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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) MARCH 4, 1996
AUTOMOBILE CREDIT FINANCE IV, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 33-62980 75-2472952
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
700 N. PEARL STREET
SUITE 400, L.B. 401
DALLAS, TEXAS 75201-7490
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 965-6000
NOT APPLICABLE
(Former name or former address, if changed since last report)
Index to exhibits is located on page
seven of the sequentially numbered
page system.
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ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
On August 14, 1995, each of Automobile Credit Fund 1991-III, Inc.,
Automobile Credit Finance, Inc., Automobile Credit Partners, Inc., Automobile
Credit Finance 1992-II, Inc., Automobile Credit Finance III, Inc., Automobile
Credit Finance IV, Inc., Automobile Credit Finance V, Inc., and Automobile
Credit Finance VI, Inc. (collectively "Debtors" and individually "Debtor") filed
a petition in the U. S. Bankruptcy Court in the Northern District of Texas,
Dallas Division ("Court") seeking protection under Chapter 11 of the United
States Bankruptcy Code ("Code") under Case Nos. 395-34981-RCM-11 through
395-34988-SAF-11. These Cases were consolidated for purposes of joint
administration under Case No. 395-34981-RCM-11. All of the Debtors are
subsidiaries of Search Capital Group, Inc. ("Search"). Search did not seek
protection under the Code.
Confirmation of Joint Plan. Search and the Debtors filed, on December
22, 1995, as co-proponents, their Third Amended and Supplemental Joint Plan of
Reorganization (the "Joint Plan") for all of the Debtors. On March 4, 1996,
the Court entered an order (the "Confirmation Order") confirming the Joint Plan
as to all of the Debtors. Confirmation by the Court occurred after a vote of
the holders ("Noteholders") of outstanding notes issued by the Debtors
("Notes"). The Notes and the Noteholders constituted essentially all of the
indebtedness and creditors, respectively, of the Debtors. The Noteholders of
each Debtor were entitled to vote for or against the Joint Plan, with respect
to claims represented by their Notes, as a separate creditor class. The final
date for voting on confirmation of the Joint Plan occurred in late January
1996. Sufficient affirmative votes for confirmation of the Joint Plan were
received from the Noteholders of each Debtor. The effective date of the Joint
Plan is March 15, 1996 (the "Effective Date"). The following discussion
summarizes the terms and provisions of the Joint Plan, but reference is made to
Joint Plan itself for the full terms and provisions of the Joint Plan.
Plan Options for Secured Claims of Noteholders. The Joint Plan provides
that Noteholders voting to accept the Joint Plan could choose one of two options
(the "Plan Options"). Under one of the Plan Options (the "Search Equity
Option"), the Noteholders receive with respect to the secured portion of their
claims the issuance by Search of a combination of shares of Common Stock and New
Preferred Stock (as defined below) and the cash dividends accrued on their New
Preferred Stock from July 1, 1995 to the Effective Date of the Joint Plan. Under
the other Plan Option (the "Collateral Option"), the Noteholders receive with
respect to the secured portion of their claims distributions of the proceeds of
the continued collection or the sale of the motor vehicle receivables securing
their Notes. The selection of either Plan Option was made by each Noteholder
except that those Noteholders who voted against the Joint Plan were not entitled
to select between the Search Equity Option and the Collateral Option but receive
treatment under the Search Equity Option. Any purchaser of a Noteholder's claim
could change his transferor's election of a Plan Option so long as the change
occurred prior to the Effective Date.
Search Equity Option. Under the Search Equity Option, the pro rata
portion of the assets of the Debtors attributable to Noteholders electing the
Search Equity Option is transferred to Search on the Effective Date. Search
will ultimately issue to the Noteholders receiving the Search Equity Option
treatment, subject to adjustment, 0.2823 shares of New Preferred Stock and
0.3109 shares of Common Stock for each $1.00 of a Noteholder's secured claim.
The number of shares to be issued may be adjusted by agreement of the financial
advisors of Search and the official Creditors Committee of the Debtors as of the
Effective Date of the Joint Plan or, if no agreement can be reached, by the
Court. Such adjustment will be made to the extent necessary so that the
Noteholders will receive New Preferred Stock and Common Stock equal, on a fully
diluted basis, to 75% of the value of all shares of New Preferred Stock, Common
Stock, 12% Preferred Stock, Warrants (as defined below), other warrants, stock
options and rights then outstanding, or agreed to be issued by Search (with
certain exceptions), as if all of the Noteholders had elected the Search Equity
Option.
Collateral Option. Under the Collateral Option, a pro rata share of the
assets of the Debtors attributable to Noteholders electing the Collateral Option
will be transferred to a newly established trust (the "Noteholders Trust") to be
held for the benefit of such Noteholders. These assets consist primarily of
cash, motor vehicle receivables and repossessed
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motor vehicles. The transferred cash, net of a pro rata share of administrative
expenses, will be immediately distributed to the Noteholders. The trustee will
collect the motor vehicle receivables held by the Noteholders Trust and make
regular distributions to the Noteholders. In the alternative, the motor vehicle
receivables will be sold by the trustee to the highest bidder if the trustee
estimates that their sale proceeds would be greater than the present value of
the collection proceeds from the receivables. The net proceeds from the sale
will be distributed to the Noteholders.
Determination of Secured Claims of Noteholders. With respect to each
Debtor, the total amount of the allowed secured claims for the Noteholders of
that Debtor equals 120% of the present value (the "Present Value") of the
Debtor's "Net Cash Flow," using a 15% discount rate. The "Net Cash Flow" for
each Debtor is the estimated periodic cash distributions that would be made by
the Debtor to its Noteholders assuming it continued to collect its receivables
at the historical average collection rate experienced by Search and the Debtors
in the collection of their receivables. The Present Value was determined as of
August 1, 1995. The total Present Values for all Debtors is $44,367,048.
Unsecured Claims of Noteholders. The unsecured portion of the claims of
the Noteholders consists of the difference (i.e. $16,077,204) between total
principal and interest due the Noteholders of $69,317,661 and the amount of the
secured claims of $53,240,457. All Noteholders, with respect to the unsecured
portion of such Noteholders' claims, and any other holders of unsecured claims
against the Debtors, will receive from Search a pro rata share of five year
warrants to purchase an aggregate of 5,000,000 shares of Common Stock (the
"Warrants"). The exercise price of the Warrants will be $2.00 during the first
year and increase by $0.25 per year over the term of the Warrants. All Warrants
not exercised prior to expiration will be redeemed by Search at a price of $0.25
per Warrant.
The Joint Plan also requires the establishment of a trust (the "Litigation
Trust") for the benefit of the holders of unsecured claims against the Debtors,
including the Noteholders. The trust will be established with a total funding
of $350,000 to be supplied pro rata from the Debtors' assets. The Litigation
Trust will be authorized to pursue any claims and causes of action of each
Debtor and of any Noteholder who elected, or failed to elect not, to assign his
or her claims and causes of action to the Litigation Trust. Any proceeds will be
distributed pro rata to unsecured claim holders. The Litigation Trust will
automatically terminate if Search's Common Stock trades at an average price of
$2.50 per share for 30 consecutive trading days during the first year following
effectiveness of the Joint Plan.
Dissolution of Debtors. The Joint Plan requires Search to cause each of
the Debtors to be liquidated and dissolved as soon as possible after the
assignment of the Debtors' assets to the Noteholders Trust, the Litigation Trust
and Search.
Terms of New Preferred Stock. Search's Board of Directors is required to
establish a new series of its preferred stock for the purpose of effecting the
Joint Plan. The series is designated as the "9%/7% Convertible Preferred Stock"
(the "New Preferred Stock"). The Joint Plan specifies certain of the basic
preferences, rights and powers of the New Preferred Stock. The final terms of
the New Preferred Stock are established by the Board of Directors in the
Certificate of Designations filed with the Delaware Secretary of State. The
following summary describes only a few of the more significant terms of the New
Preferred Stock. Reference is made to the Joint Plan for a more detailed
summary of the required preferences, rights and powers of the New Preferred
Stock and to the Certificate of Designations for a complete statement of such
preferences, rights and powers.
The New Preferred Stock would have a liquidation preference of $3.50 per
share. The New Preferred Stock will receive quarterly dividends at a per annum
rate of (i) $0.315 (or 9% of $3.50) per share until the end of the twelfth
(12th) full calendar quarter following payment of the first dividend on the New
Preferred Stock ("9% End Date"), or (ii) $0.245 (or 7% of $3.50) per share after
the 9% End Date. Dividends accrue from July 1, 1995.
The New Preferred Stock will be convertible at any time into Common Stock,
at a conversion ratio of two shares of Common Stock for each share of New
Preferred Stock. The conversion ratio is subject to adjustment in certain
events.
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Up to 50% of the New Preferred Stock will be mandatorily converted into Common
Stock at the option of Search if Search's Common Stock trades (i) at a price of
$3.50 per share or higher on any 20 trading days for a period of 30 consecutive
trading days after the third anniversary of the Effective Date, or (ii) at a
price of $4.25 per share or higher on any 20 trading days in a period of 30
consecutive trading days between the second and third anniversaries of the
Effective Date. On the seventh anniversary of the Effective Date, all of the
New Preferred Stock will be mandatorily converted into Common Stock.
The holders of outstanding New Preferred Stock will be entitled to one
vote per share of New Preferred Stock. The affirmative vote or consent of the
holders of more than 66-2/3% of all outstanding shares of New Preferred Stock,
voting as a separate class, will be required (i) to amend, alter or repeal any
provision of the Certificate of Designations establishing the New Preferred
Stock to adversely affect the relative rights, preferences, qualifications,
limitations or restrictions of the New Preferred Stock, or (ii) to effect any
reclassification of the New Preferred Stock. In any vote, a holder of New
Preferred Stock will have one vote for each share of New Preferred Stock held of
record by such holder. If Search defaults in the payment of the first two
quarterly dividends or any four consecutive quarterly dividends, the holders of
New Preferred Stock will have two votes per share and will be given the right to
elect two-thirds of the members of Search's Board of Directors.
The New Preferred Stock will not be subject to redemption by Search or at
the election of the holders thereof. The New Preferred Stock will not have any
preemptive or sinking fund rights.
Cancellation of Notes. As a condition to receiving any distributions
under the Joint Plan, Noteholders are required by the Joint Plan to surrender
the certificates for their Notes to the transfer agent of the Joint Plan. Under
the Joint Plan, the Notes and the indebtedness represented by the Notes are
deemed canceled when the Confirmation Order becomes final. The trust indentures
for the Notes, and all related restrictions, are also deemed canceled.
Financial Information. As of February 29, 1995, the respective balance
sheets of the Debtors were as follows:
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DEBTORS' BALANCE SHEETS
Based Upon Debtors' Monthly Operating Reports
dated February 29, 1996
(Dollars in Thousands)
<TABLE>
<CAPTION>
ACF-1991 ACF ACP ACF-1992 ACF-III ACF-IV ACF-V ACF-VI
-------- --- --- -------- ------- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Cash and Equivalents $130 $305 $134 $5,068 $6,307 $2,275 $2,138 $789
Net Contracts Receivable 67 77 70 1,650 3,816 4,587 14,343 8,646
Allowance for Credit Losses (30) (35) (31) (715) (1,581) (1,676) (5,163) (3,030)
---- ---- ---- ------ ------ ------ ------ ------
Net Contracts Receivable after
Allowance for Credit Losses 37 42 39 935 2,235 2,911 9,180 5,615
Other Assets (8) (20) (21) (30) (145) (227) (988) (559)
---- ---- ---- ------ ------ ------ ------- ------
Total Assets $159 $327 $152 $5,973 $8,687 $5,413 $12,306 $6,963
==== ==== ==== ====== ====== ====== ======= ======
Liabilities & Shareholders' Equity
Secured Debt (Liabilities
Subject to Compromise) 590 1,506 610 10,173 15,275 10,171 20,163 10,832
Other Liabilities
(Not Subject to Compromise) 1 2 1 49 29 47 74 47
---- ---- ---- ------ ------ ------ ------ ------
Total Liabilities 591 1,508 611 10,222 15,304 10,218 20,247 10,879
Shareholders' Equity
(Capital Deficit ) (432) (1,181) (459) (4,249) (6,617) (4,805) (7,931) (3,916)
---- ------ ---- ------ ------ ------ ------- ------
Total Liabilities &
Shareholders Equity
(Capital Deficit) $159 $327 $152 $5,973 $8,687 $5,413 $12,306 $6,963
==== ==== ==== ====== ====== ====== ======= ======
</TABLE>
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Not Applicable
(b) PRO FORMA FINANCIAL INFORMATION.
Not Applicable
(c) EXHIBITS.
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
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2.1 Third Amended Joint Plan of Reorganization
2.2 Modification to Third Amended Joint Plan of Reorganization
2.3 Order Confirming Third Amended and Supplemented Joint Plan, Pursuant
to 11 U.S.C. Section 1129
2.4 Chapter 11 Post-Confirmation Order
2.5 Order Regarding Entry Date of Order Confirming Third Amended and
Supplemented Joint Plan Pursuant to 11 U.S.C. Section 1129
2.6 Order Granting Second Motion for Technical, Non-Material
Modification to the Third Amended and Supplemented Joint Plan of
Reorganization
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SIGNATURE
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.
AUTOMOBILE CREDIT FINANCE IV, INC.
By: /s/ Robert Idzi
------------------------------------
Robert Idzi, Chief Financial Officer
Dated: March 21, 1996
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
- ------- --------------------
2.1 Third Amended Joint Plan of Reorganization
2.2 Modification to Third Amended Joint Plan of
Reorganization
2.3 Order Confirming Third Amended and Supplemented Joint
Plan, Pursuant to 11 U.S.C. Section 1129
2.4 Chapter 11 Post-Confirmation Order
2.5 Order Regarding Entry Date of Order Confirming Third
Amended and Supplemented Joint Plan Pursuant to 11 U.S.C.
Section 1129
2.6 Order Granting Second Motion for Technical, Non-Material
Modification to the Third Amended and Supplemented Joint
Plan of Reorganization
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<PAGE> 1
EXHIBIT 2.1
EXHIBIT "A"
Michael R. Rochelle Joe B. Dorman
State Bar No. 17126700 State Bar No.06003500
Stephen T. Hutcheson Senior Vice President & General Counsel
State Bar No. 10335700 Search Capital Group, Inc.
Rochelle and Hutcheson, L.L.P. 700 N. Pearl Street, Ste. 400
2929 Carlisle, Suite 222 Dallas, Texas 75201
Dallas, Texas 75204 (214) 965-6007 (tel)
(214) 953-0182 (214) 965-6098 (fax)
(214) 953-0185 (Facsimile) COUNSEL FOR SEARCH CAPITAL GROUP, INC.
COUNSEL FOR THE DEBTORS
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
IN RE: Section CHAPTER 11
Section
Section CASE NOS. 395-34981-RCM-11
AUTOMOBILE CREDIT Section THROUGH 395-34988-SAF-11
FUND 1991-III, ET. AL., Section
Section ADMINISTRATIVELY
Section CONSOLIDATED UNDER
DEBTORS. Section CASE NO. 395-34981-RCM-11
THIRD AMENDED
JOINT PLAN OF REORGANIZATION
Search Capital Group, Inc., and Automobile Credit Fund 1991-III, Inc.,
Automobile Credit Finance, Inc., Automobile Credit Partners, Inc., Automobile
Credit Finance 1992-II, Inc., Automobile Credit Finance III, Inc., Automobile
Credit Finance IV, Inc., Automobile Credit Finance V, Inc. and Automobile
Credit Finance VI, Inc. file this Third Amended Joint Plan of Reorganization
pursuant to the provisions of Chapter 11 of the Code. Each of the Debtors
filed a petition seeking protection under Chapter 11 of the Code on August 14,
1995. This Joint Plan is a consolidated plan of reorganization for each
Debtor, and proposes the method for the treatment of each class of Creditors
and Interest Holders for each Debtor.
ARTICLE I.
DEFINITIONS
Many terms used in this Joint Plan are specifically defined for
purposes of this Joint Plan. These definitions are set forth in Appendix I
which is attached to and made an integral part of this Joint Plan. You will
need to read these definitions to understand this Joint Plan. Any word that is
not specifically defined in Appendix I shall have the meaning ascribed to it in
the text hereof or under the Code, if applicable. Otherwise it shall have its
usual and customary meaning. Rules of interpretation and construction are also
set forth in Appendix I.
<PAGE> 2
ARTICLE II.
HOW THE PLAN WORKS:
SEARCH EQUITY OPTION AND COLLATERAL OPTION
A. Noteholders Voting to Accept the Joint Plan.
2.01 Plan Options. Noteholders voting to accept the Joint Plan may
choose one of two options ("Plan Options"): First, an exchange of Notes for
Common Stock and Convertible Preferred Stock in Search (the "Search Equity
Option"); and second, the continued collection (Servicing) or sale of the Note
Collateral and distribution of resulting cash proceeds to the Noteholders (the
"Collateral Option"). As to any one Debtor, a vote to accept this Joint Plan
by two-thirds (2/3) in dollar amount of Notes and one-half ( 1/2) in number of
Noteholders voting on the Joint Plan will allow it to be confirmed and will
provide Noteholders the right to select either Plan Option.
As to any one Debtor, the Noteholders' selection of either
Plan Option will be implemented on a Noteholder by Noteholder basis. There are
no restrictions on the amount and number of Noteholders accepting the Joint
Plan that may select either the Search Equity Option or the Collateral Option.
B. Noteholders Voting Against the Joint Plan.
Noteholders voting against this Joint Plan will not be
entitled to select between the Search Equity Option and the Collateral Option.
If the Joint Plan is confirmed with respect to a particular Debtor, Noteholders
voting "No" on the Joint Plan with respect to their Allowed Noteholder Secured
Claim will receive treatment under the Search Equity Option.
2.02 The Search Equity Option and Collateral Option.
A. Search Equity Option. The Search Equity Option provides that
Noteholders who select it will exchange their Notes of their respective Debtor
for newly-issued stock of that Debtor, which will then be transferred to Search
in exchange for the Noteholders' share of newly issued Search Convertible
Preferred Stock and Search Common Stock, as described hereinafter. On the
Effective Date, Noteholders selecting the Search Equity Option will be paid a
cash dividend, accrued from July 1, 1995 at the rate of nine percent (9%) per
annum on the Convertible Preferred Stock.
B. The Collateral Option. Noteholders selecting the Collateral
Option will receive their beneficial interest in their proportionate share of
Note Collateral, including:
(i) existing Sinking Fund Account (as defined in the Indenture
Agreements or Memoranda) for each Debtor;
(ii) the future stream of cash from the automobile loans that
secure their notes; and
(iii) sale proceeds of repossessed automobiles, minus
(iv) the Noteholders' Pro Rata share of each Debtor's proportionate
share of the Administrative Claims,
by transferring their share of that Collateral to a Noteholders' Trust and
either (a) having it Serviced and the Cash proceeds regularly distributed to
the respective Noteholders or (b) having the Note Collateral sold to the
highest bidder, assuming a sale price greater than the Collateral's liquidation
value, (which value shall be the then-present value of the remaining Note
Collateral at the time of determination as agreed to by the Plan Proponents and
the Creditors' Committee or failing agreement, determined by the Bankruptcy
Court) and the proceeds distributed, as soon as practicable after such sale.
The Noteholders' Trustee will account for the Collateral and all proceeds
separately for each Debtor. The Noteholders' Trust will operate under and be
governed in accordance with a Noteholders' Trust Agreement which will be
prepared by the Creditors' Committee, filed with the Bankruptcy Court, treated
as a Plan Document and contain the terms and conditions similar to those as set
forth in Appendix II.
Third Amended and Supplemented
Joint Plan of Reorganization
2
<PAGE> 3
2.03 Transfer of Assets. On the Effective Date and pursuant to
Section 1123(a)(5)(B) of the Code, each Debtor with respect to which this Plan
is confirmed will cause a transfer of the proportionate share of the Note
Collateral and other assets of the Debtor (except those assets transferred to
the Litigation Trust pursuant to Sections 9.04 or 9.05 below) to be made to
Search for those Noteholders selecting the Search Equity Option and, subject to
the provisions of Section 4.04(B) below, to the Noteholders' Trust for those
Noteholders selecting the Collateral Option. Under Section 1141 (b) and (c) of
the Bankruptcy Code, the Confirmation Order will vest title to all of the
Debtors' assets in either Search, the Noteholders' Trust or the Litigation
Trust as of the Effective Date. Search will thereafter liquidate and dissolve
each Debtor.
The determination of the exact Loans, related Collateral, files and
computerized information (except for proprietary Search software) to be
assigned to Search for those Noteholders selecting the Search Equity Option and
to be assigned or delivered to the Noteholders' Trust, New Servicer or highest
bidder at a sale for those Noteholders selecting the Collateral Option shall be
made by the Collateral Consultant. The Creditors' Committee or a sub-committee
thereof and Search shall agree by the Confirmation Hearing date as to the
appropriate person(s) or institution(s) to undertake that role and if no
agreement can be reached then the Bankruptcy Court shall appoint such a
person(s) or institution(s), after notice and hearing and submission of
suggestions by the Creditors' Committee and Search.
The fees of the Collateral Consultant shall be treated as and paid as
an Ordinary Course Claim.
In performing its functions, the Collateral Consultant shall employ
criteria and standards typical of the sub-prime auto loan industry and which
are designed to and, achieve a fair and equitable division of the Collateral in
accordance with the Plan Options selected by the Noteholders.
2.04 Treatment of Noteholders Who Did Not Vote or Who Failed to
Select an Option. If the Joint Plan is confirmed as to any one Debtor, then
the holders of Allowed Noteholder Secured Claims who either (i) did not vote or
(ii) voted "Yes" but did not select a Plan Option will receive the
distributions provided for in the Search Equity Option.
ARTICLE III.
DIVISION OF CREDITORS INTO CLASSES
3.01 Class 1: Noteholder Secured Claims of Creditors of ACF-1991;
3.02 Class 2: Noteholder Secured Claims of Creditors of ACF;
3.03 Class 3: Noteholder Secured Claims of Creditors of ACP;
3.04 Class 4: Noteholder Secured Claims of Creditors of ACF-1992;
3.05 Class 5: Noteholder Secured Claims of Creditors of ACF-III;
3.06 Class 6: Noteholder Secured Claims of Creditors of ACF-IV;
3.07 Class 7: Noteholder Secured Claims of Creditors of ACF-V;
3.08 Class 8: Noteholder Secured Claims of Creditors of ACF-VI.
3.09 Class 9: Unsecured Claims of Creditors of ACF-1991;
3.10 Class 10: Unsecured Claims of Creditors of ACF;
3.11 Class 11: Unsecured Claims of Creditors of ACP;
3.12 Class 12: Unsecured Claims of Creditors of ACF-1992;
3.13 Class 13: Unsecured Claims of Creditors of ACF-III;
3.14 Class 14: Unsecured Claims of Creditors of ACF-IV;
3.15 Class 15: Unsecured Claims of Creditors of ACF-V;
3.16 Class 16: Unsecured Claims of Creditors of ACF-VI;
Third Amended and Supplemented
Joint Plan of Reorganization
3
<PAGE> 4
3.17 Class 17: Unsecured Claims of Search with respect to any
Debtor; 3.18 Class 18: Interest Holder of each Debtor.
ARTICLE IV.
TREATMENT OF CLASSES
Claims of Creditors that are Allowed Claims shall be satisfied and
paid in the following manner:
4.01 Allowed Noteholder Secured Claims in Classes 1 through 8.(1)
In consideration of and in full satisfaction for any and all Allowed
Noteholder Secured Claims against the Debtors, the holders of such Claims will
receive the treatment shown below, subject to the conditions which follow:
A Noteholder may vote either "YES" or "NO" on the Joint Plan.
A "YES" VOTE FOR THIS JOINT PLAN IS A VOTE TO RESOLVE ALL OUTSTANDING
CLAIMS AGAINST EACH DEBTOR, WHETHER THE RESULT BE THE EXCHANGE OF NOTES FOR
SEARCH EQUITY OR THE LIQUIDATION OF THE NOTEHOLDERS' COLLATERAL. A PERSON
SHOULD VOTE "NO" ON THE JOINT PLAN ONLY IF HE THINKS THAT THE SEARCH EQUITY
OPTION OR THE COLLATERAL OPTION DESCRIBED BELOW IS NOT A PREFERABLE ALTERNATIVE
AND THAT ANOTHER METHOD OF REORGANIZING OR LIQUIDATING THE DEBTORS SHOULD BE
PROPOSED.
4.02 Selection of Options by Classes 1 through 8. Each Noteholder
voting "Yes" on the Joint Plan may select either the Search Equity Option or
the Collateral Option. Any Noteholder voting "No" on the Joint Plan will not
be given the right to select either the Search Equity Option or the Collateral
Option. If the Joint Plan is confirmed as to the applicable Debtor, those who
voted "No" on the Joint Plan shall receive treatment under the Search Equity
Option.
4.03 The Search Equity Option
Each holder of an Allowed Noteholder Secured Claim selecting this Plan
Option shall receive a combination of Convertible Preferred Stock, with accrued
dividends from July 1, 1995 and Common Stock in the amounts and for the
consideration more particularly described below.
A. Exchange of Allowed Noteholder Secured Claims for
Securities Upon Confirmation of the Joint Plan, the Plan Transfer
Agent shall send a request to each holder of an Allowed
Noteholder Secured Claim to tender his Note or Notes. In consideration of and
in full satisfaction for all Allowed Noteholder Secured Claims against the
Debtors, the holders of Allowed Noteholder Secured Claims as of the Record Date
electing the Search Equity Option will receive such Debtor's newly issued
common stock that will be held temporarily by the Plan Transfer Agent on behalf
of such holder and who will on the Effective Date, exchange the Debtor's Common
Stock for Search Convertible Preferred Stock and Common Stock. With respect to
each Debtor, the total amount of the Allowed Noteholder Secured Claims for each
Class shall equal the Present Value of the Note Collateral and the Common Stock
Portion.
B. Issuance of Debtor's Common Stock
Holders of Allowed Noteholder Secured Claims against a Debtor will be
paid one (1) share of that Debtor's Common Stock for every one dollar ($1.00)
of such holder's Allowed Noteholder Secured Claim.
____________________
(1) NOTE: EACH NOTEHOLDER WILL HAVE BOTH A SECURED AND AN
UNSECURED CLAIM; NOTEHOLDERS MUST REVIEW SECTIONS 4.03 AND 4.04 REGARDING
PAYMENT OF THEIR ALLOWED NOTEHOLDER SECURED CLAIMS, AND SECTION 4.06 REGARDING
PAYMENT OF THEIR UNSECURED CLAIMS FOR A COMPLETE EXPLANATION OF THE TREATMENT
OF ALL NOTEHOLDER CLAIMS.
Third Amended and Supplemented
Joint Plan of Reorganization
4
<PAGE> 5
On the Effective Date, each Debtor will issue and deliver the Debtor's
Common Stock to the Plan Transfer Agent. The Debtor's Common Stock will be
held by the Plan Transfer Agent for the benefit of the holders of Allowed
Noteholder Secured Claims.
C. Issuance of Search Stock
On the Effective Date, Search will issue to the Plan Transfer Agent
the following: 0.2823 shares of Convertible Preferred Stock for each share of
Debtor's Common Stock and 0.3109 shares of Common Stock for each share of
Debtor's Common Stock. The Convertible Preferred Stock and the Common Stock
will be temporarily held by the Plan Transfer Agent for the benefit of the
holders of Allowed Noteholder Secured Claims. Such share amounts will, if
necessary, be adjusted pursuant to Section 4.03.D and E.
The Plan Transfer Agent will deliver the appropriate shares of
Convertible Preferred Stock and Common Stock to the holders of Allowed
Noteholder Secured Claims in exchange for the Notes originally issued thereto
by each such Debtor within twenty (20) days after the delivery of their
corresponding Notes to the Plan Transfer Agent.
D. Non-Dilutive Effect
Notwithstanding anything contained herein to the contrary, if all of
the Noteholders in each Class 1-8 elects the Search Equity Option, then on a
fully-diluted basis to be determined by agreement of the financial advisors for
Search and the Creditors' Committee as of the Effective Date (and if an
unresolvable dispute arises, then by the Bankruptcy Court), the Convertible
Preferred Stock and Common Stock to be issued to the Noteholders in such
classes shall equal seventy-five percent (75%) of the value of all shares of
Convertible Preferred Stock, Common Stock and Warrants, outstanding 12% Search
Preferred Stock, existing Search Common Stock, other warrants, stock options
and rights, then outstanding, issued or agreed to be issued by Search, as
verified in a certification delivered by Search to the Creditors' Committee
prior to the Effective Date.
E. Allocation of Securities if Collateral Option Selected
In the event that any Allowed Noteholder Secured Claimant selects the
Collateral Option, the financial advisors to Search and the Creditors'
Committee will determine the amounts of Convertible Preferred Stock and Common
Stock to be issued to the Allowed Noteholder Secured Claimants that do not
select the Collateral Option by (a) determining the amounts of Convertible
Preferred Stock and Common Stock that would have been issued had no Allowed
Noteholder Secured Claimant selected the Collateral Option and (b) multiplying
the amounts determined in Section (a) by the fraction of (i) the Allowed
Noteholder Secured Claims of those holders who do not select the Collateral
Option divided by (ii) the total Allowed Noteholder Secured Claims. In such
event, an Allowed Noteholder Secured Claimant not selecting the Collateral
Option would receive his pro rata share of the amounts determined in Section
(b) based upon his Allowed Noteholder Secured Claim relative to the total
Allowed Noteholder Secured Claims that do not select the Collateral Option.
4.04 The Collateral Option
Each Noteholder selecting the Collateral Option shall receive the
proceeds of his proportional amount of the Note Collateral for such Debtor as
more particularly described below.
A. The Noteholders' Trust
The proportionate amount of all Note Collateral assets (other than
those transferred to the Litigation Trust pursuant to Sections 9.04 and 9.05)
for each Debtor relating to the amount of Allowed Noteholder Secured Claims
whose holders elect the Collateral Option, will be transferred on the Effective
Date to the Trustee of the Noteholders' Trust, to be administered pursuant to
the terms of a Noteholders' Trust Agreement, which will be filed with the
Bankruptcy Court as a Plan Document (the "Noteholders' Trust Agreement"). A
summary of the basic terms to be incorporated in the Noteholders' Trust
Agreement is contained in Appendix II. The Noteholders' Trustee will either
sell or Service the Note Collateral and distribute the proceeds to the
Noteholders of a particular Debtor who selected the Collateral Option. The
beneficial interests in the Noteholders' Trust will be essentially
non-transferrable. The initial Trustee of the Noteholders' Trust will be
selected by the Creditors' Committee which will make its decision known to the
Bankruptcy Court on or prior to the Confirmation Hearing.
Third Amended and Supplemented
Joint Plan of Reorganization
5
<PAGE> 6
B. Sale of Assets
If, prior to the Effective Date, the Creditors' Committee receives a
bona fide offer to purchase the respective Collateral at a price, net of
selling costs and after taking into account risks associated with other
alternatives which exceeds the liquidation value of the Collateral (as agreed
upon by the Plan Proponents and the Committee or, if necessary, determined by
the Bankruptcy Court), the Noteholders' Trust may not be formed. Instead, the
net proceeds of the Collateral sale shall, after providing appropriate escrows
for the payment of Administrative Claims and other contingency expenses or
claims, be distributed to all Noteholders selecting the Collateral Option
within thirty (30) days following the closing of such sale.
For each Noteholder electing the Collateral Option, the Collateral
corresponding to such electing Noteholder shall be sold to the highest bidder
for cash if, in the estimation of the Noteholders' Trustee, the anticipated
proceeds net of selling costs equals or exceeds the liquidation value (as
defined above) of the Collateral. The proceeds of such Collateral sale,
together with the corresponding amount of escrowed cash, will be distributed to
all Noteholders electing the Collateral Option in such Class within thirty (30)
days following the closing of any such sale. If the Creditors' Committee or
Noteholder's Trustee determines that the cash purchase offers for such Note
Collateral are insufficient, the underlying loans will be collected pursuant to
a new servicing contract that will be executed by the Noteholders' Trust and/or
the Creditors' Committee and the New Servicer to be effective and fully
operational as soon as possible after the Confirmation Date.
Through the date of the Confirmation Hearing (and later as
necessary to consummate a sale or transfer of the Servicing), interested
parties will be permitted, subject to entering into appropriate confidentiality
agreements, to perform appropriate due diligence with respect to the Note
Collateral and ACAC's records pertaining thereto and reduce, if appropriate,
their bid to a definitive written contract for Servicing or sale to be closed
after Confirmation of the Joint Plan for those Classes or individual
Noteholders who select the Collateral Option.
All Note Collateral transferred to the Noteholders Trust on
behalf of Noteholders electing the Collateral Option will be segregated on the
books of the Noteholders Trust on a Debtor-by-Debtor basis, whether the Note
Collateral is sold in a bulk sale or collected over time under a new servicing
contract. Accordingly, Noteholders will receive the proceeds of the Note
Collateral of their particular Debtor, regardless of the manner in which their
Note Collateral is liquidated, and the actual percentage recoveries on their
respective Note Collateral may vary significantly.
4.05 Result of a "No" Vote in Classes 1 - 8.
If the Joint Plan is not confirmed as to any Debtor, that Debtor will
continue to conduct its business in the ordinary course although the
exclusivity period will terminate. Any party-in-interest may thereafter,
propose a new plan of reorganization, seek to have the Chapter 11 case
dismissed or converted to a Chapter 7 case, or take such other actions as may
be available to such party-in-interest under the Code with respect to that
Debtor.
4.06 Treatment of Classes 9 through 16: Allowed Unsecured Claims.
In consideration and in full satisfaction of any and all Allowed
Unsecured Claims within Classes 9 through 16 against the Debtors, a holder of
an Allowed Unsecured Claims will receive:
(a) his share of the 5,000,000 Warrants distributed to Allowed
Unsecured Claims as soon after the Effective Date as possible
in the ratio that each such holder's Allowed Unsecured Claim
bears to all Allowed Unsecured Claims against the Debtors; and
(b) a distribution of the proceeds, if any, of the Litigation
Trust that is established pursuant Article IX hereof.
Distributions, if any, from such Litigation Trust will be made
on a quarterly basis beginning on the first anniversary date
of the Effective Date. As to any single Debtor, such
distributions will be made to each holder of an Allowed
Unsecured Claim on pro rata basis in a ratio that such
holder's Allowed Unsecured Claim bears to all Allowed
Unsecured Claims against that Debtor.
Third Amended and Supplemented
Joint Plan of Reorganization
6
<PAGE> 7
4.07 Class 17: Unsecured Claims of Search.
Class 17 will receive nothing on account of such Claims.
4.08 Class 18: Interest Holder of Each Debtor.
Allowed Interests in Class 18 will receive nothing on account of such
Interests.
4.09 Designation of Impaired Classes.
All Classes in this Joint Plan are impaired.
ARTICLE V.
CONDITIONS PRECEDENT TO CONFIRMATION AND THE EFFECTIVE DATE
5.01 Confirmation of Joint Plan. Confirmation of the Joint Plan is
specifically conditioned on:
A. Shareholders of Search shall have by proxy solicitation
approved by the required voting margins the amendments to its articles of
incorporation and authorized the issuance of necessary Convertible Preferred
Stock, Common Stock and Warrants to fulfill Search's obligations hereunder; and
B. Applicable requirements of Title 11 of the Bankruptcy Code
have been fulfilled.
5.02 Effective Date. Occurrence of the Effective Date is
specifically conditioned upon:
A. As of the Effective Date if a New Servicer has been selected
by the Creditors' Committee, then such New Servicer will either be
substantially operational or Search will have turned over all of the required
documentation and computerized information (other than Search's proprietary
software) pertaining to the applicable Note Collateral to be Serviced by such
New Servicer, or Search shall have committed in writing to the Noteholders'
Trust to continue Servicing such Collateral for so long as requested by the
Noteholders' Trustee, at a reasonable and appropriate rate which shall not
exceed the rate to be charged by the New Servicer. In order to become fully
operational, such New Servicer will have been provided by Search full and
complete access to and been delivered all original files and computerized
information with respect to such Collateral, other than Search's proprietary
software.
B. Search will have selected and appointed two such nominees as
active members of its Board of Directors. Provided, however, that the failure
or refusal of such approved nominee to serve shall not prevent the Joint Plan
from becoming effective.
C. The specific Note Collateral applicable to all Noteholders
having selected a Plan Option will have been selected by the Collateral
Consultant and such Note Collateral will be ready for immediate delivery and/or
transfer, as the case may be, to Search or the Noteholders' Trust (or, if
applicable, the highest bidder) in accordance with each such Noteholders'
election.
Third Amended and Supplemented
Joint Plan of Reorganization
7
<PAGE> 8
ARTICLE VI.
TERMS AND CONDITIONS GOVERNING
CONVERTIBLE PREFERRED STOCK
6.01 Dividends.
The Convertible Preferred Stock dividend annual rate will be:
o $0.315 (9%) per share from July 1, 1995, to the end of 12th
full calendar quarter following payment of first dividend
("End Date").
o $0.245 (7%) per share from the day following the End Date to
the date it is converted but no later than the seventh
anniversary of the Effective Date.
6.02 Payment of Dividends.
The dividends on the Convertible Preferred Stock will only be paid to
the Noteholders entitled to receive the Convertible Preferred Stock pursuant to
the terms of the Search Equity Option. Convertible Preferred Stock dividends
will begin to accrue from July 1, 1995. The first payment of Convertible
Preferred Stock dividends will be made in conjunction with the disbursement of
the Convertible Preferred Stock as soon as practicable after the Effective Date
and will be based on the accrual period of July 1, 1995 to the date the
Confirmation Order becomes a Final Order. This dividend payment will be made
in Cash. Thereafter, quarterly dividends will be paid in Cash (the first
quarter's payment being based on the accrual period beginning the day the
Confirmation Order becomes a Final Order and ending on the last day of the
quarter) to the holders of record on or about the 15th day of the month
following the end of each quarter, until one full year's dividends have been
paid in cash by Search following the Effective Date. After one (1) full year
of Cash dividends have been paid by Search, dividends will continue to be paid
entirely in Cash unless Search is prohibited from paying the dividends entirely
in Cash by Delaware law (the state of its incorporation ) or by the terms of
any loan agreement of $5,000,000 or more. If Search is prevented from paying a
dividend entirely in Cash, it will pay a dividend in the form of a mixture of
Cash and Common Stock to the extent possible under Delaware law and any
applicable loan agreement or, if necessary, entirely in Common Stock, provided
the average closing price of the Common Stock is $.50 or greater for the twenty
(20) trading day period ending five (5) days prior to the date of payment of
the Common Stock Dividend.
6.03 Conversion.
On any Conversion Date the Convertible Preferred Stock will convert to
Common Stock at the ratio of 2.0 shares of Common Stock for each 1.0 share of
Convertible Preferred Stock.
6.04 Mandatory Conversion.
Search may, at its option, call for the conversion, in whole or in
part, of up to one-half (50%) of the number of shares of Convertible Preferred
Stock issued as of the Effective Date under the following conditions: (i) the
Common Stock trades at $4.25 or higher on each of any twenty (20) trading days
in a period of thirty (30) consecutive trading days, beginning with the first
day following the second anniversary of the Effective Date and ending on the
third anniversary of the Effective Date, or (ii) the Common Stock trades at
$3.50 or higher on each of any twenty (20) trading days in a period of thirty
(30) consecutive trading days, beginning with the first day following the third
anniversary of the Effective Date and ending on the day immediately preceding
the Conversion Date. For purposes of this Section, the Common Stock price
shall be determined by using the closing bid price as reported by NASDAQ or
comparable national exchange. The conversion prices shall be subject to
adjustment in the same manner as the conversion rate is adjusted, as discussed
herein.
Any previously unconverted Convertible Preferred Stock (which shall be
a minimum of fifty percent (50%) of the Convertible Preferred Stock) shall be
convertible by Search on the seventh anniversary of the Effective Date. The
Convertible Preferred Stock shall be convertible into Common Stock at a
fraction which has as its denominator the market price of the Common Stock at
the time of conversion, and which has as its numerator the $3.50 liquidation
value of the Convertible Preferred Stock; provided, however, that in no event
shall the ratio so expressed be higher than 3 to 1.
Third Amended and Supplemented
Joint Plan of Reorganization
8
<PAGE> 9
Within thirty (30) days after any Conversion Date, Search will deliver
the new Common Stock certificates and pay all accrued and unpaid dividends on
the Convertible Preferred Stock.
6.05 Voluntary Conversion Rate.
At any time after the Effective Date but prior to the seventh
anniversary of the Effective Date, a holder of the Convertible Preferred Stock
may, upon written notice to Search and in compliance with the Certificate of
Designation and applicable laws, convert all or any portion of the Convertible
Preferred Stock then held at the ratio of two (2.0) shares of Common Stock for
each one (1.0) share of Convertible Preferred Stock. Within thirty (30) days
after voluntary conversion of any Convertible Preferred Stock, Search will
deliver the new Common Stock Certificates and pay any accrued but unpaid
dividends.
6.06 No Required Redemption.
Because Search is not obligated to redeem the Convertible Preferred
Stock, Search will not establish a redemption or sinking fund.
6.07 Board of Directors.
On the Effective Date, subject to the conditions of Article
5.02.B, and subject to any lenders' negotiated rights to appoint new board
members, the initial board of directors of Search shall consist of eight (8)
members, which shall include the six (6) current members of the Search board
and two (2) additional directors selected by Search from the nominees selected
by the Creditors' Committee. The duration of the terms of the new directors
shall be three (3) years for one of the two additional directors, and two (2)
years for the other. With the exception of the two additional directors
selected by the Creditors' Committee referred to above, all of the terms of the
directors shall remain as they presently exist, subject to the terms of
Search's amended charter and bylaws. The board of directors shall be
compensated under a plan providing for the payment to non-employee directors of
annual director fees and meeting fees and the reimbursement to all directors
for expenses incurred in attending meetings of the board of directors. The two
(2) new members of the board of directors nominated by the Creditors' Committee
shall be members of the three-member Compensation Committee for a one (1) year
period after the Effective Date. The Compensation Committee will have, among
its responsibilities, that of approving the issuance, granting terms and
conditions of all warrants, stock options, bonuses, and forms of compensation
for the officers and directors set forth in the Joint Plan or Joint Disclosure
Statement. To the extent necessary, Search will amend by the Effective Date
its charter and/or Bylaws so as to make the Compensation Committee's
determination as to the above binding on the whole Board of Directors for one
(1) year after the Effective Date.
6.08 Voting.
Each share of Convertible Preferred Stock shall be entitled to
exercise the same voting rights as each share of Common Stock and shall have
one vote per share.
6.09 Voting After Failure to Pay Dividends.
In addition to the foregoing voting rights, if Search fails to pay a
dividend on the Convertible Preferred Stock (i) in Cash for either of the first
two quarterly dividends following the Effective Date or (ii) in Cash or Stock
for any four consecutive quarters, the Convertible Preferred Stock shall
automatically be vested with an additional one vote per share, and the holders
of the Convertible Preferred Stock will be given the right to elect immediately
at an emergency meeting of shareholders which Search shall hold within thirty
(30) days after any such failure, such additional members as equals two-thirds
(2/3) of Search's Board of Directors determined after such election.
6.10 Supermajorities Required.
Prior to the seventh anniversary of the Effective Date, Search will
not, without the affirmative vote or consent of the holders of at least 66 2/3%
of all outstanding shares of Convertible Preferred Stock, voting as a single
class, (i) amend, alter or repeal any provision of the Certificate of
Designation, to adversely affect the relative rights, preferences,
qualifications, limitations or restrictions of the Convertible Preferred Stock
or (ii) effect any reclassification of the Convertible Preferred Stock (other
than by virtue of the mandatory conversion set forth above).
Third Amended and Supplemented
Joint Plan of Reorganization
9
<PAGE> 10
6.11 Merger and Sale.
Prior to the seventh anniversary of the Effective Date, Search will
not, without the affirmative vote or consent of holders of at least fifty
percent (50%) of all outstanding shares of Convertible Preferred Stock, voting
as a single class (i) merge with another company when thereafter Search is not
the controlling entity, or (ii) sell more than fifty percent (50%) of Search's
assets.
6.12 Liquidation Preference.
If Search is liquidated, the holders of Convertible Preferred Stock
will have a preference to receive liquidation proceeds (proceeds from the
disposition of assets less payment of all debts) in the amount of $3.50 per
share plus all accrued and unpaid dividends, if any.
6.13 Status With Relation to Subsequently-Issued Convertible
Preferred Stock Issues. Search may issue other convertible preferred
stock after the consummation of the Joint Plan. However, no other
preferred stock, whether or not convertible, may be issued in the future that
will be pari passu with the Convertible Preferred Stock unless at the time of
such issuance all dividends due the Convertible Preferred Stock have been paid
in full. In no event shall convertible preferred stock be issued which is
senior in rights to that of the Convertible Preferred Stock, other than that
such pari passu convertible preferred stock may carry the then-current market
interest rate, which may be higher or lower than that of the Convertible
Preferred Stock.
6.14 Status With Relation To Currently-Existing and Any Future
Preferred Issues. The Convertible Preferred Stock will be pari passu
with the existing 12% Preferred Stock and pari passu or
senior in rights to future issues of straight, convertible and all other forms
of preferred stock with the exception of the rate of interest for such future
issues of preferred stock, which shall be no greater than the prevailing market
rate for similar such issues.
6.15 Anti-Dilution.
Search shall be prohibited from issuing preferred or common stock or
warrants or any other form of security to an affiliate for consideration that
does not equal or exceed the fair market value of such security (as determined
by an independent third party); provided, that Search may issue options or
warrants to new or existing directors or management, so long as such warrants
or options are approved by the Compensation Committee of the Board of
Directors. Search may also issue Common Stock upon the exercise of warrants or
options presently outstanding; provided, that such warrants or options are not
amended or modified without the approval of the Compensation Committee. In the
event that Search issues any security not excepted above for consideration that
is less than the fair market value (as determined above) of such security, the
number of shares of Common Stock, Convertible Preferred Stock and Warrants
shall be immediately and appropriately adjusted (and the conversion price of
the Convertible Preferred Stock and the exercise price of Warrants shall be
adjusted downward on a full ratchet basis) to take into account the dilution in
value of the securities holdings of Noteholders caused by such below-market
issuance of Search's securities.
In addition, Search will not: (a) declare any cash or other form of
dividend on or with respect to any issue of common stock unless all dividends
on the Convertible Preferred Stock have been paid, nor (b) issue common stock
that is convertible into convertible or other preferred stock.
ARTICLE VII.
TREATMENT OF UNCLASSIFIED CLAIMS
7.01 Administrative Claims and Priority Tax Claims.
As provided in Section 1123(a)(1) of the Code, Administrative Claims
and Priority Tax Claims against the Debtors shall not be classified for
purposes of voting or receiving distributions under the Joint Plan. Rather,
all such Claims shall be treated separately as unclassified Claims.
Third Amended and Supplemented
Joint Plan of Reorganization
10
<PAGE> 11
7.02 Treatment of Administrative Claims.
All Administrative Claims against any of the Debtors shall be treated
as set forth in Sections 7.03 - 7.08 below:
7.03 Time for Filing Administrative Claims.
The holder of an Administrative Claim, other than (1) a Fee Claim, (2)
a liability incurred and paid prior to the Confirmation Date in the ordinary
course of business by the Debtors, (3) an Allowed Administrative Claim, or (4)
a Rejection Claim which must be filed in accordance with Article X of this
Joint Plan, must file with the Bankruptcy Court and serve on the Plan
Proponents and their counsel, notice of such Administrative Claim within five
(5) days prior to the Confirmation Hearing. Such notice must include at a
minimum: (1) the Debtor that is liable for the Administrative Claim, (2) the
name of the holder of the Administrative Claim, (3) the amount of the
Administrative Claim, and (4) the basis of the Administrative Claim. Failure
to file this notice timely and properly shall result in the Administrative
Claim being forever barred and discharged.
7.04 Procedure and Time for Filing Fee Claims.
Each professional hired pursuant to Section 330 of the Bankruptcy
Code, any indenture trustee or other entity (including attorneys, accountants,
investment bankers, brokers, consultants and other such persons for the Debtors
and the Creditors' Committee) that hold or assert a Fee Claim against the
Debtors that is for unpaid fees or unreimbursed expenses (including "success
fees") incurred by or agreed to be paid by the Debtors before the Effective
Date or arising from or in connection with the Bankruptcy Cases shall be
required to file with the Bankruptcy Court and serve on all parties required to
receive notice an estimate of such fees on or before the Confirmation Date and
a Fee Application on or before the date set for such filings by the Bankruptcy
Court. The failure to file timely the Fee Application as required by the
Bankruptcy Court shall result in the Fee Claim being forever barred and
discharged. To the extent necessary, entry of the Confirmation Order shall
amend and supersede any previously entered order of the Bankruptcy Court
regarding procedures for the payment of such Fee Claims.
7.05 Allowance of Administrative Claims.
An Administrative Claim with respect to which notice has been properly
filed pursuant to the Joint Plan shall become an Allowed Administrative Claim
if no objection is filed within thirty (30) days after the filing and service
of notice of such Administrative Claim. If an objection is filed within such
thirty (30) day period, the Administrative Claim shall become an Allowed
Administrative Claim only to the extent Allowed by Final Order. An
Administrative Claim that is a Fee Claim, and with respect to which a Fee
Application has been properly filed pursuant to the Joint Plan, shall become an
Allowed Administrative Claim only to the extent Allowed by Final Order.
Section 1129(a)(4) of the Code provides that any payment made or to be
made by the proponent, by the debtor, or by a person issuing securities or
acquiring property under the plan, for services or for costs and expenses in or
in connection with the case, or in connection with the plan and incident to the
case, must be approved by the court as reasonable. Pursuant to Section
1129(a)(4), Search will seek approval from the Bankruptcy Court of the
reasonableness of the fees and expenses to be paid to Search's professionals in
connection with these cases.
7.06 Payment of Allowed Administrative Claims.
Allowed Administrative Claims shall be paid in full, in cash, on the
Effective Date, or within fifteen (15) days after allowance of such Claim, if
entry of a Court order of allowance be necessary. Allowed Administrative Claim
for professional fees of the Debtors' and Creditors' Committee's counsel,
financial and other advisors shall be allocated among and remain the liability
of each Debtor in the ratio that the Present Value of the Notes of each Debtor
bears to the Present Value of the Notes of all Debtors. If, on the Effective
Date, a particular Debtor does not have enough cash to pay the professional
fees mentioned above, then the liability for such fees shall follow the Note
Collateral. Such fees shall then be paid out of the first amounts collected
from the Note Collateral and from Search, on a pro rata basis based upon the
percentages of Allowed Noteholder Secured Claims of each of the Debtors that
chooses the Collateral Option and the Search Equity Option under this Plan.
The Noteholders' Trust and the Collateral attributable to the Noteholders
having selected the Collateral Option shall not be liable for the fees,
incurred by Search's professionals, such as Alex. Brown & Sons, Brean Murray,
Foster Securities, or Akin Gump Strauss Hauer & Feld.
Third Amended and Supplemented
Joint Plan of Reorganization
11
<PAGE> 12
7.07 Priority Tax Claims.
Each holder of an Allowed Priority Tax Claim as to a particular Debtor
shall receive the amount of such holder's Allowed Claim in one cash payment in
full satisfaction of such holder's Allowed Claim upon the latest to occur of
(a) the Effective Date; (b) as soon as practicable after the tenth (10th)
business day after such Claim becomes an Allowed Claim; (c) the date that the
Allowed Claim becomes due and payable pursuant to the terms of the agreement
upon which such Allowed Claim is based or becomes due and payable under
applicable law, or (d) upon such other terms as may be agreed to by the holder
of such Allowed Claim and the Plan Proponents (or Search or the Noteholders'
Trustee as is appropriate if after the Effective Date). Search and the
Noteholders' Trustee reserve the right under Section 1129(a)(9)(C) of the Code
to extend the payment of Allowed Priority Tax Claims; provided, however, in
such event, that the holder of such Allowed Priority Tax Claim shall receive on
account of such Claim deferred cash payments, over a period not exceeding two
(2) years after the date of assessment of the tax, of a value, as of the
Effective Date of this Joint Plan, equal to the Allowed amount of such Claim.
7.08 Treatment of Fees and Expenses of Indenture Trustee.
The reasonable fees, costs and out-of-pocket expenses, including
attorneys' fees, of the Indenture Trustee, including without limitation such
fees, costs and expenses incurred prior to the Petition Date, are
Administrative Claims in the Case. Set forth in Section 2(G)(i)(b) of the
Disclosure Statement are the fees incurred as of the most recent available date
by the Indenture Trustee for the Notes of six (6) of the Debtors. Any dispute
regarding the reasonableness of any of such fees and expenses shall be
determined by the Bankruptcy Court at or prior to the Confirmation Hearing.
The treatment of the Indenture Trustee's fees and expenses as provided in this
Section 7.08 shall be in lieu of and in consideration of the respective
Indenture Trustee's lien rights (if any) under the applicable Trust Indenture.
ARTICLE VIII.
MEANS FOR EXECUTION AND CONSUMMATION OF THE JOINT PLAN
8.01 Amended Articles of Incorporation and Amended Charter.
Prior to the Effective Date, each Debtor that has Allowed Noteholder
Secured Claimants who elect the Search Equity Option will amend and restate its
Articles of Incorporation pursuant to either Article 4.14 of the Texas Business
Corporation Act or Section 303 of the Delaware General Corporation Law in order
to provide for the issuance of sufficient shares of Debtor's Common Stock to
satisfy the requirements of Article 4.03.B. above for which it will also have
obtained shareholder approval necessary under Delaware law. Prior to the
Effective Date, Search will amend its Charter to include a provision which is
consistent with the requirements of Section 1123(a)(6) of the Bankruptcy Code,
and to the extent necessary to implement any of the other provisions of this
Joint Plan.
8.02 Certificate of Designation.
Search's Board of Directors will file a Certificate of Designation
with the Secretary of State of the State of Delaware, containing the terms and
conditions of the Convertible Preferred Stock as set forth in Article VI.
8.03 Liquidation of Debtors.
As soon as possible after the transfer and assignment of the Debtors'
assets to the Noteholders' Trust, the Litigation Trust or Search, as the case
may be, Search shall cause each of the Debtors to be liquidated or dissolved.
8.04 Stock Exchange Listing.
Search will use commercially reasonable business efforts to cause the
Convertible Preferred Stock, Common Stock, and Warrants to be listed on NASDAQ
or another national stock exchange.
8.05 Plan Documents.
On or before five (5) days prior to the commencement of the
Confirmation Hearing, the Plan Proponents shall file the Plan Documents with
the Bankruptcy Court.
Third Amended and Supplemented
Joint Plan of Reorganization
12
<PAGE> 13
8.06 Condition to Distribution to Record Noteholders.
As a condition to receiving distributions provided for by this Joint
Plan in respect of the Notes, any record Noteholder shall be required to
surrender to the Plan Transfer Agent the Notes, certificates or other
instruments evidencing such holder's ownership of the Notes. All such
instruments surrendered shall be delivered to the Plan Transfer Agent
accompanied by completed letters of transmittal or otherwise in proper form.
Unless waived by Search or the Noteholders' Trustee, any person seeking the
benefits of being a record Noteholder who is unable to surrender the necessary
instrument shall supply, if required by Search or, if applicable, the
Noteholders' Trustee, an indemnity bond acceptable to Search, the Noteholders'
Trustee and the Plan Transfer Agent, which indemnity bond shall hold harmless
the Plan Proponents, the Noteholders Trustee, and the Plan Transfer Agent
acting from any damages, liabilities, or costs incurred in treating such person
as a record Noteholder, together with appropriate evidence of the destruction,
loss, or theft of such instrument. Thereafter, such person shall be treated as
the record Noteholder for purposes of this Joint Plan.
8.07 Means of Cash Payment.
Cash payments made pursuant to this Joint Plan shall be in U.S. funds,
by check drawn on a domestic bank, or, at the option of Search or the
Noteholders' Trustee, as the case may be, by wire transfer from a domestic
bank.
8.08 De Minimis Distributions.
No distribution of less than twenty-five dollars ($25.00) or fewer
than five (5) shares of Convertible Preferred Stock or Common Stock shall be
made to any holder of an Allowed Claim. The Allowed Claim producing such
distribution shall be canceled and discharged, and the de Minimis distribution
shall be retained by Search or the Noteholders' Trustee, as the case may be.
8.09 Post-Effective Date Fees and Expenses of Professional Persons.
Except as provided in this Section of the Joint Plan, after the
Effective Date, Search or the Noteholders' Trust, as the case may be, shall in
the ordinary course of business and without the necessity for any approval by
the Bankruptcy Court, pay the reasonable fees and expenses of the professional
persons employed by the Debtors, Search and the Creditors' Committee related to
implementation and consummation of the Plan provided, however, that no such
fees and expenses shall be paid except upon receipt by such respective entity
of a written notice, which invoice shall also be served upon counsel for the
Creditors' Committee, the Plan Proponents and the United States Trustee, from
the professional person seeking fee and expense reimbursement and provided,
further, however, that Search or another party-in-interest may, within ten
(10) days after receipt of an invoice for fees and expenses, request that the
Bankruptcy Court adjudicate the reasonableness and appropriateness of any such
request.
8.10 Time Bar to Cash Payments.
Checks issued in respect of Noteholders by the Noteholders' Trust or
Search shall be null and void if not negotiated within six (6) months after the
date of issuance thereof. Request for reissuance of any check shall be made
directly to the Noteholders' Trustee, or, if applicable, Search by the
Noteholder with respect to which such check originally was issued. Any claim
in respect of such a voided check shall be made on or before the later of the
second anniversary of the Effective Date or the date ninety (90) days after
such check becomes null and void pursuant hereto. After such date, all claims
in respect of void checks shall be discharged and forever barred.
8.11 Delivery of Distributions.
Subject to Bankruptcy Rule 9010, distributions to holders of Allowed
Claims shall be made at the address of each such holder as set forth on the
proofs of Claim or proofs of Interest filed by such holders (or at the last
known addresses of such a holder if no proof of Claim or proof of Interest is
filed or if the Debtors have been notified in writing of a change of address),
or in the case of Noteholders, may be made at the addresses contained in the
records of the Indenture Trustee, except as provided below. If any holder's
distribution is returned as undeliverable, no further distributions to such
holder shall be made unless and until Search, the Plan Transfer Agent, or the
Noteholders' Trustee is notified of such holder's then current address, at
which time all missed distributions shall be made to such holder without
interest. Amounts in respect of undeliverable distributions made through the
Plan Transfer Agent or through the Noteholders' Trustee shall be returned to
the Plan Transfer Agent or the Noteholders' Trustee making such
Third Amended and Supplemented
Joint Plan of Reorganization
13
<PAGE> 14
distribution until such distributions are claimed. All Claims for
undeliverable distributions shall be made on or before the later of second
anniversary of the Effective Date and the date ninety (90) days after such
Claim is Allowed. After such date, all unclaimed property shall revert to
Search or its successor or the Noteholders' Trustee and the Claim of any holder
with respect to such property shall be discharged and forever barred.
8.13 Cancellation of Notes.
In respect of Debtors whose Plans are confirmed, when the Confirmation
Order becomes a Final Order, the Notes for all such Debtors will be canceled.
8.14 Purchase of Stock by Hall Financial Group, Incorporated.
Under this Joint Plan, Hall Financial Group, Inc. ("HFG") will have
the option to purchase Search Common Stock, Convertible Preferred Stock, and
Warrants. HFG shall receive securities equal to those received by Noteholders
who elect the Search Equity Option as though it held Allowed Secured and
Allowed Unsecured Claims. The purchase price will be equal to an amount that
is 80% of the Present Value of the Notes that would have been entitled to such
shares and warrants under the Search Equity Option less an amount equal to
seven months of the accrued dividends attributable to the Convertible Preferred
Stock that is received by HFG. HFG shall be entitled to purchase an amount of
securities equating to up to a maximum of $6,000,000 in Present Value of Notes.
The proceeds of any shares so purchased will be paid to Search.
ARTICLE IX.
ESTABLISHMENT AND GOVERNANCE OF
THE CREDITORS' LITIGATION TRUST
9.01Establishment.
On the Effective Date, the Litigation Trust will be established for
the benefit of the holders of Allowed Unsecured Claims against those Debtors
for whom the Confirmation Order applies. The beneficial interests in the
Litigation Trust will be non-transferrable. The Litigation Trust will maintain
separate accounting records for each Class 9 through 16 and the holders of
Allowed Unsecured Claims within each such Class, who will hold Class A
Beneficial Interests (as defined in the Litigation Trust Agreement). In
addition, the Litigation Trust shall keep separate accounting records for all
Noteholders who by default or in accordance with the procedures set forth in
the Ballot assign their individual causes of action to the Litigation Trust
(the "Assigning Noteholders"), who will hold Class B Beneficial Interests (as
defined in the Litigation Trust Agreement). The terms of the Litigation Trust
shall be as set forth in the Litigation Trust Agreement which will be filed
with the Bankruptcy Court as a Plan Document prior to Confirmation. The
Litigation Trust is intended to be a grantor trust for federal income tax
purposes. After the Effective Date, the Litigation Trust shall be maintained in
accordance with this Joint Plan and the Litigation Trust Agreement.
9.02 Title.
On and after the Effective Date, title to the assets of the Litigation
Trust, including those described in Section 9.04 herein, shall be transferred
by the Debtors and the Assigning Noteholders to and vested in the Litigation
Trustee for the benefit of the beneficiaries of the Litigation Trust on the
Confirmation Date.
9.03 Funding.
The Litigation Trust shall be established with a total funding of
$350,000. For purposes of funding or cost allocation, this sum shall be
prorated among the eight (8) Debtors, in a ratio that each Debtor's Allowed
Unsecured Claims bears to all Debtor's Allowed Unsecured Claims, or if required
by the Creditors' Committee, estimated under Section 502 of the Code, as the
Unsecured Claims for each. No distribution shall be made to the beneficiaries
of the Litigation Trust attributable to particular Debtors, until such
allocated costs have been first recovered from the proceeds of litigation
attributable to such Debtor and/or its particular Noteholders.
9.04 Preservation and Assignment of Causes of Action.
Each Debtor will transfer and assign, to the extent permitted by
applicable law, all rights and causes of action pursuant to (a) Section 502 of
the Bankruptcy Code; (b) preference claims pursuant to Section 547 of the
Bankruptcy Code; (c) fraudulent transfer claims pursuant to Section 548 of the
Bankruptcy Code; (d) all other claims and causes of action of each Debtor
against any Person to the Litigation Trust ("Estate Claims") as of the
Effective Date.
Third Amended and Supplemented
Joint Plan of Reorganization
14
<PAGE> 15
Accordingly, the Estate Claims shall be preserved, transferred and assigned to,
and vested in, the Litigation Trust for all purpose as of that date. Subject
in all respects to the following limitations, the respective Litigation Trust
will be authorized to prosecute, settle and collect the Estate Claims on behalf
of each Debtor. The Litigation Trust may also hold, prosecute, settle and
collect causes of action which may be the property of Noteholders ("Individual
Claims"), but only to the extent that such claims are assigned to the Trust
pursuant to the procedure contained in the ballot for voting on the Joint Plan
or by default by such Noteholder failing to submit a Ballot or properly execute
the Non-Assignment Election provided for on the Ballot. The Litigation
Trustee, in its sole discretion, may pursue such causes of action and without
further order of the Bankruptcy Court take all actions in connection with the
prosecution, defense, compromise and settlement thereof. In such connection,
the Litigation Trustee may retain such counsel, accountants or other
professionals deemed necessary in connection therewith. All proceeds of
recoveries, if any, received from or in respect of the causes of action
(whether by settlement, judgment, or otherwise) shall, after payment of all
related reasonable professional and experts fees, become and be distributed to
the Noteholders of the respective Debtor, Pro Rata, for whom such settlement,
judgment or other form of recovery was obtained.
9.05 Assignment of Causes of Action.
On the Effective Date, Noteholders, on the Record Date will in their
Ballots for voting on the Joint Plan assign to the Litigation Trust any
pre-petition Claims or causes of action such Noteholders may hold as of the
Record Date against any Persons, including, but not limited to, the Debtors,
Search, their respective current or former directors, officers, and
professionals, or other third parties, including, but not limited to, financial
institutions and third party professionals arising from or relating to such
holder's status as a Creditor of the Debtors on account of a financial
transaction, such Noteholder's transactions with the Debtors, or such
Noteholder's purchase or sale of any portion of the Notes, or which arise
pursuant to the terms of the respective Indenture Agreement or Memorandum under
which such Notes were issued.
A Noteholder may elect not to assign his Individual Claims to the
Litigation Trust by checking the Non-Assignment Election on the Ballot.
Absent checking the Non-Assignment Election on the Ballot, including if a
Noteholder does not return a Ballot, the Noteholder will be deemed to have
chosen to assign his Individual Claims to the Litigation Trust. In the event a
Noteholder does not return a Ballot, the Confirmation Order shall be deemed the
operative document for assignment of such Noteholder's Individual Claims.
9.06 Interim Trustee.
To the extent Debtors' counsel and the Creditors' Committee agree and
notify the Bankruptcy Court of same, that discussions regarding the resolution
or liquidation of certain Trust Assets (causes of action) are susceptible to
imminent resolution, the appointment of a permanent Litigation Trustee may be
deferred for a period of ninety (90) days. During such ninety (90) day period,
the Assignments discussed in Sections 9.04 and 9.05 above shall be effective
and the Interim Trustee shall have the full authority that the Litigation
Trustee would have to settle or pursue causes of action subject to Bankruptcy
Court approval of the same. Accordingly, the Interim Trustee shall be fully
indemnified and upon resignation of the Interim Trustee at the end of or during
the ninety (90) day period be fully released from any and all liability or
potential claims against same.
9.07 Hiatus.
During the first year following the Effective Date, the Litigation
Trust will have the authority to commence discovery or suit with respect to any
Estate Claim or an Individual Claim assigned to the Litigation Trust against
any party only in the event that such party is (i) requested to execute an
agreement which tolls for the one year after the Effective Date any applicable
statue of limitations and (ii) refuses to execute or fails to return an
executed copy of such tolling agreement to the Litigation Trust within ten (10)
days after such tolling agreement is provided to such party.
9.08 Termination.
The Litigation Trust will automatically terminate and be subject to
liquidation and asset distribution if the Common Stock trades at an average
price of $2.50 per share for thirty (30) consecutive trading days during the
first year following the Effective Date. For purposes of this section, the
Common Stock price shall be determined by using the closing bid price as
reported by NASDAQ or other comparable national securities exchanges. Should
the foregoing not occur, the Litigation Trust will terminate on the date which
is five (5) years following the Effective Date.
9.09 Accounting.
Within 120 days after the end of each calendar year after the
Effective Date, the Litigation Trustee shall prepare with respect to the
preceding year (or part thereof) an accounting of its proceedings as Litigation
Trustee in a form acceptable for filing and settlement in the courts of the
State of Texas. Unless the Litigation Trust has terminated during the first
year following the Effective Date pursuant to Section 9.08 above, the
Litigation Trustee shall give the beneficiaries a copy of such accounting.
Third Amended and Supplemented
Joint Plan of Reorganization
15
<PAGE> 16
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<PAGE> 17
ARTICLE X.
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
10.01 General Treatment: Rejected.
Unless a Debtor, with the consent of the Creditors' Committee, files
an application to accept a particular executory contract or unexpired lease ten
(10) days prior to the Confirmation Date, all executory contracts or unexpired
leases for any Debtors shall be deemed rejected as of the Confirmation Date.
Except as provided below, servicing contracts between a Debtor and Search
Capital or one of its subsidiaries, including Auto Credit Acceptance
Corporation, Inc. ("ACAC"), for servicing the Noteholders' Collateral shall be
rejected or deemed rejected within the meaning of Section 365 of the Code as of
Confirmation. In the case of Noteholders selecting the Collateral Option, ACAC
shall continue to service the respective noteholders' collateral, if requested
by the Noteholders' Trustee, until it can be sold to the highest bidder or a
New Servicer becomes substantially operational in accordance with Section
5.02.A. of the Joint Plan. In that situation, the Noteholders' Trustee shall
compensate ACAC in accordance with Section 5.02.A. until the respective
Noteholders' Collateral is either sold or servicing rights transferred to the
New Servicer.
10.02 Indemnity Contracts.
To the extent that it is deemed an executory contract for purposes of
the Bankruptcy Code, any contract whereby any of the Debtors have agreed to
indemnify the other party to such contract upon the occurrence of an event
specified in such contract shall be, if not otherwise previously rejected be
deemed to be rejected, on the Confirmation Date. Such rejection shall
constitute a breach of the indemnity agreement and the other party to such
indemnity agreement shall be entitled to assert an Unsecured Claim against the
applicable Debtor.
10.03 Bar Date For Rejection Claims.
Rejection Claims must be filed within ten (10) days after the earlier
of the entry of the Confirmation Order or, if applicable, entry of a Final
Order rejecting such executory contract or unexpired lease within the meaning
of Section 365 of the Code.
ARTICLE XI.
RELEASE AND BINDING EFFECT
11.01 Discharge and Release of Claims Against and Interest In
Debtors.
Any consideration distributed under the Joint Plan shall be in
exchange for and in complete satisfaction, discharge, and release of all Claims
of any nature whatsoever against the Debtors or any of their assets or
properties; and, except as otherwise provided herein, upon the Effective Date,
the Debtors shall be deemed discharged and released to the extent permitted by
Section 1141 of the Bankruptcy Code from any and all Claims, including but not
limited to demands and liabilities that arose before the Effective Date, and
all debts of the kind specified in Section 502(g), 502(h), or 502(i) of the
Bankruptcy Code, whether or not (a) a proof of Claim based upon such debt is
filed or deemed filed under Section 501 of the Bankruptcy Code; (b) a Claim
based upon such debt is allowed under Section 502 of the Bankruptcy Code; or
(c) the holder of a Claim based upon such debt has accepted the Plan. Except
as provided herein, the Confirmation Order shall be a judicial determination of
discharge of all liabilities of the Debtors. As provided in Section 524 of the
Bankruptcy Code, such discharge shall void any judgment against the Debtors at
any time obtained to the extent it relates to a Claim discharged, and operates
as an injunction against the prosecution of any action against the Debtors, or
the property of any of them, to the extent it relates to a Claim discharged.
11.02 Release by Claimants and Interest Holders.
Neither the Debtors, the Creditors' Committee, Search, the Interim
Trustee (should one be appointed) nor any of their respective members,
officers, directors, employees, agents, or professionals shall have or incur
any liability to any holder of a Claim or Interest for any act, event, or
omission in connection with, or arising out of, the Chapter 11 Cases (including
the activities and deliberations of the Creditors' Committee), the confirmation
and consummation of the Joint Plan, or the administration of the Joint Plan or
the property to be distributed under the Joint Plan, except for willful
misconduct or gross negligence.
Third Amended and Supplemented
Joint Plan of Reorganization
16
<PAGE> 18
11.03 Mutual Release Among the Principal Parties to the
Reorganization.
The Debtors, Search, members of the Creditors' Committee, and their
affiliates, directors, officers, employees, attorneys, agents, financial
advisors, or other representatives, and any or all of their assigns, shall be
mutually released and discharged each from the others upon Confirmation from
any and all post-petition claims arising in connection with the Chapter 11
Cases.
11.04 Injunction.
The Confirmation Order will provide, among other things, that all
persons who have held, hold, or may hold Claims against or Interests in the
Debtors are permanently enjoined, on and after the Effective Date from:
o commencing or continuing in any manner any action or other
proceeding of any kind against the Debtors or their former
assets,
o the enforcement, attachment, collection or recovery by any
manner or means of any judgment, award, decree or order
against the Debtors or their former assets,
o creating, perfecting or enforcing any encumbrance of any kind
against the Debtors or their former assets,
o asserting any right of setoff, subrogation, or recoupment of
any kind against any obligation due, against the Debtors, and
any or all of their assigns; no such enjoined act may be based
upon any act, event, or omission in connection with, or
arising out of, the confirmation of the Joint Plan or the
conduct of these Chapter 11 Cases generally (including the
activities and deliberations of the Creditors' Committee) and
the consummation of the Joint Plan, or the administration of
the Joint Plan or the property to be distributed under the
Joint Plan, except for willful misconduct or gross negligence.
11.05 Contribution Bar.
The Confirmation Order shall constitute an order forever barring
Claims for contribution, reimbursement, subrogation or indemnity against the
Debtors, or the Litigation Trust and their successors by any holder of an
indemnity Claim or any Person or entity who was named as a defendant, who could
have been named as a defendant, or who otherwise may claim contribution,
reimbursement, subrogation and indemnity rights in the future against a Debtor
in connection with the facts and Claims asserted, or that could have been
asserted within the scope of any lawsuit that was pending or could have been
pending on the Effective Date.
ARTICLE XII.
PROCEDURES FOR RESOLVING AND TREATING CONTESTED
AND DISPUTED CLAIMS UNDER THE JOINT PLAN
12.01 Objection Deadline.
As soon as practicable, but in no event later than thirty (30) days
after the Effective Date, unless otherwise ordered by the Bankruptcy Court,
objections to Claims shall be filed with the Bankruptcy Court and served upon
the holders of each of the Claims to which objections are made.
12.02 Prosecution of Objections.
On and after the Effective Date, except as the Bankruptcy Court may
otherwise order, the filing, litigation, settlement, or withdrawal of all
objections shall be the responsibility of the Creditors' Committee, if
applicable, or the Litigation Trustee.
12.03 No Distributions Pending Allowance.
Notwithstanding any other provision of the Joint Plan, no payment or
distribution shall be made with respect to any Claim to the extent it is a
Disputed Claim unless and until such Disputed Claim becomes an Allowed Claim.
Third Amended and Supplemented
Joint Plan of Reorganization
17
<PAGE> 19
12.04 Withholding of Allocated Distributions.
Search or the Noteholders' Trustee, as the case may be, shall withhold
from the property to be distributed on the Effective Date under the Joint Plan
amounts sufficient to be distributed on account of Claims that are not Allowed
Claims, other than Administrative Claims, Priority Non-Tax Claims and Priority
Tax Claims, as of the Effective Date. Such withheld amounts shall be held by
the Plan Transfer Agent, Search or the Noteholders' Trustee, as the case may
be, until the Claim is Allowed.
ARTICLE XIII.
RETENTION OF JURISDICTION
13.01 The Court shall retain jurisdiction over this case after
Confirmation for the following purposes:
A. To determine all controversies relating to or concerning the
classification, allowance or satisfaction of Claims;
B. To liquidate all disputed, contingent or unliquidated Claims;
C. To determine any and all applications for the rejection or
assumption and/or assignment, as the case may be, of executory
contracts and unexpired leases to which any of the Debtors are
party or with respect to which any of the Debtors may be
liable, and to determine and, if necessary, to liquidate, any
and all Claims arising therefrom;
D. To determine any and all applications, adversary proceedings,
and contested or litigated matters properly before the Court,
including, without limitation, any proceeding commenced for
the purpose of avoiding, recovering or preserving for the
benefit of the estate any transfer of property, obligation
incurred by the Debtor, lien or setoff,
E. To determine any dispute arising under this Joint Plan and to
make such orders as are necessary or appropriate to carry out
the provisions of this Joint Plan;
F. To grant extensions of any deadlines set herein;
G. To hear and determine all requests for compensation and/or
reimbursement of expenses which may be made after
Confirmation; provided, however, this paragraph shall not be
construed as limiting the Debtors' ability to pay their
attorneys and other professionals for services performed after
the Confirmation Date, including services performed in
connection with this Case;
H. To enforce all provisions of the Confirmation Order and this
Joint Plan;
I. To modify this Joint Plan; and
J. To hear and determine all issues with respect to the accounts,
if any, filed by the Noteholders Trustee and the Litigation
Trustee.
K. In addition, and at any time, the Court may make such orders
or give such direction as may be appropriate under Sections
105 or 1142 of the Bankruptcy Code.
L. If the need arises, to enforce the rights of Noteholders to
receive cash dividends and elect a supermajority of board of
directors under the terms of the Joint Plan.
Third Amended and Supplemented
Joint Plan of Reorganization
18
<PAGE> 20
M. To enter and implement such orders as may be appropriate in
the event the Confirmation Order is for any reasons stayed,
revoked, modified, reversed, or vacated;
N. To enter and implement such orders as may be necessary or
appropriate to execute, interpret, implement, consummate, or
enforce the Joint Plan and the transactions contemplated
thereunder;
O. To consider any modification of the Joint Plan pursuant to
Section 1127 of the Bankruptcy Code, to cure any defect or
omission, or reconcile any inconsistency in any order of the
Bankruptcy Court, including, without limitation, the
Confirmation Order;
P. To recover all assets of the Debtors and property of the
estates, wherever located;
Q. To hear and determine matters concerning state, local, and
federal taxes in accordance with Sections 346, 505, and 1146
of the Bankruptcy Code;
R. To hear and determine any other matter not inconsistent with
the Bankruptcy Code and title 28 of the United States Code
that may arise in connection with or related to the Plan;
S. To approve any settlements reached by the Interim Trustee; and
T. To enter a final decree closing the Chapter 11 Cases.
ARTICLE XIV.
MISCELLANEOUS
14.01 Satisfaction of All Claims.
Various classes of Claims are defined in this Joint Plan. This Joint
Plan is intended to satisfy all Claims against each Debtor of whatever
character, whether or not contingent or liquidated, and whether or not Allowed
Claims. Only Allowed Claims will be entitled to receive the treatment afforded
by this Joint Plan.
14.02 Time for Filing Claims.
All Creditors, other than creditors having Administrative Claims or
Rejection Claims will be required to file proofs of claim, if necessary, by the
Bar Date. Rejection Claims must be filed in accordance with Article X of this
Joint Plan. Administrative Claims, other than those made pursuant to Section
330 of the Bankruptcy Code, must be filed within five (5) days before the
Confirmation Hearing. Any Administrative Claim not filed by the time specified
will be barred.
14.03 Modifications to the Joint Plan.
This Joint Plan may be modified or corrected with the consent of
Search, the applicable Debtor and the Creditors' Committee and as permitted by
the Bankruptcy Code prior to Confirmation, including in accordance with
Bankruptcy Rule 3019, without notice and hearing and without additional
disclosure pursuant to Section 1125 of the Bankruptcy Code provided that the
Court finds, in accordance with Section 1127(b) of the Bankruptcy Code, that
such modification does not adversely affect any Creditor or class of Creditors
or equity owner or make modifications to remedy any defect or omission or
reconcile any inconsistencies in the Joint Plan in such a manner as may be
necessary to carry out the purposes and intent of the Joint Plan.
14.04 Discontinuation of Creditors' Committee.
The Creditors' Committee shall cease to exist upon the earlier to
occur of (a) 90 days after the Effective Date or (b) Substantial Consummation
of the Joint Plan. Neither Search nor the Noteholders' Trust shall be
obligated to pay fees to the Creditors' Committee's professionals for services
rendered or costs incurred ninety days after the Effective Date.
14.05. Events of Default..
Third Amended and Supplemented
Joint Plan of Reorganization
19
<PAGE> 21
In the event of a default under the provisions of the Joint Plan (as
opposed to a default under documentation executed in implementing the terms of
the Joint Plan, which documents shall provide independent basis for relief),
any Creditor or party in interest desiring to assert such a default shall
provide the Debtors and the Noteholders' Trustee with written notice of the
alleged default. Search, or if applicable, the Noteholders' Trustee shall have
ten (10) business days from receipt of the written notice in which to cure the
default. Such notice shall be delivered by certified mail, return receipt
requested to Search, or if applicable, the Noteholders' Trustee and its
counsel. If the default is not cured, any Creditor or party in interest may
thereafter file and serve upon Search, or if applicable, the Noteholders'
Trustee and their respective counsel provided in the Confirmation Order, a
Motion to Compel in compliance with applicable provisions of the Joint Plan.
The Bankruptcy Court, upon finding a material default, shall issue such orders
compelling compliance with the pertinent provisions of the Joint Plan.
An event of default will be deemed to have occurred if distributions
of the Convertible Preferred Stock and Common Stock are not timely made to
holders of Allowed Noteholders Secured Claims who have been requested by Search
to tender and have, in fact, tendered their Notes to the Plan Transfer Agent
and if the Warrants are not distributed within ninety (90) days of the
Effective Date.
14.06. Securities Law Matters.
It is an integral and essential element of this Joint Plan that the
issuance to holders of Allowed Claims and to Hall Financial Group, Inc. of the
Convertible Preferred Stock, Common Stock, and Warrants pursuant to this Joint
Plan, and the subsequent exercise of Warrants by such holders or transferees to
purchase the Common Stock issuable hereunder, or conversion of Convertible
Preferred Stock into Common Stock issued hereunder shall be exempt from
registration under the Securities Act of 1933, as amended, pursuant to Section
1145 of the Bankruptcy Code. Any such securities issued to an "affiliate" of
Search within the meaning of the Securities Act of 1933 or any person Search
reasonably determines to be an "underwriter", and which does not agree to
resell such securities only in "ordinary trading transactions", within the
meaning of Section 1145(b)(1) of the Bankruptcy Code shall be subject to such
transfer restrictions and bear such legends as shall be appropriate to ensure
compliance with the Securities Act of 1933. It is an integral and essential
element of the Joint Plan that Rule 144 under the Securities Act of 1933 be
available to any such "affiliate" that is not otherwise such an "underwriter"
for purposes of permitting resales of such securities.
14.07 Due Authorization.
Each and every Noteholder who elects to participate in the
distributions provided for in this Joint Plan warrants that such Noteholder is
authorized to accept, in consideration of its Claims against the Debtor, the
distributions provided for in this Joint Plan, and that there are no
outstanding commitments, agreements, or understandings, express or implied,
that may or can in any way defeat or modify the rights conveyed, or obligations
undertaken, by such holder of a Claim under this Joint Plan.
14.08 Cancellation of Indentures and Memoranda.
On the Effective Date, the Indenture Agreements and Memoranda for each
Debtor shall, except as otherwise provided in the Joint Plan, be deemed
canceled, terminated, and of no further force or effect pursuant to Section
1123(a)(5)(F) of the Bankruptcy Code. Except as otherwise provided, such
cancellation of the Indenture Agreements and Memoranda shall extinguish the
rights of the Indenture Trustee to assert liens against the distributions to
the holders of Allowed Noteholder Claims for unpaid fees and expenses, as set
forth in the indentures and memoranda. The cancellation of the Indenture
Agreements and Memoranda, and surrender of instruments pursuant to Section 8.06
of the Joint Plan shall extinguish the right of any Noteholder to commence any
cause of action against any person for principal and interest. Subject to the
foregoing, neither the cancellation of the Indenture Agreements or Memoranda,
nor the surrender of Note instruments pursuant to Section 8.06 of the Joint
Plan shall in any way affect individual causes of action assigned to the
Litigation Trust or of a holder electing not to have such causes of action
assigned to the Litigation Trust pursuant to Section 9.05 of the Joint Plan. A
"Yes" vote for the Joint Plan may, if the Joint Plan is confirmed for the
applicable Debtor, be considered a vote to amend the applicable Indenture
Agreement or Memorandum, if such is deemed by the Plan Proponents and the
Creditors' Committee to be needed to implement either the Search Equity Option
and/or the Collateral Option.
Third Amended and Supplemented
Joint Plan of Reorganization
20
<PAGE> 22
14.09 Fees Payable to the United States Trustee.
All fees payable pursuant to Section 1930 of Title 28 of the United
States Bankruptcy Code, as determined by the Bankruptcy Court at the
Confirmation Hearing, shall be paid on or before the Effective Date.
14.10 Transfer Taxes.
The issuance, transfer or exchange of any new note or stock instrument
issued under, or the transfer of any other assets or property pursuant to this
Joint Plan or the Plan Documents, or the making or delivery of an instrument of
transfer under this Joint Plan or the Plan Documents, shall not (and the
Confirmation Order shall so order), under Section 1146 of the Bankruptcy Code,
be taxed under any law imposing a stamp tax, transfer tax or other similar tax.
14.11 Governing Law.
Unless a rule of law or procedure is supplied by federal law
(including the Bankruptcy Code and Bankruptcy Rules), or the Texas General
Corporation Law, Delaware General Corporation Law, or the law of the
jurisdiction of organization of any entity, the internal laws of the State of
Texas shall govern the construction and implementation of the Joint Plan and
any agreements, documents, and instruments executed in connection with the
Joint Plan or the Chapter 11 Cases, including the Plan Documents, except as may
otherwise be provided in such agreements, documents, instruments, and Plan
Documents.
14.12 Severability.
SHOULD THE BANKRUPTCY COURT DETERMINE THAT ANY PROVISION OF THE JOINT
PLAN IS UNENFORCEABLE EITHER ON ITS FACE OR AS APPLIED TO ANY CLAIM OR EQUITY
INTEREST OR TRANSACTION, THE PLAN PROPONENTS MAY MODIFY THE JOINT PLAN, WITH
THE CREDITORS' COMMITTEE'S CONSENT, SO THAT SUCH PROVISION SHALL NOT BE
APPLICABLE TO THE HOLDER OF ANY CLAIM OR EQUITY INTEREST. SUCH A DETERMINATION
OF UNENFORCEABILITY SHALL NOT (1) LIMIT OR AFFECT THE ENFORCEABILITY AND
OPERATIVE EFFECT OF ANY OTHER PROVISION OF THE JOINT PLAN OR (2) REQUIRE THE
RESOLICITATION OF ANY ACCEPTANCE OR REJECTION OF THE JOINT PLAN.
Third Amended and Supplemented
Joint Plan of Reorganization
21
<PAGE> 23
Respectfully submitted this ___ day of December, 1995.
AUTOMOBILE CREDIT FINANCE, INC., et al., Debtors
By: [ILLEGIBLE]
------------------------------
Title: SVP & CPO
---------------------------
and
[ILLEGIBLE]
---------------------------------
Their Counsel
Michael R. Rochelle
Stephen T. Hutcheson
Rochelle & Hutcheson
2929 Carlisle, Suite 222
Dallas, TX 75204
(212) 953-0182
COUNSEL FOR THE DEBTORS
and
SEARCH CAPITAL GROUP, INC., Joint Plan Proponent
By: [ILLEGIBLE]
------------------------------
Title: SVP & CPO
---------------------------
and
[ILLEGIBLE]
---------------------------------
Joe B. Dorman
State Bar No.06003500
Senior Vice President & General Counsel
Search Capital Group
700 N. Pearl Street, Ste. 400
Dallas, Texas 75201
(214) 965-6007 (tel)
(214) 965-6098 (fax)
COUNSEL FOR SEARCH CAPITAL GROUP, INC.
Third Amended and Supplemented
Joint Plan of Reorganization
22
<PAGE> 24
APPENDIX 1
DEFINITIONS
Ground Rules
INTERPRETATION: Unless otherwise specified, all section, article, and exhibit
references in this Joint Plan are to the respective section in, article of, or
exhibit to, this Joint Plan, as the same may be amended, waived or modified
from time to time. The headings in this Joint Plan are for convenience of
reference only and shall not limit or otherwise affect the provisions of this
Joint Plan. Any reference in this Joint Plan to an existing document or
instrument means such document or instrument as it may have been amended,
modified, or supplemented from time to time. As contextually appropriate, each
term stated in either the singular or plural shall include both the singular
and the plural. The words herein, hereof, hereto, hereunder, and others of
similar import refer to this Joint Plan as a whole and not to any particular
section, subsection, or clause contained in this Joint Plan.
RULES OF CONSTRUCTION: The rules of construction set forth in Section
102 of the Bankruptcy Code shall apply to this Joint Plan. In computing any
period of time prescribed or allowed by this Joint Plan, the provisions of
bankruptcy Rule 9006(a) shall apply.
JOINT PLAN DOCUMENTS: The Plan Documents and the Appendices hereto
are incorporated into and are a part of the Joint Plan as if set forth in full
herein.
Definitions
a. "ADMINISTRATIVE CLAIM OR CLAIMS" means a request for payment of an
administrative expense under Section 503(b) of the Code that, if
allowable, would be entitled to priority under Section 507 (a) (1) of
the Code.
b. "ALLOWED" with respect to a Claim means to which (a) the Debtor has not
scheduled as disputed, contingent or unliquidated, (b) no party in
interest, including the Debtor, has made an objection or (c), if an
objection has been made, a Final Order has been entered by the
Bankruptcy Court under Section 502 of the Code allowing in whole or in
part such Claim. A Disputed Claim is not an Allowed Claim. This
definition should be equally applicable when used in conjunction with
any other defined terms, including Administrative Claim, Noteholder
Claims and Unsecured Claim.
c. "ACF-1991" means Automobile Credit Fund 1991-III, Inc.
d. "ACF" means Automobile Credit Finance, Inc.
e. "ACP" means Automobile Credit Partners, Inc.
f. "ACF-1992" means Automobile Credit Finance 1992-II Inc.
g. "ACF-III" means Automobile Credit Finance III, Inc.
h. "ACF-IV" means Automobile Credit Finance IV, Inc.
i. "ACF-V" means Automobile Credit Finance V, Inc.
j. "ACF-VI" means Automobile Credit Finance VI, Inc.
k. "BALLOT" means the official documents recording the votes of Creditors
on this Joint Plan which are sent out as part of the Disclosure
Statement package.
Third Amended and Supplemented
Joint Plan of Reorganization
23
<PAGE> 25
l. "BALLOTING AGENT" means that entity selected by the Debtors to receive
and tabulate the Ballots.
m. "BANKRUPTCY CODE" OR "CODE" means, Title I of the Bankruptcy Reform Act
of 1978, Pub. L. No. 95598, 92 stat 2549 (1978), as amended and as set
forth in 11 U.S.C. Sections 101-1330.
n. "BANKRUPTCY RULES" means the Federal Rules of Bankruptcy Procedure,
Title 11, United States Code, and the related Federal Rules of Evidence.
o. "BAR DATE" means the date of the meeting of creditors and equity
security holders held pursuant to Rule Section 341 of the Code by which
all Creditors, other than creditors having Administrative Claims or
Rejection Claims, will be required to file proofs of claim.
p. "CASE OR CASES" means one or more of these Chapter 11 Cases pending
before the Court.
q. "CERTIFICATE OF DESIGNATION" means the document filed and approved by
the Secretary of State of Delaware which sets forth the terms and
conditions governing the Convertible Preferred Stock issued by Search
and authorizing the issuance of the Convertible Preferred Stock. The
terms of the Certificate of Designation shall be consistent with Article
VI of the Joint Plan.
r. "CHAPTER 11 OR CHAPTER 11 OF THE BANKRUPTCY CODE" means a business
reorganization under Chapter 11 of the Code.
s. "CHAPTER 11 CASE OR CASES" means, collectively, the case under chapter
11 of the Code concerning the Debtor or jointly or severally, the cases
under chapter 11 of the Code concerning the Debtors.
t. "CLAIM OR CLAIMS" means, (a) a right to payment, whether or not such
right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured, or unsecured; or (b) a right to an equitable remedy for breach
of performance if such breach gives rise to a right to payment, whether
or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured, or
unsecured.
u. "CLAIMANT"means the holder of a Claim.
v. "COLLATERAL CONSULTANT" means an individual with experience in valuing
note paper of the sort which constitute the Loans, who shall select and
equitably divide the Note Collateral between Search and the Noteholders'
Trust, with such division to be agreed upon by Search and the
Noteholders' Trust.
w. "COMMON STOCK" means, the stock of Search, last to share in property of
Search on dissolution, representing the residual ownership $.01 par
value common stock of Search which is to be issued pursuant to the terms
of the Joint Plan and the Confirmation Order.
x. "COMMON STOCK DIVIDEND" means a dividend consisting of Common Stock that
is paid to holders of the Convertible Preferred Stock. The number of
shares of Common Stock issued in payment of Common Stock Dividends will
be determined by dividing the accrued Convertible Preferred Stock
dividend payable in Common Stock by the average closing price of the
Common Stock for the 20 trading day period ending 5 trading days prior
to the payment of such dividend.
y. "COMMON STOCK PORTION" means 20% of the Present Value of the Notes. The
Common Stock Portion for each Debtor is:
Third Amended and Supplemented
Joint Plan of Reorganization
24
<PAGE> 26
<TABLE>
<CAPTION>
DEBTOR AMOUNT
- ------ ------
<S> <C>
ACF-1991 36,659
ACF 86,977
ACP 44,427
ACF-1992 1,336,170
ACF-III 1,803,494
ACF-IV 1,209,273
ACF-V 2,870,834
ACF-VI 1,485,574
</TABLE>
z. "CONFIRMATION" means the confirmation of the Joint Plan by the
Bankruptcy Court pursuant to Section 1129 of the Code.
aa. "CONFIRMATION DATE" means the date and time the Confirmation Order is
entered on the Bankruptcy Court's docket.
bb. "CONFIRMATION HEARING" means the hearing at which the Bankruptcy Court
confirms the Joint Plan.
cc. "CONFIRMATION ORDER" means the order of the Bankruptcy Court confirming
the Plan pursuant to Section 1129 of the Bankruptcy Code.
dd. "CONVERTIBLE PREFERRED STOCK" means the preferred stock of Search as is
more fully described in Article VI of the Joint Plan.
ee. "CONVERSION DATE" means either (a) the seventh anniversary of the
Effective Date, or (b) earlier, as provided in Section 6.04.
ff. "COURT" means United States Bankruptcy Court Northern District of Texas
at Dallas, having primary jurisdiction over the Cases and any other
court having appellate jurisdiction over the Cases.
gg. "CREDITOR OR CREDITORS" means a person or entity holding a claim against
the Debtors as defined in Section 101 (10) of the Code.
hh. "CREDITORS' COMMITTEE" means the committee appointed by the United
States trustee pursuant to Section 1102 of the Code
ii. "DEBTOR OR DEBTORS" means any of the following: Automobile Credit Fund
1991-III, Inc., Automobile Credit Finance, Inc., Automobile Credit
Partners, Inc., Automobile Credit Finance 1992-II, Inc., Automobile
Credit Finance III, Inc., Automobile Credit Finance IV, Inc., Automobile
Credit Finance V, Inc., and Automobile Credit Finance VI, Inc., and
collectively, "DEBTORS" means any two or more of the above.
jj. "DEBTOR'S COMMON STOCK" means the $.01 par value of each Debtor's Common
Stock to be issued pursuant to the Joint Plan and the Confirmation
Order.
kk. "DISCLOSURE STATEMENT" means the Chapter 11 disclosure statement, as it
may be amended and as approved by the Court pursuant to Section 1125(b)
of the Code.
ll. "DISPUTED CLAIM OR CLAIMS" means the portion (including, when
appropriate, all) of a Claim that is not an Allowed Claim as to which:
(a) a proof of claim has been (or is deemed to have been) filed with the
Bankruptcy Court; (b) an objection has been or may be timely filed; and
(c) any such objection has not
Third Amended and Supplemented
Joint Plan of Reorganization
25
<PAGE> 27
been withdrawn or overruled, denied, or granted by a Final Order. For
purposes of the Plan, a Claim filed against a Debtor, other than a Claim
allowed or disallowed by Final Order of the Plan, shall be considered a
Disputed Claim in its entirety before the objection deadline if, in the
Schedule of Assets and Liabilities, a corresponding Claim has: (x) not
been listed; (y) been listed as disputed, contingent, or unliquidated;
or (z) been listed in a lower amount or classification than the amount
or classification specified in the proof of claim.
mm. "EFFECTIVE DATE" means 20 days following the date that the Confirmation
Order becomes a Final Order.
nn. "FEE CLAIM" means any claim for compensation or reimbursement of
expenses filed pursuant to Section 330 of the Bankruptcy Code.
oo. "FINAL ORDER" means an order or judgment of the Bankruptcy Court as
entered on the docket of such Bankruptcy Court which order has not been
reversed, stayed, modified, or amended, and as to which: (a) the time to
appeal, seek review or rehearing, or petition for certiorari has expired
and no timely-filed, appeal taken, or (b) any motion for review or
rehearing filed, appeal taken, or petition for certiorari filed has been
resolved by the highest court to which the order or judgment was or may
be appealed or from which certiorari was or may be sought.
pp. "INDENTURE AGREEMENTS" means the agreements between the Debtors issuing
publicly-held Notes and Texas Commerce Bank, as successor in interest to
Ameritrust Texas National Bank Association under which the Notes are
issued, setting forth the form of the Notes, the maturity date, the
amount of issue, a description of the pledged assets, interest rate, and
other general terms are set forth.
qq. "INDENTURE TRUSTEE"means Texas Commerce Bank N.A. successor in interest
to Ameritrust Texas National Association, the trustee under the
"Indenture Agreement".
rr. "INTERESTS" shall mean any share or other instrument evidencing an
ownership interest in any of the Debtors, whether or not transferable or
denominated "stock," or similar security, and any warrant or right
(other than a right to convert) to purchase, sell, or subscribe to a
share, security, or interest in any of the Debtors.
ss. "INTEREST HOLDERS" means the holder of any equity interest of the
Debtor.
tt. "JOINT PLAN" means this Third Amended Joint Plan of Reorganization filed
by Search and the Debtors on December 11, 1995, together with any
amendments or modifications thereto.
uu. "LITIGATION TRUST" means the trust established pursuant to Article IX of
the Joint Plan.
vv. "LITIGATION TRUSTEE" means the trustee of the Litigation Trust selected
pursuant to the terms of the Litigation Trust instrument.
ww. "LOAN" as to the Debtors' Loan Portfolio's means a retail installment
sale contract and security agreement entered into between an automobile
dealer and an obligor thereunder and thereafter assigned to a Debtor.
As to borrowing in general, "Loan" means (1) the creation of debt by a
person or entity under which it agrees to make a payment or periodic
payments to a lender or its assigns or (2) the creation of debt by a
credit to an account with a lender upon which Search is entitled to draw
immediately.
xx. "LOAN PORTFOLIO" means the automobile loans held by Texas Commerce Bank
as Trustee under the terms of the Indenture Agreements and Memoranda
between certain Debtors and Texas Commerce Bank as successor in interest
to Ameritrust Texas National Bank Association.
Third Amended and Supplemented
Joint Plan of Reorganization
26
<PAGE> 28
yy. "MEMORANDA" means the agreements governing the issuance of the
privately-held Notes which set forth the form of the Notes, the maturity
date, the amount of issue, a description of the pledged assets, interest
rate, and other general terms.
zz. "NASDAQ" means National Association of Securities Dealers Automated
Quotations.
aaa. "NET CASH FLOW" means periodic Cash distribution that would be made
(pursuant to the terms of the Indenture Agreements or Memoranda) by
Debtors to the Noteholders as estimated by Search, assuming the Debtors
continued to collect their receivables at the historical average rate of
each Debtor's Loan Portfolio.
bbb. "NEW SERVICER" means that entity selected to service the Note Collateral
of those Noteholders electing the Collateral Option under the Plan.
ccc. "NOTE OR NOTES" means one or more of the promissory notes issued by a
Debtor and secured by the Loan Portfolio.
ddd. "NOTE COLLATERAL" or "COLLATERAL" means the Loans in each Debtor's Loan
Portfolio which secure the repayment of the Notes issued by such Debtor,
as well as any and all sinking fund Cash, automobile inventories, and
any other rights pertaining to these items, save and except for causes
of action.
eee. "NOTEHOLDER" means the holders of a Note or the Notes or "NOTEHOLDERS"
means the holder of a Note or the Notes of issued by a Debtor.
fff. "NOTEHOLDER CLAIM RATIO" means a fraction the numerator of which is the
original principal of the Note or Notes held by a Noteholder and the
denominator of which is the original principal amount of all Notes
originally issued by each Debtor. The original principal amount of all
Notes originally issued by each Debtor is:
<TABLE>
<CAPTION>
Debtor Name Denominator
- ----------- -----------
<S> <C>
ACF-1991 1,000,000
ACF 5,000,000
ACP 1,000,000
ACF-1992 9,990,000
ACF-III 15,000,000
ACF-IV 10,000,000
ACF-V 19,872,000
ACF-VI 10,675,000
</TABLE>
ggg. "NOTEHOLDER SECURED CLAIM" means the Secured Claim held by a Noteholder
which, for each Debtor is equal to the sum of the Present Value of the
Notes plus the Common Stock Portion.
hhh. "NOTEHOLDERS' TRUST" means the trust established pursuant to Section
4.04 of the Joint Plan.
iii. "NOTEHOLDERS' TRUSTEE" means the trustee selected by the Creditors'
Committee or such trustee's successor, selected in accordance with
Section 4.04.A. of the Joint Plan.
jjj. "ORDINARY COURSE CLAIM OR CLAIMS" means Administrative Claims of
Creditors that were incurred by the Debtors in the ordinary course of
its business after the Petition Date which has been regularly paid
during the pendency of the Case.
Third Amended and Supplemented
Joint Plan of Reorganization
27
<PAGE> 29
kkk. "PETITION DATE" means the date on which the Debtors filed the Cases with
the Bankruptcy Court, August 14, 1995.
lll. "PLAN DOCUMENTS" means any and all contracts, trust agreements,
conveyancing documents, certificates of designation, or any other
document referred to in this Joint Plan which is required to be
executed by the Debtors in the consummation of this Joint Plan.
mmm. "PLAN TRANSFER AGENT" means the office or agency of Search or its
designee to which Search will deliver its shares of Convertible
Preferred Stock, Common Stock, and Warrants, and to which each Debtor
will deliver its share of Debtor's Common Stock and to which Noteholders
will deliver their Notes. The Plan Transfer Agent will be designated at
the time of the Confirmation Hearing.
nnn. "PRESENT VALUE OF THE NOTES" means the value obtained by discounting at
a rate of 15% per annum to the date of August 1, 1995 the Net Cash Flow.
The total value of all Notes for each Debtor is:
<TABLE>
<CAPTION>
Debtor Amount
- ------ ------
<S> <C>
ACF-1991 183,295
ACF 434,886
ACP 222,137
ACF-1992 6,680,851
ACF-III 9,017,468
ACF-IV 6,046,367
ACF-V 14,354,171
ACF-VI 7,427,872
</TABLE>
ooo. "PRIORITY CLAIM OR CLAIMS" means any Claim, if allowed, entitled to
priority pursuant to Section 507(a) of the Bankruptcy Code, other than
an Administrative Claim or a Tax Claim.
ppp. "PRO RATA" means the proportion that an Allowed Claim bears to a larger
group that subsumes it, whether it be the aggregate of all Allowed
Claims in a particular Class, or some other greater group of Allowed
Claims specified by the particular language of the text.
qqq. "RECORD DATE" means December 15, 1995.
rrr. "REJECTION CLAIM OR CLAIMS" means a claim for a loss suffered from the
rejection of an executory contract or unexpired lease pursuant to
Section 365 or Section 1123(b)(2) of the Code.
sss. "SEARCH" means Search Capital Group, Inc. and any of its subsidiaries,
excluding the Debtors.
ttt. "SECURED CLAIM OR CLAIMS" means any Claim (other than an Administrative
Claim, Priority Claim, or Tax Claim) to the extent such Claim
constitutes a secured Claim pursuant to Section 506 or 1111(b) of the
Bankruptcy Code.
uuu. "SECURITIES ACT OF 1933" means 15 U.S.C. Sections 77a-77z.
vvv. "SERVICE" OR "SERVICED" means, the billing, Cash application processing,
accounting, repossessing of vehicles, disbursing of Cash and other
matters related to the Note Collateral.
www. "SUBSIDIARY" means a corporation run and owned by Search.
Third Amended and Supplemented
Joint Plan of Reorganization
28
<PAGE> 30
xxx. "SUBSTANTIAL CONSUMMATION" means the later of (i) distribution of
Certificates of Convertible Preferred Stock and Common Stock to
Noteholders who individually select the Search Equity Option and who
have transmitted their Notes for exchange; (ii) the delivery of all
books, records, related files and computerized information, as
designated by the Noteholder Trustee, to the New Servicer, or purchaser
of particular Noteholders' Collateral; (iii) the selection of the
specific Noteholder Collateral to be allocated to the Noteholders' Trust
for those Noteholders electing the Collateral Option and to Search, for
those Noteholders electing the Search Equity Option; and (iv)
commencement of delivery of Certificates of Warrants to Noteholders
having Allowed Unsecured Claims within Classes 9-16.
yyy. "UNSECURED CLAIM OR CLAIMS" means any Claim except an Administrative
Claim, Priority Claim, or Secured Claim, including any Claim arising
under and assertable pursuant to a contract of any type which contract
requires that a Debtor indemnify the other party to such contract upon
the occurrence of events specified in such contract which is rejected
pursuant to Article X.
zzz. "WARRANTS" means the 5 million warrants issued under this Joint Plan,
each of which is, when exercised at the then applicable exercise price,
convertible into one share of Common Stock. The term of the Warrants is
five years from the Effective Date. The exercise prices per Warrant are
as follows:
<TABLE>
<S> <C>
Year 1 $2.00
Year 2 $2.25
Year 3 $2.50
Year 4 $2.75
Year 5 $3.00
</TABLE>
All Warrants not exercised at the end of Year 5 will be redeemed
in Cash at a price of $0.25 per Warrant.
Third Amended and Supplemented
Joint Plan of Reorganization
29
<PAGE> 31
APPENDIX 2
TERM SHEET FOR NOTEHOLDERS' TRUST AGREEMENT
I. APPOINTMENT OF NOTEHOLDERS' TRUSTEE
A. Selection of Trustee by Working Group of Creditors' Committee
(current members of Committee, excluding any members who are
brokers, dealers, other members of securities industry)
B. Approval of Trustee by Bankruptcy Court
II. DELIVERY OF COLLATERAL INTO TRUST
A. Selection of Collateral
1. Appointment of Collateral Consultant acceptable to both
Working Group and Search
2. Methodology for division of Collateral to be
substantially similar to methodology used to identify
Collateral for sale by Debtors to Search
3. Loans in each Debtors' portfolio to be divided between
Search and Noteholders' Trust based upon percentages of
Noteholders of each Debtor electing Search Equity
Option and Collateral Option
B. Transfer of Collateral by Debtors to Noteholders' Trust on
Effective Date, subject to beneficial interests of electing
Noteholders in Collateral transferred by their particular
Debtors on account of their particular claims
C. Segregation of Collateral on Debtor-by-Debtor Basis
1. Initial report to all Noteholders identifying
Collateral transferred on account of claims of
Noteholders of each particular Debtor, and names,
addresses, and amounts of claims of Noteholders with
claims against each pool of Collateral; to be delivered
within 60 days of Effective Date (in lieu of issuance
of certificates)
2. Quarterly reports to all Noteholders of Debtors in
question
3. Monthly reports to be available upon request
4. Noteholders' Trustee to record transfers of
Noteholders' interests in Noteholders' Trust on books
of Noteholders' Trust, upon written request of electing
Noteholder; only
Third Amended and Supplemented
Joint Plan of Reorganization
30
<PAGE> 32
limited transfers to be permitted under Noteholders'
Trust Agreement, e.g., death, divorce, or dissolution
of Noteholder.
III. LIQUIDATION OF COLLATERAL
A. Aggregation of Collateral for Disposition
1. Collateral may be aggregated for either sale or
servicing by New Servicer or purchaser
2. Proceeds of Collateral belonging to different Debtors
may be commingled for investment by Trustee pending
distributions to Noteholders
B. Sale/Servicing Decisions
1. In discretion of Noteholders' Trustee, provided that
Noteholders' Trustee has obtained and reviewed adequate
information to make informed decision
2. Right, but not obligation, to confer with Noteholders
or with representatives of Creditors' Committee
C. Allocation of Administrative and Liquidation Costs of the
Noteholders' Trust based upon amounts of Allowed Noteholders'
Secured Claims of Noteholders electing Collateral Option for
each Debtor
D. Investment guidelines for Collateral proceeds pending
distributions to electing Noteholders
IV. DISTRIBUTIONS
A. If Collateral is sold -- promptly following receipt of
consideration from buyer, subject to reasonable reserves for
administrative and liquidation costs
B. If Loans are serviced -- not less than quarterly for each
Noteholders of each Debtor in question, together with
accountings showing gross receipts, costs of servicing, and
costs of administration by Trustee
V. RESERVATION OF BANKRUPTCY COURT JURISDICTION
A. Approve/Disapprove of program to dispose of Collateral
B. Issue orders regarding liens or encumbrances on Collateral
C. Allowance or allocation of administrative or liquidation
expenses
Third Amended and Supplemented
Joint Plan of Reorganization
31
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D. Removal or replacement of Noteholders' Trustee
1. For gross negligence/reckless behavior
2. For breach of duty/fraud/conversion of Noteholders'
Trust assets
3. Can be filed by any electing Noteholder, on notice to
Noteholders' Trustee and twenty largest electing
Noteholders (Noteholders' Trustee to provide names and
addresses of such Noteholders)
4. Appointment of successor trustee consistent with
provisions of Section I above
E. Notices
F. Governing Law
Third Amended and Supplemented
Joint Plan of Reorganization
32
<PAGE> 1
EXHIBIT 2.2
Michael R. Rochelle
State Bar No. 17126700
Stephen T. Hutcheson
State Bar No. 10335700
Rochelle and Hutcheson, L.L.P.
2929 Carlisle, Suite 222
Dallas, TX 75024
(214) 953-0182
(214) 953-0185 (fax)
ATTORNEYS FOR DEBTOR
Joe B. Dorman
State Bar No. 06003500
Senior Vice President and General Counsel
Search Capital Group, Inc.
700 N. Pearl Street, Ste. 400
Dallas, Texas 75201
(214) 965-6007 (tel.)
(214) 965-6098 (fax)
COUNSEL FOR SEARCH CAPITAL GROUP, INC.
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
IN RE: Section CHAPTER II
Section
AUTOMOBILE CREDIT FUND Section CASES 395-34981-RCM-11
1991-111, INC., ET AL., Section THROUGH 395-34988-SAF-11
Section
Section JOINTLY ADMINISTERED UNDER
Debtors. Section CASE NO. 395-3498 1 -RCM- 11
MODIFICATION TO THIRD AMENDED JOINT PLAN OF REORGANIZATION
Search Capital Group, Inc., and Automobile Credit Fund 1991-III,
Inc., Automobile Credit Finance, Inc., Automobile Credit Partners, Inc.,
Automobile Credit Finance 1992-II, Inc.,
1
<PAGE> 2
Automobile Credit Finance III, Inc., Automobile Credit Finance IV. Inc.,
Automobile Credit Finance V, Inc., Automobile Credit Finance VI, Inc., and
Automobile Credit Partners, Inc. file this Modification to Third Amended Joint
Plan of Reorganization pursuant to 11 U.S.C Section 1127(a).
The Third Amended Joint Plan of Reorganization is modified as follows:
1. Article I, paragraph mm is amended to read as follows:
"Effective Date means the eleventh day after the entry of the Confirmation
Order by the Court unless Search, in its sole discretion, determines to extend
the Effective Date; provided, however, that the Effective Date will occur no
later than the twentieth day after the entry of the Confirmation Order."
2. Article IIA, Section 2.01 is amended be deleting the last
sentence of the first paragraph.
3. Article II, Section 2.02 B is amended by deleting in its
entirety subparagraph (v).
4. Article II, Section 2.04 is amended by deleting the original
text and substituting the following language: "The holders of Allowed
Noteholder Secured Claims who either (I) did not vote or (ii)voted 'Yes' but
did not select a Plan Option prior to the voting deadline set by the Court,
will receive a written communication from the Balloting Agent that will allow
each Noteholder an additional 14 days from the date of the mailing of such
communication to select either the Search Equity Option or the Collateral
Option. Upon the expiration of the 14-day period, anyone who fails to select a
Plan Option will receive the distributions provided for in the Search Equity
Option."
5. Article IV, Section 4.03 C is amended by adding the following
paragraphs:
"For purposes of determining the number of shares of
Convertible Preferred
2
<PAGE> 3
Stock and Common Stock to be issued to the Noteholders that elected
the Search Equity Option (the "SEO Noteholders") pursuant to Sections
4.03(D) and (E) of the Joint Plan, the Financial advisors for Search
and the Creditors' Committee shall estimate as of the Effective Date
the number of shares issued pursuant to settlement of the O'Shea Class
Action Litigation ("Settlement Shares") to be equal to $2,612,500
divided by the Common Stock price estimated by Alex. Brown.
The Plan Transfer Agent will (a) reserve 25% of the shares of
Common Stock to be distributed to SEO Noteholders (the "Reserved
Shares") pending final settlement of the O'Shea matter and (b) make an
initial distribution of all cash dividends and securities except the
Reserved Shares (the "Initial Distribution").
Subsequently, when the settlement of the O'Shea matter becomes
final, the Settlement Shares will be determined based upon the formula
($2,612,500 divided by the average trading price for the prior 30
days), and if different from the estimate on the Effective Date, the
financial advisors to Search and the Creditors' Committee will again
determine, using the actual number of Settlement Shares, the number of
securities to be issued to the SEO Noteholders (the
"Re-Determination").
If, based upon the Re-Determination, additional shares need to
be issued to SEO Noteholders to comply with Sections 4.03(D) and (E),
then Search shall issue such additional shares as soon as practicable
to the Plan Transfer Agent, who will distribute such additional shares
and the Reserved Shares Pro Rata to those SEO Noteholders. If, based
upon the Re-Determination, fewer shares need to be issued to SEO
Noteholders to comply with Sections 4.03(D) and (E), then the Plan
Transfer
3
<PAGE> 4
Agent will (a) return to Search such fewer shares from the Reserved
Shares and (b) distribute any remaining Reserved Shares Pro Rata to
the SEO Noteholders.
If in the Initial Distribution, the Plan Transfer Agent
rounded down to eliminate fractional shares of Common Stock, the Plan
Transfer Agent will include such fractional shares in determining the
total number of shares that each SEO Noteholder should receive and
then round down to eliminate fractional shares in order to avoid
rounding fractional shares twice."
6. Article IV, Section 4.06(b) is amended by deleting the
original text and substituting the following language:
"a distribution of the proceeds, if any, of the Litigation Trust that
is established pursuant to Article IX. Distributions, if any, will be
attributable to and allocated among the holders of Class A Beneficial Interests
and Class B Beneficial Interests as those interests are defined in the
Litigation Trust Agreement. The recoveries, if any, from the Estate Claims (as
defined in 9.04 below) will be allocated to the Class A Beneficial Interests
and will be distributed among all holders of Allowed Unsecured Claims in
Classes 9 through 16 in accordance with the terms of the Joint Plan and the
Litigation Trust Agreement. The recoveries, if any, from the Individual Claims
(as defined in 9.04 below) will be allocated to the Class B Beneficial
Interests and will be distributed only among the holders of Allowed Unsecured
Claims in Classes 9 through 16 whose causes of action were assigned to the
Litigation Trust through the procedures described in 9.05 below. Distributions,
if any, from the Litigation Trust will be made to the holders of the respective
interests on a quarterly basis beginning on the second anniversary date of the
Effective Date. As to any single Debtor, such distributions will be made to the
holders of Class A Beneficial Interests and Class B Beneficial
4
<PAGE> 5
Interests, as the case may be, on a pro rata basis in a ratio that such
holder's Allowed Unsecured Claims bears to all Allowed Unsecured Claims
included in the applicable class of Beneficial Interests. "
7. Article V, Section 5.01 A is amended by deleting the original
text and substituting the following: "The Judge of United States District Court
for the Northern District of Texas presiding over the O'Shea Class Action
Litigation, Case No. 3:94-CV- 1428-J shall have entered an order (a) certifying
the settlement class, (b) approving notice to the class and (c) preliminarily
approving the class settlement."
8. Article V, Section 5.02 is amended by deleting the original
text of subparagraph B and substituting the following: "Search will have
selected and appointed two directors nominated by the Creditors' Committee as
active members of its Board of Directors. Provided, however, that the failure
or refusal of such nominees to serve shall not prevent the Joint Plan from
becoming effective. "
9. Article VI, Section 6.01 is amended by deleting the words
Conversion Date from the last sentence of such Section and adding the following
phrase at the end of the last sentence: "date it is converted, but no later
than the seventh anniversary of the Effective Date."
10. Article VI, Section 6.02 is amended by inserting before the
words "the Effective Date" in the fourth line the phrase "in conjunction with
the initial distribution of the Convertible Preferred Stock as soon as
practicable after".
11. Article VI, Section 6.08 is amended by deleting the original
text and substituting the following: "Each share of Convertible Preferred Stock
shall have the same voting attributes and characteristics as do the shares of
the Common Stock which shall be one vote per share."
5
<PAGE> 6
12. Article VII, Section 7.06 is amended by deleting the original
text and substituting the following: "Allowed Administrative Claims shall be
paid in full, in cash, on the Effective Date, or within fifteen (15) days after
allowance of such Claim, if entry of a Court order of allowance be necessary.
Allowed Administrative Claim for professional fees of the Debtors' and
Creditors' Committee's counsel, financial and other advisors shall be allocated
among and remain the liability of each Debtor in the ratio that the Present
Value of the Notes of each Debtor bears to the Present Value of the Notes of
all Debtors. If, on the Effective Date, a particular Debtor does not have
enough cash to pay the professional fees mentioned above, then the liability
for such fees shall follow the Note Collateral. Such fees shall then be paid
out of the first amounts collected from the Note Collateral in the Noteholders
Trust and from Search, on a pro rata basis based upon the percentages of
Allowed Noteholder Secured Claims of each of the Debtors that chooses the
Collateral Option and the Search Equity Option under this Plan. The
Noteholders' Trust and the Collateral attributable to the Noteholders having
selected the Collateral Option shall not be liable for the fees, incurred by
Search's professionals, such as Alex. Brown & Sons, Brean Murray, Foster
Securities, or Akin Gump Strauss Hauer & Feld."
13. Article VII, Section 7.08 is amended by deleting the original
text and substituting the following: "The reasonable fees, costs and
out-of-pocket expenses, including attorneys' fees, of the Indenture Trustee,
including without limitation such fees, costs and expenses incurred prior to
the Petition Date, are Administrative Claims in the Case. Set forth in Section
2(f)(1)(h) of the Disclosure Statement are the fees incurred as of the most
recent available date by the Indenture Trustee for the Notes of six (6) of the
Debtors. Any dispute regarding the reasonableness of any of such fees and
expenses shall be determined by the Bankruptcy Court at or prior to the
Confirmation
6
<PAGE> 7
Hearing. The treatment of the Indenture Trustee's fees and expenses as provided
in this Section 7.08 shall be in lieu of and in consideration of the respective
Indenture Trustee's lien rights (if any) under the applicable Indenture
Agreement."
14. Article IX, Section 9.01 is amended by deleting the original
text and substituting the following: "On the Effective Date, the Litigation
Trust will be established for the benefit of the holders of Allowed Unsecured
Claims against those Debtors for whom the Confirmation Order applies. The
beneficial interests in the Litigation Trust will be non-transferable except as
mandated by applicable nonbankruuptcy law. The Litigation Trust will maintain
separate accounting records for each Class 9 through 16 and the holders of
Allowed Unsecured Claims within each such Class, who will hold Class A
Beneficial Interests (as defined in the Litigation Trust Agreement). In
addition, the Litigation Trust shall keep separate accounting records for all
Noteholders who by default or in accordance with the procedures set forth in
the Ballot assign their individual causes of action to the Litigation Trust
(the "Assigning Noteholders"), who will hold Class B Beneficial Interests (as
defined in the Litigation Trust Agreement). The terms of the Litigation Trust
shall be as set forth in the Litigation Trust Agreement which will be filed
with the Bankruptcy Court as a Plan Document prior to Confirmation. The
Litigation Trust is intended to be a grantor trust for federal income tax
purposes. After the Effective Date, the Litigation Trust shall be maintained in
accordance with this Joint Plan and the Litigation Trust Agreement."
15. Article IX, Section 9.01 is further amended by adding a new
subparagraph A which reads as follows: "The Litigation Trust Agreement shall
provide for the appointment of an Interim Trustee in the same manner by which
the Trustee will be appointed. To the extent that Debtors' counsel and the
Creditors' Committee agree, that discussions regarding the resolution or
liquidation
7
<PAGE> 8
of certain Trust Assets (causes of action) are susceptible to imminent
resolution and if they so notify the Bankruptcy Court of the same, the
appointment of a permanent Litigation Trustee may be deferred for a period not
to exceed ninety (90) days. During such ninety (90) day period, the Assignments
discussed Sections 9.04 and 9.05 above shall be effective and the Interim
Trustee shall have the full authority that the Litigation Trustee would have to
settle or pursue causes of action subject to Bankruptcy Court approval.
Accordingly, the Interim Trustee shall be fully indemnified and upon
resignation of the Interim Trustee at the end of or during the ninety (90) day
period be fully released to the same extent as provided for the permanent
Litigation Trustee."
16. Article IX, Section 9.02 is amended by deleting the original
text and substituting the following: "On and after the Effective Date, title to
the assets of the Litigation Trust, including those described in Section 9.04
herein, shall be transferred by the Debtors and the Assigning Noteholders to
and be vested in the Litigation Trustee for the benefit of the beneficiaries of
the Litigation Trust existing as of the Confirmation Date."
17. Article IX, Section 9.04 is amended by deleting the original
text and substituting the following: "Each Debtor will transfer and assign, to
the extent permitted by applicable law, all rights and causes of action
pursuant to (a) Section 502 of the Bankruptcy Code, (b) preference claims
pursuant to Section 547 of the Bankruptcy Code; (c) fraudulent transfer claims
pursuant to Section 548 of the Bankruptcy Code; (d) all other claims and causes
of action of each Debtor against any Person to the Litigation Trust ("Estate
Claims") as of the Effective Date. Accordingly, the Estate Claims shall be
preserved, transferred and assigned to, and vested in, the Litigation Trust for
all purposes as of that date. Subject in all respects to the following
limitations, the respective Litigation Trust will be authorized to prosecute,
settle and collect the Estate Claims on behalf of each Debtor.
8
<PAGE> 9
The Litigation Trust may also hold, prosecute, settle and collect recoveries of
causes of action which may be the property of Noteholders ("Individual
Claims"), but only to the extent that such claims are assigned to the Trust
pursuant to the procedure contained in the ballot for voting on the Joint Plan
or by default by such Noteholder failing to submit a Ballot or properly execute
the Non-Assignment Election provided for on the Ballot. The Litigation Trustee,
in its sole discretion, may pursue such causes of action and without further
order of the Bankruptcy Court take all actions in connection with the
prosection, defense, compromise and settlement thereof. In such connection, the
Litigation Trustee may retain such counsel, accountants or other professionals
deemed necessary in connection therewith. All proceeds of recoveries, if any,
received from or in respect of the causes of action (whether by settlement,
judgment, or otherwise) shall, after payment of all related reasonable
professional and expert fees, become and be distributed to the Noteholders of
the respective Debtor, Pro Rata, for whom such settlement judgment or other
form of recovery was obtained."
18. Article IX, Section 9.05 is amended by deleting the original
text and substituting the following: "Noteholders, as of the Record Date will
in their Ballots for voting on the Joint Plan and by virtue of Bankruptcy Court
order have assigned to the Litigation Trust any pre-petition Claims or causes
of action such Noteholders may hold as of the Record Date against any Persons,
including, but not limited to, the Debtors, Search, their respective current or
former directors, officers, and professionals, or other third parties,
including, but not limited to, financial institutions and third party
professionals arising from or relating to such holder's status as a Creditor of
the Debtors on account of a financial transaction, such Noteholder's
transactions with the Debtors, or such Noteholder's purchase or sale of any
portion of the Notes, or which arise pursuant to the terms of the respective
Indenture Agreement or Memorandum under which such Notes were issued.
9
<PAGE> 10
A Noteholder may elect not to assign his Individual Claims to the
Litigation Trust by checking the Non-Assignment Election on the Ballot. Absent
checking the Non-Assignment Election on the Ballot, including if a Noteholder
does not return a Ballot, the Noteholder will be deemed to have chosen to
assign his Individual Claims to the Litigation Trust. In the event a Noteholder
does not return a Ballot, the Confirmation Order shall be deemed the operative
document for assignment of such Noteholder's Individual Claims."
19. Article XI. Section 11.02 is amended by deleting the original
text and substituting the following: "Neither the Debtors, the Creditors'
Committee, Search, the Interim Trustee (should one be appointed) nor any of
their respective members, officers, directors, employees, agents, or
professionals shall have or incur any liability to any holder of a Claim or
Interest for any act, event, or omission in connection with, or arising out of,
the Chapter 11 Cases (including the activities and deliberations of the
Creditors' Committee), the confirmation and consummation of the Joint Plan,
preparation or contents of the Joint Disclosure Statement or any supplements
thereof or the administration of the Joint Plan or the property to be
distributed under the Joint Plan, except for willful misconduct or gross
negligence."
20. Article XIII is amended by adding a new paragraph S and
relettering the original paragraph S to T. New paragraph S will read as
follows: "To approve any settlements reached by the Interim Trustee; and."
21. Article XIV, Section 14.02 is amended by deleting the original
text and substituting the following: "All Creditors, other than creditors
having Administrative Claims or Rejection Claims with be required to file
proofs of claim, if necessary, by the Bar Date. Rejection Claims must be filed
In accordance with Article X of this Joint Plan. Administrative Claims, other
than those made
10
<PAGE> 11
pursuant to Section 330 of the Bankruptcy Code, must be filed within five (5)
days before the Confirmation Hearing. Any Administrative Claim not filed by the
time specified will be barred."
Except as specifically amended and modified above, the remainder of
the Third Amended Joint Plan of Reorganization shall remain fully effective and
enforceable.
Respectfully submitted this today of February 1996.
By: /s/ MICHAEL R. ROCHELLE
----------------------------------
Michael R. Rochelle
Stephen T. Hutcheson
Rochelle & Hutcheson
2929 Carlisle, Suite 222
Dallas, TX 75204
(212) 953-0182
ATTORNEYS FOR DEBTORS
Search Capital Group, Inc.
By /s/ JOE B. DORMAN
-----------------------------------------
Joe B. Dorman
State Bar No.06003500
Senior Vice President and General
Counsel Search Capital Group, Inc.
700 N. Pearl Street, Ste. 400
Dallas, Texas 75201
(214) 965-6007 (tel.)
(214) 965-6098 (fax)
COUNSEL FOR SEARCH CAPITAL GROUP, INC.
11
<PAGE> 1
EXHIBIT 2.3
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
IN RE: Section CHAPTER 11
Section
Section CASES 395-34981-RCM-11
AUTOMOBILE CREDIT FUND Section THROUGH 395-34988-SAF-11
1991-III, INC., ET AL. Section
Section JOINTLY ADMINISTERED UNDER
Section CASE NO. 395-34981-RCM-11
Debtors. Section
ORDER CONFIRMING THIRD AMENDED AND
SUPPLEMENTED JOINT PLAN, PURSUANT TO 11 U.S.C. Section 1129
Automobile Credit Fund 1991-III, Inc., Automobile Credit Finance,
Inc., Automobile Credit Partners, Inc., Automobile Credit Finance 1992-II,
Inc., Automobile Credit Finance III, Inc., Automobile Credit Finance IV, Inc.,
Automobile Credit Finance V, Inc., and Automobile Credit Finance VI, Inc.,
(collectively the "Debtors"), as debtors in possession, and Search Capital
Group, Inc. ("Search") (the Debtors and Search collectively are referred to
herein as the "Proponents") filed a Third Amended Joint Plan of Reorganization
with this Court on December 11, 1995; filed a supplement thereto on December
22, 1995; and on February 12, 1996 filed Motion For Order (1) Approving
Modification To The Third Amended And Supplemented Joint Plan Under Bankruptcy
Rule 3019; (2) Directing Procedure For Further Opportunity To Elect Equity Or
Collateral Option; (3) Directing Procedure For Certain Creditors To Complete
And Return Previously Unexecuted
<PAGE> 2
Ballot Portions; (4) Approving Supplemental Disclosure (the "Motion For
Order").(1) The Plan(2) was transmitted to the creditors and parties in
interest of the Debtors; after due and sufficient notice and hearing, the Court
hereby makes the following FINDINGS OF FACT AND CONCLUSIONS OF LAW:
1. On August 14, 1995, the Debtors filed voluntary petitions
under Chapter 11 of title 11 of the United States Code (the "Bankruptcy Code").
2. On December 22, 1995 the Proponents filed their Third Amended
And Supplemented Joint Disclosure Statement ("Disclosure Statement") which
contained the Plan as an exhibit.
3. The Court approved the Disclosure Statement on December 27,
1995, as containing adequate information as such term is defined in Section
1125 of the Bankruptcy Code.
4. January 29, 1996 was established as the last day to file
objections to the Plan and to file a ballot regarding the Plan. As of January
29, 1996, no objections to the confirmation of the Plan were filed.
5. The Plan has been accepted by all impaired classes of each
Debtor.
6. On February 12, 1996, the Proponents filed their Motion For
Order, and on or about February 12, 1996 the Court approved it. The Court
found that the modifications included in the Motion For Order did not change
the treatment of any claim against or interest in the Debtors.
__________________________________
(1) The Third Amended Joint Plan of Reorganization and the supplement
thereto along with the modifications to the Third Amended And
Supplemented Joint Plan as included in the Motion For Order, shall be
referred to herein as the "Plan".
(2) Capitalized terms used herein without definition are defined as set
forth in the Plan, the Noteholders Trust Agreement or the Litigation
Trust Agreement, as the case may be.
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<PAGE> 3
7. Copies of the Plan and the Disclosure Statement were mailed to
all creditors and parties in interest. Copies of the modifications to the Plan
were mailed to all affected creditors and parties in interest. Appropriate
ballots were also mailed to the holders of claims and interests to which the
modifications applied. Timely notice of the hearing on confirmation of the
Plan and of the time for filing objections thereto was given to all creditors
under Fed. R. Bankr. P. 2002(b) and (d).
8. As to each Debtor, the Plan has been accepted in writing by
the requisite majorities of creditors and equity security holders whose
acceptance is required by law.
9. As to each Debtor, at least one class of claims has accepted
the Plan, determined without including any acceptance of the Plan by any
insider holding a claim of such class.
10. As to each Debtor, the preconditions to Confirmation, as
defined in the Plan, have been satisfied.
11. The Proponents have complied with the applicable provisions of
the Bankruptcy Code.
12. As to each Debtor the Plan complies with the applicable
provisions of Chapter 11 of the Bankruptcy Code, and has been proposed in good
faith and not by any means forbidden by law.
13. All payments made or promised by the Proponents, or by a
person issuing securities or acquiring property under the Plan, or by any other
person for services or for costs and expenses in, or in connection with, the
Plan and incident to the Cases, have been or will be fully disclosed to the
Court and remain subject to the approval of this Court for reasonableness.
14. Each holder of a Claim or Interest of each class will receive
or retain under the Plan on account of such Claim or Interest property of a
value, as of the Confirmation Date, that is not less
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<PAGE> 4
than the amount that such holder would receive or retain if the Debtors were
liquidated under Chapter 7 of the Bankruptcy Code on such date.
15. Pursuant to Section 1145 of the Bankruptcy Code, the
securities issued under the Plan or issued pursuant to the exercise of the
Warrants issued under the Plan are exempt from the registration requirements of
the Securities Act of 1933, as amended, and any state or local law requiring
registration for the offer or sale of a security.
16. All securities to be issued pursuant to the Plan are being
issued in exchange for a Claim against, and Interest in or a Claim for an
administrative expense concerning the Debtors in these Chapter 11 Cases, within
the meaning of Section 1145 of the Bankruptcy Code.
17. The terms and conditions of the Plan are incorporated in this
Order.
18. These findings of fact and conclusions of law shall be
considered orders of this Court and vice-versa.
19. This Court reserves the right to make further findings of fact
and conclusions of law and orders as may be appropriate.
In consideration of the foregoing findings of fact and
conclusions of law, it is hereby ORDERED, ADJUDGED, AND DECREED:
A. The Plan is confirmed.
B. The findings set forth above are ratified and
approved.
C. Any objections to Confirmation are overruled.
D. The Debtors, Search and all other relevant parties
shall perform their respective duties and
obligations as set forth in the Plan.
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<PAGE> 5
E. All approvals and consents of the equity owner, and
officers and directors of the Debtors, as may be
necessary to carry out the Plan and the actions
authorized by this Order be, and they hereby are
deemed made or done.
F. Susan A. Brown and Fred Hammer (the "Noteholder
Directors") are hereby appointed as the directors of
Search Capital Group, Inc. from and after 8:00 a.m.,
C.S.T., on the Effective Date or such other date
thereafter as may be selected by each such
Noteholder Director, but not later than seventy-five
(75) days following the Effective Date, or following
such seventy-five (75) day period replacement
Noteholder Directors as selected by the Creditors'
Committee and approved by Search in accordance with
the Plan shall be appointed.
G. In accordance with Section 1141(c) of the Bankruptcy
Code, all assets of the Debtors are free and clear of
all claims and interests of creditors and equity
security holders, and all property to be assigned,
transferred or conveyed by the Debtors to Search, the
Noteholders' Trust and the Litigation Trust in
accordance with the terms of the Plan shall be
assigned, transferred or conveyed free and clear of
all liens, Claims, and Interests of creditors and
equity security holders of the Debtors and shall be
deemed: (i) legally, validly and effectively
transferred in accordance with the provisions of the
Plan; (ii) to have been transferred without violating
any fraudulent transfer or conveyance law of the
United States, any state, territory, possession or
the District of Columbia, applicable to the Debtors
or Search; and (iii) deemed
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<PAGE> 6
to have been transferred under the Plan without
subjecting the Debtors, Search, the Noteholders'
Trustee and the Litigation Trustee to any liability
to a creditor or party-in-interest of the Debtors'
Estates by reason of such transfer under the laws of
the United States, any state, territory, possession
or District of Columbia based, in whole or in part,
directly or indirectly, on any theory of law
including, without limitation, any theory of
transferee or successor liability.
H. In accordance with the provisions of the Plan and
Sections 365 and 1123(b)(2) of the Bankruptcy Code,
the deemed rejection of executory contracts and
unexpired leases shall be, and hereby is, approved in
all respects. Only those executory contracts or
unexpired leases which each Debtor has assumed prior
to the date of this Order or with respect to which a
motion to reject is pending are not deemed rejected.
I. All persons having Claims arising from the rejection
of executory contracts or unexpired leases shall have
ten (10) days after the earlier of the entry of this
Order or, if applicable, entry of a Final Order
rejecting such executory contract or unexpired lease
within the meaning of Section 365 of the Bankruptcy
Code to file such Claims.
J. All Noteholders that failed timely to elect a Plan
Option are deemed to have elected the Search Equity
Option.
K. Objections to proofs of claim against the Debtors'
Estates may be filed (by the Debtors, the Creditors'
Committee or other parties in interest in
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<PAGE> 7
accordance with the Bankruptcy Code) for a period of
thirty (30) days after the Effective Date, unless
otherwise ordered by this Court.
L. The Creditors' Committee shall cease to exist upon
the earlier to occur of (a) ninety (90) days after
the Effective Date or (b) Substantial Consummation of
the Plan. Neither Search nor the Noteholders' Trust
shall be obligated to pay fees of the Creditors'
Committee professionals for services rendered or
costs incurred beyond ninety (90) days after the
Effective Date.
M. Prior to the Effective Date, the Debtors shall
deposit in a new separate interest-bearing account,
the amount of $2,000,000 or such additional amount as
is estimated to be sufficient to pay all
administrative, priority tax, and priority non-tax
Claims, including those of the professionals in the
Cases. The account shall not be subject to any lien,
claim or security interest created by Search or any
other party. The distribution of such funds shall be
made only upon Court order approving such
administrative, priority tax and priority non-tax
Claims. Any amounts remaining in such account
following the final disposition of all
administrative, priority tax and priority non-tax
Claims shall be returned to the Debtors in the
pro-rata amount corresponding to the amount such
Debtor contributed to the payment of such
administrative, priority tax and priority non-tax
Claims. All such amounts returned to the Debtors
pursuant hereto shall then be transferred to Search
or the Noteholders' Trust in an amount corresponding
to those Noteholders electing the Search Equity
Option for the former and the Collateral Option for
the
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<PAGE> 8
latter. On the Effective Date, the Debtors shall
each transfer their proportionate share of $350,000
to the Litigation Trust as provided in Section 9.03
of the Plan.
N. A copy of this Order shall be sent to all creditors
of the Debtors and the cost of doing so shall be an
expense of administration of the Estates.
O. This Court hereby retains, after the date hereof,
jurisdiction:
1. To determine all controversies relating to or
concerning the classification, allowance or
satisfaction of Claims;
2. To liquidate all disputed, contingent or
unliquidated Claims;
3. To determine any and all application for the
rejection or assumption and\or assignment, as
the case may be, of executory contracts and
unexpired leases to which any of the Debtors
are party or with respect to which any of the
Debtors may be liable, and to determine and,
if necessary, to liquidate, any and all
Claims arising therefrom;
4. To determine any and all applications,
adversary proceedings, and contested or
litigated matters properly before the Court,
including, without limitation, any proceeding
commenced for the purposes of avoiding,
recovering or preserving for the benefit of
the Estates any transfer of property,
obligation incurred by the Debtor, lien or
set-off;
5. To determine any dispute arising under the
Plan and to make such orders as are necessary
or appropriate to carry out the provisions of
the Plan;
-8-
<PAGE> 9
6. To grant extensions of any deadlines set
herein;
7. To hear and determine all requests for
compensation and/or reimbursement of expenses
which may be made after Confirmation;
provided, however, this paragraph shall not
be construed as limiting the Debtors' ability
to pay their attorneys and other
professionals for services performed after
the Confirmation Date, including services
performed in connection with the Cases;
8. To enforce all provisions of the Confirmation
Order;
9. To hear and determine all issues with respect
to the accounts, if any, filed by the
Noteholders' Trustee and the Litigation
Trustee;
10. In addition, and at any time, the Court may
make such orders or give such direction as
may be appropriate under Sections 105 or
1142 of the Bankruptcy Code;
11. If the need arises, to enforce the rights of
Noteholders to receive cash dividends and
elect a supermajority of board of directors
under the terms of the Plan;
12. To enter and implement such orders as may be
appropriate in the event the Confirmation
Order is for any reason stayed, revoked,
modified, reversed, or vacated;
13. To enter and implement such orders as may be
necessary or appropriate to execute,
interpret, implement, consummate, or enforce
the Plan and the transactions contemplated
thereunder;
-9-
<PAGE> 10
14. To consider any modification of the Plan
pursuant to Section 1127 of the Bankruptcy
Code, to cure any defect or omission, or
reconcile any inconsistency in any order of
the Bankruptcy Court, including, without
limitation, the Confirmation Order;
15. To recover all assets of the Debtors and
property of the Estates, wherever located;
16. To hear and determine matters concerning
state, local, and federal taxes in accordance
with Sections 346, 505, and 1146 of the
Bankruptcy Code;
17. To hear and determine any settlements
submitted pursuant to Fed. R. Bankr. P. 9019
proposed by the Interim Litigation Trustee or
by the Litigation Trustee, if appointed
thereafter;
18. To hear and determine any other matter not
inconsistent with the Bankruptcy Code and
title 28 of the United States Code that may
arise in connection with or related to the
Plan; and
19. To enter a final decree closing the Chapter
11 Cases.
P. The Effective Date shall not occur unless and until
all of the conditions precedent set forth in Section
5.02 of the Plan have occurred or been satisfied.
Q. Each and every federal, state, commonwealth, local,
foreign or other governmental agency or department is
hereby directed to accept any and all documents and
instruments necessary, useful or appropriate to
effectuate, implement or consummate the transactions
contemplated by the Plan or this Order.
-10-
<PAGE> 11
R. The Debtors, Search, Texas Commerce Bank, N.A. as
Indenture Trustee or custodian (collectively, the
"Indenture Trustee"), and their respective officers,
directors, agents and employees, be, and they hereby
are, required, authorized and empowered to issue,
execute and deliver such documents and instruments
and to take such actions as may be necessary to carry
out the Plan and the actions authorized by this
Order, including, without limitation, such actions
necessary to assign, transfer and convey to the
Noteholders' Trust, to the Litigation Trust and to
Search, the Debtors' assets which are being assigned,
transferred and conveyed pursuant to the Plan and to
acknowledge satisfaction and discharge of the
Indentures and the Memoranda.
S. The fees, costs, and out-of-pocket expenses,
including attorneys' fees of the Indenture Trustee,
including without limitation such fees, costs, and
expenses incurred prior to the Petition Date are
Administrative Claims in the Cases, subject to review
of this Court as to their reasonableness.
T. On the Effective Date, the Debtors shall execute the
Litigation Trust Agreement and Noteholders' Trust
Agreement in substantially the forms thereof filed as
Plan Documents together with such changes thereto as
are acceptable to the Debtors and the Creditors'
Committee, which Litigation Trust Agreement and
Noteholders' Trust Agreement are hereby approved in
all respects.
U. The Litigation Trust is the "successor" to the
Debtors for purposes of Section 1145(a)(1) of the
Bankruptcy Code, but only with respect to the Estate
Claims under Section 9.04 of the Plan and not for any
other purpose.
-11-
<PAGE> 12
V. Pursuant to Section 1123(b)(3)(B) of the Bankruptcy
Code and Section 9.04 of the Plan, the Litigation
Trust shall be the representative of both the
Debtors' Estates and the Assigning Noteholders for
purposes of pursuing any Estate Claims or Individual
Claims, as the case may be, in accordance with the
terms of the Plan; notwithstanding the foregoing, any
potential cause of action that is assigned to the
Litigation Trust shall be subject to any rights of
set-off or other defenses as existed immediately
prior to such assignment except as otherwise provided
in this Order.
W. If a Noteholder did not check the Non-Assignment
Election on the Ballot or if a Noteholder did not
return a Ballot, the Noteholder will be deemed to
have assigned his Individual Claims to the Litigation
Trust. In the event a Noteholder did not return a
Ballot, this Order shall be deemed the operative
document for assignment of such Noteholder's
Individual Claims.
X. The Creditors' Committee or such members thereof as
determined by the Creditors' Committee are hereby
appointed as Interim Litigation Trustee with full
power and authority of the Litigation Trustee in
accordance with the terms of the Plan and the
Litigation Trust Agreement to take all actions with
respect to the Litigation Trust Assets (including but
not limited to negotiating and implementing
settlements of Estate Claims or assigned Individual
Claims) which could have been taken by the Litigation
Trustee for a period not to exceed ninety (90) days
after the Effective Date, at which time the
Litigation Trustee shall be appointed unless there
has been such substantial resolution of the
Litigation Trust Assets that the Interim Litigation
Trustee determines that dissolution of the Litigation
Trust and disbursement of the
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<PAGE> 13
liquidated Estate Claims or assigned Individual
Claims is appropriate and such determination is
approved by this Court.
Y. Upon the Effective Date and thereafter, to the extent
requested by the Noteholders' Trustee or Noteholders'
Trust Committee, Mr. Robert Idzi or other appropriate
officer of the Debtors, shall execute on their
behalf, powers of attorney in substantially the same
form as attached as Exhibit "D" to the Noteholders'
Trust Agreement in favor of the Noteholders' Trustee
or Noteholders' Trust Committee in order to deal in
all respects with the Collateral(3) and all related
title, contract or other rights. Such powers of
attorney for each Debtor shall fully authorize the
Noteholders' Trustee or Noteholders' Trust Committee
to execute appropriate documents to, among other
things, (a) assign all right, title and interest in
the Collateral to the Noteholders' Trust, or if
appropriate, a Successful Bidder or (b) have all or a
portion of the Collateral serviced under new contract
arrangements with a New Servicer.
Z. All rights of holders of Claims or Interests of all
classes under the Plan, including, without
limitation, the right to receive distributions on
account of such Claims or Interests, hereafter shall
be limited solely to the right to receive such
distributions
__________________________________
(3) Collateral shall mean: (i) cash (including existing sinking fund
accounts, other than that set aside for payment of Administrative
Claims in accordance with paragraph M hereof); (ii) automobile
loans and related contract rights and insurance proceeds, together
with underlying future streams of cash that secure the Notes; (iii)
repossessed automobiles, related rights and pending liquidation
proceeds; (iv) charge-offs and inactive automobile loan contracts;
and (v) all other assets of the Debtors not dealt with in the Plan
that are attributable to Noteholders.
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<PAGE> 14
exclusively as provided in the Plan, and after the
date hereof, the holders of such Claims or Interests
shall have no other or further rights against the
Debtors.
AA. The Noteholders' Trust Committee created under the
Noteholders' Trust Agreement shall include initially
representatives of The Boston Company (William
Reilly), Rousseau Mortgage Corp. (Ted Louie) and
Accredited Investors, Inc. (Duel Glass) who
collectively shall act as the initial Noteholders'
Trustee, with the right to employ Mr. Stephen Fisher
of 6054 Northwood, Dallas, Texas 75225 as either a
consultant to the Noteholders' Trustee or to act as
the Noteholders' Trustee and be paid such
compensation as the Noteholders' Trust Committee
deems appropriate under the circumstances taking into
account the value of the Collateral, the Noteholders'
Trustee's need to preserve it for the benefit of all
beneficiaries of the Noteholders' Trust and to effect
a sale, collection of underlying automobile loan
accounts through a New Servicer, or other Collateral
disposition attributable to those Noteholders having
selected the Collateral Option under the Plan.
BB. Through and beyond the Effective Date, Search will
permit interested parties, subject to entering into
appropriate confidentiality agreements, to perform
appropriate due diligence with respect to the
Collateral and each Debtor's and Search's records
pertaining thereto in order to reduce, if
appropriate, their bids to a definitive written
contract for servicing or sale with respect to those
Noteholders having selected the Collateral Option.
The Collateral attributable to Noteholders having
selected the Collateral Option will be segregated as
of the Confirmation Date on the books and records of
Search, on a Debtor-by-Debtor basis, until a sale of
the Collateral is
-14-
<PAGE> 15
achieved, transfer to a New Servicer is arranged or
other disposition occurs. Search will permit an
authorized representative of the Noteholders' Trust
to, during normal business hours, inspect and make
copies of the records, documents, and computer
records concerning such segregated Collateral.
CC. The proportionate amount of all cash, deposits and
funds in any accounts held by or for the benefit of
the Debtors which is determined to be allocated to
the Noteholders' Trust shall be transferred to the
Noteholders' Trustee on the Effective Date, which
monies shall be maintained exclusively for the
purposes set forth in the Plan.
DD. Pending transfer of the Collateral attributable to
Noteholders having selected the Collateral Option,
Search will continue servicing such Collateral for so
long as requested by the Noteholders' Trust Committee
or the Noteholders' Trustee for the same
consideration and under the same terms as provided
under the Servicing Agreements. Search's employees,
officers, directors, consultants and other personnel
shall assist in the orderly transition of the
Collateral attributable to Noteholders having
selected the Collateral Option to either the
Noteholders' Trust, New Servicer, or Successful
Bidder in a timely, meaningful and cooperative
manner.
EE. The allocation of Collateral to Search and to the
Noteholders' Trust, as determined by Boston Portfolio
Advisors, Inc., the Collateral Consultant appointed
as contemplated by the Plan, based upon the criteria
set forth in Exhibit "E" to the Noteholders' Trust
Agreement, shall be agreed upon by Search and the
Noteholders' Trust, or absent such agreement
determined by this Court and thereafter shall be
-15-
<PAGE> 16
binding upon Search and the Noteholders' Trust, and
all other parties in interest under Section 1141 of
the Bankruptcy Code.
FF. Any judgment at any time obtained, to the extent that
such judgment is a determination of the personal
liability of the Debtors, Search, the Litigation
Trust or the Noteholders' Trust with respect to any
discharged debt, whether or not discharge of such
debt is waived, be, and it is hereby void.
GG. This Order shall forever bar Claims for contribution,
reimbursement, subrogation or indemnity against the
Debtors or the Litigation Trust and their successors
by any holder of an indemnity Claim or any Person or
entity who was named as a defendant, who could have
been named as a defendant, or who otherwise may claim
contribution, reimbursement, subrogation or indemnity
rights in the future against a Debtor in connection
with the facts and Claims asserted, or that could
have been asserted within the scope of any lawsuit
that was pending or could have been pending on the
Effective Date.
HH. The Plan and its provisions shall bind the Debtors,
any entity acquiring property under the Plan, and any
Creditors, their agents, employees, officers,
directors and other representatives, whether or not
the Claim or Interest of such Creditors or Interest
Holders is impaired under the Plan and whether or not
such Creditors or Interest Holders have accepted the
Plan.
II. All of the Debtors' Creditors and Interest Holders
are hereby permanently enjoined pursuant to Section
524 and precluded from (a) asserting, commencing or
continuing in any manner any action against the
Debtors, for recovery of any debt, Claim or Interest
-16-
<PAGE> 17
against the Debtors' assets or properties, or any
other or further debt or Claim, right or Interest
based upon any documents, executory contracts,
unexpired leases, instrument or act, omission,
transaction or other activity of any kind or nature
that occurred prior to the Confirmation Date, (b) the
enforcement, attachment, collection or recovery, by
any manner or means of any judgment, award or decree
or order against any of the Debtors or any property
or assets of any of the Debtors, (c) creating,
perfecting or enforcing any encumbrance or
contractual right of any kind against the Debtors
which arises from or is related to any fact in
existence prior to the Confirmation Date, (d)
asserting any set-off, right of subrogation or
recoupment of any kind against any obligation due the
Debtors and (e) any action, in any manner, in any
place whatsoever, that does not conform to or comply
with the provisions of the Plan.
JJ. In accordance with Section 1141(d) of the Bankruptcy
Code, the Debtors are hereby discharged of and from
any and all debts, Claims and Interests of any nature
whatsoever against the Debtors and their respective
Estates that arose or could have been asserted
against any or all of them before the Effective Date,
including, without limitation, any claim which in any
way arises from their supervision, operation,
control, ownership or contemplated conveyance of
property of any of the Debtors or is based upon any
asserted environmental protection law or cause or
action arising from the same, and any debt or Claim
of a kind specified in Sections 502(g), 502(h) or
502(i) of the Bankruptcy Code, whether or not (i) a
proof of claim based on such a debt is filed or
deemed filed under Section 501 of the Bankruptcy
Code, (ii) such Claim is
-17-
<PAGE> 18
allowed under Section 502 of the Bankruptcy Code, or
(iii) the holder of such Claim has accepted the Plan.
KK. The Debtors, Search, members of the Creditors'
Committee, and their affiliates, directors, officers,
employees, attorneys, agents, financial advisors, or
other representatives, and any or all of their
assigns, shall hereby be mutually released and
discharged each from the others, from any
post-petition Claims arising in connection with the
Chapter 11 Cases. Neither the Debtors, the Creditors'
Committee, nor any of their respective members,
officers, directors, employees, agents, attorneys or
other professionals shall have or incur any liability
to any holder of a Claim or Interest or any other
Person or entity for any act, event, or omission in
connection with, or arising out of the Chapter 11
Cases (including the activities and deliberations of
the Creditors' Committee), or in connection with the
Confirmation of the Plan, the negotiations for and
the motions to approve any third party settlements
prior to Substantial Consummation which are approved
pursuant to Fed. Bankr. R. P. 9019(a), the
consummation of the Plan, the administration of the
Plan or the property to be distributed under the
Plan, except for willful misconduct or gross
negligence.
LL. Pursuant to Section 1145(a) of the Bankruptcy Code,
the issuance of the Common Stock, Convertible
Preferred Stock and Warrants pursuant to the Plan to
holders of Allowed Claims, and the subsequent
exercise of the Warrants to purchase the securities
issuable thereunder or the conversion of the
Convertible Preferred Stock into the underlying
Common Stock (collectively "Plan Securities") by such
holders or their transferees shall be exempt from
registration under the Securities Act of 1933, as
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<PAGE> 19
amended; any state or local law requiring
registration under the Securities Act of 1933, as
amended; and any state or local law requiring
registration for offer or sale of a security or
registration or licensing of an issuer or underwriter
of, or broker or dealer in, a security. All such
securities to be so issued shall be freely
transferable by the initial recipients thereof,
except for any such securities received by an
underwriter within the meaning of Section 1145(b) of
the Bankruptcy Code, subject to any restriction
contained in the terms of such securities themselves,
in the Plan, or in the Plan Documents.
MM. Pursuant to Section 1146 of the Bankruptcy Code, the
issuance, distribution, transfer or exchange of the
Plan Securities, and the creation, modification,
consolidation, recording, making or delivery of any
instrument of transfer (including deeds, security
agreements, financing statements and other
instruments of transfer) or the making, assignment or
recording of any document required in order to
implement the transactions set forth in the Plan or
the provisions respecting the vesting of the
Collateral in the Noteholders' Trust and Search set
forth in Sections 4.03 and 4.04 of the Plan or
otherwise required in order to effectuate, implement
or consummate the Plan or this Order, shall not be
subject to any tax under any law imposing a document
recording tax, intangibles or other similar tax,
mortgage tax, stamp tax or similar tax, and the
appropriate governmental officials or agents shall
be, and hereby are, directed to forego the collection
of any such tax and to accept for filing and
recordation any of the foregoing instruments without
the payment of any such tax.
-19-
<PAGE> 20
NN. The Convertible Preferred Stock and Common Stock to
be issued to the Noteholders that elected the Search
Equity Option shall equal the percentage (which is
the product of .75 times a fraction the numerator of
which is the Allowed Noteholder Secured Claims of
Noteholders that selected or were assigned the Search
Equity Option and the denominator of which is all
Allowed Noteholder Secured Claims) on a fully diluted
basis of the value of all shares of Convertible
Preferred Stock, Common Stock, Warrants, outstanding
12% Search Preferred Stock, existing Search Common
Stock, other warrants and stock options, and rights,
then outstanding, issued or agreed to be issued by
Search. The calculation made pursuant to this
paragraph NN and Section 4.03 of the Plan shall be
determined by agreement of Alex. Brown & Sons, as
financial advisor for Search and Gordian Group, L.P.
as financial advisor for the Creditors' Committee, or
absent such agreement by this Court.
OO. Search will amend by the Effective Date its
Certificate of Incorporation and bylaws as provided
for in Section 6.07 of the Plan.
DATED: March 4, 1996.
ORIGINAL SIGNED BY
/s/ ROBERT C. MCGUIRE
------------------------------------
ROBERT C. McGUIRE
CHIEF UNITED STATES BANKRUPTCY JUDGE
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<PAGE> 1
EXHIBIT 2.4
MAR 5, 1996
TAWANA C. MARSHALL, CLERK
By
-----------------------
Deputy
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
IN RE: SECTION
SECTION
Automobile Credit Fund 1991-III, SECTION CASE NO. 395-34981-RCM-11
Inc. SECTION
SECTION
SECTION
DEBTOR(S).
CHAPTER 11 POST-CONFIRMATION ORDER
The court entered an order confirming a plan in this case. Pursuant to 11
U.S.C. SECTION 1106(a)(7) and Bankruptcy Rule 3022, to provide a schedule for
final action in this case, it is
ORDERED that the debtor or plan proponent shall pay forthwith unpaid
notice charges and claim charges incurred to date to the Clerk, U.S. Bankruptcy
Court, and it is further
ORDERED that all applications for the award of compensation or expenses,
if any, for professional persons in this case and motions for administrative
expenses, if any, shall be filed and served within 30 days after entry of this
order, unless the confirmation order provides otherwise. Objections to any
application or motion must be filed within 20 days of service, and it is further
ORDERED the all objections to claims, if any, shall be filed and served
within 30 days after entry of this order, unless the confirmation order
provides otherwise. Responses to the objections must be filed within 30 days of
service, and it is further
ORDERED that the debtor or plan proponent shall obtain settings for
hearings on all applications for the award of compensation or expenses and
motions for administrative expenses, and, consistent with the notice
requirements of Bankruptcy Rule 3007, to determine objections to claims, and it
is further
ORDERED that, within 20 days after the hearings described in the previous
paragraph, a post-confirmation report shall be filed by the party responsible
for distribution under the plan, and it is further
ORDERED that the debtor, plan proponent or other responsible party,after
substantial consummation, as defined under 11 U.S.C. SECTION 1101(2), shall
file an application for final decree and obtain a setting on the application
within 180 days of the entry of this Oder, and it is further ORDERED that if
the application for final decree is not filed within 180 days of the entry of
this Order, a status conference will be held on 9-30, 1996, at 9 a.m., and it
is further
ORDERED that if the debtor, plan proponent or other responsible party does
not appear at the status conference, the court, on its own motion, may enter a
final decree closing the case, Bankruptcy Rule 3022, or dismiss the case, and
it is further
ORDERED that the debtor or plan proponent shall certify that copies of
this order were mailed to all creditors and other parties in interest within 10
days of entry of this order.
SIGNED this 4th day of March, 1996.
ORIGINAL SIGNED BY
/s/ ROBERT C. MCGUIRE
------------------------------
United States Bankruptcy Judge
<PAGE> 1
EXHIBIT 2.5
MAR 6, 1996
TAWANA C. MARSHALL, CLERK
By
-----------------------
Deputy
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF TEXAS
Dallas Division
IN RE: SECTION Bankruptcy Case
SECTION No.395-34981-RCM-11
AUTOMOBILE CREDIT FUND SECTION Through 395-34988-SAF-11
1991-III. INC. ET AL. SECTION
Debtor SECTION JOINTLY ADMINISTERED UNDER
SECTION CASE NO. 395-34981-RCM-11
ORDER REGARDING ENTRY DATE OF ORDER CONFIRMING THIRD
AMENDED AND SUPPLEMENTAL JOINT PLAN PURSUANT TO 11 U.S.C. 1129
- --------------------------------------------------------------------------------
After consideration of matters pertaining to the entry of the ORDER
CONFIRMING THIRD AMENDED AND SUPPLEMENTAL JOINT PLAN, PURSUANT TO 11 U.S.C.
1129, the Court determines that in the interest of economy and equity, the
Order was presented for entry on March 4, 1996 and said date is proper and right
for entry of this Order, it is therefore,
ORDERED that the ORDER CONFIRMING THIRD AMENDED AND SUPPLEMENTAL JOINT
PLAN, PURSUANT TO 11 U.S.C. 1129 shall be deemed to be entered nunc pro tunc on
March 4, 1996.
This Order shall be served on all parties to whom the ORDER CONFIRMING
THIRD AMENDED AND SUPPLEMENTAL JOINT PLAN, PURSUANT TO 11 U.S.C. 1129 in the
manner and as set forth in the ORDER CONFIRMING THIRD AMENDED AND SUPPLEMENTAL
JOINT PLAN, PURSUANT TO 11 U.S.C. 1129.
Dated: March 5, 1996
/s/ ROBERT C. MCGUIRE
----------------------------------
Honorable Robert C. McGuire, Chief
United States Bankruptcy Judge
<PAGE> 1
EXHIBIT 2.6
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
IN RE: Section CHAPTER 11
Section
AUTOMOBILE CREDIT FUND Section CASES 395-34981-RCM-11
1991-III, INC., ET AL., Section THROUGH 395-34988-SAF-11
Section
Section JOINTLY ADMINISTERED UNDER
Debtors. Section CASE NO. 395-34981-RCM-11
ORDER GRANTING SECOND MOTION FOR TECHNICAL, NON-MATERIAL
MODIFICATION TO THE THIRD AMENDED AND SUPPLEMENTED
JOINT PLAN OF REORGANIZATION
On March 8, 1996, the Debtors and the Official Creditors' Committee
brought on for hearing a Second Motion for Technical, Non-Material Modification
to the Third Amended and Supplemented Joint Plan of Reorganization. Notice had
been given on a limited basis, only to the members of the Committee and their
counsel, as well as to the Office of the United States Trustee. The pleadings
of the parties were considered. The following constitute the Court's Findings
of Fact and Conclusions of Law:
Findings of Fact and Conclusions of Law
1. On March 1, 1996, this Court confirmed the Third Amended and
Supplemented Joint Plan proposed by the Debtors and Search Capital Group, Inc.,
(the "Plan"). The order confirming the Plan was entered on March 4, 1996.
2. The Plan provided two basic options. Noteholders could either
accept preferred and common stock in Search Capital Group (the "Search Equity
Option"), or they could take their
1
<PAGE> 2
pro rata share of the Collateral securing the Notes (the "Collateral Option").
Under the Collateral Option, the Notes would be sold or serviced out under the
supervision of a Noteholders' Trust. Approximately twenty per cent of the
Noteholders elected the Collateral option; those Notes total approximately
$12.5 million in estimated face amount, as summarized below for each Debtor and
as identified in Exhibit "A" attached to this Order:
<TABLE>
<S> <C> <C>
(a) ACF-1991 $145,000
(b) ACF $411,000
(c) ACP $122,000
(d) ACF-1992 $2,035,000
(e) ACF-III $2,162,000
(f) ACF-IV $1,181,000
(g) ACF-V $2,883,000
(h) ACF-VI $3,500,000
</TABLE>
3. Under Section 4.04(b) of the Plan, the Committee can sell the
Collateral for those Noteholders having selected the Collateral Option (the
"Electing Noteholders"), if the Committee receives a bona-fide offer in an
amount equal to or exceeding the liquidation value of the corresponding
Collateral prior to the Plan's Effective Date. In accordance with the Plan, a
sub-committee of the full Committee (the "Trust Committee") has negotiated with
third parties to sell the Electing Noteholders' Notes and/or Collateral for the
net purchase price set forth below for each $1,000 in original face amount of
the Notes/Collateral:
<TABLE>
<S> <C> <C>
(a) ACF-1991 $200
(b) ACF $200
(c) ACP $250
(d) ACF-1992 $650
(e) ACF-III $650
(f) ACF-IV $680
(g) ACF-V $700
(h) ACF-VI $780
</TABLE>
2
<PAGE> 3
4. A copy of the letter agreement between the Committee and the
Purchasers is attached to this Order as Exhibit "B".
5. The sale is conditioned upon the following items from the
Noteholders/Sellers perspective:
a. Court approval;
b. Such sale being completed on a "block" basis, meaning
that all of the Collateral or Notes, will be sold together, or none shall be
sold.
c. Purchasers will have committed in writing, in a form
acceptable to the Committee, and in a binding fashion, to purchase all such
Collateral or Notes for each Debtor fund by no later than March 11, 1996, at
5:00 p.m. CST.
d. The sale will be closed by March 13, 1996; if closed
later, such closing shall in no event be later than the Plan's Effective Date.
The physical exchange of the Notes and related instruments for cash shall occur
no later than March 20, 1996.
e. An escrow arrangement satisfactory to the Committee
and the Purchasers will be implemented to assure the availability of the cash
purchase price by March 13, 1996; if closed later than March 13, such escrow
shall be created no later than the Plan's Effective Date.
f. The sale of the Collateral/Notes will exclude the
treatment provided such Noteholders' Allowed Unsecured Claims, including (a)
all interests of Noteholders having selected either the Collateral Option in
the Litigation Trust with respect to "Estate Claims" and "Individual Claim"
either assigned to the Litigation Trust or withheld by individual Noteholders
from being
3
<PAGE> 4
assigned to the Litigation Trust under Article IX of the Plan, and (b)
Noteholders' rights to receive Warrants under the Plan.
g. The Purchasers will represent and warrant that such
purchase of securities issued by Search has not been made with a view toward
redistribution within the meaning of Section 1145(b) of the Bankruptcy Code.
6. The sale is conditioned upon the following items from the
Purchasers' perspective:
a. Court approval of a Plan Amendment providing for the
Purchasers of the Collateral/Notes, having the opportunity for fifteen (15)
days following the closing of sale of the Collateral/Notes (and exchange of
note instruments for the cash consideration), to change such Noteholders'
original election of the Collateral Option to the Search Equity Option, as such
elections are described in Sections 4.03 and 4.04 of the Plan; and
b. the sale's taking place prior to the Plan's Effective
Date.
7. The price to be realized by the Noteholders will equal or
exceed the ultimate estimated recoveries set out on page 11 of the Disclosure
Statement under both the low and middle case recovery rates for all funds; such
prices also exceed the recovery rates posited in the highest case for four of
the eight funds. The Disclosure Statement assumed that the recovery would be
obtained over the remaining life of the Notes; the proposed purchases provide
for immediate cash payment. While the recoveries forecast in the Disclosure
Statement were discounted to a present value, the sale eliminates the vagaries
and uncertainties of future collections.
8. The proposed purchase opportunity is open for only a brief
period. The Purchasers wish to acquire freely-tradeable Search stock under the
Plan.
4
<PAGE> 5
9. In order to effect a prompt sale and "settlement" within three
(3) days thereafter, as typically required of securities transactions by the
Securities and Exchange Acts, the Debtors will issue new Notes in the name of
each Purchaser for its respective amount of purchased Collateral/Notes and
deliver such Notes to the Committee for its exchanging them with the Purchasing
Agent for cash.
10. All existing Note certificates issued by the Debtors and held
by Noteholders having selected this Collateral Option will become null and void
once this order becomes final and non-appealable. Nonetheless, in order to
avoid any confusion over the continuing validity of such certificates,
Noteholders will be required to submit them to the Committee, for ultimate
transmission to the Plan Transfer Agent, in order to receive their cash
payments.
11. The Plan in its present form does not contemplate or deal with
the current situation, in two ways:
a. Although Claims are freely transferrable under Bankruptcy
Rule 3001(e), the Plan is silent regarding whether a Claim purchaser may change
the Equity/Collateral Option election already made by the previous holder of an
Allowed Secured Noteholder Claim as part of the balloting process.
b. As to those Noteholders who have elected the Collateral
Option, the Plan provides only for the sale of the Collateral before the
Effective Date; there is no explicit mechanism or authority for the acceptance
and approval of a sale of the Notes before the Effective Date. Without such
authority, the Collateral-electing Noteholders may lose a significant and
beneficial opportunity which they otherwise may not have, since no other offers
to buy the collateral have come forward at so high a price.
5
<PAGE> 6
12. The members of the Trust Committee -- the entity created by
the Noteholders Trust Agreement to deal with the matter of Note/Collateral sale
- -- believe that this purchase proposal should be accepted, if there is clear
authority to do so.
13. Because the Offers are likely to exceed the payout to those
electing the Collateral Option under the Plan, the changes proposed are merely
technical, non-material modifications which may be made ex parte, without a
generalized notice to creditors.
14. It is in the best interest of the Estates that the Plan be
modified and supplemented as requested by the Movants.
WHEREFORE, PREMISES CONSIDERED, it is therefore
ORDERED THAT All existing Note certificates issued by the Debtors and
held by Noteholders having selected this Collateral Option will become null and
void once this order becomes final and non-appealable. Nonetheless, in order
to avoid any confusion over the continuing validity of such certificates,
Noteholders will be required to submit them to the Committee, for ultimate
transmission to the Plan Transfer Agent, in order to receive their cash
payments.
ORDERED that the Plan be, and it hereby is, modified and supplemented
in the follows ways:
a. By adding the bolded, underlined language to the
currently-existing Section 4.02 of the Plan, which is set out in normal type:
4.02 Selection of Options by Classes 1 Through 8. Each Noteholder
voting "Yes" on the Joint Plan may select either the Search Equity
Option or the Collateral Option. Any Noteholder voting "No" on the
Joint Plan will not be given the right to select either the Search
Equity Option or the Collateral Option. If the Joint Plan is
confirmed as to the applicable Debtor, those who voted "No" on the
Joint Plan shall receive treatment under the Search Equity Option. IF
A PERSON PURCHASES A NOTEHOLDER CLAIM BEFORE THE EFFECTIVE DATE BUT
AFTER EITHER THE SEARCH EQUITY OR THE COLLATERAL OPTION HAS BEEN
SELECTED BY THE NOTEHOLDER, SUCH NEW
6
<PAGE> 7
PURCHASER MAY ALTER THE OPTION SELECTED, IF SUCH ALTERATION IS DONE
BEFORE THE EFFECTIVE DATE.
b. By adding the bolded, underlined language to
the currently-existing first paragraph of Section 4.04.B. of the Plan, which is
set out in normal type:
4.04.B. Sale of Assets
If, prior to the Effective Date, the Creditors' Committee receives a
bona fide offer to purchase the respective NOTES AND/OR Collateral at
a price, net of selling costs and after taking into account risks
associated with other alternatives which exceeds the ESTIMATED
liquidation value of the Collateral (as determined by the Committee
AND ITS EXPERTS or, if necessary, determined by the Bankruptcy Court),
the Noteholders' Trust may not be formed. Instead, the net proceeds
of the NOTE OR Collateral sale shall, after providing appropriate
escrows for the payment of the Administrative Claims and other
contingency expenses or claims, be distributed BY THE COMMITTEE OR ITS
DESIGNEES to all Noteholders selecting the Collateral Option within
thirty (30) days following the closing of such sale.
Dated: March 8, 1996
/s/ ROBERT C. MCGUIRE
-------------------------------
ROBERT C. McGUIRE, CHIEF
UNITED STATES BANKRUPTCY JUDGE
7
<PAGE> 8
After entry, please return to:
Van Oliver
Andrews & Kurth, LLP
4400 Thanksgiving Tower
Dallas, Texas 75201
Counsel for the Official Creditors' Committee
8
