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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) November 26, 1997 (November 13,
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1997)
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Reconversion Technologies, Inc.
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(exact name of registrant as specified in its charter)
Delaware 0-23100 22-2649848
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
2 Hendersonville Road, Suite E, Asheville, NC 28803
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(Address of principal executive offices)
Registrant's telephone number, including area code (704) 255-0307
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None
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(Former name or former address, if changed since last report)
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Reconversion Technologies, Inc.
Form 8-K
Table of Contents
Item 1. Changes in Control of Registrant Page 1
Item 2. Acquisition or Disposition of Assets Page 1
Item 3. Bankruptcy or Receivership Page 4
Item 6. Resignations of Registrant's Director Page 21
Item 7. Financial statements and Exhibits Page 21
Signatures Page 29
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Upon the effective date (defined as 20 days after the entry of the
confirmation order) (the "Effective Date") of the plan of reorganization for
Reconversion Technologies, Inc. (the "Company") as approved by the Bankruptcy
Court for the Northern District of Oklahoma, the common stock and preferred
stock of the Company will be reclassified, the management of the Company will be
changed, and certain shares of common stock of the Company will be issued, all
as discussed under Item 3, below.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
As part of the plan of reorganization approved by the Bankruptcy Court, the
Company will acquire Keystone Laboratories, Inc., a Delaware corporation,
("Keystone"). The terms of the acquisition, the consideration paid, the
principle followed in determining the amount of the consideration, the identity
of the persons from whom Keystone will be acquired, and the material
relationships between the Company and the persons from whom Keystone will be
acquired are discussed under Item 3. There follows a brief description of
Keystone.
GENERAL Keystone was incorporated in 1987 as a Delaware corporation. Its
sole business is the operation of a forensic urine drug screening and
confirmatory testing laboratory located in Asheville, North Carolina. Urine
laboratory tests are used primarily by employers to detect the use of illegal
substances by employees and/or prospective employees.
LABORATORY TESTING OPERATIONS & SERVICES Keystone has one laboratory and
one collection station which are both located within its Asheville facility. In
addition to an in-house collection service, Keystone provides on-site collection
to its customers through independent couriers. In the past year, urine
specimens have been collected by Keystone through on-site collections and
courier collection in 16 states. At its facility in Asheville, North Carolina,
each urine specimen and related test request form is checked for completeness
and assigned an identification number, which insures that the results are
attributed to the correct patient. The test request forms are then sent to a
data entry terminal where a file is established for each test specimen and the
necessary testing and billing information is entered. Once such billing
information is entered into the system, the tests are performed and the results
posted through a computer interface. Test results are printed and prepared for
distribution by service representatives the same day routine testing is
performed. In addition, written reports of the test results may be generated
directly in the offices of clients with computer printers. Clients who have
specimens tested before 1:00 p.m. and who request that the test results be
communicated by telephone are so notified the same day while the remainder of
the clients are notified of the test results the following business day.
QUALITY ASSURANCE Keystone considers the quality of its tests to be of
critical importance to its growth and the retention of existing client accounts.
Therefore, it has established a quality assurance program for its laboratory,
designed to help assure accurate and timely test results. Keystone's laboratory
also participates in a number of proficiency testing programs which generally
involve the submission of pre-tested samples to a laboratory to verify the
laboratory test results against a known proficiency test value. These
proficiency programs are conducted
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both independently by Keystone and in conjunction with groups such as the
College of American Pathology ("CAP").
CAP is an independent non-governmental organization of board certified
pathologists which offers an accreditation program to which laboratories may
voluntarily subscribe. The CAP accreditation program involves both on-site
inspections of the laboratory and participation in CAP's proficiency testing
program for all categories in which the laboratory is accredited by CAP. In
addition to these compulsory external inspections and proficiency programs,
Keystone has adopted a number of additional quality assurance checks. The
laboratory is equipped with sophisticated testing equipment which is checked
daily in accordance with Keystone's preventive maintenance program. In
addition, the laboratory is supervised by a scientific director, Robert G.
Breiner, who possesses a Ph.D. in toxicology and is a fellow of the American
College of Toxicology as well as an inspector for forensic urine drug testing
for CAP. The primary role of the scientific director is to ensure the accuracy
of the laboratory's tests.
MARKETS AND MARKETING The potential customers for Keystone's services are
primarily small local hospitals, drug abuse treatment centers and private
businesses. Marketing of Keystone's services is accomplished primarily through
direct solicitation by its salesmen who initially meet with each new potential
client. Keystone believes that this one-on-one contact has proven invaluable in
customer satisfaction and, in turn, customer retention. As of April, 1997,
Keystone had two full-time employees engaged in sales, along with four outside
salespersons who are compensated on a commission only basis. Keystone intends
to continue to selectively increase the size of its sales force by expansion in
existing markets as well as by entering into new geographic areas. Keystone
believes that sales force productivity is primarily due to Keystone's knowledge
of state drug testing laws and personalized follow-up. After a customer account
is acquired, primary responsibility for the account is turned over to
coordinators in Keystone's Client Service Program. Through these coordinators,
Keystone continuously monitors client activities and attempts to identify and
resolve any potential client dissatisfaction at an early stage.
Keystone has found that the three primary concerns of clients are
turnaround time, price and accuracy. Keystone provides rapid turnaround time
for its written reports - 24 hours in the case of negative specimens and 48
hours for positive specimens. Keystone believes the price charged for its
services is competitive. With regard to accuracy, Keystone routinely performs
adulteration tests such as "pH" and "specific gravity" tests on all specimens
verifying that the urine specimens are valid. Many laboratories either do not
perform these tests or charge extra fees to clients to perform such tests if
they are requested. A lack of certification by the National Institute on Drug
Abuse ("NIDA") prevents Keystone from performing tests for certain governmental
agencies. However, Keystone believes that the advantage of NIDA certification
would not generate enough additional revenues to offset the probable significant
additional expenses which would probably be incurred with NIDA certification.
COMPETITION The forensic urine drug testing business is characterized by
intense competition between hospitals, physician-owned laboratories and
independent laboratory companies such as Keystone. Keystone views the urine
laboratory industry as highly fragmented at present with many local, regional
and national laboratory companies currently in operation.
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Keystone believes that there are several laboratory companies which provide a
broad range of laboratory testing services in the same markets serviced by
Keystone. Among Keystone's national competitors with larger name recognition
are Allied Clinical Laboratories, Inc., Lab Core, Inc. (a recent combination of
National Health Laboratories, Inc. and Roche Biomedical Laboratories, Inc.),
MetPath Inc., and SmithKline Beecham Clinical Laboratories, Inc. According to
the Health Care Financing Administration, over 12,000 federally regulated
clinical laboratories are currently operating in the United States. As
mentioned above, competition is based primarily on accuracy of testing, price
and the time required to report results. Finally, in addition to competition
for customers, there is increasing competition for qualified personnel.
CUSTOMERS To date, Keystone has focused its marketing efforts primarily on
manufacturing companies whose orders account for approximately 95% of Keystone's
net sales. The remaining 5% of net sales is derived from hospital reference
testing, nursing homes, clinics, referrals from other clinical laboratories and
other clients. In fiscal 1996, the largest customer of Keystone accounted for
approximately 5% of net sales. Keystone believes that the loss of any one
client would not have a material effect on its financial condition. Payments
for Keystone's services are made directly by the clients.
GOVERNMENT REGULATION Keystone is a forensic drug testing laboratory and
not subject to the Clinical Laboratory Improvement Act. Keystone complies with
all federal, state and local regulations applicable to forensic drug testing
laboratories.
COMPLIANCE WITH ENVIRONMENTAL LAWS Certain federal and state laws govern
the handling and disposal of infectious and hazardous wastes. Although Keystone
believes that it is currently in compliance in all material respects with such
federal and state laws, failure to so comply could subject Keystone to fines,
criminal penalties and/or other enforcement actions.
OFFICERS, DIRECTORS AND KEY EMPLOYEES OF KEYSTONE The officers, directors,
and key employees of Keystone are as follows:
Joel C. Holt serves as a Director and as President of Keystone in addition
to his duties as Director and President of the Company. See Item 3.
John B. Sams serves as a Director and as Vice-President of Keystone in
addition to his duties as Director and Vice-President of the Company. See
Item 3.
Marianne Smith serves as a Director and as Secretary and Treasurer in
addition to her duties as Secretary of the Company. See Item 3.
Robert G. Breiner serves Keystone as scientific director, a position he has
held since August, 1996. As scientific director, Dr. Breiner is
responsible for all scientific and technical testing matters.
None of the officers, directors or key employees of Keystone are parties to
written employment agreements.
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EMPLOYEES As of April, 1997, Keystone employed a total of 15 employees, 14
of whom work full-time. Keystone has no collective bargaining agreements with
any unions and believes that the overall relations with its employees are
excellent.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
INTRODUCTION
On November 13, 1997 the United Bankruptcy Court for the Northern District
of Oklahoma entered its order confirming the First Amended Modified Plan of
Reorganization of Reconversion Technologies, Inc. Proposed by Joel C. Holt and
Richard T. Clark, Jr., Creditors and Interest Holders in In Re Reconversion
Technologies, Inc. Case No. 95-00821-M. As used herein, Reconversion
Technologies, Inc. is referred to as the "Company," the plan confirmed by the
Bankruptcy Court is referred to as the "Plan," and Messrs. Holt and Clark are
referred to as the "Plan Proponents."
SUMMARY OF PLAN
The principal elements of the Plan as confirmed by the Court are as
follows:
(1) The acquisition of Keystone Laboratories, Inc., a Delaware corporation
("Keystone").
(2) The subordination by the Company of a portion of its secured claim
against Retex Technologies of Texas, Inc. ("Retex"), the sole
remaining subsidiary of the Company, and liquidation of Retex under a
Retex Plan.
(3) The evaluation and disposition of the Company's Claims against third
parties.
(4) The classification and treatment of creditors of the Company
("Creditors") and holders of the Company's preferred and common stock
("Interest Holders").
(5) The amendment of the Company's Certificate of Incorporation.
(6) The election of Directors and management for the Company and issuance
of New Common Stock to Directors as compensation for services.
ACQUISITION OF KEYSTONE LABORATORIES, INC. On the Effective Date all
outstanding shares of Keystone will be acquired by the Company from Plan
Proponents in exchange for common stock of the Company as reorganized by the
Plan (the "New Common Stock") issued to Plan Proponents as follows:
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Shares of New Common Stock
Shares in in the Company
Keystone Received in Exchange
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Richard T. Clark, Jr. 500 Total of 19.5% (1,250,000
shares) of outstanding
Shares of the Company
prior to exercise of Warrants
Joel C. Holt 500 Total of 19.5% (1,250,000
shares) of outstanding
Shares of the Company
prior to exercise of Warrants
The above listed shares of New Common Stock to be issued to Plan Proponents in
exchange for their Keystone stock do not include other shares of New Common
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Stock to be received by Plan Proponents pursuant to the Plan in their capacities
as Creditors and Interest Holders and in Mr. Holt's capacity as a Director of
the Company. See "Capitalization and Principal Stockholders."
The capital stock of Keystone was acquired by Plan Proponents in July,
1996, when Clark Capital Corp. purchased all of the issued and outstanding
capital stock of Keystone from ProActive Technologies, Inc. (formerly Keystone
Medical Corporation) for a total consideration of $1,500,000. Clark Capital
Corp. is an Oklahoma corporation. Its outstanding shares are owned by Kelly
Clark, wife of Richard T. Clark, Jr. The shares of Keystone stock were
subsequently transferred to Plan Proponents by Clark Capital Corp.
The purchase price paid to ProActive for Keystone was determined by
purchasers based upon an industry standard valuation of one times annual
revenue. Keystone's annual revenue for its year ending June 30, 1996 was
$1,433,319. Keystone's average annual revenue over the three years ended June
30, 1996, was $1,517,200. No independent valuation of Keystone was undertaken
for purposes of development of a fairness opinion either in connection with Plan
Proponents' acquisition of Keystone, or in connection with the acquisition of
Keystone by the Company pursuant to the Plan.
Plan Proponents own shares of stock of ProActive. Richard T. Clark, Jr.
owns 100,000 shares of Common Stock of ProActive and Joel C. Holt owns 30,000
shares of Common Stock of ProActive. ProActive Technologies owns 100,000 shares
of the Company's preferred stock, and under the Plan will receive New Common
Stock in the Company when such preferred stock is reclassified.
LIQUIDATION OF RETEX TECHNOLOGIES OF TEXAS, INC. Retex is a wholly owned
subsidiary of the Company and is a Chapter 11 debtor in a separate bankruptcy
case pending in the United States Bankruptcy Court for the Northern District of
Oklahoma, Case No. 95-00822-W. The Company is the major secured creditor of
Retex with a claim in excess of $5,000,000 secured by a mortgage and security
interest encumbering Retex's assets. It is possible that Retex, or a
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creditor of Retex, will assert that the Company's lien claim is voidable because
its perfection occurred within one year of the date of filing of the Retex
bankruptcy case.
Retex has no current operations, and its principal asset is an industrial
plant facility in Brenham, Texas (the "Brenham Plant"). The Brenham Plant is
subject to a Lease Agreement (expiring in June 1999, if the final extension is
exercised), which grants the present lessee an option to purchase for a total
purchase price of $640,000. The Lease Agreement is currently in default.
Retex will be required to submit its own plan of reorganization in its
bankruptcy proceedings. Under a plan of liquidation for Retex, the Brenham
Plant could be conveyed to the Retex Liquidating Trust subject to the existing
Lease Agreement and sold through the Retex Liquidating Trust. In the interim,
efforts will be made to keep the Brenham Plant leased. Rental income will be
used to defray costs of maintaining the facility and to establish a reserve for
operations. The Company, for its participation in such Retex Plan, will
subordinate its security interest in the Brenham Plant up to $200,000 to permit
rental and sale funds to be used to pay Retex allowed claims and administrative
expenses, but only for that purpose. Net rental and sale proceeds in excess of
$200,000 (or the lesser amount necessary to pay Retex allowed claims and
administrative expenses) will be paid to the Company and retained for the
Company's operations. Bankruptcy Court approval of the Retex Plan will be
required in the Retex bankruptcy case.
There is no current contract for the sale of the Brenham Plant and no sale
is imminent to the knowledge of the Plan Proponents. Under the existing Lease
Agreement, the current tenant has until June 30, 1999, to exercise its option to
purchase, if the remaining lease extension is exercised. The default by lessee
under its Lease Agreement could result in a loss of such option. The Brenham
Plant is subject to a mortgage claim, various asserted tax lien claims and a
potential environmental claim, the priority of which vis-a-vis the Company's
security interest in the Brenham Plant has not been determined.
ASSESSMENT AND DISPOSITION OF THE COMPANY'S CLAIMS The Company will retain
and will be vested with all rights, claims and causes of action which existed
against third parties at the commencement of the Company's bankruptcy
proceedings, and which have not been compromised, released or discharged in the
bankruptcy proceedings.
The Company's Claims are not affected by confirmation of the Plan, and each
will be evaluated by the Board of Directors of the Company with advice of
independent counsel to be selected by the Board. The independent counsel will
be selected and retained by the Board of Directors of the Company and will not
require Bankruptcy Court approval. Counsel will make recommendations (within 60
days of the date the Court confirmed the Plan) to the Board of Directors of the
Company for further action. In the interim, all litigation will be suspended
for 90 days from the confirmation date to permit assessment and evaluation to be
completed, including consideration of settlement or arbitration possibilities.
Under the Plan, the Bankruptcy Court will retain jurisdiction over all of
the Company's Claims until resolved. Any settlement or other dispositive
decision affecting any of the
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Company's claims will be presented to the Bankruptcy Court for approval, and
will be subject to a fairness evaluation in the context of the Company's best
interest, pursuant to Bankruptcy Rule 9019. In order to assure the adequate and
fair consideration of such claims, the Plan provides that the Examiner appointed
by the Bankruptcy Court, although generally discharged in the Plan, will remain
a party in interest with respect to the Company's Claims and will be authorized
and directed to report his opinion on any proposed settlement or disposition of
such claims to the Bankruptcy Court, when any such matter is considered, in
order to assure that matters are fully and fairly presented to the Bankruptcy
Court. Joel C. Holt and Joe Sams will not participate in any decision by the
Board of Directors concerning the Company's Claims against Joel C. Holt, Richard
T. Clark, Jr., Ira Rimer, G. David Gordon, Jr., and Klenda Gordon & Getchell.
CLASSIFICATION AND TREATMENT OF CREDITORS AND INTEREST HOLDERS Creditors
and Interest Holders are classified into eleven separate classes under the Plan.
The treatment of each class is summarized as follows:
Class 1: Allowed Administrative Claims. Allowed Claims under (S)503(b) of
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the Bankruptcy Code. The Class 1 Claims include (i) allowed but unpaid
attorneys' fees on the Effective Date for the Company's counsel, Riggs, Abney,
Neal, Turpen Orbison & Lewis, and (ii) allowed but unpaid professional fees due
to Neal Tomlins, Examiner, and his counsel, and fees and expenses not yet
presented for payment and, therefore, not approved. The Class 1 Claims will be
paid in cash within forty-five (45) days after the Effective Date or within 20
days of determination and allowance by the Bankruptcy Court if determined after
45 days of the Effective Date, or as may be otherwise agreed between the Company
and each Class 1 Claimant.
Class 2: Allowed Priority Claims. Allowed Unsecured Claims entitled to
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priority pursuant to (S)507(a) of the Bankruptcy Code. The Company scheduled
priority claims owing in unknown amounts to the Internal Revenue Service and the
Securities and Exchange Commission. It is believed there is no liability to
either of the agencies included in this Class.
Class 3: Disputed Secured Claims. Creditors who assert a secured claim
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against the Company and its assets. The Company will object to each of the
secured claims. None of these claims represents an obligation of the Company.
These claims, to the extent valid, are claims against Retex, the Company's
subsidiary corporation, which debts have not been assumed or guaranteed by the
Company. Nothing contained in the Plan affects the status of any such claim
against Retex, except to the extent contemplated in the Plan of Liquidation of
Retex contemplated in the Plan.
Class 4: Claim of Transfer Agent AST and Depository Trust Co. The Class 4
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Claims consist of the pre-petition unsecured claims of American Securities
Transfer and Depository Trust Co. Both claims were incurred for stock transfer
services rendered to the Company pre-petition. The Class 4 Claims will be paid
in cash the amount of pre-petition claims which in the aggregate total $4,603.66
within 45 days of the Effective Date.
Class 5: Administrative Convenience Class -- Small Claims Class 5 Claims
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consist of all Allowed Unsecured Claims against the Company to which no
objection has been interposed,
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which are $1,000 or less in amount, and include Class 6 Creditors who elect to
reduce their claim for Class 5 participation. All members of this Class will be
paid in full in cash within 45 days of the Effective Date. Class 6 Creditors
electing to reduce their claims and participate in Class 5 will be paid $1,000
in cash within 45 days of the Effective Date.
Class 6: Allowed Unsecured Claims Class 6 Claims consist of all Allowed
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Unsecured Claims against the Company to which no objection has been interposed
and total approximately $413,668.49. Disputed Claims which would otherwise be
included within this Class will not be Allowed until allowed by Final Order of
the Bankruptcy Court. The aggregate amount of Disputed Claims is $1,503,824.19.
Expressly excluded from Class 6 Claims are the Klenda Gordon & Getchell Creditor
Claim and the GAIA Claim, which are separately classed. The holders of Class 6
Allowed Unsecured Claims will be allowed to elect to participate in Class 5
Claims. Holders of Class 6 Claims who do not so participate shall receive 40%
of the allowed amount of their Claims (i) in cash, or (ii) in shares of New
Common Stock, or (iii) in a combination of cash and shares of New Common Stock
at the election of each holder within 45 days after the later of (i) the
Effective Date or (ii) the date the Claim is determined by the Bankruptcy Court
or by settlement and compromise approved by the Court. If no election is made
within such 45 day period, New Common Stock will be delivered. To the extent
New Common Stock is delivered, it will be delivered at the rate of 0.4 share per
$1.00 of the amount of Allowed Claim (subject to cash payment for fractional
shares on the basis of $1.00 per share). Disputed Class 6 Claims will not be
paid until the dispute over such claim has been finally resolved.
Class 7: Disputed Unsecured Claim of GAIA. Gaia Technologies, Inc.
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("GAIA") is the holder of a disputed Unsecured Claim against the Company. On
March 17, 1995, GAIA obtained a judgment against the Company and certain
individuals in the aggregate sum of $22 million dollars in the United States
District Court for the Southern District of Texas styled Gaia Technologies, Inc.
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v. Reconversion Technologies, Inc., et al., Case No. H-94-2258 and GAIA filed
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its Proof of Claim in this case for $23,043,276.31. On August 19, 1996, the
U.S. Court of Appeals for the Federal Circuit reversed and vacated the judgment
entirely and remanded the matter to the U.S. District Court for the Southern
District of Texas. The GAIA Claim is disputed under the Plan. An objection to
the GAIA claim was filed seeking a determination of the value of the GAIA claim
through the claim estimation process pursuant to 11 U.S.C. (S)502(c). After the
objection was filed, the United States District Court for the Southern District
of Texas (to which the appeals court had remanded the matter after vacating and
reversing the judgment) entered judgment in favor of GAIA and against the
Company and others as follows:
(a) Judgment against the Company, Retex, Progressive Capital Corporation,
David Gordon, Ira Rimer, Joel C. Holt and Rick T. Clark, Jr., jointly
and severally, for: (i) $4,350,000; and (ii) pre-judgment interest of
$2,130,192.79;
(b) Judgment against the Company, Retex and Progressive Capital
Corporation, jointly and severally, for: (i) $125,000; and (ii) pre-
judgment interest of $61,212.42;
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(c) Judgment against David Gordon, Ira Rimer, Joel C. Holt and Richard T.
Clark, Jr. for $100,000 each, in the nature of punitive damages;
(d) Attorney's fees of $450,000 against the Company, Retex, Progressive
Capital Corporation, David Gordon, Ira Rimer, Joel C. Holt and Richard
T. Clark, Jr., jointly and severally; and
(e) Post-judgment interest after July 10, 1997, at 5.65%.
The aggregate amount of the judgment against the Company and other parties is
$7,116,405.21, exclusive of interest after July 10, 1997. The Company and Plan
Proponents have initiated an appeal of the judgment, which it is believed was
rendered in contravention of the mandate from the Court of Appeals which vacated
the earlier judgment of $23,043,276.31. The appeal will be vigorously
prosecuted by the Company and Plan Proponents. This Claim is disputed and will
receive no distribution until and unless the Claim has been established by Final
Order of a Court of competent jurisdiction. The Company will vigorously
prosecute its appeal to vacate the judgment and to obtain a ruling that the GAIA
Claim against this Estate is zero. Upon any determination by Final Order that
GAIA holds an Allowed Claim, GAIA shall receive New Common Stock in the Company
in the amount equal to 20% (based on the average of the bid and ask price as of
the date of the final order establishing a claim of GAIA against the Company) of
the Allowed Claim, which shares in an amount necessary to distribute to GAIA
shall be authorized pursuant to the Plan, but shall not be issued or distributed
until a claim is finally allowed, subject to any right of offset. The Company
shall be entitled to credit on any claim which may be finally allowed, resulting
from payment by a party jointly obligated to GAIA on any finally allowed
judgment. The Plan will not affect any claim of GAIA against any third party,
and affects only any finally allowed claim against the Company.
Class 8: TNRCC Claim The TNRCC Claim against the Company arises, if at
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all, in connection with certain environmental claims which are asserted by TNRCC
against Retex from operation of the Retex plant in Brenham, Texas. TNRCC has
not filed a claim against the Company. The Company believes that TNRCC asserts
its claim against Retex and that the Company has no liability to TNRCC. The
Claim of TNRCC against the Company will be determined in the Company's
bankruptcy proceedings pursuant to 11 U.S.C. (S) 502(c). The Company will
assert that TNRCC must pursue its right of recovery against assets of other
parties who may have liability for any environmental claim, and that the Company
has no obligation to TNRCC.
Class 9: Klenda Gordon & Getchell Creditor Claim This Class consists of
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the Claim of Klenda Gordon & Getchell asserting an Unsecured Claim in the amount
of $128,439.37. The Company asserted claims against Klenda Gordon & Getchell
which on May 22, 1997, resulted in a judgment in favor of the Company against
Klenda Gordon & Getchell for $98,625 together with interest at 6.72% from June
21, 1996, until paid. To the extent of an affirmative recovery from Klenda
Gordon & Getchell, the same may, upon payment by Klenda Gordon & Getchell, give
rise to an allowed unsecured claim in such amount which will be added to the
amount of the existing claim of $128,439.37. The full claim will be treated for
purposes of distribution under the Plan, as a Class 6 Claim. In the event there
is a final determination in the preference
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action in favor of Klenda Gordon & Getchell, then it shall have an Allowed Claim
of $128,439.37 in this case, and will be treated for purposes of distribution
and the Plan as a Class 6 Claim.
Class 10: Preferred Stock This Class consists of the Interests of the
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Equity Security Holders who own Pre-Petition Shares of Preferred Stock. There
were 1,104,081 Pre-Petition Shares of Preferred Stock issued by the Company.
The shares of Preferred Stock held by the holders of Class 10 Interests will be
reclassified into New Common Stock which will result in cancellation of all
rights for priority in liquidation and for accumulated dividends or any right
for rescission under state or federal securities laws. As a result of the
reclassification, an aggregate of 1,274,172 shares of New Common Stock will be
issued to Class 10 Interest Holders. Each holder of Pre-Petition Shares of
Preferred Stock will be issued, pursuant to the Plan, 1.1 shares of New Common
Stock for each share of issued and outstanding Preferred Stock (subject to cash
payment for fractional shares on the basis of $1.00 per share). In addition,
Class 10 Interest Holders will be issued Class "A" Warrants to purchase an equal
number of shares of New Common Stock at the price of $1.00 per share within 12
months after the Effective Date.
Class 11: Common Stock This Class consists of the holders who own pre-
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petition shares of Common Stock of the Company. There are outstanding
11,807,785 Pre-Petition Shares of Common Stock. The owners and their holdings
of these shares, as of November 17, 1994, according to the records of the
Company's stock transfer agent, AST, are contained in "List of Equity Security
Holders" filed in the office of the United States Bankruptcy Court Clerk for the
Northern District of Oklahoma on or about April 19, 1995. The pre-petition
shares of Common Stock held by the holders of Class 11 Interests will be subject
to a one-for-eight reverse stock split. As a result of the reverse stock split,
the holders of Pre-Petition Shares of Common Stock will exchange their
certificates evidencing Pre-Petition Shares of Common Stock for certificates
evidencing shares of New Common Stock (subject to cash payment for fractional
shares on the basis of $1.00 per share). In addition, Class 11 Interest Holders
will receive Class "B" Warrants to purchase an equal number of shares of New
Common Stock at the price of $1.00 per share within 15 months after the
Effective Date. For each share of New Common Stock purchased under a Class "B"
Warrant, a Class "C" Warrant will be issued to purchase another share of New
Common Stock. The Class "C" Warrants will be exercisable during the 18 months
after the Effective Date at a price of $1.75 per share.
AMENDMENT TO THE COMPANY'S CERTIFICATE; DESCRIPTION OF THE COMPANY'S
CAPITAL STOCK As part of the Plan, the Company's Certificate of Incorporation
will be amended to change the number of authorized shares of Common Stock from
200,000,000 shares to 60,000,000 shares and to prohibit the issuance of non-
voting equity securities as required by (S)1123(a)(6) of the Bankruptcy Code.
The amendment will also provide for the one-for-eight reverse stock split of
Pre-Petition Common Stock and the reclassification of the Company's Pre-Petition
Preferred Stock into shares of New Common Stock. Following the amendment to the
Company's Certificate of Incorporation, the Company will be authorized to issue
60,000,000 shares of common stock, par value $.0001 per share.
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Each outstanding share of New Common Stock will be entitled to one vote on
all matters submitted to a vote of stockholders, including the election of
directors. The holders of New Common Stock will not have cumulative voting
rights. Dividends may be paid to holders of New Common Stock when and if
declared by the Board of Directors out of funds legally available therefor.
Holders of New Common Stock will have no conversion, redemption or preemptive
rights. All outstanding shares of New Common Stock will be fully paid and non-
assessable. In the event of any liquidation, dissolution or winding-up of the
affairs of the Company, holders of New Common Stock will be entitled to share
ratably in the assets of the Company remaining after provision for payment of
creditors and after the liquidation preference, if any, of preferred stock
outstanding at the time.
No shares of preferred stock will be authorized or issued under the Plan
and all Pre-Petition Shares of Preferred Stock will be reclassified to New
Common Stock.
In addition to the shares of New Common Stock to be issued under the Plan,
the Company will issue Class A and B Warrants, and will issue Class C Warrants
if any Class B Warrants are exercised.
The New Common Stock and the Warrants to be issued in accordance with the
Plan (other than shares issued to directors as compensation for services) and
the New Common Stock to be issued upon exercise of the Warrants will not be
registered under the 1933 Securities Act or any state securities act, pursuant
to an exemption under Section 1145 of the Bankruptcy Code. It is not
anticipated that the shares of New Common Stock issued as compensation to
directors will not be registered but will be issued pursuant to Regulation D
under the 1933 Securities Act or other applicable exemption. As a general rule
under the Bankruptcy Code, holders of New Common Stock, other than affiliates or
underwriters, will be able to resell shares of New Common Stock without
registration.
MANAGEMENT OF THE COMPANY Following the Effective Date of the Plan, G.
David Gordon will be removed as the sole Officer and Director of the Company.
The Company's Board of Directors and Officers will be:
Joel C. Holt Director; President
John B. Sams Director
C. Robert Garner Director
Leo W. Morris Director
To Be Determined Director Elected by Equity Committee
Members
Marianne Smith Secretary
The fifth Director will be elected by the members of the Equity Security Holders
Committee. Such Director need not be a member of the Equity Security Holders
Committee but will hold an Interest in the Company and will not be a party in
litigation against the Company or a Plan Proponent. Mr. Garner, Mr. Morris and
the Director elected by the Equity Holders Committee will be compensated for
services as Director through the issuance and delivery to each of 75,000 shares
of New Common Stock of the Company upon assumption of office and by issuance and
-11-
<PAGE>
delivery of an additional 75,000 shares of New Common Stock of the Company upon
the one year anniversary of service or upon termination of service in the event
the Board of Directors is reconstituted through merger or acquisition, if upon
such anniversary or earlier termination each such Director shall have fully
discharged his duty as Director. Mr. Holt and Mr. Sams will be compensated for
services as Directors through the issuance and delivery to each of 37,500 shares
of New Common Stock of the Company upon assumption of office and by issuance and
delivery of an additional 37,500 shares of New Common Stock of the Company upon
the one year anniversary of service or upon termination of service in the event
the Board of Directors is reconstituted through merger or acquisition, if upon
such anniversary or earlier termination each such Director shall have fully
discharged his duty as Director. A brief biographical profile of each Director,
who will be elected for a term of one year pursuant to the Plan upon
Confirmation, is as follows:
Robert Garner: Mr. Garner, 62 years old, manages several family companies in
the oil and gas business and other areas as principal of Garner
Energy, Inc., and serves as President and Chief Executive
Officer of Excelco Energy, Inc. Formerly, Mr. Garner was
Executive Vice President of Occidental Oil and Gas Corporation
(1986-1990), Vice President of Cities Services Company (1980-
1986), and held numerous other positions with Cities Services
Company from 1955-1980. Mr. Garner earned a Bachelor of Science
Degree in Petroleum Engineering from the University of Oklahoma
in 1955 and has completed graduate work at Emory University,
Indiana University and the University Center at Tulsa.
W. Leo Morris: W. Leo Morris, age 75, has a degree in Petroleum Engineering
from Texas Tech University. Mr. Morris has served as engineer
and Production Superintendent for Mobil Oil Corporation. He
served for 22 years as Vice President of First National Bank of
Tulsa and as an officer of various other banks in the Oklahoma
area, and has been engaged in the banking business for 40
years.
Joel C. Holt: Joel C. Holt, age 67, was educated at the Medical College of
Virginia with B.S. Degrees in both Physical Therapy and
Biology. Prior to attending the Medical College of Virginia,
Mr. Holt served a tour of duty in the U.S. Navy. Mr. Holt was
employed as a physical therapist for two years prior to joining
a major pharmaceutical company where he remained in sales and
marketing for 30 years. He was instrumental in forming Keystone
Laboratories, Inc. in 1987, and has remained as president to
date. He also served as Chairman of the Board for Proactive
Technologies during 1995.
Joe B. Sams: John B. Sams, age 48, has been Vice President of Sales and
Marketing of Keystone Laboratories, Inc. since 1995. He was
educated at Montreat-Anderson College with a B.A. Degree. He
has an extensive background in the medical and diagnostic
field. Mr. Sams was employed in marketing and sales management
with a major clinical diagnostic corporation for 19
-12-
<PAGE>
years. He also spent 4 years in the pharmaceutical industry. He
has served on the board of directors for Proactive
Technologies, and several other corporations, and is active
with the American Diabetes Association.
Director Elected by
Equity Holders Committee
Joel C. Holt will serve as President of the Company and Chairman of the
Board of Directors. Marianne Smith will serve as Secretary of the Company. G.
David Gordon will not serve as a member of the Board of Directors or as an
officer or employee of the Company. Richard T. Clark, Jr. will not serve as a
member of the Board of Directors or as an officer or employee of the Company.
Neither Richard T. Clark, Jr., nor Joel C. Holt have at any time served as
an officer or director of the Company or any affiliate of the Company. David
Gordon, in his capacity as attorney, has represented both Richard T. Clark, Jr.,
and Joel C. Holt in the past. Messrs. Clark, Holt and Gordon have each made
individual investments in common entities, but have not done so as joint
venturers or partners. Mr. Gordon maintains offices in Tulsa, Oklahoma, and Mr.
Clark rents office space from Mr. Gordon, on an arm's length basis. Neither Mr.
Clark nor Mr. Holt have at any time been associated in any business investment
or venture with the Company's former directors, James Turner, Sam Lindsey,
Mickey Deison, Betty Rose Turner, or John Jarrett. There is no family
relationship between Plan Proponents and any former or current officer or
director of the Company, or of any affiliate of the Company.
Joel C. Holt will continue as a full-time salaried employee at Keystone at
the annual salary of $120,000. Richard T. Clark, Jr., is not presently, has not
been, and will not be employed by Keystone or the Company.
CAPITALIZATION AND PRINCIPAL STOCKHOLDERS
Following consummation of the Plan, the capitalization of the Company and
the principal stockholders of the Company will be as set forth on the following
tables:
[THIS SPACE INTENTIONALLY LEFT BLANK]
-13-
<PAGE>
CAPITALIZATION TABLE
<TABLE>
<CAPTION>
Percentage
Shares of if all
New Common Warrants Warrants
Class Stock Issued Percentage Issued Exercised
- ----- ------------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Claims:
Classes 6,
7 & 9 575,309 (1) 9.0% -0- 5.4%
Preferred
Stock:
Class 10 1,274,172 (2) 19.8% 1,274,172 (3) 23.9%
Common
Stock:
Class 11 1,475,973 (4) 23.0% 2,951,946 (5) 41.6%
Keystone Labs:
Shares issued
to Joel C. Holt
and Richard T.
Clark, Jr.(6) 2,500,000 38.9% -0- 23.5%
Shares issued
to Directors
(7) 600,000 9.3% -0- 5.6%
---------- -------- --------- -------
Total 6,425,454 100.0% 4,226,118 100.0%
</TABLE>
(1) The number of shares to be issued is estimated based on the following
assumptions:
(a) The aggregate amount of Class 6 Allowed Unsecured Claims is $1,211,212
($413,668 allowed unsecured claims plus $797,994 disputed unsecured
claims other than "stock claims" identified in Exhibit D to the Plan)
and all of the Class 6 Claims are satisfied by New Common Stock.
Thus, 484,484 shares of New Common Stock are issued at the rate of .4
share per $1.00 of Allowed Claim (.4 x $1,211,212 = $484,484.80).
(b) The amount of the Class 7 Disputed Unsecured Claim of GAIA is zero and
no shares of New Common Stock are issued for the Claim. In addition
to the GAIA Claim, GAIA holds 1,189,250 shares of the Company's Common
Stock which following the reverse stock split will be
-14-
<PAGE>
converted into 148,656 shares of New Common Stock. If the Class 7
Claim is established by final order, GAIA will receive additional
shares of New Common Stock in the amount equal to 20% of the final
order amount (based on the average of the bid and ask price as of the
date of the final order). Assuming the final order is $7,116,405
(based on the Final Judgment dated July 10, 1997, but excluding post-
judgment accruing interest), the average bid and ask price are as
follows, and no Warrants are exercised, the shares issued to GAIA for
the Class 7 Claim and the percentage interest of GAIA (based on both
the shares issued for the Class 7 and the foregoing 148,656 shares)
will be as follows, and there will be appropriate adjustments to the
shares issued and percentages set forth in the table:
<TABLE>
<CAPTION>
Average
Bid/Ask GAIA Total GAIA
Price Shares Shares Percentage
------- --------- ---------- -----------
<S> <C> <C> <C>
$ .25 5,693,124 12,118,578 48.2%
$ .50 2,846,562 9,272,016 32.3%
$1.00 1,423,281 7,848,735 20.0%
$1.50 948,854 7,374,308 11.9%
</TABLE>
(c) The amount of the Class 9 Klenda Gordon & Getchell Claim is
$227,064.37 (base claim plus preference action claim) and all of the
Class 9 Claim is satisfied by New Common Stock. Thus, 90,825 shares
of New Common Stock are issued at the rate of .4 share per $1.00 of
Allowed Claim (.4 x $227,064.37 = $90,825.75).
Because no fractional shares will be issued, the actual number of shares
issued may be reduced.
(2) The shares of New Common Stock will be allocated among the Holders of
Preferred Stock pro rata. Because no fractional shares will be issued, the
actual number of shares issued may be reduced.
(3) Class A Warrants: Warrants to purchase up to 1,274,172 shares of New
Common Stock at $1.00 per share within twelve (12) months after the
Effective Date.
(4) Pre-petition Shares of Common Stock will be subject to a one-for-eight
reverse stock split. Because no fractional shares will be issued, the
actual number of shares issued may be reduced.
-15-
<PAGE>
(5) Class B and C Warrants: Class B Warrants to purchase up to 1,475,973
shares of New Common Stock at $1.00 per share for a period of fifteen (15)
months after the Effective Date. Upon exercise of a Class B Warrant, the
holder will receive, in addition to shares of New Common Stock, a Class C
Warrant to purchase up to the same number of shares of New Common Stock at
$1.75 per share within eighteen (18) months after the Effective Date.
(6) Richard T. Clark, Jr. and Joel C. Holt may also participate as members of
Class 6 Allowed Unsecured Claims. See "Principal Stockholders."
(7) Assumes all shares are issued. See "Management of the Company."
[THIS SPACE INTENTIONALLY LEFT BLANK]
-16-
<PAGE>
PRINCIPAL STOCKHOLDERS
<TABLE>
<CAPTION>
Percentage
Shares of if Warrants
New Common Warrants Exercised
Name(1) Stock Percentage(2) Issued (2)(3)
- -------------- --------- ------------ -------- -----------
<S> <C> <C> <C> <C>
JOEL C. HOLT
Claims:
Class 6 (4) 17,100 0.3% -0- 0.3%
Preferred Stock:
Class 10 (5) 14,025 0.2% 14,025 0.4%
Common Stock:
Class 11 (6) 59,012 0.9% 118,024 2.6%
Director Shares 75,000 1.2% -0- 1.1%
Keystone Labs 1,250,000 19.5% -0- 18.4%
--------- ---- ------- ----
Totals 1,354,300 22.1% 132,049 22.8%
RICHARD T. CLARK, JR.
Claims:
Class 6 (7) 61,109 1.0% -0- 0.9%
Preferred Stock:
Class 10 (8) 44,000 0.7% 44,000 1.3%
Common Stock:
Class 11 (9) 87,260 1.4% 174,520 3.9%
Keystone Labs 1,250,000 19.5% -0- 18.4%
--------- ---- ------- ----
Totals 1,407,681 22.6% 218,520 24.5%
</TABLE>
(1) In the event GAIA is successful in its claim, it may become a principal
stockholder of the Company and the percentages in the table would be
appropriately adjusted. See Note 1(b) to the Capitalization Table.
According to information available to Plan Proponents, no other shareholder
will hold 5% or more of the Company's New Common Stock.
-17-
<PAGE>
(2) Percentages based on assumptions set forth in the Capitalization Table.
(3) Assumes Messrs. Holt and Clark exercise their Warrants and no other
Warrants are exercised. If all Warrants issued are exercised, Messrs. Holt
and Clark's total percentages would be 14.0% and 15.3%, respectively.
(4) Assumes Class 6 Allowed Unsecured Claim of Mr. Holt is $42,750.00, and Mr.
Holt elects New Common Stock.
(5) Does not include 12,750 shares which the Examiner asserts Mr. Holt acquired
on July 15, 1994.
(6) Includes 55,583 shares received by Mr. Holt from John Flowers, Examiner.
(7) Assumes Class 6 Allowed Unsecured Claim of Mr. Clark is $152,774.85, and
Mr. Clark elects New Common Stock.
(8) Does not include 12,750 shares which the Examiner asserts Mr. Clark
acquired on July 15, 1994.
(9) Includes (i) shares held in the Richard and Kelley Inter Vivos Trust, and
(ii) 55,583 shares received by Mr. Clark from John Flowers, Examiner.
[THIS SPACE INTENTIONALLY LEFT BLANK]
-18-
<PAGE>
ASSETS AND LIABILITIES
The assets of the Company presented in the form furnished to the Bankruptcy
Court in connection with the confirmation of the Plan is as follows:
Value Adjustments
----- -----------
1. Cash on Hand (7/31/97) $ 50,273.91
2. Judgment against Klenda 98,625.00 Collectability
Gordon & Getchell uncertain
3. Claim of interest in 640,000.00 Subject to
real estate in Brenham, mortgage claim
Texas owned by subsidiary, of $25,000 and
Retex ad valorem tax
claims of approx. $102,000
and a realtor's commission
of $44,800 if 7%
commission allowance, and
Retex' administrative
expenses. Environmental
claims.
4. Patents owned No value assumed
5. The Company's claims (not liquidated and disputed) against:
(a) Klenda Gordon & Getchell Litigation
(b) Richard T. Clark Litigation
(c) Ira Rimer Litigation
(d) George Gordon Litigation
(e) Joel Holt Litigation
(f) GAIA Holdings, Inc. (Not asserted)
A value on the Brenham real estate is conjectural. There is no contract
for sale, and the current tenant is in default. A sale price would be subject
to the noted deductions, and resolution of environmental claims. The other
Company claims will require expenditure of funds to obtain recovery. For these
reasons, Plan Proponents believe that the distribution to Unsecured Allowed
Claims under the Plan will be greater and earlier than distributions which might
be received after liquidation of the Company. As noted, there is likely no
recovery under Chapter 7 liquidation except as might result from net recoveries,
if any, from litigation of the Company's claims or might result from Retex
following the sale of the Brenham Plant.
-19-
<PAGE>
Estimated funds necessary to fund the Plan as presented to the Bankruptcy
Court in connection with the confirmation of the Plan are as follows:
(a) Administrative Expense Priority Claims $65,000.00
(b) Class 2: Priority Claims 0
(c) Class 3: Disputed Secured Creditors 0
(d) Class 4: Claims of AST and Depository 4,603.66
Trust Company
(e) Class 5: Administrative Convenience 2,068.78
Class (assumes no election by
Class 6 creditor)
(f) Class 6: Unsecured Claims (assumes 87,257.45
Clark and Holt take stock; all
other allowed claims get 40% cash)
(g) Class 6: Disputed includes $706,280 in 0
stock claims; $797,543 in other
claims. Litigation claims are
asserted against $577,508 of the
amount of disputed claims
(h) Class 7: GAIA No cash
(i) Class 8: TNRCC 0
(j) Class 9: Klenda Gordon & Getchell 0
(Estate holds judgment of $98,625
against claim of $128,439 and
unliquidated claims.)
(k) Class 10: Preferred Stock No cash
(l) Class 11: Common Stock No cash
(m) Delaware Franchise Tax 20,000.00
(n) Costs for tax return preparation 18,000.00
-----------
Total Cash Needs $196,929.00
Sources for Funding Plan:
Cash on Hand $ 50,000
Intercompany loan from Keystone 146,929
to the Company from its reserves
The Plan Proponents believe cash needs will be reduced if other Class 6
Creditors elect to take New Common Stock instead of cash. If the disputed Class
6 creditors against whom there is no Company Claim in litigation were determined
to hold Allowed Claims, 40% of this amount ($220,035) would be $88,014.00
-20-
<PAGE>
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTOR.
See discussion under Item 3.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Unaudited financial statements of Keystone for the fiscal years ended June
30, 1996 and 1997 are included in this report. Pro forma information is not
presented as it is not relavant to the business of Keystone.
-21-
<PAGE>
KEYSTONE LABORATORIES, INC.
Balance Sheet
As of June 30,1997
(UNAUDITED)
<TABLE>
<CAPTION>
Jun 30,'97
------------
<S> <C>
ASSETS
Current Assets
Checking/Savings
Cash In Checking 1,930.82
CASH IN CHECKING-FUN 163,354.32
------------
Total Checking/Savings 165,285.14
Accounts Receivable
Accounts Receivable 289,026.97
RESERVED FOR DOUBTFUL ACCOUNTS (25,055.73)
------------
Total Accounts Receivable 263,971.24
Other Current Assets
ALLOWANCE FOR LOSS ON MKT SEC (346,286.80)
DEF'D NC INC TAX ASSET 29,336.00
DUE FROM EMPLOYEES 1,900.00
DUE FROM MARK CONNER 32,980.89
INTERCOMPANY A/R-A/P (4,149.62)
INVESTMENTS 1,370.99
MARKETABLE SECURITIES 416,127.57
PREPAID EXPENSES 9,863.54
REC-KEYSTONE MEDICAL 170,964.41
------------
Total Other Current Assets 312,106.98
------------
Total Current Assets 741,363.36
Fixed Assets
ACCUMULATED DEPRECIATION (350,540.26)
FURNITURE 11,596.98
LAB EQUIPMENT 456,916.32
MACHINERY & EQUIPMENT 9,131.16
OFFICE EQUIPMENT 69,160.93
------------
Total Fixed Assets 196,265.13
Other Assets
OTHER ASSETS (95.00)
------------
Total Other Assets (95.00)
------------
TOTAL ASSETS 937,533.49
============
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable
ACCOUNTTRADE PAYABLE 21,637.62
------------
Total Accounts Payable 21,637.62
Other Current Liabilities
ACCRUED PAYROLL 12,408.42
ACCRUED PROPERTY TAXES 15,071.51
ACCRUED SALES TAX 7,707.95
DUE TO KGG 20,000.00
NOTE PAYABLE BANK CURRENT 23,445.24
STATE INCOME TAX PAYABLE 16,487.00
------------
Total Other Current Liabilities 95,120.12
------------
Total Current Liabilities 116,757.74
Long Term Liabilities
CAPITAL LEASE BAYER (0.03)
CAPITAL LEASE H.P. 1,535.17
LOAN (33,600.00)
N/P WACHOVIA 22,721.88
NOTE PAYABLE BANK NON CURRENT 82,262.15
------------
Total Long Term Liabilities 72,919.18
------------
</TABLE>
-22-
<PAGE>
KEYSTONE LABORATORIES, INC.
Balance Sheet
As of June 30,1997
(UNAUDITED)
<TABLE>
<CAPTION>
Jun 30, '97
-----------
<S> <C>
Total Liabilities 189,676.92
Equity
Capital Stock 10.00
CURRENT PROFIT (5,402.45)
PAID IN CAPITAL 597,835.20
Retained Earnings (125,096.06)
Net Income 280,509.88
----------
Total Equity 747,856.57
----------
TOTAL LIABILITIES & EQUITY 837,633.49
----------
</TABLE>
-23-
<PAGE>
KEYSTONE LABORATORIES, INC.
Profit and Loss
July 1996 through June 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Jul'96 - Jun'97
------------------------
<S> <C> <C>
Ordinary Income/Expense
Income
DRUG SCREENING REVENUE 1,700,020.23
REFUND (3,626.03)
---------------
Total income 1,696,394.20
Cost of Goods Sold
Airborne 133,090.32
Courier 3,270.25
FedEx 10,386.83
GC/MS cost 49,802.85
General Lab 7,503.75
KITS 64,185.82
NIDA 28,630.55
Pony Express 360.25
Screen Cost 125,733.56
TIS 3,742.00
UPS 9,001.62
---------------
Total COGS 435,707.90
---------------
Gross Profit 1,260,686.40
Expense
ADVERTISING 1,165.79
Alarm System 2,295.00
AUTO EXPENSE 233.27
AUTO INSURANCE 5,290.81
Automobile Lease 13,435.11
Bank Service Charges 452.89
Bonuses 0.00
Cellular Telephone 2,298.83
Cleaning & Janitorial 5,631.36
Commissions 4,672.13
COMPUTER & PARTS 12,207.89
computer consulting 2,840.00
CONSULTING FEE 1,545.00
Continuing Ed 380.00
Depreciation Expense 42,500.00
Dues and Subscriptions 1,653.17
Equipment Lease 19,358.91
Insurance
Health insurance 38,767.17
Liability insurance 7,544.10
Work Comp 3,268.96
Insurance - Other 1,784.00
----------
Total insurance 51,364.23
Licenses and Permits 3,634.58
Miscellaneous 8,087.67
MOVING EXPENSE 9,995.00
Office Supplies 14,766.68
Payroll Expenses 0.00
Payroll Processing 1,157.25
PETTY CASH 2,150.00
Postage 16,732.00
Printing and Reproduction 3.10
Professional Fees
Legal Fees 2,270.58
Professional Fees - Other 2,564.07
----------
Total Professional Fees 4,834.55
Rent 53,374.95
Repairs and Maintenance
Janitorial Exp 680.00
Repairs and Maintenance - Other 4,350.67
----------
</TABLE>
-24-
<PAGE>
KEYSTONE LABORATORIES, INC.
Profit and Loss
July 1996 through June 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Jul '98 - Jun '97
-----------------------
<S> <C> <C>
Total Repairs and Maintenance 5,030.67
Salaries 520,733.49
SALES TAX 7,306.69
Service Contracts 80,649.52
Storage Rent 770.00
Taxes
Federal 31,280.41
FRANCHISE 215.38
Property 9,281.97
State 0.00
----------
Total Taxes 40,777.76
Telephone 25,362.69
Travel & Ent
Meals 2,685.28
Travel 6,408.93
Travel & Ent - Other 762.68
----------
Total Travel & Ent 9,856.89
Unemployment Taxes 1,181.99
Utilities 3,847.37
VOID 0.00
Waste 2,579.18
------------
Total Expense 980,176.52
------------
Net Ordinary Income 280,509.88
------------
Net Income 280,509.88
============
</TABLE>
-25-
<PAGE>
KEYSTONE LABORATORIES, INC.
Balance Sheets
June 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Assets
1996
----------
<S> <C>
Current assets:
Cash and cash equivalents $ 53,929
Marketable equity securities at cost 4l6,128
Less allowance for unrealized
losses (346,287)
69,841
---------
Accounts receivable 233,415
Less allowance for doubtful
receivables (25,056)
---------
208,359
---------
Due from employees and stockholders 1,900
Due from parent company 166,815
Notes receivable -
Prepaid expenses 9,768
Deferred income tax asset 29,336
---------
539,948
Total current assets
Property and equipment:
Furniture and fixtures 9,131
Office equipment 68,429
Lab equipment 443,180
---------
520,740
Less accumulated depreciation (308,040)
Net property and equipment 212,700
---------
$ 752,648
=========
</TABLE>
-26-
<PAGE>
KEYSTONE LABORATORIES, INC.
Balance Sheets, Continued
June 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1996
---------
<S> <C>
Liabilities and Stockholders' Equity
Current liabilities:
Note payable $ -
Current portion of long-term debt 23,446
Current portion of capital lease
obligations 50,660
Accounts payable 21,638
Income taxes payable 16,487
Due to related party 20,000
Due to parent company
Accrued expenses 41,128
--------
Total current liabilities 173,359
--------
Noncurrent portion of long-term debt 104,984
Noncurrent portion of capital lease
obligations 1,556
Total liabilities 279,899
--------
Stockholders' equity:
Common stock 10
Paid-in-capital 597,835
Accumulated deficit (125,096)
--------
Total stockholders' equity 472,749
--------
$752,648
========
</TABLE>
-27-
<PAGE>
KEYSTONE LABORATORIES, INC.
Statements of Operations
Year Ended June 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1996
----
<S> <C>
Net sales $ 1,433,319
Cost of sales 302,716
Selling, general and administrative
expenses 965,137
------------
Operating income 165,466
Other income (expense):
Interest expense -
Interest income -
Dividend income -
Gain (loss) on sale of assets -
Realized gain (loss) on investments (1,883)
Unrealized loss on investments (93,015)
Miscellaneous income -
------------
(94,898)
Net earnings (loss) before income
taxes 70,568
Income tax (expense) benefit 6,611
------------
Net earnings $ 77,179
============
</TABLE>
-28-
<PAGE>
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.
RECONVERSION TECHNOLOGIES, INC.
Date: November 26, 1997 By: /s/ JOEL C. HOLT
--------------------------------
Joel C. Holt, President Designee
-29-
<PAGE>
EXHIBIT INDEX
Exhibit 2.1 Plan of Reorganization
<PAGE>
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA
IN RE: )
)
RECONVERSION TECHNOLOGIES, INC. ) CASE NO. 95-00821-M
EIN 22-2649848 ) CHAPTER 11
)
DEBTOR. )
FIRST AMENDED MODIFIED
PLAN OF REORGANIZATION
OF RECONVERSION TECHNOLOGIES, INC.
PROPOSED BY JOEL C. HOLT AND
RICHARD T. CLARK, JR.,
CREDITORS AND INTEREST HOLDERS
SUBMITTED BY:
PLAN PROPONENTS:
JOEL C. HOLT
RICHARD T. CLARK, JR.
SEPTEMBER 27, 1997
BY: DOERNER, SAUNDERS, DANIEL
& ANDERSON
GARY M. MCDONALD, OBA# 5960
WILLIAM F. RIGGS, OBA# 7586
LEONARD I. PATAKI, OBA# 6935
320 SOUTH BOSTON, SUITE 500
TULSA, OK 74103
(918) 582-1211
<PAGE>
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA
IN RE: )
)
RECONVERSION TECHNOLOGIES, INC. ) CASE NO. 95-00821-W
EIN 22-2649848 ) CHAPTER 11
)
DEBTOR. )
FIRST AMENDED MODIFIED
PLAN OF REORGANIZATION
OF RECONVERSION TECHNOLOGIES, INC.
PROPOSED BY JOEL C. HOLT AND
RICHARD T. CLARK, JR.,
CREDITORS AND INTEREST HOLDERS
------------------------------
ARTICLE I: INTRODUCTION
------------------------
This Plan of Reorganization for Reconversion Technologies, Inc. ("Debtor")
is proposed by Joel C. Holt and Richard T. Clark, Jr. ("Plan Proponents"). The
Plan Proponents are holders of Claims and Interests in Debtor. Neither Plan
Proponent has served as an officer or director of Debtor.
THE INFORMATION CONCERNING DEBTOR CONTAINED IN THIS PLAN AND IN THE
ACCOMPANYING DISCLOSURE STATEMENT IS TRUE, CORRECT AND MATERIALLY COMPLETE TO
THE BEST OF PLAN PROPONENTS' KNOWLEDGE AND BELIEF. THERE MAY EXIST MATTERS
WHICH ARE MATERIAL TO THE AFFAIRS OF DEBTOR WHICH ARE UNKNOWN TO PLAN
PROPONENTS, DESPITE THEIR REASONABLE BEST EFFORTS TO PROVIDE ACCURATE AND
COMPLETE INFORMATION TO DEBTOR'S CREDITORS AND INTEREST HOLDERS.
This case was commenced on March 23, 1995. Since that date, no Plan of
Reorganization has been presented. Most efforts in the case have involved
litigation of claims asserted by Debtor against third parties and the vast
majority of Debtor's limited resources have been consumed in this activity.
Plan Proponents believe that the nature of the legal issues and the complexity
of Debtor's history have made it difficult for a disinterested person to develop
a Plan of Reorganization, and that if Debtor is to be reorganized, it will
require leadership from and participation by existing Creditors and Interest
Holders.
This Plan contemplates the acquisition by Debtor of Keystone Laboratories,
Inc. as an operating subsidiary, and the establishment for an orderly, and less
expensive, means to resolve the pending Retek Claims (as defined herein). All
Pre-Petition Common Stock will be subject to a reverse split and Pre-Petition
Preferred Stock will be reclassified into Common Stock. A five-member Board of
Directors (with three non-management directors who, although Equity Security
Holders of Debtor, have not participated in management of Debtor previously)
will oversee the affairs of Reorganized Debtor after Confirmation.
ARTICLE II: DEFINITIONS
------------------------
Unless the context of usage in this Plan indicates otherwise, the following
words and phrases shall have the following meanings when their first letter is
capitalized in this Plan and in the Disclosure Statement, filed
contemporaneously herewith:
2.1 ACCEPTANCE. As used herein, this term is defined in (S)1126 of the
----------
Bankruptcy Code. A Class of Claims or Interests has accepted this Plan if this
Plan has been accepted by Claimants or Interest holders of that Class that hold
at least two-thirds in dollar amount and a majority in number of the Allowed
Claims or Allowed Interests, which vote either to accept or reject this Plan.
Pursuant to 1126(f), a Class that is not impaired under this Plan, and each
holder of a Claim or Interest of such Class, is conclusively
<PAGE>
presumed to have accepted this Plan, and Solicitation of Acceptances with
respect to such Class from the holders of Claims or Interests of such Class is
not required.
2.2 ADMINISTRATIVE CONVENIENCE CLASS. A Class of Unsecured Creditors
--------------------------------
whose Allowed Claims are $1,000.00 or less, or holders of Allowed Unsecured
Claims who elect to reduce a larger claim to $1,000.00 and participate in the
Administrative Convenience Class.
2.3 ADMINISTRATIVE EXPENSE CLAIM. A Claim allowed by the Court under 11
----------------------------
U.S.C. (S)503(b), after hearing, for costs or expense of administration of the
case pursuant to Section 330 of the Bankruptcy Code and/or post-confirmation
expenses incident to the implementation of this Plan, including professional
services, to the extent allowed by the Bankruptcy Court and claims for
reimbursement of expenses to preserve or benefit the Estate.
2.4 ALLOWED CLAIM. A Claim which is allowed by the Court under 11 U.S.C.
-------------
(S)502(a), representing the amount owed by Debtor as of the Petition Date, March
23, 1995, and certain post-petition charges on secured claims, if applicable, as
contemplated by 11 U.S.C. (S)506(b) and approved by the Bankruptcy Court. If a
claim is timely filed before the Bar Date, the allowed amount will be the
claimed amount, provided no objection is or has been filed, or the claim is not
listed as "Disputed" in this Plan or a schedule appended hereto. If no Proof of
Claim has been filed, the amount of the claim will be the amount scheduled by
Debtor pursuant to 11 U.S.C. (S)521(1) and Bankruptcy Rule 1007(a)(1), if it is
listed as not disputed, contingent or unliquidated. If an objection to a Claim
is filed, the amount and validity of the Claim will be the amount determined by
the Court.
2.5 ALLOWED SECURED CLAIM. An Allowed Claim arising on or before the
---------------------
Petition Date that is secured by a valid lien on property of Debtor which is not
void or voidable under any state or federal law or an Allowed Claim for which
the holder asserts a set-off under (S)553 of the Code, to the extent of the
value (which is either agreed to by the Debtor pursuant to this Plan, or in the
absence of an agreement, has been determined in accordance with (S)506(a) or
(S)1111(b) of the Code) of the interest of holder of such allowed claim in
Debtor's property, or an Allowed Claim that Debtor has agreed to treat as an
Allowed Secured Claim pursuant to this Plan. That portion of such an Allowed
Claim exceeding the value of security held therefor shall be an Allowed
Unsecured Claim except as modified by this Plan.
2.6 ALLOWED TAX CLAIM. All or that portion of any Tax Claim which is an
-----------------
Allowed Claim, in the amounts and as described in Article 5.2 of this Plan,
without modification.
2.7 ALLOWED UNSECURED CLAIM. An Allowed Claim against Debtor which is not
-----------------------
an Allowed Tax Claim or an Allowed Secured Claim.
2.8 BANKRUPTCY CODE. The Bankruptcy Reform Act of 1978 as amended in
---------------
Title 11 of the United States Code (11 U.S.C. (S)101, et seq.).
-- ---
2.9 BANKRUPTCY COURT. The United States Bankruptcy Court for the Northern
----------------
District of Oklahoma which has jurisdiction over this case.
2.10 BAR DATE. February 20, 1996, the date fixed by the Bankruptcy Court
--------
as the deadline for filing claims in this case.
2.11 CHARTER AMENDMENTS. The amendments to Debtor's Certificate of
------------------
Incorporation to be effected under this Plan, pursuant to Article 8.10 hereof.
2.12 CLAIM. Any right of a Creditor to payment from Debtor, whether or not
-----
such right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured, unsecured;
or any right to any equitable remedy for breach of performance, if such breach
gives rise to a right to payment from the Debtor, whether or not such right to
an equitable
-2-
<PAGE>
remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
2.13 CLAIMS AGAINST KLENDA GORDON & GETCHELL. Shall refer to Claims of
---------------------------------------
this Estate which exist against Klenda Gordon & Getchell, a Tulsa, Oklahoma law
firm, arising from legal services rendered for Debtor, or claims of any other
nature, whether filed, asserted or unasserted. This Claim is also included in
the aggregate group defined as Retek Claims.
2.14 CLARK CLAIMS. Potential Claims of the Estate identified by the
------------
Examiner against Richard T. Clark, Jr. This Claim is also included in the
aggregate group defined as Retek Claims.
2.15 CLASS. A category of Claims or Interests which are substantially
-----
similar to the other claims in such class.
2.16 COMMON STOCK. The common stock of Debtor authorized in Debtor's
------------
Certificate of Incorporation in effect as of the Petition Date.
2.17 CONFIRMATION DATE. The date upon which the Order of Confirmation is
-----------------
entered by the Bankruptcy Court.
2.18 CONFIRMATION ORDER. The Order entered by the Bankruptcy Court
------------------
confirming this Plan, as it may be amended or modified.
2.19 CONSUMMATION OF THE PLAN. The substantial performance of all material
------------------------
obligations provided for in this Plan.
2.20 CREDITOR. Any person having a Claim against the Debtor, that arose on
--------
or before the Petition Date, or a Claim against any of the Debtor's Estate of a
kind specified in 502(9)(b) or (1) of the Bankruptcy Code.
2.21 DEBTOR. Reconversion Technologies, Inc., a Delaware corporation.
------
2.22 DEBTOR-IN-POSSESSION. The entity created upon the filing of Debtor's
--------------------
Chapter 11 bankruptcy case.
2.23 DISCLOSURE STATEMENT. The disclosure statement filed in this
--------------------
bankruptcy case pursuant to 11 U.S.C. (S)1125, as amended and approved by the
Bankruptcy Court.
2.24 DISPUTED CLAIM. Any Claim (other than an Allowed Claim) either (1)
--------------
scheduled by Debtor as disputed, contingent or unliquidated, (2) proof of which
has been filed with the Bankruptcy Court and an objection to the allowance of
which has been timely filed by a party in interest, which objection has not been
resolved by a final order, or (3) listed as Disputed on an exhibit appended
hereto.
2.25 EFFECTIVE DATE. Twenty (20) days after the entry of the Confirmation
--------------
Order.
2.26 EQUITY COMMITTEE. The Committee appointed by the Court to represent
----------------
the holders of Interests, whose members are Donald R. Nichols, Jeff Tsay, Pat
Catizone, and Ali Mahtashemi.
2.27 EQUITY SECURITY HOLDERS. Holders of Debtor's Preferred Stock or
-----------------------
Common Stock outstanding as of March 23, 1995, the Petition Date.
2.28 ESTATE OR DEBTOR'S ESTATE. The estate created by (S)541 of the
-------------------------
Bankruptcy Code upon commencement of this chapter 11 case.
-3-
<PAGE>
2.29 EXAMINER. Neal Tomlins of Tulsa, Oklahoma, who is the appointed
--------
Examiner in the Debtor and Retex cases, appointed by the Bankruptcy Court on
August 20, 1995, pursuant to 11 U.S.C. (S) 1104(a).
2.30 FILED. Filed in the Bankruptcy Court or, with regard to a proof of
-----
claim, deemed filed pursuant to 11 U.S.C. (S)1111(a).
2.31 GAIA. GAIA Technologies, Inc., a corporation with its principal
----
offices in Houston, Texas.
2.32 GAIA CLAIMS. Claims Debtor may have against GAIA or persons
-----------
associated with GAIA from the GAIA litigation. This Claim is also included in
the aggregate group defined as Retek Claims.
2.33 GORDON CLAIMS. Potential claims of the Estate identified by the
-------------
Examiner against George D. Gordon. This Claim is also included in the aggregate
group defined as Retek Claims.
2.34 HOLT CLAIMS. Potential claims of the Estate identified by the
-----------
Examiner against Joel C. Holt. This Claim is also included in the aggregate
group defined as Retek Claims.
2.35 INTEREST. The interest of an Equity Security Holder which existed
--------
Pre-Petition.
2.36 KLENDA GORDON & GETCHELL CREDITOR CLAIM. The Unsecured Claim asserted
---------------------------------------
by Klenda Gordon & Getchell.
2.37 KEYSTONE. Keystone Laboratories, Inc., a Delaware corporation.
--------
2.38 NEW COMMON STOCK. The common stock of Debtor authorized in Debtor's
----------------
Certificate of Incorporation after the Charter Amendments are effective (i.e.,
after the reverse stock split and the reclassification of the Preferred Stock).
2.39 NET OPERATING LOSS ("NOL"). Total deductible expenses exceeding net
--------------------------
revenues accumulated from tax period to tax period.
2.40 PETITION DATE. March 23, 1995.
-------------
2.41 PLAN. This Plan of Reorganization, including any amendments or
----
modifications thereto.
2.42 PRE-PETITION SHARES. Preferred Stock and Common Stock of Debtor which
-------------------
were issued and outstanding immediately prior to the filing of the Petition of
Debtor, commencing this case.
2.43 PREFERRED STOCK. The preferred stock of Debtor issued by Debtor prior
---------------
to the Petition Date.
2.44 PRIORITY CREDITOR. The owner and holder of an Allowed Priority Claim.
-----------------
2.45 RECONVERSION TECHNOLOGIES, INC. OF TEXAS ("RETEX"). A Texas
--------------------------------------------------
corporation and a wholly-owned subsidiary of Debtor. Retex is a Debtor in a
Chapter 11 Bankruptcy Case pending in the United States Bankruptcy Court for the
Northern District of Oklahoma, Case No. 95-00822, which has been
administratively consolidated with Debtor.
2.46 RECYCLED PRODUCTS. Recycled Products Corporation (sometimes referred
-----------------
to as Recycled Products, Inc.), a corporation with its principal offices in
Dallas, Texas.
2.47 REORGANIZED DEBTOR. Debtor, on and after the Effective Date.
------------------
-4-
<PAGE>
2.48 RETEK CLAIMS. Shall refer to all claims and causes of action which
------------
existed against third parties at the commencement of this case which are not
compromised, released or discharged in this case, and include, without
limitation, claims Debtor holds or may hold defined as Clark Claims, Holt
Claims, Rimer Claims, Gordon Claims, Claims against Klenda Gordon & Getchell and
GAIA Claims.
2.49 RETEX. Reconversion Technologies of Texas, Inc., and a wholly owned
-----
subsidiary of Debtor.
2.50 RETEX LIQUIDATING TRUST. Shall refer to the Liquidating Trust created
-----------------------
in the Retex Plan of Reorganization. The principal asset of the Liquidating
Trust will be the Retex Plant in Brenham, Texas.
2.51 RIMER CLAIMS. Potential claims of the Estate identified by Examiner
------------
against Ira Rimer. This Claim is also included in the aggregate group defined
as Retek Claims.
2.52 SECURED CLAIM. Pursuant to 11 U.S.C. (S)506(b), a Claim against
-------------
property of the Debtor's Estate for which the claimant holds duly perfected
mortgage, lien (statutory or otherwise), security interest or other encumbrance,
as security for the payment of such claim, to the extent that the value of the
property securing the claim is equal to or exceeds such claim. That portion of
such claim exceeding the value of the property securing the claim shall be an
Unsecured Claim, as defined below.
2.53 SPECTRUM. Spectrum Recycling Technologies Incorporated, a corporation
--------
organized under the laws of New York, and in which Debtor owned a substantial
equity interest. Spectrum became a debtor-in-possession in Case No. 95-32187-T
in the United States Bankruptcy Court for the Eastern District of Virginia.
2.54 TAX CLAIM. A Claim which, if allowed, would be entitled to priority
---------
under (S)507(a)(7) of the Code.
2.55 TNRCC. Texas Natural Resources Conservation Corporation.
-----
2.56 UNSECURED CLAIM. All Claims against Debtor for which the claimant
---------------
holds no valid lien, mortgage, security interest or other encumbrance on
property of the bankruptcy estate as security for the payment thereof, and all
claims against the bankruptcy estate for which the claimant holds a valid lien,
mortgage, security interest or other encumbrance on property of the bankruptcy
estate as security for the repayment thereof to the extent that such claim
exceeds the value of the property.
2.57 WARRANTS. The Warrants (designated in this Plan as Class "A," "B,"
--------
and "C" Warrants) to be issued by Reorganized Debtor to holders of Interests, as
set forth in Article 8.9 below.
ARTICLE III: CONCEPT OF PLAN
-----------------------------
This Plan is premised on the concept that the Claims and Interests of
Creditors and Equity Security Holders are best served by an orderly
reorganization of Debtor built around the acquisition by Debtor of Keystone
Laboratories, Inc. ("Keystone") and the establishment of a less expensive
procedure for resolution of Retek Claims.
Keystone is engaged in the business of forensic drug testing. Keystone's
business affairs, history and financial data are more particularly described in
the Disclosure Statement. Currently, all outstanding shares of Common Stock of
Keystone are owned by Richard T. Clark, Jr. and Joel C. Holt, Plan Proponents.
Under this Plan, Messrs. Holt and Clark will exchange their shares in Keystone
for New Common Stock in Reorganized Debtor as follows:
-5-
<PAGE>
<TABLE>
<CAPTION>
Shares of New Common
Stock in Reorganized
Shares in Debtor Received in
Keystone Exchange for Keystone Stock
--------- ---------------------------
<S> <C> <C>
Richard T. Clark, Jr. 500 Total of 19.5%
(1,250,000 shares) of
outstanding shares of New
Common Stock on the
Effective Date
Joel C. Holt 500 Total of 19.5%
(1,250,000 shares) of
outstanding shares of New
Common Stock on the
Effective Date
</TABLE>
The above shares of New Common Stock do not include other shares of New Common
Stock to be received by Messrs. Clark and Holt pursuant to this Plan in their
capacities as either Equity Security Holders of Common Stock and Preferred Stock
or as Creditors.
Clark Capital Corp. acquired all outstanding shares of Keystone from
ProActive Technologies, Inc. ("ProActive") in July, 1996, for a total
consideration of $1,500,000. These shares were subsequently transferred to Plan
Proponents by Clark Capital Corp., free and clear of any lien, claim or
encumbrance. A substantial portion of the purchase price and accrued interest
($1,354,080) remains unpaid to ProActive and was due on June 30, 1997, but has
been extended until December 31, 1997, and will remain an independent obligation
of Clark Capital Corp., Richard T. Clark, Jr., and Joel C. Holt. The shares of
Keystone stock will be acquired by Debtor free from any lien, claim or
encumbrance therein of ProActive, Clark Capital Corp. or Plan Proponents.
ProActive has confirmed through correspondence from ProActive's counsel, Robert
E. Maloney, Jr., dated June 27, 1997, that ProActive has agreed to release any
interest it may have in the Keystone stock, after ProActive had previously
asserted that the Keystone stock was subject to a security interest in favor of
ProActive. Plan Proponents assert that ProActive never had a lien, claim or
encumbrance in the Keystone stock after the sale to Clark Capital Corp.
Unaudited Financial Statements of Keystone for the years 1993, 1994, 1995,
1996 and 1997 are appended as Appendix 8 to the Disclosure Statement. Following
the stock exchange pursuant to this Plan, Keystone would become a wholly owned
subsidiary of Debtor.
In addition to the acquisition of Keystone and the orderly collection of
Retek Claims proposed herein, Reconversion Technologies, Inc. of Texas
("Retex"), a subsidiary of Debtor, will be liquidated through a Liquidating Plan
and a Retex Liquidating Trust in its pending Chapter 11 case./1/ Debtor is the
principal secured creditor of Retex. The principal asset of Retex is the
Brenham Plant facility in Brenham, Texas ("Brenham Plant"). Pursuant to the
Liquidating Trust, the Brenham Plant would be sold. No sale is expected in the
near future. Debtor is the major secured creditor of Retex, but under this Plan
Debtor will agree to subordinate its allowed secured claim against Retex in the
amount of $5,000,000 to the extent of up to $200,000 of the first dollars
received from the sale to permit payment of Retex's allowed claims and
administrative expenses. The balance of all funds or assets of Retex (after the
lesser of the amounts required to pay Retex's allowed priority claims and
allowed claims, or $200,000) will be paid by the Liquidating Trust to Debtor in
satisfaction of the Retex obligation to Debtor, and Debtor will retain such
claim and enforce it against Retex for the benefit of Debtor's Creditors and
Interest holders.
- ---------------
/1/ No Plan has yet been filed in the Retex case.
-6-
<PAGE>
Following the acquisition of Keystone and the liquidation of the principal
assets of Retex through the Retex Liquidating Trust and collection on any Retek
Claims, Debtor's only operating asset will be Keystone. Debtor will be engaged
solely in the business of forensic drug testing through Keystone unless and
until Debtor expands its business activities. Under this Plan:
(a) All Pre-Petition Shares of Common Stock will be subject to a one-for-
eight reverse stock split such that each holder of Pre-Petition shares of Common
Stock will receive the number of shares of New Common Stock equal to the number
of shares of Pre-Petition Common Stock held by the holder, divided by eight;
(b) All Pre-Petition Shares of Preferred Stock will be reclassified as New
Common Stock and the holders of Preferred Stock will receive a pro rata share of
1,274,172 shares of New Common Stock in exchange for Pre-Petition Preferred
Shares;
(c) Certain Creditor Claims may be converted into New Common Stock; and
(d) Warrants to purchase New Common Stock will be issued to certain holders
of Interests.
ARTICLE IV: BUSINESS HISTORY
-----------------------------
The history of Debtor's business affairs are set forth in detail in the
accompanying Disclosure Statement. A brief summary of the business reverses
follows, but the more complete discussion on business affairs described in the
Disclosure Statement should be consulted for more detail.
A. RECYCLED PRODUCTS CORPORATION DISPUTE
- -----------------------------------------
The Recycled Products dispute arose from the purchase by Retex (at the time
of purchase Retex was not affiliated with Debtor) of real estate, equipment,
technology and inventory from Recycled Products. Recycled Products operated a
manufacturing facility in Brenham, Texas. The asset acquisition was paid for by
the issuance and delivery by Retex of 33,000 shares of Retex Common Stock
delivered to Recycled Products and the shareholders of Recycled Products. In
connection therewith, Struthers Investment Enterprises, an Oklahoma general
partnership, also acquired 8,000 shares of Retex Common Stock for services
rendered in assisting Retex in the purchase of assets from Recycled Products./2/
Thereafter, Recycled Products, Struthers Investment Enterprises and the other
shareholders of Recycled Products exchanged all their outstanding shares of
Retex Common Stock with Debtor, in exchange for 2,485,000 shares, 710,000
shares, and 355,000 shares, respectively, of Debtor's Common Stock. Thereupon,
Debtor held all outstanding and issued shares of Retex.
On or about September 16, 1993, Debtor was advised that Entek Corporation
("Entek") asserted that it owned certain of the equipment, inventory and
technology which Retex acquired from Recycled Products. In effect, Entek was
alleging that Recycled Products sale to Retex of certain assets was fraudulent.
Entek was a debtor in a bankruptcy case pending in the United States Bankruptcy
Court for the Northern District of Texas. John Flowers, who was appointed
Examiner in the Entek case, initiated an adversary action styled John Flowers,
Examiner v. James E. Turner, Betty R. Turner, Recycled Products, Inc. and
Reconversion Technologies, Inc., Adversary Proceeding No. 393-3559, to, among
other matters, recover certain of the assets sold by Recycled Products to Retex
and to obtain a money judgment against Recycled Products. On May 22, 1996, the
Texas Bankruptcy Court entered a money judgment in favor of Entek against
Recycled Products. Entek, pursuant to the judgment of the Texas Bankruptcy
- ---------------
/2/ Struthers Investment Enterprises is described in more detail in the
Disclosure Statement. Plan Proponents each acquired Common Stock of Debtor from
Struthers Investment Enterprises, as noted in the Disclosure Statement, at
footnote 5.
-7-
<PAGE>
Court, was determined to be the owner of most inventory, technology and
equipment sold by Recycled Products to Retex, and was determined to be entitled
to claims to proceeds thereof. These assets were sold by public auction. In
addition, John Flowers, Examiner for James E. Turner and Entek Corporation,
acquired by execution on his judgment against Recycled Products the 2,712,000
shares of Debtor's Common Stock, which had been issued to Recycled Products in
exchange for Retex stock. The shares of Debtor's Common Stock acquired by
Flowers were thereafter, to the knowledge of Plan Proponents, subject of a
settlement agreement with GAIA, pursuant to which 1,189,250 of the shares of
Debtor's Common Stock were conveyed to GAIA and 1,356,000 were retained by John
Flowers, Examiner for James E. Turner and Entek Estates. In addition, 166,750
shares of Debtor's Common Stock were to be transferred to the Clark Group
consisting of Richard T. Clark, Jr., Joel C. Holt and Ira Rimer in equal
portions in settlement of independent claims of the Clark Group against Recycled
Products. At the present time, Debtor believes these shares of Debtor's Common
Stock to be held as follows:
<TABLE>
<CAPTION>
<S> <C>
John Flowers, Examiner for 1,356,000
James E. Turner and
Entek Estates
GAIA Technologies 1,189,250
Clark Group 166,750
</TABLE>
As a result of the Entek adversary action, Retex was divested of most
equipment, inventory and technology which had been acquired by Retex from
Recycled Products, but retained the real estate (the Brenham Plant) described as
1709 Highway 36 North, Brenham, Texas, and more particularly described in
Appendix 1 to the Disclosure Statement. The Brenham Plant, owned by Retex, is
subject to oversight by Neal Tomlins, Examiner of Retek (as well as Debtor), and
is presently leased to ThermaSave Corporation through December, 1997, at a
monthly rental of $3,000 for April, May and June, 1997, $6,000 monthly rental
for July, August and September, 1997, and $9,000 per month for October, November
and December, 1997, pursuant to a triple net lease. The regular monthly rental
is $6,000 per month, and provides two one-year options (the first of which Plan
Proponents assume has been exercised such that the lease now expires on June 30,
1998). The lease extends an option to purchase the Brenham Plant for $640,000
during the term of the Lease, which if the remaining option is exercised, will
extend to June 30, 1999. The Examiner has advised that a default exists in the
July and August rental payments.
B. GAIA LITIGATION
- -------------------
The GAIA litigation arose over patent and trademark infringement claims of
GAIA against Debtor with respect to technology that Retex believed it had
acquired from Recycled Products. Debtor incurred legal expenses in excess of
$600,000 in defending the GAIA litigation. GAIA originally obtained a judgment
against Debtor and others in the United States District Court for the Southern
District of Texas in March 1995, after trial of the matter. A judgment was also
rendered in favor of GAIA against Plan Proponents and other individuals. On
appeal to the U.S. Federal Circuit Court of Appeals, the GAIA judgment was
vacated and reversed and a GAIA's request for rehearing was denied. On remand
to the United States District Court for the Southern District of Texas, that
Court entered a judgment on July 18, 1997, against Debtor, Retex, Progressive
Capital Corporation, David Gordon, Ira Rimer, Joel C. Holt, and Richard T.
Clark, Jr., for (a) $4,350,000; (b) pre-judgment interest of $2,130,192.79; and
(c) attorney's fees of $450,000. In addition, the Court entered judgment
against Debtor, Retex and Progressive Capital Corporation, jointly and
severally, as follows: (a) $125,000; and (b) pre-judgment interest of
$61,212.42. A separate judgment was entered against David Gordon, Ira Rimer,
Joel C. Holt and Richard T. Clark, Jr., of $100,000 each for a total of
$400,000. On the total judgment as entered, interest accrues after July 10,
1997 at 5.65%. The GAIA claims against Debtor are and have been vigorously
disputed and previously been reversed. Plan Proponents believe that the
judgment is in derogation of the remand from the appellate court, and have
appealed the decision. The GAIA litigation is described in more detail in the
Disclosure Statement. Debtor may have claims against GAIA, which potential
claims are retained under this Plan and will be evaluated and disposed of
pursuant to this Plan, post-Confirmation. See Article 8.2 of this Plan.
-8-
<PAGE>
C. SUMMARY
- -----------
As a result principally of the Entek and GAIA litigation, the assets in
which Debtor had made substantial investment were depleted. In addition, Debtor
was stripped of assets for business operations. The Brenham Plant was closed by
Debtor, in an effort to comply with Orders of the United States District Court
in the GAIA litigation. The impact of these litigation matters on the operation
of Debtor's other subsidiary interests was equally devastating and are discussed
in detail in the Disclosure Statement.
ARTICLE V: CLASSIFICATION OF CLAIMS AND INTERESTS
--------------------------------------------------
This Article establishes Classes for all Claims against and of all
Interests in Debtor. A Claim or Interest falls within a particular Class to the
extent the Claim or Interest meets the description of the Class. Creditors or
Equity Security Holders may hold Claims or Interests which fall within one or
more Classes to the extent that its Claims or Interests meet the description of
the other Class or Classes.
5.1 CLASS 1 CLAIMS: ALLOWED ADMINISTRATIVE CLAIMS. Allowed Claims under
----------------------------------------------
(S)503(b) of the Bankruptcy Code. The Class 1 Claims include (i) allowed but
unpaid attorneys' fees on the Effective Date for Debtor's counsel, Riggs, Abney,
Neal, Turpen Orbison & Lewis, and (ii) allowed but unpaid professional fees due
to Neal Tomlins, Examiner, and his counsel, and fees and expenses not yet
presented for payment and, therefore, not approved.
5.2 CLASS 2 CLAIMS: ALLOWED PRIORITY CLAIMS. Allowed Unsecured Claims
----------------------------------------
entitled to priority pursuant to (S)507(a) of the Bankruptcy Code. The Debtor
has scheduled priority claims owing in unknown amounts to the Internal Revenue
Service and the Securities and Exchange Commission. The Plan Proponents believe
that there is no liability to either of the agencies included in this Class.
5.3 CLASS 3: DISPUTED SECURED CREDITORS. This Class consists of
------------------------------------
Creditors who assert a secured claim against Debtor and its assets. All of such
secured claims are disputed, and all underlying claims are disputed, as they do
not arise from obligations of Debtor but instead represent, if valid,
obligations of Retex. It is believed that the joint administration of the
Debtor's case and the Retex case may have created confusion among Retex
creditors who assert secured status in this case. Class 3 Creditors are listed
on Exhibit A hereto.
5.4 CLASS 4 CLAIM: CLAIM OF TRANSFER AGENTS AST AND DEPOSITORY TRUST CO.
-------------------------------------------------------------------
The Class 4 Claim consists of the pre-petition Unsecured Claim of American
Securities Transfer ("AST") in the amount of $3,553.66 and of the pre-petition
Unsecured Claim of Depository Trust Co. in the amount of $1,050.00. Both claims
were incurred for stock transfer services rendered to Debtor pre-petition.
5.5 CLASS 5 CLAIMS: ADMINISTRATIVE CONVENIENCE SMALL CLAIMS. Class 5
---------------------------------------------------------
Claims consist of all Allowed Unsecured Claims against Debtor to which no
objection has been interposed, which are $1,000 or less in amount, and shall
include Class 6 Creditors who elect to reduce their claim for Class 5
participation. Class 5 Creditors are listed on Exhibit B hereto.
5.6 CLASS 6 CLAIMS: UNSECURED CLAIMS. Class 6 Claims consist of all
---------------------------------
Allowed Unsecured Claims against Debtor to which no objection has been
interposed and total approximately $413,668.49. These Class 6 Claims are listed
on the attached Exhibit C. Disputed Claims which would otherwise be included
within this Class are designated on Exhibit D, and will not be Allowed until
allowed by Final Order of the Bankruptcy Court. The aggregate amount of
Disputed Claims is $1,503,824.19. Expressly excluded from Class 6 Claims are
the Klenda Gordon & Getchell Creditor Claim and the GAIA Claim, which are
separately classed.
5.7 CLASS 7 CLAIM: DISPUTED UNSECURED CLAIM OF GAIA. GAIA is the holder
------------------------------------------------
of a disputed Unsecured Claim against Debtor. On March 17, 1995, GAIA obtained
a judgment against Debtor and certain individuals in the aggregate sum of $22
million dollars in the United States District Court for the
-9-
<PAGE>
Southern District of Texas styled Gaia Technologies, Inc. v. Reconversion
---------------------------------------
Technologies, Inc., et al., Case No. H-94-2258 and GAIA filed its Proof of Claim
- --------------------------
in this case for $23,043,276.31. On August 19, 1996, the U.S. Court of Appeals
for the Federal Circuit reversed and vacated the judgment entirely and remanded
the matter to the U.S. District Court for the Southern District of Texas. A
copy of the Opinion of the Court of Appeals are on file in this case. The GAIA
Claim is disputed under this Plan. An objection to the GAIA claim was filed
seeking a determination of the value of the GAIA claim through the claim
estimation process pursuant to 11 U.S.C. (S)502(c). After the objection was
filed, the United States District Court for the Southern District of Texas (to
which the appeals court had remanded the matter after vacating and reversing the
judgment) entered judgment in favor of GAIA and against Debtor and others as
follows:
(a) Judgment against Debtor, Retex, Progressive Capital Corporation,
David Gordon, Ira Rimer, Joel C. Holt and Rick T. Clark, Jr.,
jointly and severally, for:
(i) $4,350,000;
(ii) pre-judgment interest of $2,130,192.79;
(b) Judgment against Debtor, Retex and Progressive Capital
Corporation, jointly and severally, for:
(i) $125,000;
(ii) pre-judgment interest of $61,212.42;
(c) Judgment against David Gordon, Ira Rimer, Joel C. Holt and
Richard T. Clark, Jr. for $100,000 each, in the nature of
punitive damages;
(d) Attorney's fees of $450,000 against Debtor, Retex, Progressive
Capital Corporation, David Gordon, Ira Rimer, Joel C. Holt and
Richard T. Clark, Jr., jointly and severally; and
(e) Post-judgment interest after July 10, 1997, at 5.65%.
The aggregate amount of the judgment against Debtor and other parties is
$7,116,405.21, exclusive of interest after July 10, 1997. Debtor and Plan
Proponents have initiated an appeal of the judgment, which it is believed was
rendered in contravention of the mandate from the Court of Appeals which vacated
the earlier judgment of $23,043,276.31. The appeal will be vigorously
prosecuted by Debtor and Plan Proponents.
Plan Proponents believe the value of the GAIA claim against the Estate will
ultimately be determined to be zero, and further that the Estate may have claims
against GAIA arising as a result of the GAIA litigation, which potential claim
is reserved pending analysis. See Article 8.2 of this Plan.
5.8 CLASS 8 CLAIM: TNRCC CLAIM. The TNRCC Claim against Debtor arises,
---------------------------
if at all, in connection with certain environmental claims which are asserted by
TNRCC against Retex from operation of the Retex plant in Brenham, Texas. TNRCC
has not filed a claim against Debtor. Debtor believes that TNRCC asserts its
claim against Retex, and as set forth in the Disclosure Statement, that Debtor
has no liability to TNRCC.
5.9 CLASS 9 CLAIM: KLENDA GORDON & GETCHELL CREDITOR CLAIM. This Class
-------------------------------------------------------
consists of the Claim of Klenda Gordon & Getchell asserting an Unsecured Claim
in the amount of $128,439.37. The Estate asserted claims against Klenda Gordon
& Getchell which on May 22, 1997, resulted in a judgment
-10-
<PAGE>
in favor of Debtor against Klenda Gordon & Getchell for $98,625 together with
interest at 6.72% from June 21, 1996, until paid.
5.10 CLASS 10 INTERESTS: PREFERRED STOCK. This Class consists of the
------------------------------------
Interests of the Equity Security Holders who own Pre-Petition Shares of
Preferred Stock. According to information available to Plan Proponents, there
were 1,104,081 Pre-Petition Shares of Preferred Stock issued by Debtor and held
by approximately forty-eight (48) entities or individuals who are listed on
Exhibit E.
5.11 CLASS 11 INTERESTS: COMMON STOCK. This Class consists of the
---------------------------------
Interests of the Equity Security Holders who own Pre-Petition Shares of Common
Stock of Debtor. According to information available to Plan Proponents, there
are outstanding 11,807,785 Pre-Petition Shares of Common Stock held by
approximately 301 entities or individuals. The owners and their holdings of
these shares, as of November 17, 1994, according to the records of Debtor's
stock transfer agent, AST, are contained in "List of Equity Security Holders"
filed in the office of the United States Bankruptcy Court Clerk for the Northern
District of Oklahoma on or about April 19, 1995, and listed on Exhibit F.
ARTICLE VI: CLAIMS AND INTERESTS IMPAIRED BY THIS PLAN
-------------------------------------------------------
Classes 1, 2, 4, and 5 are unimpaired by this Plan. Claims in Classes 3,
6, 7, 8 and 9, and the Interests in Classes 10 and 11 are impaired by this Plan.
ARTICLE VII: TREATMENT OF CLAIMS AND INTERESTS
-----------------------------------------------
7.1 CLASS 1 CLAIMS: ALLOWED ADMINISTRATIVE CLAIMS. The Class 1 Claims
----------------------------------------------
will be paid in cash within forty-five (45) days after the Effective Date or
within twenty (20) days of determination and allowance by the Bankruptcy Court
if determined after 45 days of the Effective Date, or as may be otherwise agreed
between Debtor and each Class 1 Claimant. Class 1 is unimpaired.
7.2 CLASS 2 CLAIMS: ALLOWED PRIORITY CLAIMS. The Class 2 Claim of the
----------------------------------------
Internal Revenue Service and the Securities and Exchange Commission were
scheduled to assure each agency an opportunity to be heard and to protect its
interest in this case. No liability is owed to either entity and, therefore, no
payment will be made on Class 2 Claims under this Plan. Class 2 is unimpaired,
if Plan Proponents' information is correct.
7.3 CLASS 3: DISPUTED SECURED CLAIMS. Debtor will object to each of the
---------------------------------
Secured Claims shown on Exhibit A. None of these claims represents an
obligation of Debtor. These claims, to the extent valid, are claims against
Retex, Debtor's subsidiary corporation, which debts have not been assumed or
guaranteed by Debtor. Nothing contained in this Plan shall affect the status of
any such claim against Retex, except to the extent contemplated in the Plan of
Liquidation of Retex contemplated in this Plan. See Article III.
7.4 CLASS 4 CLAIMS: CLAIMS OF TRANSFER AGENT AST AND DEPOSITORY TRUST CO.
---------------------------------------------------------------------
The Class 4 Claims will be paid in cash the amount of Pre-Petition Claims which
in the aggregate total $4,603.66 within forty-five (45) days of the Effective
Date. Class 4 is unimpaired.
7.5 CLASS 5 ADMINISTRATIVE CONVENIENCE CLASS. All members of this Class
----------------------------------------
will be paid in full in cash within forty-five (45) days of the Effective Date.
Class 6 Creditors electing to reduce their claims and participate in Class 5
will be paid $1,000 in cash within forty-five (45) days of the Effective Date.
Class 5 is unimpaired.
7.6 CLASS 6 CLAIMS: ALLOWED UNSECURED CLAIMS. The holders of Class 6
-----------------------------------------
Allowed Unsecured Claims will be allowed to elect to participate in Class 5
Claims. Holders of Class 6 Claims who do not so participate shall receive forty
percent (40%) of the allowed amount of their Claims (i) in cash, or (ii) in
shares of New Common Stock, or (iii) in a combination of cash and shares of New
Common Stock
-11-
<PAGE>
at the election of each holder within forty-five (45) days after the later of
(i) the Effective Date or (ii) the date the Claim is determined by the
Bankruptcy Court or by settlement and compromise approved by the Court. If no
election is made within such forty-five day period, New Common Stock will be
delivered. To the extent New Common Stock is delivered, it will be delivered at
the rate of 0.4 share per $1.00 of the amount of Allowed Claim (subject to cash
payment for fractional shares on the basis of $1.00 per share). Disputed Class
6 Claims will not be paid until the dispute over such claim has been finally
resolved.
7.7 CLASS 7 CLAIM: DISPUTED UNSECURED CLAIM OF GAIA. This Claim is
------------------------------------------------
disputed and will receive no distribution until and unless the Claim has been
established by Final Order of a Court of competent jurisdiction. Debtor will
vigorously prosecute its appeal to vacate the judgment and to obtain a ruling
that the GAIA Claim against this Estate is zero. The decision as to whether
Debtor will assert claims against GAIA is addressed in Article 8.2 of this Plan.
Upon any determination by Final Order that GAIA holds an Allowed Claim, GAIA
shall receive New Common Stock in the Reorganized Debtor in the amount equal to
twenty percent (20%) (based on the average of the bid and ask price as of the
date of the final order establishing a claim of GAIA against Debtor) of the
Allowed Claim, which shares in an amount necessary to distribute to GAIA shall
be authorized pursuant to this Plan, but shall not be issued or distributed
until a claim is finally allowed, subject to any right of offset as described in
paragraph 8.2. Debtor shall be entitled to credit on any claim which may be
finally allowed, resulting from payment by a party jointly obligated to GAIA on
any finally allowed judgment. This Plan will not affect any claim of GAIA
against any third party, and affects only any finally allowed claim against
Debtor.
7.8 CLASS 8 CLAIM: TNRCC CLAIM. The Claim of TNRCC against Debtor will
---------------------------
be determined in this case pursuant to 11 U.S.C. (S) 502(c). Debtor will assert
that TNRCC must pursue its right of recovery against assets of other parties who
may have liability for any environmental claim, and that Debtor has no
obligation to TNRCC.
7.9 CLASS 9 CLAIM: KLENDA GORDON & GETCHELL CLAIM. The final
----------------------------------------------
determination in the pending preference action, Neal Tomlins, Examiner v.
-------------------------
Klenda, Gordon & Getchell, Adversary Proceeding No. 96-0206-W, will provide the
- -------------------------
basis for the treatment of the Class 9 Claim. The Estate, through the action of
the Examiner, obtained a judgment against Klenda Gordon & Getchell, for
$98,625.00 together with accruing interest. To the extent of an affirmative
recovery from Klenda Gordon & Getchell, the same may, upon payment by Klenda
Gordon & Getchell, give rise to an allowed unsecured claim in such amount which
will be added to the amount of the existing claim of $128,439.37. The full
claim will be treated for purposes of distribution under this Plan, as a Class 6
Claim. In the event there is a final determination in the preference action in
favor of Klenda Gordon & Getchell, then it shall have an Allowed Claim of
$128,439.37 in this case, and will be treated for purposes of distribution and
this Plan as a Class 6 Claim.
7.10 CLASS 10 INTERESTS: PREFERRED STOCK. The Pre-Petition Shares of
------------------------------------
Preferred Stock held by the holders of Class 10 Interests will be reclassified
into New Common Stock which will result in cancellation of all rights for
priority in liquidation and for accumulated dividends or any right for
rescission under state or federal securities laws. As a result of the
reclassification, an aggregate of 1,274,172 shares of New Common Stock will be
issued to Class 10 Interest Holders. Each holder of Pre-Petition Shares of
Preferred Stock will be issued, pursuant to this Plan, 1.1 shares of New Common
Stock for each share of issued and outstanding Preferred Stock (subject to cash
payment for fractional shares on the basis of $1.00 per share). In addition,
Class 10 Interest Holders will be issued Class "A" Warrants to purchase an equal
number of shares of New Common Stock at the price of $1.00 per share within
twelve (12) months after the Effective Date. Upon delivery and as a condition
therefor, Class 10 Interest holders shall surrender the Preferred Stock subject
to the treatment provided herein.
7.11 CLASS 11 INTERESTS: COMMON STOCK. The Pre-Petition Shares of Common
---------------------------------
Stock held by the holders of Class 11 Interests, Common Stock holders, will be
subject to a one-for-eight reverse stock split. As a result of the reverse
stock split, the holders of Pre-Petition Shares of Common Stock will exchange
their certificates evidencing Pre-Petition Shares of Common Stock for
certificates evidencing shares of New Common Stock (subject to cash payment for
fractional shares on the basis of $1.00 per
-12-
<PAGE>
share). In addition, Class 11 Interest Holders will receive Class "B" Warrants
to purchase an equal number of shares of New Common Stock at the price of $1.00
per share within fifteen (15) months after the Effective Date. For each share
of New Common Stock purchased under a Class "B" Warrant, a Class "C" Warrant
will be issued to purchase another share of New Common Stock. The Class "C"
Warrants will be exercisable during the eighteen (18) months after the Effective
Date at a price of $1.75 per share. Upon delivery and as a condition therefor,
Class 11 Interest Holders shall surrender the Pre-Petition Common Stock
Certificates subject to the treatment provided herein.
ARTICLE VIII: MEANS OF EXECUTION OF THIS PLAN
----------------------------------------------
8.1 REVESTING OF DEBTOR'S PROPERTY, EFFECTUATION OF PLAN. Debtor shall
----------------------------------------------------
continue to operate its business as Debtor-in-Possession in the ordinary course
until the Effective Date. All property, rights and claims, tangible or
intangible, of the Estate, except as have been abandoned, released or rejected
by the Debtor prior to or on the Effective Date, shall revert to and vest in
Reorganized Debtor, free and clear of all security interests and other liens,
claims and encumbrances, except those specified in this Plan.
8.2 CLAIMS AGAINST GAIA. Debtor may have claims against GAIA arising in
-------------------
connection with the GAIA litigation which are retained under this Plan. Debtor
incurred in excess of $600,000 (together with other defendants) in legal costs
in defending claims asserted by GAIA, based upon alleged infringements of
patents claimed to be owned by GAIA. The original judgment entered in favor of
GAIA in the trial court against Debtor and other defendants was reversed and
vacated on appeal by the United States Court of Appeals, Federal Circuit. As
noted herein, on remand, a judgment has been re-entered against Debtor and
others. Debtor and Plan Proponents believe that the evidence on appeal
established that GAIA did not own the patents it alleged it owned as the basis
for its claims against Debtor. Potential claims of Debtor against GAIA arising
from the GAIA litigation are expressly reserved. Furthermore, nothing in this
Plan shall preclude Reorganized Debtor from asserting a right to offset a claim
against GAIA against any Final Order allowing GAIA a claim against Debtor or
from asserting any rights of contribution against other parties, to the extent
permitted by law.
GAIA may elect to assert only a portion of its Allowed Claim against
Debtor, and may elect to pursue the balance of its Allowed Claims against any
co-debtor of joint liability with Debtor to GAIA under any Allowed Claim. In
such event, GAIA's Allowed Claim will be satisfied utilizing the same formula
set forth herein, applied only to the dollar amount of the Allowed Claim which
GAIA elects to assert under this Plan. GAIA must make such election within
ninety (90) days of the date its Allowed Claim becomes final, and upon failure
to timely so elect, it shall be conclusively presumed that GAIA's entire Allowed
Claim shall be satisfied herein.
8.3 CLAIMS AGAINST KLENDA GORDON & GETCHELL. The Examiner has brought an
---------------------------------------
action against Klenda Gordon & Getchell based upon allegations that Klenda
Gordon & Getchell was negligent in rendering legal representation to Debtor.
Klenda Gordon & Getchell has disputed this claim. This action, Adversary Case
No. 96-0330-W, is more particularly described in the Disclosure Statement. In
addition, on May 22, 1996, a judgment was entered in Adversary Case No. 96-0206-
W, against Klenda Gordon & Getchell for $98,625.00 together with accruing
interest from June 21, 1996, at 6.72%. All Debtor claims against Klenda Gordon &
Getchell are expressly reserved in this Plan. Upon Confirmation of this Plan,
Management's Board of Directors will evaluate what action should be taken with
respect to the claims against Klenda Gordon & Getchell and recommend an
appropriate course of action. In the interim, Debtor will request that the
Adversary Case No. 96-0330-W be stayed and all existing discovery schedules be
extended. The report and recommendation of the Board of Directors shall be
submitted to the Board of Directors within sixty (60) days of the Confirmation
Date. Any recovery on the claim will become assets of Reorganized Debtor.
8.4 CLAIM OF DEBTOR AGAINST RETEX. Debtor is a creditor of Retex in the
-----------------------------
amount of $5,000,000 arising from a secured loan dated January 3, 1994, and is
more particularly described in the Disclosure Statement. The loan is secured by
virtually all the assets of Retex. Retex, through the
-13-
<PAGE>
Examiner, is currently leasing the Brenham Plant for $6,000 per month on a one-
year lease, with two one-year options. The Lessee, ThermaSave Corporation holds
an option to purchase the property for $640,000. Debtor subordinates under this
Plan its Claim as a Secured Creditor of Retex in lease payments to Retex and/or
proceeds from the sale of the Brenham Plant an amount which is the lesser of
$200,000 or an amount necessary to satisfy Allowed Claims in the Retex case,
provided that Retex utilizes the lease payments or sale proceeds to pay its
creditors administrative expenses and allowed claims under a confirmed Plan of
Reorganization. The balance of Retex lease payments and/or sale proceeds, if
any, upon receipt by Retex shall be paid to Reorganized Debtor in satisfaction
of the Retex obligation due to Debtor, and Reorganized Debtor will undertake
action to assure that Debtor's claims are adequately protected.
8.5 CLAIMS AGAINST SPECTRUM. Based upon the Plan of Reorganization of
-----------------------
Spectrum, Debtor does not appear to have any claims against Spectrum which
justify legal expenditure, in the judgment of Plan Proponents, but the claims
will not be released, and the Board of Directors, in its judgment may elect to
pursue such claims.
8.6 OTHER CLAIMS. The Examiner has reviewed business and stock records of
------------
Debtor and has asserted claims against Richard T. Clark, Jr., Joel C. Holt, Ira
Rimer and George D. Gordon, described below:
A. Joel C. Holt: The Examiner has asserted that on July 15, 1994,
------------
Debtor issued 12,750 shares of Debtor's Preferred Stock to Holt, for which Holt
paid no consideration. The Examiner contends the value of such shares on the
date of issuance is $35,062.50. Holt disputes the existence of a financial
obligation to Debtor in connection with such Preferred Stock. Holt contends
that such shares were originally authorized by Debtor to be issued to Holt as
compensation for services rendered by Holt to Debtor in connection with Debtor's
acquisition of Spectrum Products, Inc. in the fall of 1994. Holt also contends
that such shares, if ever issued, were not delivered to him and are not now in
his possession, nor does he claim a right to such shares. On March 21, 1997,
Holt executed an agreement with the Examiner to toll the running of the statute
of limitations for periods after April 30, 1997, subsequently extended to
September 30, 1997, to obtain further information, and to permit the parties to
attempt to resolve the matter. The dispute could result in litigation between
the Examiner as Estate Representative and Mr. Holt.
B. Richard T. Clark, Jr.: The Examiner has asserted claims against
---------------------
Clark related to two separate stock transactions involving Debtor.
(1) Preferred Stock: The Examiner has asserted that on July 15,
---------------
1994, Debtor issued and delivered to Clark 12,750 shares of Preferred Stock
for which no payment has been made. The Examiner contends the value of
such shares on the date of issuance is $35,062.50. Clark disputes the
existence of a financial obligation to Debtor in connection with such
Preferred Stock. Clark contends that such shares were originally
authorized by Debtor to be issued to Clark as compensation for services
rendered by Clark to Debtor in connection with Debtor's acquisition of
Spectrum Products, Inc. in the fall of 1994. Clark contends that such
shares, if ever issued were never delivered to Clark or accepted by Clark.
Clark does not claim a right to such shares.
(2) Common Stock: The Examiner has asserted claims against Clark
------------
in connection with the issuance to Clark of 200,000 shares of Common Stock
of Debtor, on or about December 14, 1994. The Examiner contends that Clark
received such shares for which inadequate payment was made. Clark
acknowledges receipt of 100,000 shares only, for which he contends $106,000
was paid in cash as full payment in January 1995. Clark contends that
100,000 shares of the Common Stock in dispute were delivered to Larry Erber
d/b/a HBL & Associates in satisfaction of an obligation of Debtor to HBL
Investments, Inc. and that Clark received no benefit for such shares.
-14-
<PAGE>
On March 21, 1997 Clark entered into an agreement with the Examiner tolling
the running of the statute of limitations for periods after April 30, 1997
(subsequently extended to September 30, 1997), in order to permit further
information to be obtained and to permit a resolution of the claims to be
resolved with the Examiner. If no resolution is achieved, litigation is the
likely result.
C. Ira Rimer: The Examiner has asserted that on July 15, 1994,
---------
Debtor issued 9,000 shares of Debtor's Preferred Stock to Rimer, for which Rimer
paid no consideration. The Examiner contends the value of such shares on the
date of issuance is $24,750.00. Rimer disputes the existence of a financial
obligation to Debtor in connection with such Preferred Stock. Rimer contends
that such shares were originally authorized by Debtor to be issued to Rimer as
compensation for services rendered by Rimer to Debtor in connection with
Debtor's acquisition of Spectrum Products, Inc. in the fall of 1994. The
dispute is subject to litigation between the Examiner as Estate Representative
and Rimer.
D. George D. Gordon: The Examiner has asserted that on July 15,
----------------
1994, Debtor issued 75,000 shares of Debtor's Common Stock to Gordon, for which
Gordon paid no consideration. The Examiner contends the value of such shares on
the date of issuance is $159,375. Gordon disputes the existence of a financial
obligation to Debtor in connection with such Preferred Stock. The dispute is
subject to litigation between the Examiner as Estate Representative and Gordon.
8.7 RESOLUTION OF RETEK CLAIMS. The Retek Claims are comprised of
--------------------------
Debtor's claims or potential claims against third parties at the commencement of
this case which are not compromised, released or discharged in this case and
include claims Debtor holds or may hold, defined as Clark Claims, Holt Claims,
Rimer Claims, Gordon Claims, Claims against Klenda Gordon & Getchell and GAIA
Claims. A principal objective of this Plan is the fair evaluation and economic
resolution of the Retek Claims, but through a procedure which assures all
Creditors and Interest Holders of fairness in appearance and fairness in fact.
A decision of Reorganized Debtor concerning each Retek Claim will be made by
affirmative vote of the Board of Directors, after having first obtained advice
of competent, independent counsel of the choice of the Board of Directors. Joel
C. Holt and Joe Sams will not participate in any decision concerning the Retek
Claims against Holt, Clark, Rimer, Gordon or Klenda Gordon & Getchell. In the
process of Retek Claim evaluation, the Board of Directors may invite, but shall
not be required to do so, the Examiner to present an assessment of any Retek
Claim, and permit the potential target of a Retek Claim to advise the Board of
Directors of its position concerning such claim. The Board of Directors shall
make recommendation within 90 days of the Confirmation Date, with respect to
each Retek Claim. Each decision affecting disposition or resolution of a Retek
Claim will be submitted to the Bankruptcy Court for approval consistent with
Bankruptcy Rule 9019, with notice and opportunity for hearing. The Examiner,
Neal Tomlins, notwithstanding discharge as Examiner will be constituted under
this Plan as a party in interest for purposes of appearing and presenting his
views to the Court concerning the fundamental fairness of the proposed
disposition or resolution of any Retek Claim.
8.8 ISSUANCE OF SECURITIES. Pursuant to this Plan, Debtor shall issue
----------------------
shares of New Common Stock as follows:
<TABLE>
<CAPTION>
Number of Shares of
New Common Stock
-------------------
<S> <C>
Class 6 -- Unsecured Claims Undetermined
Class 7 -- GAIA Disputed Undetermined
Class 9 -- Klenda Gordon & Getchell Undetermined
Class 10 -- Preferred Stock 1,274,172
Class 11 -- Common Stock 1,475,973
</TABLE>
-15-
<PAGE>
Estimates of the amount of shares to be issued based on a number of assumptions
are set forth in the Capitalization Table set forth in the "The Plan -
Capitalization and Principal Stockholders" in the Disclosure Statement.
8.9 ISSUANCE OF WARRANTS. Under this Plan, Debtor shall issue Warrants as
--------------------
follows:
<TABLE>
<CAPTION>
Warrants to Purchase
Number of Shares of
New Common Stock
--------------------
<S> <C>
Class 10 -- Preferred Stock Class "A"
Class 11 -- Common Stock Class "B" and "C"
</TABLE>
Class "A" Warrants will allow the purchase of 1,274,172 shares of New
Common Stock. They are exercisable within twelve (12) months after the
Effective Date at $1.00 per share of New Common Stock.
Class "B" Warrants will allow the purchase of 1,475,973 shares of New
Common Stock. They are exercisable within fifteen (15) months after the
Effective Date at $1.00 per share of New Common Stock. Upon exercise of a Class
"B" Warrant, a Class "C" Warrant will be issued allowing the purchase of the
number of shares of New Common Stock equal to the number of shares purchased
upon the exercise of the Class B Warrants. Class C Warrants are exercisable
within 18 months after the Effective Date at $1.75 per share of New Common
Stock.
Copies of the forms of the Warrants are attached as Exhibit G.
8.10 CERTIFICATE OF INCORPORATION. On the Effective Date, Debtor will file
----------------------------
its Amended Certificate of Incorporation with the Secretary of State of the
State of Delaware in accordance with the General Corporation Law of the State of
Delaware. The Amended Certificate of Incorporation will provide for the reverse
stock split, the reclassification of the Preferred Stock, and will prohibit the
issuance of non-voting equity securities as required by (S)1123(a)(6) of the
Bankruptcy Code and will authorize 60,000,000 shares of New Common Stock. The
form of amendment is attached as Exhibit H.
8.11 CORPORATE GOVERNANCE AND MANAGEMENT. Upon Confirmation, the Board of
-----------------------------------
Directors of Debtor will become Joel C. Holt (a Plan Proponent), John B. Sams,
C. Robert Garner, W. Leo Morris, and one director elected by the Equity
Committee. The Equity Committee shall, no later than ten (10) days after
Confirmation, select a member to serve on the Board of Directors. The Director
selected by the Equity Committee need not be a member of the Equity Committee,
but shall own an Interest in Debtor. Furthermore, no person who is involved in
litigation over acquisition of shares of stock in Debtor, whether such
involvement is direct or indirect, shall be eligible for such position. G.
David Gordon will be terminated as Director by operation of Confirmation.
Messrs. Garner and Morris own Pre-Petition Common Stock in Debtor but have had
no role in management of the affairs of Debtor.
On the Effective Date, the operation of Reorganized Debtor shall become the
general responsibility of its Board of Directors, which shall thereafter have
the responsibility for the management, control and operation of Reorganized
Debtor. The initial officers of Reorganized Debtor shall be Joel C. Holt,
President, and Marianne Smith, Secretary.
The experience of each proposed Officer and Director is more particularly
described in the Disclosure Statement. The officers and directors will be
deemed elected pursuant to the Confirmation Order.
8.12 CORPORATE ACTION. On the Effective Date, the issuance of New Common
----------------
Stock and the Warrants pursuant to Articles 8.8 and 8.9 hereof, the election of
directors and officers pursuant to Article 8.11 hereof, and the other matters
provided under this Plan involving the corporate structure of the Debtor
-16-
<PAGE>
or corporate action by the Debtor shall be deemed to have occurred and shall be
in effect from and after the Effective Date pursuant to (S)303 of the General
Corporation Law of the State of Delaware and any other applicable law without
any requirement of further action by the stockholders or directors of the
Debtor. On the Effective Date, all agreements entered into pursuant to this
Plan, including without limitation, any agreements entered into in connection
with the foregoing, shall be valid, binding and in full force and effect.
8.13 COMPENSATION OF DIRECTORS. In consideration for the services of C.
-------------------------
Robert Garner, Leo W. Morris, and a qualified Director selected by the Equity
Committee, each will be compensated for service as Director through the issuance
and delivery to each of 75,000 shares of New Common Stock of Reorganized Debtor
upon assumption of office, and by issuance and delivery of an additional 75,000
shares of New Common Stock of Reorganized Debtor upon the one-year anniversary
of service (or upon termination of service in the event the Board of Directors
is reconstituted through merger or acquisition) if such Director shall have
fully discharged his duty as Director. In consideration of the service of Joel
C. Holt and John B. Sams, each will be compensated for service as Director
through the issuance and delivery to each of 37,500 shares of New Common Stock
of Reorganized Debtor upon assumption of office, and by issuance and delivery of
an additional 37,500 shares of New Common Stock of Reorganized Debtor upon the
one-year anniversary of service (or upon termination of service in the event the
Board of Directors is reconstituted through merger or acquisition) if such
Director shall have fully discharged his duty as Director.
8.14 TAX ATTRIBUTES OF REORGANIZED DEBTOR. Reorganized Debtor will seek to
------------------------------------
preserve the net operating losses of Debtor from prior years. The precise
amount of such loss is not known. Debtor has not filed federal corporate income
tax returns for several years. An accountant will be retained to prepare and
file corporate tax returns for Reorganized Debtor. Reorganized Debtor will seek
to preserve to the maximum extent possible all net operating losses under
applicable law, but there is no assurance at this time of the amount of such net
operating loss, or the eventual preservation thereof.
8.15 SECURITIES REGISTRATION. Reorganized Debtor will voluntarily comply
-----------------------
with all applicable registration provisions of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Reorganized Debtor will, among other
actions, file its periodic reports with the SEC and will comply with the proxy
rules of the SEC. In addition, officers, directors and holders of specified
securities of the outstanding New Common Stock will be subject to the reporting
requirements of (S)13 of the Exchange Act and the rules and regulations
thereunder and the reporting and shareholding profit provisions of (S)16 of the
Exchange Act and the rules and regulations thereunder.
8.16 RELEASE OF CLAIMS BY CREDITORS AND INTEREST HOLDERS. Each Creditor
---------------------------------------------------
and Interest Holder who obtains payment or securities hereunder shall be deemed
to have accepted such consideration as full and complete satisfaction of any and
all claims which such Creditor or Interest Holder or any person or entity
claiming through such Creditor or Interest Holder may have against Debtor or
Reorganized Debtor. Nothing contained herein shall constitute a release by
Debtor of Retek Claims as defined in this Plan and described herein and in the
Disclosure Statement.
8.17 DON NICHOLS LITIGATION. Donald R. Nichols has commenced an action
----------------------
against a number of parties, but not against Debtor, arising from his purchase
of Common Stock of Debtor over a period of time. The action is brought in the
United States District Court for the Northern District of Oklahoma as Case No.
95-C-1126-H. Plan Proponents are defendants in the action, which seeks recovery
of $393,600. Plan Proponents and individual defendants have vigorously defended
the action. On June 11, 1997, the case was dismissed but it may be refiled. So
long as the case is pending, Debtor will make no distribution to Don R. Nichols
or Virginia C. Nichols on their shares of Common Stock for which rescission is
sought, but New Common Stock shares attributable to those issued in their name
as a Class 11 Interest holder will be authorized by this Plan and reserved, to
be issued and delivered if and when the Nichols Claim is finally determined to
be a Common Stock claim. The Nichols Proof of Claim No. 75 asserting a claim of
$591,028.00 will be objected to, but if allowed, would become a Class 6 Claim.
Nichols has also filed
-17-
<PAGE>
Proof of Interest No. 74, which is believed to be duplicative of Proof of Claim
No. 75, and would constitute a Class 11 Claim.
8.18 STAY OF KLENDA GORDON & GETCHELL NEGLIGENCE CLAIM. Pending
-------------------------------------------------
consideration of this Plan by Creditors and Interest Holders, Plan Proponents
will seek a stay in prosecution and defense of the Estate's claim against Klenda
Gordon & Getchell, Adversary Case No. 96-033-W, which is described in Article
8.3 in order to avoid what would be unnecessary legal fees and costs.
8.19 DEBTOR'S CLAIM AGAINST RETEX. This Plan authorizes certain action
----------------------------
with respect to the asserted secured claim of Retek (Debtor) against Retex, but
is not a conclusive determination of the scope, extent or validity of the
Debtor's claim against Retex, which issue will be resolved in the Retex
bankruptcy case, notwithstanding this Plan.
8.20 UNITED STATES TRUSTEE FEES. Reorganized Debtor shall be responsible
--------------------------
for the timely payment of disbursement fees incurred pursuant to 28 U.S.C.
(S)1930(a)(6). After confirmation, and until the case is closed by the Court,
Reorganized Debtor shall file with the Court and serve on the United States
Trustee a monthly financial report for each month (or portion thereof) the case
remains open in a format prescribed by the United States Trustee.
ARTICLE IX: EXECUTORY CONTRACTS
--------------------------------
9.1 On or before Confirmation, Debtor shall have the right to assume or
reject any and all executory contracts and unexpired leases in the manner
provided by (S)365 of the Bankruptcy Code.
9.2 Any contracts or leases not specifically assumed shall be deemed to be
rejected.
9.3 All parties asserting Claims against Debtor arising out of rejection
of an executory contract or an unexpired lease shall file a Proof of Claim
within thirty (30) days after Confirmation. If allowed, the Claim shall become
a Class 6 Claim, unless the Court rules otherwise.
ARTICLE X: MODIFICATION OF PLAN
--------------------------------
Plan Proponents may amend or modify this Plan at any time prior to
Confirmation, pursuant to (S)1127(a) of the Code. After Confirmation, Debtor
may, pursuant to (S)(S)1127(b) and (c) of the Code, and with the approval of the
Court, modify or amend this Plan in a manner which does not materially or
adversely affect the interest of the persons affected by this Plan without
having to solicit acceptances of such modification, and may take such steps as
are necessary to carry out the purpose and effect of this Plan as modified.
ARTICLE XI: DISCHARGE
----------------------
Confirmation of this Plan shall act as a discharge pursuant to 11 U.S.C.
(S)1141, effective as of Confirmation, of any and all claims of Debtor which
arose prior to Confirmation, except for the Retek Claims or any other claims
which are expressly reserved for subsequent resolution.
ARTICLE XII: MISCELLANEOUS PROVISIONS
--------------------------------------
12.1 PAYMENT OR PERFORMANCE DATES. If the date for any payment or other
----------------------------
performance due under this Plan shall fall on a Saturday, Sunday or any other
day which is not a business day, then the due date shall be extended to the next
business day.
12.2 CAPTIONS. Captions used in this Plan are for convenience and shall
--------
not affect the construction of this Plan.
-18-
<PAGE>
12.3 UNCLAIMED DISTRIBUTIONS. Any distribution of cash or securities to be
-----------------------
made under this Plan which remains unclaimed for six (6) months from the date of
such distribution shall be forfeited and retained by Reorganized Debtor.
12.4 OBJECTIONS TO CLAIMS. Notwithstanding any provision herein to the
--------------------
contrary, Debtor shall have the right to dispute and object to any Unsecured
Claim subsequent to Confirmation.
12.5 FUTURE MANAGEMENT OF DEBTOR. Debtor presently intends to employ the
---------------------------
officers named in Article 8.11 subsequent to the Effective Date.
12.6 DISCHARGE OF EQUITY COMMITTEE. Ten (10) days after Confirmation, all
-----------------------------
members of the Equity Committee shall be discharged from all duties, rights and
obligations attendant to membership on the Equity Committee. Prior to
discharge, the Equity Committee shall select and notify Debtor of a qualified
person to serve as a Director of Reorganized Debtor, consistent with the
provisions of this Plan.
12.7 DISCHARGE OF EXAMINER. The Examiner shall submit a Final Report to
---------------------
the Court within forty (40) days of Confirmation and shall submit a Final
Statement for Compensation. Thereupon, the Examiner of Debtor shall be
discharged. Notwithstanding such Discharge, the Examiner shall be provided with
notice of any intended disposition of any Retek Claim. The Examiner is,
pursuant to this Plan, notwithstanding Discharge, authorized to take such action
as a party in interest in evaluating any such disposition of a Retek Claim, and
to advise the Court concerning whether such proposed disposition of a Retek
Claim is in the best interest of the Reorganized Debtor. Reorganized Debtor
will compensate Examiner for expenses and fees reasonably incurred in evaluating
any such disposition of a Retek Claim.
12.8 DISCHARGE AND INJUNCTION AGAINST COLLECTION ACTIVITIES. Entry of an
------------------------------------------------------
Order confirming this Plan will discharge all of Debtor's pre-petition
liabilities and operate as an injunction against collection activity against
Debtor or its property by the holder of any claim against Debtor or the
initiation of Claims released pursuant to Article 8.16, so long as Debtor is not
in default with respect to the terms of this Plan.
12.9 FACSIMILE SIGNATURES. For the convenience of the Plan Proponents and
--------------------
in order to expedite the reorganization of the Debtor, more than one counterpart
of this Plan, and the Disclosure Statement, may be executed by the Plan
Proponents by facsimile signatures, and each executed counterpart shall be
deemed an original.
12.10 POST-CONFIRMATION PROFESSIONAL FEES. Fees and expenses of
-----------------------------------
professional services employed by Debtor, or of the Examiner, pursuant to
Article 12.7 hereof, subsequent to Confirmation, shall not be subject to
application and approval by the Bankruptcy Court.
ARTICLE XIII: RETENTION OF JURISDICTION
----------------------------------------
The Bankruptcy Court shall retain jurisdiction until this Plan has been
fully consummated and until all holders of Allowed Claims and Interest have been
provided the consideration in accordance with this Plan and with respect to any
disputed Claims or Retek Claims until they are resolved, including but not
limited to, the following purposes:
(a) to determine and enforce any and all contract rights inuring to
the benefit of the Debtor which were in existence as of the Effective Date;
(b) to determine the nature, validity, extent or classification of any
Claims against, or Interest in, the Debtor, in accordance with the Rules of
Bankruptcy Procedure;
(c) the rejection or assumption of any unexpired leases or executory
contracts and the allowance of any Claim for damages with respect to the
rejection of any such unexpired leases or executory contracts within such
time as the Court may direct;
-19-
<PAGE>
(d) the determination of all questions and disputes regarding the
title of assets now held or disposed of by the Debtor subsequent to the
Petition Date, and the determination of all causes of action,
controversies, disputes or conflicts, whether or not subject to pending
action as of Confirmation, between the Debtor and any other party which
hinders, delays or adversely affects the consummation of this Plan,
including, but not limited to, any right of the Debtor to recover assets
pursuant to the provisions of the Bankruptcy Code;
(e) the correction of any defect, the curing of any omission or the
reconciliation of any inconsistency in this Plan or the Confirmation Order
with respect thereto, that may be necessary or helpful to carry out the
purposes and intent of this Plan;
(f) the modification of this Plan after Confirmation, but only in
accordance with the provisions of the Bankruptcy Code;
(g) to enforce and interpret the terms and conditions of this Plan;
(h) to enter any order, including injunctions, necessary to enforce
the property titles, rights and powers of the Debtor and to impose such
limitations, restrictions, terms and conditions on such property titles,
rights and powers as this Court may deem necessary;
(i) to enforce all causes of action and claims which may exist on
behalf of the Debtor. Nothing herein contained shall prevent the Debtor
from taking such action as may be necessary to enforce any claim, cause of
action or objection which may exist on behalf of the Debtor, including, but
not limited to:
(i) claims, causes or actions arising under the Bankruptcy
Code, including those contained in or contemplated by
(S)(S)502, 544-550, 553;
(ii) insurance claims;
(iii) tax refund claims or claims concerning tax liability;
(iv) tort and contract claims including (without limitation)
claims for professional negligence; and
(v) claims against governmental or quasi-governmental entities,
regardless of whether such claims were asserted, enforced
or prosecuted prior to Confirmation;
(j) to enter an order concluding and terminating this case; and
(k) to hear and determine any matter related to a Retek Claim, as
provided in this Plan.
-20-
<PAGE>
Dated this _____ day of ________________, 1997.
RICHARD T. CLARK, JR. AND
JOEL C. HOLT, PLAN PROPONENTS
By: /s/ DOERNER, SAUNDERS, DANIEL & ANDERSON
------------------------------------------
DOERNER, SAUNDERS, DANIEL
& ANDERSON
Gary M. McDonald, OBA# 5960
William F. Riggs, OBA# 7586
Leonard I. Pataki, OBA# 6935
320 South Boston, Suite 500
Tulsa, OK 74103
(918) 582-1211
-21-
<PAGE>
Exhibit A
CLASS 3: DISPUTED SECURED CLAIMS
Brenham Independent School District $74,671.33
c/o Calame, Lineberger, Graham & Pena, L.L.P. plus interest
1949 South I.H. 35 penalty
P.O. Box 17428
Austin, Texas 78760
Washington County, Texas $27,899.06
c/o Calame, Lineberger, Graham & Pena, L.L.P. plus interest
1949 South I.H. 35 penalty
P.O. Box 17428
Austin, Texas 78760
These claims are not proper claims against Debtor. Nothing contained in
this Plan shall be determinative of whether the Creditors shown on this Exhibit
holds a valid claim against Retex.
<PAGE>
Exhibit B
CLASS 5 CLAIMS: ADMINISTRATIVE
CONVENIENCE SMALL CLAIMS
<TABLE>
<CAPTION>
PROOF OF CLAIM NO. NAME AMOUNT
------------------ ---- ------
<S> <C> <C>
American Institute Cert. $ 410.00
P.O. Box 2208
Jersey City, NJ 07303
00011 Classic Transportation Company $ 512.50
P.O. Box 1618
Forney, TX 75126
00016 Drago Supply Company $ 177.83
P.O. Box 1647
Port Arthur, TX 77641
Federal Express $ 57.75
P.O. Box 1140
Memphis, TN 38101
The Hastings Group $ 750.00
2810 E. Oakland Park
Ft. Lauderdale, FL 3330
Klenda, Mitchell et al $ 162.50
301 N. Main
Wichita, KS 67202
00001 Research Institute of America $ 176.03
117 E. Stevens Ave.
Valhalla, NY 10595
---------
$2,068.78
</TABLE>
<PAGE>
Exhibit C
CLASS 6 CLAIMS: ALLOWED UNSECURED CLAIMS
<TABLE>
<CAPTION>
PROOF OF CLAIM NO. NAME AMOUNT
------------------ ---- ------
<C> <S> <C>
Schedule Bristows Cooke & Carp. $ 2,288.43
10 Lincoln's Inn Fields
London WC 2A 3BP
00064 Clark, Richard & Kelley $152,774.85
Inter Vivos Trust
1165 E. 24th Street
Tulsa, OK 74114
Schedule Fred Gilbert $ 15,000.00
406 S. Boulder, Ste. 830
Tulsa, OK 74103
00009 Guest & Company, P.C. $ 61,745.15
7110 South Braden Ave., Suite 100
Tulsa, OK 74136-6333
Schedule HBL Associates $ 19,292.00
50 Broad Street
New York, NY 10004
00059 Holt, Joel C. $ 42,750.00
445 Baltmore Ave., Suite 104
Asheville, NC 28801-4565
00065 Jarnagin, Larry $ 75,000.00
1321 East Echo Lane
Phoenix, AZ 85020
00006 Leatherwood Walker Todd & Mann $ 2,432.63
c/o F. Marion Hughes
P.O. Box 2568
Greenville, SC 29602-2568
Schedule Mike Maness $ 15,000.00
1900 N. Loop West, #500
Houston, TX 77018
Schedule Manning Fulton & Skinner $ 1,043.54
P.O. Box 20389
Raleigh, NC 27619
Schedule NASDAQ Stock Market $ 4,000.00
80 Merritt Blvd.
Trumbull, CT 06611
Schedule WOR Radio $ 6,700.00
1440 Broadway
New York, NY 10018
00002 WTS Incorporated $ 8,946.00
P.O. Box 5532
High Point, NC 27262
00053 Zingerman, Scott R. $ 6,695.89
Catalano, Zingerman & Associates
810 S. Cincinnati, Suite 200
Tulsa, OK 74119
-----------
$413,668.49
</TABLE>
<PAGE>
Exhibit D
CLASS 6 CLAIMS: UNSECURED CLAIMS - DISPUTED
<TABLE>
<CAPTION>
PROOF OF NAME AMOUNT
- --------- ---- ------
CLAIM NO.
- ---------
<C> <S> <C> <C>
00026 Bawayan, Theodore C. (Stock Claim) $ 8,810.00
340 Vista Drive
Athens, GA 30605
00014 Bremser, Arthur (Stock Claim) $ 4,800.00
310 Neal Road
Wahrton, TX 77488
00003 The Conair Group Inc. (Amplasco Claim) Contingent
c/o Buchanan Ingersoll and
58th Floor, 600 Grant Street unliquidated
Pittsburgh, PA 15219
00004 The Conair Group Inc. (Amplasco Claim) $ 8,833.53
c/o Buchanan Ingersoll
58th Floor, 600 Grant Street
Pittsburgh, PA 15219
00081 The Conair Group Inc. (Amplasco Claim) $ 125,000.00
Joseph S. Sisco
c/o Buchanan Ingersol PC
One Oxford Centre
301 Grant Street
Pittsburgh, PA 15219-1410
00016 Drago Supply Company (Retex) $ 177.83
P.O. Box 1647
Port Arthur, TX 77641
00017 Fowler, H. Doyle (Stock Claim) $ 4,000.00
c/o Jeffrey H. Conner
3301 66th Street, Suite B
Lubbock, TX 79413
00057 Gordon, G. David, Jr. $ 101,483.00
Klenda Gordon & Getchell, P.C.
100 W. 5th Street, Suite 610
Tulsa, OK 74103-4289
00063 Gordon, George D. $ 401,251.18
307 N. San Jacinto
Conroe, TX 77301
00010 Groves Industrial Supply, Inc. (Retex Claim) $ 1,717.61
4747 Darien/7520 Laundale
Houston, TX 77008
00029 Henley, Michael and Sandra (Stock Claim) $ 2,400.00
7608 Veal Station Road
Weatherford, TX 76086
00008 Herring, Dwayne W. Margaret A. (Stock Claim) $ 2,400.00
4200 Ridgecrest #7
Amarillo, TX 79109
00042 Hueske, Luther (Retex Claim) $ 10,389.22
D/B/A H & H Machine Service
P.O. Box 162
Brenham, TX 77833-0162
00037 Jarrett, Victor (Stock Claim) $ 1,179.95
1283 Nostrand Ave.
Brooklyn, NY 11226-1511
00028 Kelling, Rudy A. (Stock Claim) $ 960.00
1009 Oakridge
Brenham, TX 77833
00015 Knezek, Debbie J. (Stock Claim) $ 2,400.00
4244 West 14th
Amarillo, TX 79106
00043 Law, Frank R., M.D. individually (Stock Claim) $ 71,102.39
and
as Trustee of Frank R. Law Pen-
sion
Greenbaum & Ferentz
500 Newport Center Dr., 2nd floor
Newport Beach, CA 92860
00075 Nichols, Donald R. & Virginia C. (Stock Claim) $ 591,028.00
7120 Chruch Park
Fort Worth, TX 76133
00018 Orr, Ann B. (Stock Claim) $ 13,750.00
21 Forest View Drive
Asheville, NC 28804
00069 Parker, Bruce (Stock Claim) $ 3,000.00
101 E. Walnut
Rogers, AK 72756
00060 Progressive Capital Corporation $ 74,774.62
17323 Ventura Blvd., Suite 110
Encino, CA 91316
00041 S & S Electric Supply, Inc. (Retex Claim) $ 1,598.03
2700 Stringer Drive
Brenham, TX 77833
00024 Schindehette, Walter and Annegret (Stock Claim) $ 450.00
Rt. 3, Box 685
Brenham, TX 77833-9605
00005 Trailer Transport Systems, Inc. (Retex Claim) $ 2,432.63
Osborn Reed Burke & Tobin, LLP
Holly A. Adams
26E. Main St., P.O. Box 604
Clifton Springs, NY 14432
------------
$1,503,824.19
</TABLE>
<PAGE>
Exhibit E
CLASS 10 INTERESTS: PREFERRED STOCK
<TABLE>
<CAPTION>
PROOF OF CLAIM NO. NAME SHARES
------------------ -------------------------------- -------
<S> <C> <C>
00018 Ann B. Orr 5,000
21 Forest View Drive
Ashville, NC 28804
G. David Gordon & Thomas M. 20,000
Klenda TTE
John Lantrip Clark et al.
Irrevocable Trust u/a Dated
12- 6-92
G. David Gordon & Thomas M. 20,000
Klenda TTE
Margaret Clark et al.
Irrevocable Trust
u/a dated 12-6-92
Fine Airport Parking, Inc. 80,000
C.R. Garner & Loveda J. Garner 20,318
JTWROS
C. Deaton Maddox 60,000
Struthers Industries, Inc. 100,000
Sullivan Plumbing Pension Plan 27,000
Terry Turner 58,181
EME Investments, Inc. 40,000
Bruce K. Colton & Susan B. 5,000
Colton
Thomas Rohe & Janet Rohe, JTWRS 1,000
Billy Futch and Kathryn Futch, 1,000
JTWRS
Edward A. Gates & Judy R. 4,000
Gates, JTWRS
William Gray 6,000
Joe H. Harrill 1,000
John Anthony Heckenkemper 10,000
F. Marion Hughes & Judith L. 10,000
Hughes JTWRS
Milton Jackson 2,000
Keystone Laboratories, Inc. 12,000
J. Paul Martin & Nancy O. 2,000
Martin, JTWRS
J. Paul Martin, Trustee 2,000
J. Paul Martin, Trustee 1,500
Patrick L. Matlock FBO Sarah 1,000
Evelyn Matlock
Patrick L. Matlock FBO 1,000
Elizabeth Matlock
Patrick L. and Janet B. 2,000
Matlock, JTWRS
Ken M. Michalove 2,900
Mark L. Moody, M.D. 4,000
Ernest O. Peterson 3,000
Jimmy M. Piercy, Jr. 2,000
(Later trans. to Prudential
Sec.)
Barbara Pucilowski & Stanley J. 2,000
IRA of Steven R. Studebaker 1,500
(xfrd to Wheat Sec. 6-22-94)
(Cert 108)
IRA of Elizabeth M. Tait 1,500
(xfrd to Wheat Sec. 6-22-94)
(Cert 107)
Gene B. Thompson 2,000
Frederick G. Wenzel, MDPA, 8,000
Profit Sharing Trust A
W. Gregory Hall 1,000
Thomas D. Pope, M.D., & Jean S. 7,000
Pope,
Ann B. Orr 5,000
S. Kay Thompson 500
Patrick L. Matlock FBO Amy Bell 1,000
Matlock
Leonard Meyer 20,000
Lori May Simon 50,000
Structured Annuity Settlements 20,000
Dr. Rainer MacGuire & Roslyn R. 10,000
MacGuire, JTWRS
Dr. Rainer MacGuire & Roslyn R. 10,000
MacGuire, JTWRS
OCM Equipment, Inc. 40,000
Leo Morris 70,000
Gil Morris 10,000
INCE & Co. c/o Morgan Guaranty 5,000
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 5,000
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 5,000
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 1,000
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 1,000
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 1,000
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 1,000
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 1,000
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 1,000
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 1,000
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 1,000
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 1,000
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 1,000
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 100
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 100
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 100
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 100
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 100
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 100
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 100
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 500
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 500
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 100
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 100
Trust Company of New York
INCE & Co. c/o Morgan Guaranty 100
Trust Company of New York
Keystone Medical Corporation 100,000
Marianne Smith 2,200
Dr. Maple Avery, IRA 57,000
Thomas Addison Rhyne, Jr. 20,000
Gene B. Thompson 2,500
Robert Lipkin 7,000
Milton Jackson 3,000
Stephen N. & Mary W. 200
Scarbrough, JTWROS
Bruce K. & Susan B. Colton, 5,000
JTWROS
Asheville Addiction Consultants 1,500
Asheville Addiction Consultants 2,000
Burke OB/GYN Associates, P.A., 12,000
Employees Profit Sharing Plan
Ira Rimer 8,750
David Lincoln 10,000
Joel Holt 12,750
Fine Airport Parking, Inc. 20,000
Howard Collins 4,000
Interstate Johnson/Lane 10,000
Steve May 1,250
Sheree May 1,250
International Imaging, Inc. 50,000
April Rimer 10,000
</TABLE>
<TABLE>
<CAPTION>
PROOF OF INTEREST -- DISPUTED
-----------------------------
PROOF OF CLAIM NO. NAME AMOUNT
------------------ ------------------------- --------
<S> <C> <C>
00051 Rimer, Ira N. 8,750
17323 Ventura Blvd., Preferred
Suite 110
Encino, CA 91316
</TABLE>
<PAGE>
Exhibit F
CLASS 11 INTERESTS: COMMON STOCK
<TABLE>
<CAPTION>
PROOF OF CLAIM NO. NAME AMOUNT
- ------------------ ---- --------
<C> <S> <C>
00026 Bawayan, Theodore C.
340 Vista Drive
Athens, GA 30605
00014 Bremser, Arthur 2,000 SH
310 Neal Road Common
Wahrton, TX 77488
00073 Carolina Internal Medicine Assoc. 6,000 SH
Suite 407 Preferred
445 Biltmore Center
Ashville, NC 28801
00023 Catizone, Barbara 2,514 SH
266 Cedar Street Common
Cedar Grove, NJ 07009
00020 Catizone, Barbara for Confroth, R. 4,782 SH
266 Cedar Street Common
Cedar Grove, NJ 07009
00022 Catizone, Carmin for Catizone, S. 4,849 SH
10 1/2 Walker Avenue Common
Morristown, NJ 07960
00019 Catizone, Carmine 16,506 SH
10 1/2 Walker Avenue Common
Morristown, NJ 07960
00021 Catizone, Carmine for Catizone, C. 4,849 SH
10 1/2 Walker Avenue Common
Morristown, NJ 07960
00035 Catizone, Pat 463,495 SH
266 Cedar Street Common
Cedar Grove, NJ 07009
00036 Catizone, Raffaele & Teresa 27,000 SH
7 Logan Place Common
Morristown, NJ 07960
00034 Catizone, Sherri 20,000 SH
10 1/2 Walker Avenue Common
Morristown, NJ 07960
00054 Clark, Richard & Kelley 465,000 SH
Inter Vivos Trust Common
1165 E. 24th Street
Tulsa, OK 74114
00033 Clayton, Noelia A. 45,300 SH
3634 Marywood Dr. Common
Spring, TX 77388
00030 Colton, Bruce K. & Susan B. 10,000 SH
760 Huntington Drive Preferred
Erie, PA 16505
00076 Dabah, Ivette & Morris 4,000 SH
1840 E. 8th Street Common
Brooklyn, NY 11223
00062 Deison, R.A. 248,500 SH
307 N. San Jacinto Common
Conroe, TX 77301
00027 Fenton, John 500 SH
301 Woodridge Ln Common
Media, PA 19063
00080 Flowers, John Examiner of Bankruptcy 1,189,250 SH
Estates of James E. Turner & Entek C Common
900 Jackson, Suite 120 Restricted
Dallas, TX 75202 166,750 SH
Common
Unrestricted
00017 Fowler, H. Doyle
c/o Jeffrey H. Conner
3301 66th Street, Suite B
Lubbock, TX 79413
00048 Frank, Stephen 3,000 SH
5310 E. 31st Street Common
Tulsa, OK 74135
00046 Getchell, Robert C. 2,000 SH
5621 S.O.M. Center Road Common
Willoughby, OH 44094
00044 Getchell, Robert J. 2,700 SH
610 Oneok Plaza Common
100 West 5th Street
Tulsa, OK 74103
00047 Gordon, George David, Jr. 360,450 SH
610 Oneok Plaza 177,500
100 West 5th Street Restricted
Tulsa, OK 74103
00071 Harper, Thomas E. 2,000 SH
2399 1/2 Via Del Robles Common
Fallbrook, CA 92028
00029 Henley, Michael and Sandra
7608 Veal Station Road
Weatherford, TX 76086
00008 Herring, Dwayne W. Margaret A. 1,000 SH
4200 Ridgecrest #7 Common
Amarillo, TX 79109
00037 Jarrett, Victor L. 500 SH
1283 Nostrand Avenue Common
Brooklyn, NJ 11226-1511
00028 Kelling, Rudy A. 400 SH
1009 Oakridge Common
Brenham, TX 77833
00045 Klenda, Gordon & Getchell, P.C. 44,700 SH
610 Oneok Plaza Common
100 West 5th Street
Tulsa, OK 74103
00015 Knezek, Debbie J. 1,000 SH
4244 West 14th Common
Amarillo, TX 79106
00043 Law, Frank R., M.D. 23,700 SH
c/o Greenbaum & Ferentz Common
500 Newport Center Dr., 2nd Floor
Newport Beach, CA 92860
00038 Lawrence, Dan L. 500 SH
c/o Amanda D. Lawrence, UTMA Common
1974 Acorn Road
San Marcos, CA 92069
00039 Lawrence, Kelli 25,000 SH
1974 Acorn Road Common
San Marcos, CA 92069
00070 Mohtashemi, Ali A. 12,402 SH
1118 Fairlawn Dr. Common
Duncanville, TX 75116
00069 Parker, Bruce 1,231 SH
101 E. Walnut
Rogers, AR 72756
00031 Peacock, Warren G. 2,000 SH
1705 S. 93rd E. Ave. Common
Tulsa, OK 74102-8426
00049 Progressive Capital Corporation 5,400 SH
17323 Ventura Blvd., Suite 110 Common
Encino, CA 91316
00032 Prudential Securities 5,000 SH
FBO Perry D. Snavely, Jr. Common
10440 N. Central Expressway
Dallas, TX 75231
00068 Repetti, Steve 19,000 SH
25 Clarissa Dr. Common
Syosset, NY 11791-3712
00050 Rimer, Ira N. 525,059 SH
17323 Ventura Blvd., Suite 110 177,500
Encino, CA 91316 Common
00051 Rimer, Ira N.
17323 Ventura Blvd., Suite 110
Encino, CA 91316
00041 S & S Electric Supply, Inc.
2700 Stringer Drive
Brenham, TX 77833
00066 Samek, Alan 30,000 SH
36 Montana St. Common
Syosset, NY 11791-3117
00024 Schindehette, Walter & Annegret 200 SH
Rt. 3, Box 685 Common
Brenham, TX 77833-9605
00067 Suitic, David 60,000 SH
65 Wynjum Ave. Common
Merrick, NY 11566-4036
00052 Tsay, Jeffrey J. 28,000 SH
2110 Stonehill Ct Common
Arlington, TX 76012
00040 Turner, David O. 5,970 SH
4309 Versailles Common
Dallas, TX 75205
00025 Turner, Donald & Catherine 75,000 SH
6586 Chicory Court Common
Dallas, TX 75214
00072 Turner, Joseph W. 10,000 SH
4343 S. Jamestown Common
Tulsa, OK 74135
</TABLE>
TOGETHER WITH INTEREST
LISTED ON SECURITY HOLDER
LIST AS OF NOVEMBER 17, 1994,
AS SHOWN ON LIST OF EQUITY HOLDERS
FILED BY DEBTOR ON APRIL 19, 1995
PROOF OF INTEREST -- DISPUTED
-----------------------------
<TABLE>
<CAPTION>
PROOF OF CLAIM NO. NAME AMOUNT
------------------ ---- ------
<C> <S> <C>
00074 Nichols, Donald R. 317,200 SH
7120 Church Park
Fort Worth, TX 76133
</TABLE>
<PAGE>
Exhibit G
FORM OF WARRANTS
<PAGE>
Class A Warrant No. Right to Purchase Shares
---- ----
Reconversion Technologies, Inc.
a Delaware corporation
CLASS A WARRANT TO PURCHASE COMMON STOCK
Registered Owner:
-----------------------
Pursuant to the Plan of Reorganization approved in In re: Reconversion
-------------------
Technologies, Inc., Case No. 95-00821-W, in the United States Bankruptcy Court
- ------------------
for the Northern District of Oklahoma, Reconversion Technologies, Inc., a
Delaware corporation, (the "Company") hereby grants the following rights to the
Registered Owner of this Warrant:
1. ISSUE Upon due exercise pursuant to Section 3 below, the Company
-----
shall issue to the Registered Owner ________ shares of the Company's common
stock, par value $.0001 per share, (the "Common Stock"). The shares of Common
Stock issuable upon exercise of this Warrant are hereinafter referred to as the
"Shares." This Warrant shall be exercisable at any time and from time to time
from the date hereof until [TWELVE MONTHS AFTER THE EFFECTIVE DATE] .
-------------------------------------------
2. EXERCISE PRICE. The exercise price (the "Exercise Price") per share
--------------
for which all or any of the Shares may be purchased pursuant to the terms of
this Warrant shall be $1.00.
3. EXERCISE. This Warrant may be exercised by the Registered Owner
--------
hereof (but only on the conditions hereinafter set forth) as to all or any
increment or increments of One Hundred (100) Shares (or the balance of the
shares if less than such number), upon delivery of written notice in the form of
Exhibit A to this Warrant to the Company at the following address:
_________________, or such other address as the Company shall designate in
written notice to the Registered Owner hereof, together with this Warrant and
payment to the Company of the aggregate Exercise Price of the shares so
purchased. The Exercise Price shall be payable by certified or bank check.
Upon exercise of this Warrant as aforesaid, the Company shall as promptly as
practicable execute and deliver to the Registered Owner of this Warrant a
certificate or certificates for the total number of whole Shares for which this
Warrant is being exercised in such names and denominations as are requested by
such Registered Owner. If this Warrant shall be exercised with respect to less
than all of the Shares, the Registered Owner shall be entitled to receive a new
Warrant covering the number of Shares in respect of which this Warrant shall not
have been exercised, which new Warrant shall in all other respects be identical
to this Warrant. The Company covenants and agrees that it will pay when due any
and all state and federal issue taxes which may be payable in respect of the
issuance of this Warrant or the issuance of any shares upon exercise of this
Warrant.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees that all
------------------------
Shares which may be issued upon exercise of this Warrant will, upon issuance and
payment therefor, be legally and validly issued and outstanding, fully paid and
nonassessable, free from all taxes, liens, charges and preemptive rights, if
any, with respect thereto or to the issuance thereof. The Company shall at all
times reserve and keep available for issuance upon the exercise of this Warrant
such number of authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of this Warrant.
5. TRANSFER OF WARRANT. Subject to any restrictions hereon, this Warrant
-------------------
may be transferred, in whole or in part, by presentation of the Warrant to the
Company with written instructions for such transfer in the form of Exhibit B to
this Warrant. Upon such presentation for transfer, the Company shall promptly
execute and deliver a new Warrant or Warrants in the form hereof in the name of
the assignee or assignees and in the denominations specified in such
instruction. The Company shall pay all expenses incurred by it in connection
with the preparation, issuance and delivery of Warrants under this Section.
<PAGE>
6. REGISTERED OWNER NOT SHAREHOLDER. Except as otherwise provided herein,
--------------------------------
this Warrant does not confer upon the Registered Owner, as such, any right
whatsoever as a shareholder of the Company.
7. ADJUSTMENT UPON CHANGES IN STOCK.
--------------------------------
(a) If all or any portion of this Warrant shall be exercised subsequent to
any stock split, stock dividend, recapitalization, combination of shares of the
Company, or other similar event, occurring after the date hereof, then the
Registered Owner exercising this Warrant shall receive, for the aggregate price
paid upon such exercise, the aggregate number and class of shares which such
Registered Owner would have received if this Warrant had been exercised
immediately prior to such stock split, stock dividend, recapitalization,
combination of shares, or other similar event. If any adjustment under this
Section 7(a), would create a fractional share of Common Stock or a right to
acquire a fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares subject to this Warrant shall be the next
higher number of shares, rounding all fractions upward.
(b) If all or any portion of this Warrant shall be exercised subsequent to
any merger, consolidation, exchange of shares, separation, reorganization or
liquidation of the Company, or other similar event, occurring after the date
hereof, as a result of which shares of Common Stock shall be changed into the
same or a different number of shares of the same or another class or classes of
securities of the Company or another entity, or the Registered Owner of Common
Stock are entitled to receive cash or other property, then the Registered Owner
exercising this Warrant shall receive, for the aggregate price paid upon such
exercise, the aggregate number and class of shares, cash or other property which
such Registered Owner would have received if this Warrant had been exercised
immediately prior to such merger, consolidation, exchange of shares, separation,
reorganization or liquidation, or other similar event. If any adjustment under
this Section 7(b) would create a fractional share of Common Stock or a right to
acquire a fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares subject to this Warrant shall be the next
higher number of shares, rounding all fractions upward.
IN WITNESS WHEREOF, the Company has signed this Warrant by its duly
authorized officer this ____ day of ________, 1997.
RECONVERSION TECHNOLOGIES, INC.
[SEAL]
By:
----------------------------
Joel C. Holt, President
ATTEST:
- --------------------------------
Marianne Smith, Secretary
ADDITIONAL PROVISION FOR WARRANTS ISSUED TO UNDERWRITERS AND AFFILIATES
8. Restrictions on Transfer Neither this Warrant nor the Shares have
------------------------
been registered under the Securities Act of 1933, as amended ("Securities Act")
or any state securities laws ("Blue Sky Laws"). This Warrant may not be sold or
otherwise transferred without (i) an effective registration statement for such
Warrant under the Securities Act and such applicable Blue Sky Laws, or (ii) an
opinion of counsel, which opinion and counsel shall be reasonably satisfactory
to the Company and its counsel, that registration is not required under the
Securities Act or under any applicable Blue Sky Laws. Transfer of the shares
issued upon the exercise of this Warrant shall be restricted in the same manner
and to the same extent as the Warrant and the certificates representing such
Shares shall bear substantially the following legend:
-2-
<PAGE>
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
APPLICABLE STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED UNTIL (I) A
REGISTRATION STATEMENT UNDER THE ACT OR SUCH APPLICABLE STATE SECURITIES
LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) IN THE
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER SUCH
SECURITIES ACTS OR SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN
CONNECTION WITH SUCH PROPOSED TRANSFER.
-3-
<PAGE>
Exhibit A
Exercise Form
The undersigned hereby: (1) irrevocably subscribes for and offers to purchase
____ Shares of Common Stock of Reconversion Technologies, Inc., pursuant to the
Warrant to which this exhibit is attached; (2) encloses payment of $______ for
these Shares at a price of $1.00 per share; and (3) requests that a certificate
for the Shares be issued in the name of the undersigned and delivered to the
undersigned at the address specified below.
Date:
------------- ---------------------------------------------------
(Please sign exactly as your name appears on the
Warrant)
---------------------------------------------------
---------------------------------------------------
(Address of Warrant holder)
Warrant holder's social security number
------------
Signature guaranteed by:
---------------------------------------------------
Exhibit B
Transfer or Assignment Form
For value received, the undersigned hereby sells, assigns and transfers to:
Name:
---------------------------------------------------------------------------
Address:
------------------------------------------------------------------------
Social Security No.:
------------------------------------------------------------
this Warrant and irrevocably appoints __________________________ attorney (with
full power of substitution) to transfer this Warrant on the books of
_______________________________.
Date:
------------- ---------------------------------------------------
(Please sign exactly as your name appears on the
Warrant)
Warrant holder's social security number
------------
Signature guaranteed by:
---------------------------------------------------
<PAGE>
Class B Warrant No. Right to Purchase Shares
---- ----
Reconversion Technologies, Inc.
a Delaware corporation
CLASS B WARRANT TO PURCHASE COMMON STOCK
Registered Owner:
-----------------------
Pursuant to the Plan of Reorganization approved in In re: Reconversion
-------------------
Technologies, Inc., Case No. 95-00821-W, in the United States Bankruptcy Court
- ------------------
for the Northern District of Oklahoma, Reconversion Technologies, Inc., a
Delaware corporation, (the "Company") hereby grants the following rights to the
Registered Owner of this Warrant:
1. ISSUE Upon due exercise pursuant to Section 3 below, the Company
-----
shall issue to the Registered Owner ________ shares of the Company's common
stock, par value $.0001 per share, (the "Common Stock"). The shares of Common
Stock issuable upon exercise of this Warrant are hereinafter referred to as the
"Shares." This Warrant shall be exercisable at any time and from time to time
from the date hereof until [FIFTEEN MONTHS AFTER THE EFFECTIVE DATE] .
---------------------------------------------
2. EXERCISE PRICE. The exercise price (the "Exercise Price") per share
--------------
for which all or any of the Shares may be purchased pursuant to the terms of
this Warrant shall be $1.00.
3. EXERCISE. This Warrant may be exercised by the Registered Owner
--------
hereof (but only on the conditions hereinafter set forth) as to all or any
increment or increments of One Hundred (100) Shares (or the balance of the
shares if less than such number), upon delivery of written notice in the form of
Exhibit A to this Warrant to the Company at the following address:
_________________, or such other address as the Company shall designate in
written notice to the Registered Owner hereof, together with this Warrant and
payment to the Company of the aggregate Exercise Price of the shares so
purchased. The Exercise Price shall be payable by certified or bank check.
Upon exercise of this Warrant as aforesaid, the Company shall as promptly as
practicable execute and deliver to the Registered Owner of this Warrant:
(a) A certificate or certificates for the total number of whole
Shares for which this Warrant is being exercised in such names and
denominations as are requested by such Holder, and
(b) A Class C Warrant as described in the Plan of Reorganization
described above to purchase up to the same total number of whole Shares for
which this Warrant is being exercised in such names and denominations as
are requested by such Holder.
If this Warrant shall be exercised with respect to less than all of the Shares,
the Registered Owner shall be entitled to receive a new Warrant covering the
number of Shares in respect of which this Warrant shall not have been exercised,
which new Warrant shall in all other respects be identical to this Warrant. The
Company covenants and agrees that it will pay when due any and all state and
federal issue taxes which may be payable in respect of the issuance of this
Warrant or the issuance of any shares upon exercise of this Warrant.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees that all
------------------------
Shares which may be issued upon exercise of this Warrant will, upon issuance and
payment therefor, be legally and validly issued and outstanding, fully paid and
nonassessable, free from all taxes, liens, charges and preemptive rights, if
any, with respect thereto or to the issuance thereof. The Company shall at all
times reserve and keep available for issuance upon the exercise of this Warrant
such number of authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of this Warrant.
<PAGE>
5. TRANSFER OF WARRANT. Subject to any restrictions hereon, this Warrant
-------------------
may be transferred, in whole or in part, by presentation of the Warrant to the
Company with written instructions for such transfer in the form of Exhibit B to
this Warrant. Upon such presentation for transfer, the Company shall promptly
execute and deliver a new Warrant or Warrants in the form hereof in the name of
the assignee or assignees and in the denominations specified in such
instruction. The Company shall pay all expenses incurred by it in connection
with the preparation, issuance and delivery of Warrants under this Section.
6. REGISTERED OWNER NOT SHAREHOLDER. Except as otherwise provided herein,
--------------------------------
this Warrant does not confer upon the Registered Owner, as such, any right
whatsoever as a shareholder of the Company.
7. ADJUSTMENT UPON CHANGES IN STOCK.
--------------------------------
(a) If all or any portion of this Warrant shall be exercised subsequent to
any stock split, stock dividend, recapitalization, combination of shares of the
Company, or other similar event, occurring after the date hereof, then the
Registered Owner exercising this Warrant shall receive, for the aggregate price
paid upon such exercise, the aggregate number and class of shares which such
Registered Owner would have received if this Warrant had been exercised
immediately prior to such stock split, stock dividend, recapitalization,
combination of shares, or other similar event. If any adjustment under this
Section 7(a), would create a fractional share of Common Stock or a right to
acquire a fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares subject to this Warrant shall be the next
higher number of shares, rounding all fractions upward.
(b) If all or any portion of this Warrant shall be exercised subsequent to
any merger, consolidation, exchange of shares, separation, reorganization or
liquidation of the Company, or other similar event, occurring after the date
hereof, as a result of which shares of Common Stock shall be changed into the
same or a different number of shares of the same or another class or classes of
securities of the Company or another entity, or the Registered Owner of Common
Stock are entitled to receive cash or other property, then the Registered Owner
exercising this Warrant shall receive, for the aggregate price paid upon such
exercise, the aggregate number and class of shares, cash or other property which
such Registered Owner would have received if this Warrant had been exercised
immediately prior to such merger, consolidation, exchange of shares, separation,
reorganization or liquidation, or other similar event. If any adjustment under
this Section 7(b) would create a fractional share of Common Stock or a right to
acquire a fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares subject to this Warrant shall be the next
higher number of shares, rounding all fractions upward.
IN WITNESS WHEREOF, the Company has signed this Warrant by its duly
authorized officer this ____ day of ________, 1997.
RECONVERSION TECHNOLOGIES, INC.
[SEAL]
By:
----------------------------
Joel C. Holt, President
ATTEST:
- --------------------------------
Marianne Smith, Secretary
ADDITIONAL PROVISION FOR WARRANTS ISSUED TO UNDERWRITERS AND AFFILIATES
8. Restrictions on Transfer Neither this Warrant nor the Shares have
------------------------
been registered under the Securities Act of 1933, as amended ("Securities Act")
or any state securities laws ("Blue Sky Laws"). This
-2-
<PAGE>
Warrant may not be sold or otherwise transferred without (i) an effective
registration statement for such Warrant under the Securities Act and such
applicable Blue Sky Laws, or (ii) an opinion of counsel, which opinion and
counsel shall be reasonably satisfactory to the Company and its counsel, that
registration is not required under the Securities Act or under any applicable
Blue Sky Laws. Transfer of the shares issued upon the exercise of this Warrant
shall be restricted in the same manner and to the same extent as the Warrant and
the certificates representing such Shares shall bear substantially the following
legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
APPLICABLE STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED UNTIL (I) A
REGISTRATION STATEMENT UNDER THE ACT OR SUCH APPLICABLE STATE SECURITIES
LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) IN THE
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER SUCH
SECURITIES ACTS OR SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN
CONNECTION WITH SUCH PROPOSED TRANSFER.
-3-
<PAGE>
Exhibit A
Exercise Form
The undersigned hereby: (1) irrevocably subscribes for and offers to purchase
____ Shares of Common Stock of Reconversion Technologies, Inc., pursuant to the
Warrant to which this exhibit is attached; (2) encloses payment of $______ for
these Shares at a price of $1.00 per share; and (3) requests that a certificate
for the Shares be issued in the name of the undersigned and delivered to the
undersigned at the address specified below.
Date:
------------- ---------------------------------------------------
(Please sign exactly as your name appears on the
Warrant)
---------------------------------------------------
---------------------------------------------------
(Address of Warrant holder)
Warrant holder's social security number
------------
Signature guaranteed by:
---------------------------------------------------
Exhibit B
Transfer or Assignment Form
For value received, the undersigned hereby sells, assigns and transfers to:
Name:
---------------------------------------------------------------------------
Address:
------------------------------------------------------------------------
Social Security No.:
------------------------------------------------------------
this Warrant and irrevocably appoints __________________________ attorney (with
full power of substitution) to transfer this Warrant on the books of
_______________________________.
Date:
------------- ---------------------------------------------------
(Please sign exactly as your name appears on the
Warrant)
Warrant holder's social security number
------------
Signature guaranteed by:
---------------------------------------------------
<PAGE>
Class C Warrant No. Right to Purchase Shares
---- ----
Reconversion Technologies, Inc.
a Delaware corporation
CLASS C WARRANT TO PURCHASE COMMON STOCK
Registered Owner:
-----------------------
Pursuant to the Plan of Reorganization approved in In re: Reconversion
-------------------
Technologies, Inc., Case No. 95-00821-W, in the United States Bankruptcy Court
- ------------------
for the Northern District of Oklahoma, Reconversion Technologies, Inc., a
Delaware corporation, (the "Company") hereby grants the following rights to the
Registered Owner of this Warrant:
1. ISSUE Upon due exercise pursuant to Section 3 below, the Company
-----
shall issue to the Registered Owner ________ shares of the Company's common
stock, par value $.0001 per share, (the "Common Stock"). The shares of Common
Stock issuable upon exercise of this Warrant are hereinafter referred to as the
"Shares." This Warrant shall be exercisable at any time and from time to time
from the date hereof until [EIGHTEEN MONTHS AFTER THE EFFECTIVE DATE] .
-----------------------------------------------
2. EXERCISE PRICE. The exercise price (the "Exercise Price") per share
--------------
for which all or any of the Shares may be purchased pursuant to the terms of
this Warrant shall be $1.75.
3. EXERCISE. This Warrant may be exercised by the Registered Owner
--------
hereof (but only on the conditions hereinafter set forth) as to all or any
increment or increments of One Hundred (100) Shares (or the balance of the
shares if less than such number), upon delivery of written notice in the form of
Exhibit A to this Warrant to the Company at the following address:
_________________, or such other address as the Company shall designate in
written notice to the Registered Owner hereof, together with this Warrant and
payment to the Company of the aggregate Exercise Price of the shares so
purchased. The Exercise Price shall be payable by certified or bank check.
Upon exercise of this Warrant as aforesaid, the Company shall as promptly as
practicable execute and deliver to the Registered Owner of this Warrant a
certificate or certificates for the total number of whole Shares for which this
Warrant is being exercised in such names and denominations as are requested by
such Registered Owner. If this Warrant shall be exercised with respect to less
than all of the Shares, the Registered Owner shall be entitled to receive a new
Warrant covering the number of Shares in respect of which this Warrant shall not
have been exercised, which new Warrant shall in all other respects be identical
to this Warrant. The Company covenants and agrees that it will pay when due any
and all state and federal issue taxes which may be payable in respect of the
issuance of this Warrant or the issuance of any shares upon exercise of this
Warrant.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees that all
------------------------
Shares which may be issued upon exercise of this Warrant will, upon issuance and
payment therefor, be legally and validly issued and outstanding, fully paid and
nonassessable, free from all taxes, liens, charges and preemptive rights, if
any, with respect thereto or to the issuance thereof. The Company shall at all
times reserve and keep available for issuance upon the exercise of this Warrant
such number of authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of this Warrant.
5. TRANSFER OF WARRANT. Subject to any restrictions hereon, this Warrant
-------------------
may be transferred, in whole or in part, by presentation of the Warrant to the
Company with written instructions for such transfer in the form of Exhibit B to
this Warrant. Upon such presentation for transfer, the Company shall promptly
execute and deliver a new Warrant or Warrants in the form hereof in the name of
the assignee or assignees and in the denominations specified in such
instruction. The Company shall pay all expenses incurred by it in connection
with the preparation, issuance and delivery of Warrants under this Section.
<PAGE>
6. REGISTERED OWNER NOT SHAREHOLDER. Except as otherwise provided herein,
--------------------------------
this Warrant does not confer upon the Registered Owner, as such, any right
whatsoever as a shareholder of the Company.
7. ADJUSTMENT UPON CHANGES IN STOCK.
--------------------------------
(a) If all or any portion of this Warrant shall be exercised subsequent to
any stock split, stock dividend, recapitalization, combination of shares of the
Company, or other similar event, occurring after the date hereof, then the
Registered Owner exercising this Warrant shall receive, for the aggregate price
paid upon such exercise, the aggregate number and class of shares which such
Registered Owner would have received if this Warrant had been exercised
immediately prior to such stock split, stock dividend, recapitalization,
combination of shares, or other similar event. If any adjustment under this
Section 7(a), would create a fractional share of Common Stock or a right to
acquire a fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares subject to this Warrant shall be the next
higher number of shares, rounding all fractions upward.
(b) If all or any portion of this Warrant shall be exercised subsequent to
any merger, consolidation, exchange of shares, separation, reorganization or
liquidation of the Company, or other similar event, occurring after the date
hereof, as a result of which shares of Common Stock shall be changed into the
same or a different number of shares of the same or another class or classes of
securities of the Company or another entity, or the Registered Owner of Common
Stock are entitled to receive cash or other property, then the Registered Owner
exercising this Warrant shall receive, for the aggregate price paid upon such
exercise, the aggregate number and class of shares, cash or other property which
such Registered Owner would have received if this Warrant had been exercised
immediately prior to such merger, consolidation, exchange of shares, separation,
reorganization or liquidation, or other similar event. If any adjustment under
this Section 7(b) would create a fractional share of Common Stock or a right to
acquire a fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares subject to this Warrant shall be the next
higher number of shares, rounding all fractions upward.
IN WITNESS WHEREOF, the Company has signed this Warrant by its duly
authorized officer this ____ day of ________, 1997.
RECONVERSION TECHNOLOGIES, INC.
By:
-----------------------------
Joel C. Holt, President
[SEAL]
ATTEST:
- -----------------------------
Marianne Smith, Secretary
ADDITIONAL PROVISION FOR WARRANTS ISSUED TO UNDERWRITERS AND AFFILIATES
8. Restrictions on Transfer Neither this Warrant nor the Shares have
------------------------
been registered under the Securities Act of 1933, as amended ("Securities Act")
or any state securities laws ("Blue Sky Laws"). This Warrant may not be sold or
otherwise transferred without (i) an effective registration statement for such
Warrant under the Securities Act and such applicable Blue Sky Laws, or (ii) an
opinion of counsel, which opinion and counsel shall be reasonably satisfactory
to the Company and its counsel, that registration is not required under the
Securities Act or under any applicable Blue Sky Laws. Transfer of the shares
issued upon the exercise of this Warrant shall be restricted in the same manner
and to the same extent as the Warrant and the certificates representing such
Shares shall bear substantially the following legend:
-2-
<PAGE>
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
APPLICABLE STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED UNTIL (I) A
REGISTRATION STATEMENT UNDER THE ACT OR SUCH APPLICABLE STATE SECURITIES
LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) IN THE
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER SUCH
SECURITIES ACTS OR SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN
CONNECTION WITH SUCH PROPOSED TRANSFER.
-3-
<PAGE>
Exhibit A
Exercise Form
The undersigned hereby: (1) irrevocably subscribes for and offers to purchase
____ Shares of Common Stock of Reconversion Technologies, Inc., pursuant to the
Warrant to which this exhibit is attached; (2) encloses payment of $______ for
these Shares at a price of $1.75 per share; and (3) requests that a certificate
for the Shares be issued in the name of the undersigned and delivered to the
undersigned at the address specified below.
Date:
------------- ---------------------------------------------------
(Please sign exactly as your name appears on the
Warrant)
---------------------------------------------------
---------------------------------------------------
(Address of Warrant holder)
Warrant holder's social security number
------------
Signature guaranteed by:
---------------------------------------------------
Exhibit B
Transfer or Assignment Form
For value received, the undersigned hereby sells, assigns and transfers to:
Name:
---------------------------------------------------------------------------
Address:
------------------------------------------------------------------------
Social Security No.:
------------------------------------------------------------
this Warrant and irrevocably appoints __________________________ attorney (with
full power of substitution) to transfer this Warrant on the books of
_______________________________.
Date:
------------- ---------------------------------------------------
(Please sign exactly as your name appears on the
Warrant)
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Exhibit H
FORM OF AMENDMENT TO
CERTIFICATE OF INCORPORATION
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
RECONVERSION TECHNOLOGIES, INC.
RECONVERSION TECHNOLOGIES, INC. a corporation organized and existing under
the laws of Delaware (the "Company") for the purposes of (a) amending Article
Fourth of its Certificate of Incorporation, (b) effecting a one-for-eight
reverse stock split of its issued and outstanding Common Stock, and (c)
effecting a reclassification of each issued and outstanding share of Preferred
Stock, into 1.358596 shares of Common Stock (post reverse stock split), HEREBY
CERTIFIES as follows:
FIRST: Article Fourth of the Company's Certificate of Incorporation is
hereby amended to read in its entirety as follows:
"FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is Sixty Million (60,000,000). The par
value of each of said shares is $.0001. All such shares are of one
class and are shares of common stock without cumulative voting rights
and without any preemptive rights. The Corporation shall not be
authorized to issue non-voting equity securities."
SECOND: Simultaneously with the effective date of this Certificate (the
"Effective Date"), each share of the Company's Common Stock, par value $.0001
per share, issued and outstanding immediately prior to the Effective Date (the
"Old Common Stock") shall automatically and without any action on the part of
the holder thereof be reclassified as and changed into one-eighth (1/8) of a
share of the Company's Common Stock, par value $.0001 per share (the "New Common
Stock"), subject to the treatment of fractional share interests as described
below. Each holder of a certificate or certificates which immediately prior to
the Effective Date represented outstanding shares of Old Common Stock (the "Old
Common Certificates," whether one or more) shall be entitled to receive upon
surrender of such Old Common Certificates for cancellation together with the
release and other documents contemplated on the Plan of Reorganization
hereinafter described, a certificate or certificates (the "New Certificates,"
whether one or more) representing the number of whole shares of the New Common
Stock into which and for which the shares of the Old Common Stock formerly
represented by such Old Common Certificates so surrendered, are reclassified
under the terms hereof. From and after the Effective Date, Old Common
Certificates shall represent only the right to receive New Certificates (and,
where applicable, cash in lieu of fractional shares as provided below) pursuant
to the provision hereof. No certificates or scrip representing fractional share
interests in New Common Stock will be issued, and no such fractional share
interest will entitle the holder thereof to vote, or to any rights of a
shareholder of the Company. A holder of Old Common Certificates shall receive,
in lieu of any fraction of a share of New Common Stock to which the holder would
otherwise be entitled, a cash payment therefor on the basis of $1.00 per share.
If more than one Old Common Certificate shall be surrendered at one time for the
account of the same stockholder, the number of full shares of New Common Stock
for which New Certificates shall be issued, shall be computed on the basis of
the aggregate number of shares represented by the Old Common Certificates so
surrendered. In the event that the Company determines that a holder of Old
Common Certificates has not tendered all his certificates for exchange, the
Company shall carry forward any fractional share until all certificates of that
holder have been presented for exchange such that payment for fractional shares
to any one person shall
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not exceed the value of one share. If any New Certificate is to be issued in a
name other than that in which the Old Common Certificates surrendered for
exchange are issued, the Old Common Certificates so surrendered shall be
properly endorsed and otherwise in proper form for transfer, and the person or
persons requesting such exchange shall affix any requisite stock transfer tax
stamps to the Old Common Certificates surrendered, or provide funds for their
purchase, or establish to the satisfaction of the Company that such taxes are
not payable. From and after the Effective Date the aggregate amount of capital
represented by shares of the New Common Stock into which and for which the
shares of the Old Common Stock are reclassified under the terms hereof shall be
the same as the aggregate amount of capital represented by the shares of Old
Common Stock so reclassified, until thereafter reduced or increased in
accordance with applicable law.
THIRD: Immediately following the foregoing reverse stock split, each share
of the Company's Preferred Stock, par value $.0001 per share, issued and
outstanding immediately prior to the Effective Date shall automatically and
without any action on the part of the holder thereof be reclassified as and
changed into 1.358596 shares of New Common Stock (subject to the treatment of
fractional share interests as described below) and all powers, preferences,
privileges, voting and other special or relative rights and qualifications of
the Company's Preferred Stock, including priorities with respect to dividends
and liquidation and rights in respect of accumulated dividends and sinking fund
payments existing on the Effective Date, shall terminate and be of no further
force and effect. Each holder of a certificate or certificates which
immediately prior to the Effective Date represented outstanding shares of
Preferred Stock (the "Old Preferred Certificates," whether one or more) shall be
entitled to receive upon surrender of such Old Preferred Certificates for
cancellation together with the release and other documents contem plated on the
Plan of Reorganization, a certificate or certificates (the "New Preferred
Certificates," whether one or more) representing the number of whole shares of
New Common Stock into which and for which the shares of the Company's Preferred
Stock, formerly represented by such Old Preferred Certificates so surrendered,
are reclassified under the terms hereof. From and after the Effective Date, Old
Preferred Certificates shall represent only the right to receive New
Certificates (and, where applicable, cash in lieu of fractional shares as
provided below) pursuant to the provisions hereof. No certificates or scrip
repre senting fractional share interests in New Common Stock will be issued, and
no such fractional share interest will entitle the holder thereof to vote, or to
any rights of a shareholder of the Company. A holder of Old Preferred
Certificates shall receive, in lieu of any fractions of a share of the Company's
Common Stock to which the holder would otherwise be entitled, a cash payment
therefor on the basis of $1.00 per share. If more than one Old Preferred
Certificate shall be surrendered at one time for the account of the same
stockholder, the number of full shares of the Company's Common Stock for which
certificates shall be issued, shall be computed on the basis of the aggregate
number of shares represented by the Old Preferred Certificates so surrendered.
In the event that the Company determines that a holder of Old Preferred
Certificates has not tendered all his certificates for exchange, the Company
shall carry forward any fractional share until all certificates of that holder
have been presented for exchange such that payment for fractional shares to any
one person shall not exceed the value of one share. If any New Certificate is
to be issued in a name other than that in which the Old Certificates surrendered
for exchange are issued, the Old Preferred Certificates so surrendered shall be
properly endorsed and otherwise in proper form for transfer, and the person or
persons requesting such exchange shall affix any requisite stock transfer tax
stamps to the Old Preferred Certificates surrendered, or provide funds for their
purchase, or establish to the satisfaction of the Company that such taxes are
not payable. From and after the Effective Date, the aggregate amount of capital
represented by the shares of Common Stock into which and for which the shares of
the Preferred Stock are reclassified under the terms hereof shall be the same as
the aggregate amount of capital represented by the shares of the Preferred Stock
so reclassified, until thereafter reduced or increased in accordance with
applicable law.
FOURTH: The foregoing amendment to Article Fourth of the Certificate of
Incorporation of the Company, the one-for-eight reverse stock split of the
Company's issued and outstanding Common Stock, and the reclassification of each
issued and outstanding share of the Company's Preferred Stock into 1.358596
shares of New Common Stock were confirmed in a Plan of Reorganization for the
Company by the decree of the Bankruptcy Court in In re: Reconversion
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Technologies, Inc., Case No. 95-00821-W, in
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the United States Bankruptcy Court for the Northern District of Oklahoma, and
are made and filed in accor dance with the provisions of Section 303 of the
General Corporation Law of the State of Delaware.
FIFTH: This Certificate shall be effective upon filing.
IN WITNESS WHEREOF, Reconversion Technologies, Inc. has caused this
Certificate of Amendment to be executed in accordance with the Plan of
Reorganization described herein as of the ____ day of ________, 1997.
RECONVERSION TECHNOLOGIES, INC.
By:
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Joel C. Holt, President
[SEAL]
ATTEST:
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Marianne Smith, Secretary
