the Bankruptcy Court authorizes the proposed modifications after notice
and a hearing.
VII.
EFFECT OF CONFIRMATION OF PLAN.
The Confirmed Plan binds the Debtor, any entity acquiring property
under the Plan, and any Creditor or Interest Holder, whether or not the Claim or
Interest of such creditor, or Interest Holder is impaired under the Plan and
whether or not such Creditor, or Interest Holder has accepted the Plan. Except
as otherwise provided in the Plan or the Order Confirming the Plan, the
Confirmation of the Plan vests all of the property of the Estate in the Debtor.
VIII.
LIMITATION OF LIABILITY.
Except as otherwise provided in the Plan, the Debtor and the
Responsible Person, and any of such parties' respective present or former
members, officers, directors, employees, advisors, attorneys, representatives,
financial advisors, or agents and any of such parties' successors and assigns,
shall not have or incur, and are under the Plan released from, any claim,
-26-
<PAGE>
obligation, cause of action or liability to one another or to any Creditor or
Interest holder, or any other party in interest, or any of their respective
agents, employees, representatives, financial advisors, attorneys or affiliates,
or any of their successors or assigns, for any act or omission in connection
with, relating to or arising out of the Debtor's Chapter 11 Case, the pursuit of
confirmation of the Plan, the consummation of the Plan, the administration of
the Plan or the property to be distributed under the Plan, except for their
willful misconduct, and in all respects shall be entitled to reasonably rely
upon the advice of counsel with respect to their duties and responsibilities
under the Plan. The limited releases discussed above have no effect on any
individual direct claims of former and current shareholders with regard to the
pre-petition conduct or pre-petition liabilities of any of the individuals or
entities referred to above to the extent such claims are not property of the
Estate.
Notwithstanding any other provision of the Plan, no holder of a Claim
or Interest, or other party in interest, none of their respective agents,
employees, representatives, financial advisors, attorneys or affiliates, and no
successors or assigns of the foregoing, have any right of action against the
Debtor, or the Responsible Person or any of such parties' respective present or
former members, officers, directors, employees, advisors, attorneys,
representatives, financial advisors, or agents or such parties' successors and
assigns, for any act or omission in connection with, relating to or arising out
of the Chapter 11 Case, the pursuit of confirmation of the Plan, the
consummation of the Plan, the administration of the Plan or the property to be
distributed under the Plan, except for their willful misconduct.
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<PAGE>
The above exculpation provisions are designed to promote the fulsome
participation of debtors, other major constituents, and their professionals in
the expeditious and efficient reorganization process. Without such protections,
the reorganization process would grind to a halt as individuals would be
reluctant to serve as professionals or otherwise participate in the
reorganization for fear that time-sensitive decisions would be subsequently
challenged by disgruntled litigants.
IX.
POST-CONFIRMATION CONVERSION OR DISMISSAL.
A creditor or party in interest may bring a motion to convert or
dismiss a case under Bankruptcy Code section 1112(b)(7) after the Plan is
confirmed if there is default in performing the Plan. If the Bankruptcy Court
orders a case converted after the Plan is confirmed, the Plan provides that
property of the Estate that has not been disbursed pursuant to the Plan will
revest in the chapter 7 estate and that the automatic stay will be reimposed
upon the revested property to the extent that relief from stay was not
previously authorized by the Bankruptcy Court during the case.
The order confirming the Plan may also be revoked under very limited
circumstances. The Bankruptcy Court may revoke the order if and only if the
order of confirmation was procured by fraud and if a party in interest brings a
motion to revoke confirmation within 180 days after the entering of the order of
confirmation.
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<PAGE>
A. FINAL DECREE.
Once the Plan has been fully consummated, the Debtor shall file a
request with the Bankruptcy Court to obtain a final decree to close the case.
X.
CONCLUSION AND RECOMMENDATION.
The Debtor believes that the Plan is the most efficient, most
expedient, least costly and fairest manner to liquidate the Debtor's assets and
distribute the proceeds to its creditors and shareholders.
Dated: August 27, 1999
TRITEAL CORPORATION,
a Delaware corporation,
Debtor and Debtor in Possession
By: /S/ Jeffrey Black
-----------------
Jeffrey Black
Responsible Person
/S/ Jeffry A. Davis
- ----------------------------------------
JEFFRY A. DAVIS
GRAY CARY WARE & FREIDENRICH LLP
Proposed Attorneys for Debtor and
Debtor in Possession TriTeal Corporation
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JEFFRY A. DAVIS (Bar No. 103299)
TROY ZANDER (Bar No. 167823)
KARLA A. LYON (Bar No. 185602)
GRAY CARY WARE & FREIDENRICH LLP
401 B Street, Suite 1700
San Diego, California 92101-4297
Telephone: 619-699-2810
Facsimile: 619-236-1048
Attorneys for
Debtor and Debtor in Possession
TriTeal Corporation
UNITED STATES BANKRUPTCY COURT
Southern District of California
In re CASE NO. 99-03494-B11
TRITEAL CORPORATION, a DEBTOR IN POSSESSION'S AMENDED
Delaware corporation, PLAN OF LIQUIDATION DATED
AUGUST 27, 1999
Debtor and
Debtor in Possession. Date: October 15, 1999
Time: 10:00 a.m.
Tax I.D. No. 33-0548924 Dept: 4
Judge: Peter W. Bowie
<PAGE>
TABLE OF CONTENTS
Page
----
Section 1
DEFINITIONS...................................................................1
1.1 Administrative Expense......................................1
1.2 Allowed Claim...............................................1
1.3 Bankruptcy Code.............................................1
1.4 Bankruptcy Court............................................2
1.5 Bankruptcy Rules............................................2
1.6 Business Day................................................2
1.7 Cash........................................................2
1.8 Chapter 11 Case.............................................2
1.9 Claim.......................................................2
1.10 Claims Bar Date.............................................2
1.11 Class.......................................................2
1.12 Confirmation................................................3
1.13 Confirmation Order..........................................3
1.14 Contested Claim.............................................3
1.15 Contested Claim Amount......................................3
1.16 Contested Claims Reserves...................................3
1.17 Debtor......................................................3
1.18 Disallowed Claim............................................3
1.19 Disclosure Statement........................................3
1.20 Effective Date..............................................4
1.21 Estate......................................................4
1.22 Final Order.................................................4
1.23 Indemnity Claims............................................4
1.24 Interests...................................................4
-i-
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
----
1.25 Petition Date...............................................4
1.26 Plan........................................................4
1.27 Plan Interest...............................................4
1.28 Priority Claims.............................................4
1.29 Professional Persons........................................5
1.30 Pro Rata....................................................5
1.31 Secured Claim...............................................5
1.32 Unsecured Claim.............................................5
Section 2
DESIGNATION AND TREATMENT OF UNCLASSIFIED CLAIMS..............................5
2.1 Unclassified Claims.........................................5
2.2.1 Administrative Expenses.............................5
2.2.2 Priority Tax Claims.................................5
2.3 Treatment...................................................5
2.3.1 Administrative Expense..............................5
2.3.2 Priority Tax Claims.................................6
Section 3
DESIGNATION AND TREATMENT OF IMPAIRED AND UNIMPAIRED
CLASSES..................................................................6
3.1 Designation of Unimpaired Classes...........................6
3.1.1 No Impaired Classes of Claims and
Equity Interests................................6
3.1.2 Classification and Treatment of
Classes of Claims and Interests.................6
(a) Class 1...................................6
(b) Class 2...................................7
(c) Class 3...................................8
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<PAGE>
TABLE OF CONTENTS
(Continued)
Page
----
(d) Class 4...................................9
(e) Class 5...................................9
Section 4
MEANS FOR IMPLEMENTATION.....................................................10
4.1 Liquidation of Assets......................................10
4.2 Responsible Person.........................................10
4.2.1 Designation of Responsible Person..................10
4.2.2 Compensation of Responsible Person.................10
4.2.3 Authority and Duties of Responsible Person.........10
4.2.4 Guaranty or Fiduciary Bond.........................11
4.2.5 Professionals......................................11
4.2.6 Removal of Responsible Person......................11
4.3 Monies of the Estate.......................................12
4.4 Expedited Procedure for Compromise of
Controversies and Sale or Abandonment of Assets............12
4.5 Compensation and Reimbursement of Professional
Persons....................................................13
4.6 Condition for Payment on Class 5 Claims....................13
4.7 Unclaimed Distributions....................................13
Section 5
EXECUTORY CONTRACTS AND UNEXPIRED LEASES.....................................14
5.1 Rejection of Executory Contracts and Unexpired
Leases.....................................................14
5.2 Rejection Claims...........................................14
Section 6
PROOFS OF CLAIM AND INTEREST; OBJECTIONS.....................................14
6.1 Proofs of Claim............................................14
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
----
6.2 Time for Filing Objections.................................14
6.3 Contested Claims Reserve...................................14
Section 7
RESERVATION OF POWERS........................................................15
Section 8
MODIFICATION OF THE PLAN.....................................................15
Section 9
RETENTION OF JURISDICTION....................................................15
Section 10
EFFECT OF ORDER OF CONFIRMATION..............................................16
Section 11
DEFAULT......................................................................16
11.1 Events of Default..........................................16
11.2 Consequences of Default....................................17
Section 12
MATTERS CONCERNING THE UNITED STATES TRUSTEE.................................17
Section 13
EXCULPATION AND LIMITATION OF LIABILITY......................................17
Section 14
MISCELLANEOUS................................................................19
14.1 Headings...................................................19
14.2 Singular/Plural............................................19
14.3 Gender.....................................................19
14.4 Notices....................................................19
14.5 Reservation of Rights......................................20
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<PAGE>
TriTeal Corporation, a Delaware corporation, debtor and debtor in
possession in the above-captioned case (the "Debtor"), hereby proposes this Plan
of Liquidation (the "Plan").
SECTION 1
DEFINITIONS
The capitalized terms used herein shall have the respective meanings
set forth below.
TriTeal Corporation, a Delaware corporation, debtor and debtor in
possession in the above-captioned case (the "Debtor"), hereby proposes this Plan
of Liquidation (the "Plan").
SECTION 1
DEFINITIONS
The capitalized terms used herein shall have the respective meanings
set forth below.
1.1 "ADMINISTRATIVE EXPENSE" means any cost or expense of administration of
the Chapter 11 Case entitled to priority in accordance with the provisions of
sections 503(b) and 507(a)(1) of the Bankruptcy Code, including, without
limitation, all allowances of compensation and reimbursement of costs and
expenses to Professional Persons, as approved by a Final Order of the Bankruptcy
Court; and any fees or charges assessed against the Estate under Chapter 123 of
Title 28 of the United States Code.
1.2 "ALLOWED CLAIM" means (i) a Claim against the Debtor, proof of which
was timely filed on or before the Claims Bar Date, as to which no objection has
been interposed; or (ii) if no proof of Claim has been filed, but the Claim has
been scheduled by the Debtor as liquidated in amount and not disputed or
contingent, or is a Secured Claim and as to which no objection has been
interposed; or (iii) a Claim as to which any objection has been interposed, to
the extent such Claim has been allowed in whole or in part by a Final Order.
1.3 "BANKRUPTCY CODE" means title 11 of the United States Code, as amended
from time to time.
/////
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<PAGE>
1.4 "BANKRUPTCY COURT" means the United State Bankruptcy Court for the
Southern District of California.
1.5 "BANKRUPTCY RULES" means the Federal Rules of Bankruptcy Procedure as
applicable to the Debtor's Chapter 11 Case.
1.6 "BUSINESS DAY" means any day that is not a Saturday, Sunday or legal
holiday as identified in Federal Rule of Bankruptcy Procedure 9006.
1.7 "CASH" means United States currency and cash equivalents, including but
not limited to any check or other similar negotiable instrument.
1.8 "CHAPTER 11 CASE" means the case filed by the Debtor on April 2, 1999
under Chapter 11 of the Bankruptcy Code and Case No. 99-03494-B11 pending in the
Bankruptcy Court.
1.9 "CLAIM" means any right to payment from the Debtor, whether or not such
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, contested, uncontested, legal, equitable, secured or
unsecured; or any right to an equitable remedy for breach of performance if such
breach gives rise to a right of payment from the Debtor, whether or not such
right to an equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, contested, uncontested, secured or unsecured.
1.10 "CLAIMS BAR DATE" means the last date by order of the Bankruptcy Court
any creditor may file a proof of claim, May 17, 1999.
1.11 "CLASS" means any Class into which Claims or Interests are classified
pursuant to the Plan.
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<PAGE>
1.12 "CONFIRMATION" means the date of entry of the Confirmation Order on
the Bankruptcy Court's docket.
1.13 "CONFIRMATION ORDER" means the order of the Bankruptcy Court
confirming the Plan.
1.14 "CONTESTED CLAIM" means any Claim that is not an Allowed Claim.
1.15 "CONTESTED CLAIM AMOUNT" means the asserted amount of a Contested
Claim as to which a proof of Claim was timely filed and which has not been
disallowed or estimated for purposes of distribution by an order of the
Bankruptcy Court; PROVIDED, HOWEVER, that the Contested Claim Amount shall be
zero for any Claims as to which a proof of Claim was not timely filed on or
before the Claims Bar Date and which was not scheduled by the Debtor as an
undisputed, liquidated, noncontingent Claim.
1.16 "CONTESTED CLAIMS RESERVES" means the property which may be reserved
by the Debtor for the benefit of holders of Contested Claims, representing the
total sum of the Contested Claims, plus an adequate amount to pay Plan Interest
on account of such Contested Claims. The Contested Claims Reserves will be
maintained for each Contested Claim until such Contested Claim becomes an
Allowed Claim or a Disallowed Claim.
1.17 "DEBTOR" means TriTeal Corporation, a Delaware corporation.
1.18 "DISALLOWED CLAIM" means that portion of a Claim that is disallowed by
a Final Order by the Bankruptcy Court.
1.19 "DISCLOSURE STATEMENT" means the Disclosure Statement for the Plan as
approved by the Bankruptcy Court.
/////
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<PAGE>
1.20 "EFFECTIVE DATE" means the eleventh (11th) Business Day after the
Confirmation Date.
1.21 "ESTATE" means all interests of the Debtor in property as defined by
section 541 of the Bankruptcy Code.
1.22 "FINAL ORDER" means an order or judgment of a court of competent
jurisdiction, including the Bankruptcy Court and the United States District
Court for the Southern District of California, which is no longer subject to
appeal or certiorari proceeding and as to which no appeal or certiorari
proceeding is pending.
1.23 "INDEMNITY CLAIMS" means a Claim arising out of Debtor's indemnity
obligations to its former officers, directors and employees pursuant to the
Debtor's bylaws, individual indemnification agreements and/or section 28.02 of
the California Labor Code and section 145 of the Delaware Corporations Code.
1.24 "INTERESTS" means stock or other ownership interests in the Debtor.
1.25 "PETITION DATE" means April 2, 1999.
1.26 "PLAN" means this Chapter 11 Plan of Liquidation for the Debtor, as it
may be modified from time to time, and all exhibits and schedules thereto.
1.27 "PLAN INTEREST" means interest at the federal judgment rate applicable
to judgments entered by the United States District Courts on the Petition Date,
such Plan Interest to accrue and be paid on account of Allowed Class 2, 3(a),
3(b) and 4 Claims from the Petition Date until such Allowed Claim is paid.
1.28 "PRIORITY CLAIMS" means a Claim entitled to priority pursuant to
section 507(a) of the Bankruptcy Code.
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1.29 "PROFESSIONAL PERSONS" means persons employed pursuant to section 327
or section 1103 of the Bankruptcy Code.
1.30 "PRO RATA" means the proportion that the amount of a Claim or Equity
Interest in a particular Class bears to the aggregate amount of all Claims or
Equity Interests in such Class.
1.31 "SECURED CLAIM" means a Claim secured by a lien on property of the
Estate or that is subject to setoff under section 553 of the Bankruptcy Code, to
the extent of the value of the holder of such Claim's interest in the Estate's
interest in such property, or to the extent of the amount subject to offset.
1.32 "UNSECURED CLAIM" means a Claim, other than Administrative Expenses,
Priority Claims or Secured Claims.
SECTION 2
DESIGNATION AND TREATMENT OF UNCLASSIFIED
CLAIMS
2.1 UNCLASSIFIED CLAIMS are as follows:
2.1.1 ADMINISTRATIVE EXPENSES. Allowed Administrative Expenses as
defined above.
2.1.2 PRIORITY TAX CLAIMS. Allowed Claims entitled to priority
pursuant to Bankruptcy Code section 507(a)(8) (certain claims of taxing
authorities).
2.2 TREATMENT.
2.2.1 ADMINISTRATIVE EXPENSE. Except to the extent that a holder has
agreed to a different treatment of such Claim, each holder of an Allowed
Administrative Expense shall be paid in Cash the allowed amount of such Claim on
the later of (a) the Effective Date, or (b) upon entry of a noncontested order
allowing such Administrative Expense Claim, or (c) if such Administrative
Expense Claim is contested, when the order approving such Administrative Expense
Claim becomes a Final Order.
2.2.2 PRIORITY TAX CLAIMS. Except to the extent that the holder has
agreed to different treatment of such Claim, each holder of an allowed Priority
Tax Claim shall be paid in Cash the allowed amount of such Claim, plus Plan
Interest, on the later of the Effective Date or ten (10) days after an order
approving such Claim becomes a Final Order.
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SECTION 3
DESIGNATION AND TREATMENT OF IMPAIRED AND
UNIMPAIRED CLASSES.
3.1 DESIGNATION OF UNIMPAIRED CLASSES.
3.1.1 NO IMPAIRED CLASSES OF CLAIMS AND EQUITY INTERESTS. No classes
are impaired under the Plan. All classes are unimpaired.
3.1.2 CLASSIFICATION AND TREATMENT OF CLASSES OF CLAIMS AND INTERESTS.
The following is a description of all Classes of Claims and Interests other than
the Unclassified Claims, and their treatment under the Plan.
(a) CLASS 1.
(i) CLASSIFICATION. Class 1 consists of any Secured Claim
which is an Allowed Claim. If any Secured Claims exist, each Secured Claim will
be separately classified under Class 1 as Class 1(a), 1(b), etc.
(1) Class 1(a) -- EOP Operating Limited Partnership
("EOP"). EOP was the Debtor's landlord on a facility lease located at 17 New
England Executive Park, Burlington, MA 01803. EOP holds a security deposit in
the amount of $20,308.00.
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(2) Class 1(b) -- PT Carlsbad Associates. PT Carlsbad
Associates ("Carlsbad") was the Debtor's landlord on three facility leases
located at 2011 Palomar Airport Road, No. 200, Nos. 201/203, and No. 300,
Carlsbad, CA 92009. Carlsbad holds a security deposit in the amount of
$213,547.27.
(3) Class 1(c) -- Fairborn Morris was the Debtor's
landlord on a facility lease located at Unit 8, Shaftesbury Court, Slough,
United Kingdom. Fairborn Morris holds a security deposit in the amount of
$19,400.23.
(ii) TREATMENT. Each Class 1 claimant shall be paid in full
in accordance with the terms of the agreements between the Debtor and the holder
of such Class 1 Claim, but only up to the amount of such holder's security
deposit. Any portion of such holder's claim which exceeds the security deposit
shall be treated and paid as a Class 3 Claim. Each holder of a Class 1 Claim
will be entitled to retain any lien, security interest or collateral securing
such Claim until that holder's Class 1 Claim is paid in full. Unless a material
prepayment penalty would be incurred, the Debtor will pay all Class 1 Claims in
full on the Effective Date. If a material prepayment penalty would be incurred,
the Debtor will pay such Claim in accordance with the agreements between the
Debtor and the Class 1 Claim holder. Class 1 is unimpaired.
(b) CLASS 2.
(i) CLASSIFICATION. Class 2 consists of Claims for wages or
vacation pay accrued and owing as of the Petition Date entitled to priority
pursuant to Bankruptcy Code section 507(a)(3). Class 2 is unimpaired.
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(ii) TREATMENT. Except to the extent that the holder has
agreed to a different treatment of such Claim, each holder of an allowed Class 2
Claim shall be paid in Cash the allowed amount of such Claim, plus Plan
Interest, on the later of the Effective Date or ten (10) days after an order
allowing such Claim becomes a Final Order.
(c) CLASS 3.
(i) CLASSIFICATION. Class 3 consists of all Unsecured Claims
of the Debtor not entitled to priority under the Bankruptcy Code, including
contingent, disputed and unliquidated Claims, but not including Claims for
indemnity which may be filed by the Debtor's former officers, directors and
employees. Class 3 is unimpaired.
(ii) Class 3(a) consists of all Class 3 Claims held by
Claimants who filed a proof of claim prior to the Claims Bar Date.
(iii) Class 3(b) consists of all Class 3 Claims held by
Claimants who filed a proof of claim after the Claims Bar Date, but prior to
Confirmation.
(iv) TREATMENT. Except to the extent that the holder has
agreed to a different treatment of such Claim, each holder of an allowed Class
3(a) and 3(b) Claim shall be paid in Cash the allowed amount of such Claim, plus
Plan Interest, on the later of the Effective Date or ten (10) days after an
order approving such Claim becomes a Final Order. Class 3(a) Claims will have
priority over Class 3(b) Claims.
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(d) CLASS 4.
(i) CLASSIFICATION. Class 4 consists of all holders of
Indemnity Claims which have become Allowed Claims. Class 4 is unimpaired.
(ii) TREATMENT. Each holder of an allowed Class 4 Claim
shall be paid in Cash the allowed amount of such Claim, plus Plan Interest, on
the later of the Effective Date or ten (10) days after an order approving such
Claim becomes a Final Order and after payments to the unclassified classes,
Classes 1, 2, 3(a) and 3(b).
(e) CLASS 5.
(i) CLASSIFICATION. Class 5 consists of all holders of
Interests as reflected in the Debtor's books and records as of 30 days prior to
the Effective Date. Class 5 is unimpaired.
(ii) TREATMENT. Each holder of an allowed Class 5 Claim will
be entitled to a Pro Rata distribution of all remaining Cash of the Estate after
payments to the unclassified classes, and Classes 1, 2, 3(a), 3(b) and 4. Upon
the Effective Date, seventh-five percent (75%) of the Cash remaining in the
Estate after payment to the unclassified classes and Classes 1, 2, 3(a), 3(b)
and 4, and funding the Contested Claims Reserves, shall be distributed Pro Rata
to holders of Allowed Class 5 Interests. However, Class 5 Claims will not be
entitled to a distribution until each Class 4 Claim has become an Allowed Claim,
a Disallowed Claim, has been provided for in full within the Contested Claims
Reserves by an agreement between the Debtor and the Indemnity Claimant or
estimated for purposes of distribution by an order of the Bankruptcy Court.
After all the Debtor's assets are liquidated into Cash and all other classes
have been paid in accordance with the Plan, each holder of a Class 5 Claim will
be paid a Pro Rata distribution of the remaining Cash.
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SECTION 4
MEANS FOR IMPLEMENTATION
4.1 LIQUIDATION OF ASSETS. All assets of the Estate shall be liquidated
into Cash by the Debtor. As to any asset or group of assets with a fair market
value of less than $50,000, the Debtor may use such reasonable means for the
liquidation of its assets as it may, in its discretion, determine, without the
necessity of a court order or notice to parties in interest. The sale of any
assets or group of assets with a fair market value of $50,000 or more shall be
subject to approval of the Bankruptcy Court after notice to holders of Contested
Claims, Class 4 Claims and Class 5 Interests who have requested such notice by
written request to the Debtor's counsel.
4.2 RESPONSIBLE PERSON.
4.2.1 DESIGNATION OF RESPONSIBLE PERSON. Jeffrey G. Black shall
continue as the Debtor's Responsible Person.
4.2.2 COMPENSATION OF RESPONSIBLE PERSON. The Responsible Person shall
be paid as an independent contractor at the rate of $75.00 per hour, but may
utilize the services of independent contractors to perform such duties as will
be beneficial to the Estate.
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4.2.3 AUTHORITY AND DUTIES OF RESPONSIBLE PERSON. The Responsible
Person shall do all things necessary and appropriate to administer the Estate
and to assist the Debtor in fulfilling the duties and obligations of the Debtor
under the Plan. Such duties and obligations include, without limitation,
liquidation of the remaining assets of the Estate, making distributions pursuant
to the Plan, prosecution of any action for the benefit of the Estate,
supervision of the preparation and filing of all necessary tax returns and
moving for the entry of a final decree.
4.2.4 GUARANTY OR FIDUCIARY BOND. Prior to the Effective Date, the
Responsible Person shall obtain a guaranty or fiduciary bond for all of the Cash
held by the Estate at that time. Such guaranty bond shall be paid for out of
funds of the Estate. The amount of such guaranty or fiduciary bond may be
reduced after the initial distribution to occur on the Effective Date to an
amount equal to the highest amount estimated by the Responsible Person to come
within his control for the remainder of the period necessary to fully consummate
the Plan.
4.2.5 PROFESSIONALS. The Debtor is authorized to retain, employ and
utilize such professionals as may be necessary without further approval of the
Bankruptcy Court.
4.2.6 REMOVAL OF RESPONSIBLE PERSON. The
Responsible Person may be removed by the Bankruptcy Court for cause upon the
noticed motion of any party in interest served upon the Responsible Person and
counsel to the Debtor. In such event, or in the event of the Responsible
Person's resignation, the Bankruptcy Court shall select an individual to serve
as the successor Responsible Person.
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4.3 MONIES OF THE ESTATE. The Debtor shall maintain the Cash of the Estate
in an interest-bearing account or any deposit or investments authorized by
section 345 of the Bankruptcy Code or the Bankruptcy Court.
4.4 EXPEDITED PROCEDURE FOR COMPROMISE OF CONTROVERSIES AND SALE OR
ABANDONMENT OF ASSETS. Subject to the notice procedures set forth in this
section, the Debtor is authorized to (i) enter into binding compromises and to
settle and liquidate any cause of action of the Debtor, (ii) sell the remaining
assets of the Debtor as described in section 4.1, and (iii) abandon property of
the Estate which the Debtor determines to be burdensome or of inconsequential
benefit to the Estate. The Debtor shall mail written notice of any such
compromise, disposition or abandonment to those parties who have filed, after
Confirmation, a written request that all notices be mailed to them. If the
Debtor does not receive any written notice of an objection and demand for a
hearing on the compromise, disposition or abandonment within fifteen (15) days
of the mailing of such notice, the Debtor shall submit an order to the
Bankruptcy Court for its approval. Upon Final Order of the Bankruptcy Court, the
compromise, disposition or abandonment shall be effective, final and binding on
all parties in interest. If timely notice of an objection to the compromise,
disposition or abandonment is received by the Debtor, the Debtor shall (i)
withdraw the proposed compromise, disposition or abandonment wherein it will be
without force and effect, or (ii) move for the approval of the compromise,
disposition or abandonment by the Bankruptcy Court on notice to
/////
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all parties who have filed, after Confirmation, a written request that all
notices be mailed to them.
4.5 COMPENSATION AND REIMBURSEMENT OF PROFESSIONAL PERSONS. All
professionals retained by the Debtor shall be entitled to payment of their
post-Confirmation fees and reimbursement of expenses on a monthly basis.
Professionals shall mail or deliver a detailed statement of unpaid fees and
expenses to the Responsible Person and counsel to the Debtor. If there is no
objection to the requested fees and expenses within ten (10) days of mailing or
delivery of the detailed statement of unpaid fees and expenses, the Responsible
Person shall pay the requested amount in full. If any party objects to a portion
of the fees or expenses submitted by any professional, the Debtor shall pay the
undisputed portion of such fees and expenses and shall reserve monies in the
amount of the disputed fees and expenses pending resolution of said objection by
(i) agreement between the professional requesting such fees and expenses and the
disputing party, or (ii) resolution of the disputed amount by the Bankruptcy
Court pursuant to a Final Order. Professionals shall not otherwise be required
to file applications for Bankruptcy Court approval of post-Confirmation fees and
expenses.
4.6 CONDITION FOR PAYMENT ON CLASS 5 CLAIMS. Prior to any distribution to a
Class 5 Claim holder, such Claim holder must surrender his/her stock
certificates which evidence his/her Interests to the Debtor.
4.7 UNCLAIMED DISTRIBUTIONS. Any checks issued by the Debtor that remain
unclaimed or unnegotiated for ninety (90) days following distribution or are
returned for reasons other than the absence of a current or correct address
(unless a current or correct address cannot be determined after reasonable
inquiry) shall become the property of the Debtor and shall be added to and
treated as part of the Estate, and the Claim of the payee of such check shall be
deemed satisfied.
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SECTION 5
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
5.1 REJECTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES. All executory
contracts and unexpired leases, not previously assumed or rejected, are
rejected.
5.2 REJECTION CLAIMS. Rejection claims shall be classified as Class 3(a)
Claims. The holder of any Claim arising from the rejection of an executory
contract or unexpired lease shall file with the Bankruptcy Court, and serve on
the Debtor's counsel, a proof of claim relative to such rejection Claim prior to
Confirmation or be forever barred from asserting any such Claim or receiving any
payment on account of such Claim.
SECTION 6
PROOFS OF CLAIM AND INTEREST; OBJECTIONS
6.1 PROOFS OF CLAIM. All proofs of claim not filed prior to Confirmation,
or rejection claims filed after Confirmation, shall be deemed disallowed unless
and until determined to be Allowed Claims by Final Order of the Bankruptcy
Court.
6.2 TIME FOR FILING OBJECTIONS. Any objection to any Claim may be filed at
any time prior to the Effective Date.
6.3 CONTESTED CLAIMS RESERVE. The Debtor will segregate and hold all
payments otherwise on account of any Contested
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Claim. Contested Claims will be paid when such Claim becomes an Allowed Claim.
SECTION 7
RESERVATION OF POWERS
Nothing in the Plan shall be deemed to constitute a waiver of the
powers of the Debtor as a debtor in possession under the Bankruptcy Code, the
Bankruptcy Rules or the local rules of the Bankruptcy Court, and the Debtor
shall retain after the Effective Date, all powers granted by the Bankruptcy
Code, the Bankruptcy Rules and the local rules of the Bankruptcy Court,
including, without limitation, those with respect to preferences, fraudulent
transfers and obligations, avoidance of liens on property of the Debtor,
recovery of property, and objections to, and/or subordination of, Claims and
Interests.
SECTION 8
MODIFICATION OF THE PLAN
The Debtor may propose amendments to or modifications of the Plan
under section 1127(a) of the Bankruptcy Code and Bankruptcy Rule 3019 at any
time prior to the conclusion of the hearing on confirmation of the Plan. After
the Confirmation Date, the Debtor may modify the Plan in accordance with section
1127(b) of the Bankruptcy Code and Bankruptcy Rule 3019.
SECTION 9
RETENTION OF JURISDICTION
The Bankruptcy Court shall retain jurisdiction of this Chapter 11 Case
to the full extent allowed under 28 U.S.C. ss. 1334 including, but not limited
to, jurisdiction (a) to determine the allowance or disallowance of Claims and
Interests, (b) to hear and determine proceedings initiated before or after
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Confirmation regarding the avoidance of liens or transfers, recovery of property
and subordination of Claims and Interests, (c) to fix and approve allowance of
compensation to Professional Persons and other Administrative Expenses,
including, if appropriate, payments to be made in connection with the Plan, (d)
to adjudicate controversies arising from the terms of the Plan, (e) for the
purpose of modifications of or amendments to the Plan to the extent permitted by
section 1127 of the Bankruptcy Code and Bankruptcy Rule 3019, (f) to enforce or
interpret the provisions of the Plan, the Confirmation Order or any order
entered by the Bankruptcy Court in the Chapter 11 Case, (g) to facilitate the
consummation of the Plan, including to consider whether to approve sales or
compromises as required in the Plan, and (h) for such other matters as may be
set forth in the Plan or the Confirmation Order.
SECTION 10
EFFECT OF ORDER OF CONFIRMATION
The effect of the Confirmation Order shall be as provided in section
1141 of the Bankruptcy Code. The provisions of the confirmed Plan shall bind the
Debtor, and any creditor or equity security holder, whether or not such creditor
or equity security holder has filed a proof of claim or interest.
SECTION 11
DEFAULT
11.1 EVENTS OF DEFAULT. The failure to make Plan payments to any holder of
an Allowed Claim or Allowed Interest as provided for under the Plan, shall be an
event of default under the Plan; PROVIDED, HOWEVER, that no default shall be
deemed to have occurred if such missed payment is made within thirty (30) days
of the date written notice of the missed payment is provided to the Debtor.
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11.2 CONSEQUENCES OF DEFAULT. If an event of default occurs and is not
cured within the period provided for, any holder of an Allowed Claim or Allowed
Interest may immediately pursue its rights and remedies under applicable
nonbankruptcy law including, but not limited to, instituting levy or foreclosure
proceedings, judicial or nonjudicial, in accordance with applicable
nonbankruptcy law. Except as otherwise provided by this Plan, post-Confirmation,
no further order of the Bankruptcy Court shall be required before any such
holder may exercise its rights under this paragraph.
SECTION 12
MATTERS CONCERNING THE UNITED STATES TRUSTEE
Quarterly fees shall be paid by the Debtor to the United States
Trustee after Confirmation to the extent required by 28 U.S.C. ss. 1930(a)(6).
SECTION 13
EXCULPATION AND LIMITATION OF LIABILITY
Except as otherwise provided in the Plan, the Debtor and the
Responsible Person, and any of such parties' respective present or former
members, officers, directors, employees, advisors, attorneys, representatives,
financial advisors, or agents and any of such parties' successors and assigns,
shall not have or incur, and are under the Plan released from, any claim,
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obligation, cause of action or liability to one another or to any Creditor or
Interest holder, or any other party in interest, or any of their respective
agents, employees, representatives, financial advisors, attorneys or affiliates,
or any of their successors or assigns, for any act or omission in connection
with, relating to or arising out of the Debtor's Chapter 11 Case, the pursuit of
confirmation of the Plan, the consummation of the Plan, the administration of
the Plan or the property to be distributed under the Plan, except for their
willful misconduct, and in all respects shall be entitled to reasonably rely
upon the advice of counsel with respect to their duties and responsibilities
under the Plan. The limited releases discussed above have no effect on any
individual direct claims of former and current shareholders with regard to the
pre-petition conduct or pre-petition liabilities of any of the individuals or
entities referred to above to the extent such claims are not property of the
Estate.
Notwithstanding any other provision of the Plan, no holder of a Claim
or Interest, or other party in interest, none of their respective agents,
employees, representatives, financial advisors, attorneys or affiliates, and no
successors or assigns of the foregoing, have any right of action against the
Debtor, or the Responsible Person or any of such parties' respective present or
former members, officers, directors, employees, advisors, attorneys,
representatives, financial advisors, or agents or such parties' successors and
assigns, for any act or omission in connection with, relating to or arising out
of the Chapter 11 Case, the pursuit of confirmation of the Plan, the
consummation
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of the Plan, the administration of the Plan or the property to be distributed
under the Plan, except for their willful misconduct.
SECTION 14
MISCELLANEOUS
14.1 HEADINGS. The headings contained in the Plan are for convenience of
reference only and shall not limit or otherwise affect in any way the meaning or
interpretation of the Plan.
14.2 SINGULAR/PLURAL. All references in the Plan to the singular shall be
construed to include references to the plural and vice versa.
14.3 GENDER. All references in the Plan to any one of the masculine,
feminine or neutral genders shall be deemed to include references to both other
such genders.
14.4 NOTICES. All notices required or permitted to be made in accordance
with the Plan shall be in writing and shall be delivered personally or by first
class mail as follows:
If to the Debtor:
Jeffrey G. Black, Responsible Person
TriTeal Corporation
2075 Bravado Street
Vista, CA 92083
Counsel for the Debtor:
Jeffry A. Davis, Esq.
Gray Cary Ware & Freidenrich LLP
401 B Street, Suite 1700
San Diego, CA 92101-4297
and if to a holder of an Allowed Claim or an Allowed Interest at the address set
forth in its proof of claim or interest filed with the Bankruptcy Court, or if
none, at its address set forth in the schedules. Notices shall be deemed given
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when delivered or mailed. Any entity may change the address at which such entity
is to receive notices under the Plan by sending written notice, pursuant to the
provisions of this section, to the entity to be charged with knowledge of such
change and filing such notice with the Bankruptcy Court.
14.5 RESERVATION OF RIGHTS. Neither the filing of the Plan nor any
statement or provision contained in the Plan or in the Disclosure Statement, nor
the taking by any party in interest of any action with respect to the Plan,
shall (a) be or be deemed to be an admission against interest, and (b) until the
Effective Date, be or be deemed to be a waiver of any rights any party in
interest may have (i) against any other party in interest, or (ii) in any of the
assets of any other party in interest, and, until the Effective Date, all such
rights are specifically reserved. In the event that the Plan is not confirmed or
fails to become effective, neither the Plan nor the Disclosure Statement nor any
statement contained in the Plan or in the Disclosure Statement may be used or
relied upon in any manner in any suit, action, proceeding or controversy within
or without this Chapter 11 Case involving the Debtor, except with respect to
confirmation of the Plan.
Dated: August 27, 1999 TRITEAL CORPORATION,
a Delaware corporation
Debtor and Debtor in Possession
By: /S/ JEFFREY G. BLACK
---------------------------------
Jeffrey G. Black
Responsible Person
/S/ JEFFRY A. DAVIS
- ----------------------------------
JEFFRY A. DAVIS
GRAY CARY WARE & FREIDENRICH LLP
Attorneys for Debtor and
Debtor in Possession
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EXHIBIT 99.1
PRESS RELEASE
TRITEAL CORPORATION ANNOUNCES COURT APPROVAL OF
PLAN OF LIQUIDATION
Carlsbad, CA - January 12, 2000 - TriTeal Corporation announced today that on
December 7, 1999, the United States Bankruptcy Court for the Southern District
of California approved the Company's Plan of Liquidation in connection with its
voluntary chapter 11 petition under the United States Bankruptcy Code. In
August, the Company filed the Plan of Liquidation with the court providing for
the liquidation of the Company's assets, payment to its creditors and the
distribution of any remaining cash to the stockholders of the Company. Pursuant
to the Plan of Liquidation, holders of the Company's Common Stock will be
entitled to receive a pro rata distribution of the remaining cash, if any, of
the Company after all other claims have been resolved and paid in accordance
with the terms of the Plan of Liquidation. In order to receive such pro rata
distribution, each owner of the Company's Common Stock will be required to
surrender his/her stock certificates which evidence such ownership of the
Company's common stock. At this time, the timing and amount of such
distribution, if any, remains undetermined.
Except for the liquidation of its assets, the Company has ceased doing business.
Contact: Bankruptcy Counsel for TriTeal Corporation
Gray Cary Ware & Freidenrich LLP
Jeffrey A. Davis, Esq.
(619) 699-2905
