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Ex-99.2
Order Confirming Debtor's Plan of Reorganization
and Fixing Post Confirmation Deadlines.
EXHIBIT 99.2
Brooks & Raub,
A Professional Corporation
Lincoln A. Brooks [Cal. Bar No. 63912]
David S. Caplan [Cal. Bar No. 74219]
721 Colorado Avenue, Suite 101
Palo Alto, California 94303-3913
Telephone: (650) 321-1400
Facsimile: (650) 321-1450
Reorganization Counsel for Debtor,
TELEGEN CORPORATION
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
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<S> <C>
In re
Chapter 11
TELEGEN CORPORATION,
fka Solar Energy Research Corporation and Case No. 98-34876-DM-11
Solar Energy Research Corporation of California
ORDER CONFIRMING DEBTOR'S PLAN OF REORGANIZATION
Debtor. AND FIXING POST CONFIRMATION DEADLINES
Address: 1840 Gateway Drive, Suite 200
San Mateo, CA 94404
Employer Identification
Number 84-0672714
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The Plan of Reorganization (As Amended) under Chapter 11 of the Code
("Plan") was filed by the Debtor on June 7, 2000. All terms capitalized, but
not defined, herein and defined in the Plan shall have the meanings
prescribed in the Plan.
The Plan and the Disclosure Statement approved by this court as
meeting the requirements of Section 1125 of the Code have been transmitted to
creditors and equity security holders of the Debtor and its subsidiaries TCC
and TDL in
ORDER CONFIRMING DEBTOR'S
PLAN OF REORGANIZATION
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accordance with the requirements of this court's ORDER APPROVING DISCLOSURE
STATEMENT AND FIXING TIME FOR FILING ACCEPTANCES OR REJECTIONS OF PLAN filed
June 13, 2000, its ORDER ESTABLISHING RECORD DATE FOR VOTING ON DEBTOR'S PLAN
OF REORGANIZATION BY DEBTOR'S SHAREHOLDERS filed April 21, 2000, and its
ORDER APPROVING: EMPLOYMENT OF INNISFREE M&A INC. AS VOTING AGENT AND
PROCEDURES FOR NOTICE TO AND SOLICITATION OF ACCEPTANCES FROM BENEFICIAL
HOLDERS OF COMMON STOCK filed March 29, 2000. Accordingly, notice and
opportunity to be heard by creditors and equity security holders of the
Debtor, TCC and TDL were appropriate under the circumstances.
A hearing was conducted on confirmation of the Plan on June 28,
2000, at 1:30 p.m. Lincoln A. Brooks and David S. Caplan of Brooks & Raub, A
Professional Corporation, appeared as reorganization counsel for the Debtor.
David L. Kagel appeared as corporate and securities counsel for the Debtor.
Paul R. Brown of Black, Lowe & Graham appeared as intellectual property and
litigation counsel for the Debtor. Maita Deal Prout of Whitman Breed Abbott &
Morgan LLP appeared on behalf of objector W. Edward Naugler, Jr., Jessica L.
Stevens, Chief Executive Officer and Responsible Person for the Debtor, was
also present. Other appearances, if any, are noted in the record.
The court has determined after hearing on notice that the
requirements for confirmation set forth in Section 1129(a) have been
satisfied, including the following:
A. The Plan was proposed in good faith and not by any means
prohibited by law. It will achieve the reorganizational purposes of the Code,
in that it will permit revitalization of the Debtor's business and provide
full payment to holders of Allowed Claims.
B. The Debtor and its representatives have solicited acceptances
of the Plan and participated in the offer, issuance and sale under the Plan
of securities of the Debtor in good faith and in compliance with the
applicable provisions of the Bankruptcy Code within the meaning of Section
1125(e) of the Code.
C. The value of the Debtor's assets, and the value of the separate
assets of each of the Debtor's subsidiaries, is less than the amount of
claims whose holders hold security interests in such assets. Therefore,
holders of Allowed Claims and Allowed Interests will not receive less under
the Plan than if the case were converted to Chapter 7 on the Effective Date
and the entities' assets immediately liquidated, and the Plan is in the best
interests of creditors and equity security holders.
ORDER CONFIRMING DEBTOR'S
PLAN OF REORGANIZATION
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D. Disclosure regarding the Plan and the Debtor was adequate under
the circumstances because, among other things, a disclosure statement
approved by the court prior to solicitation of acceptances to the Plan as
containing adequate information within the meaning of Section 1125(a) of the
Code was transmitted to creditors and parties in interest.
E. As to each class of claims that is impaired under the Plan
except Class A-5, the Plan has been accepted by creditors holding at least
two-thirds in amount and more than one-half in number of the Allowed Claims
of such class that have accepted or rejected the Plan.
F. As to each class of interests that is impaired under the Plan
except Classes D-3, D-4 and D-5, the Plan has been accepted by persons
holding at least two-thirds in amount of the Allowed Interests of such class
that have accepted or rejected the Plan.
G. Class A-5 is deemed to have rejected the Plan because the
holder of the claim in that class did not vote. However, the Plan may be
confirmed notwithstanding such rejection because the Plan provides for full
payment of the Allowed Claim in such class.
H. Classes D-3, D-4 and D-5 are deemed to have rejected the Plan.
However, the Plan does not discriminate against such classes because the Plan
does not provide more favorable treatment to the holders of interests in
classes with equivalent levels of priority. The Plan is fair and equitable to
such classes because interests in such classes are without value and no
junior class of interests exists which is receiving anything under the Plan.
Therefore, the Plan may be confirmed notwithstanding such rejection.
I. The Plan is feasible; confirmation is not likely to be followed
by the liquidation, or the need for further financial reorganization, of the
Debtor. The Debtor has presented competent evidence that it has the resources
to meet its payment obligations under the Plan and that it has the ability to
fulfill its financial needs for a reasonable period of time.
J. The compromise with Synercom, Inc., and its affiliates
contained in Section 5.20 of the Plan is in the best interests of creditors
and the estates of the Debtor and TCC in that the compromise restores a
patent and other intellectual property to the Debtor which the Debtor
considers will be useful in its post-reorganization business; it requires the
Debtor to return less funds to the other parties than it might likely have
had to return if the Debtor had prevailed in an avoidance action, and it
eliminates the need for the costs and delay of litigation.
ORDER CONFIRMING DEBTOR'S
PLAN OF REORGANIZATION
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K. The eTraxx Acquisition represents a reasonable exercise of the
Debtor's business judgment and is in the best interests of the Debtor, its
creditors and shareholders in that it provides the Debtor with (a)
substantial potential synergies between the two companies' businesses and (b)
access to valuable management and technical personnel, and the exchange
ration of eTraxx for the Debtor's shares is just and reasonable.
L. The Debtor has adequately disclosed to the holders of claims
and interests entitled to vote on the Plan against whom the Debtor may seek
enforcement of claims after Confirmation the fact that the Debtor has
reserved under the Plan its right and potential intention to assert such
claims against such holders.
M. TCC and TDL have consented to the jurisdiction of this court
for purposes of consolidation of their estates with the estate of the Debtor.
N. Creditors of TCC and TDL will be benefited by consolidation
because a source of cash or other consideration will become available for
payment of their claims.
O. Any value of the assets of TCC and TDL, collectively or
separately, is less than the claims secured by liens against such assets.
Specifically, any intellectual property TDL might hold as a licensee does not
have significant separate value because of its interrelationship with
property of the other entities and because of the limited assignability
thereof and its potentially significant royalty obligations. Accordingly,
consolidation and the Plan's treatment of the equity security interests in
TDL are fair, just, and equitable.
P. Good cause exists to waive the stay of this order under Fed. R.
Bankr. P 3020(e) due to the Debtor's necessity to close the 1999 Offering on
or before June 30, 2000.
THEREFORE, IT IS ORDERED THAT:
1. The Debtor's Plan of Reorganization (As Amended) filed March 6,
2000, a copy of which is attached hereto, is hereby confirmed as amended
further as set forth in paragraph 16 herein. Issuance of this order shall
constitute due authorization required for the full validity, enforceability,
and effectiveness of all transactions provided for in this Plan,
notwithstanding any provisions of the California Corporations Code which
would otherwise require approval of such transactions by the Debtor's board
of directors, shareholders, or otherwise. Such issuance shall constitute
authorization for the Debtor's Responsible Individual designated under B. L.
R. 4002-1 (and/or her designees), without the necessity of further
authorization from this court, to take all actions and execute, deliver and
ORDER CONFIRMING DEBTOR'S
PLAN OF REORGANIZATION
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file all certificates, notices, and other documents as she deems necessary or
appropriate to consummate the transactions provided for in this Plan,
including certificates of amendment of the Debtor's Articles of Incorporation
and certificates of merger, etc. relating to the consolidation or merger of
eTraxx, TCC and TDL into the Debtor, formation of New TDL, and/or transfer of
assets in connection therewith.
2. The Objection filed by W. Edward Naugler, Jr., is withdrawn.
3. Pursuant to Section 1146(c) of the Code, the issuance,
transfer, or exchange of a security under the Plan shall not be taxed under
any law imposing a stamp tax or similar tax.
4. Except as provided in the Plan, the Debtor, TCC and TDL shall
be discharged from any debt that arose prior to the date hereof, whether or
not a proof of claim was filed or deemed filed, whether or not such claim was
allowed, whether or not the holder of such claim accepted the Plan, and
whether or not the right to payment was reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, secured or unsecured. Any judgment at any time obtained, to the extent
that such judgment is a determination of the liability of the Debtor, TCC or
TDL with respect to any debt discharged, is void.
5. The commencement or continuation of any action, the employment
of process or any act to collect, recover or offset any such debt as a
liability of the Debtor or from property of the Debtor, is enjoined, except
that Metropolitan shall have the right to assert claims against any insurance
policies maintained by the Debtor should a third party tort claim for
personal injury or tangible property damage be asserted against Metropolitan
for any act or omission relating in any way to the Debtor's occupancy or use
of the premises previously occupied by the Debtor pursuant to its leases with
Metropolitan and commonly known as 101 and 200 Saginaw, Redwood City,
California.
6. The rejection under the Plan of all executory contracts and
unexpired leases, except the contracts and leases described in Exhibit A to
the Plan, is hereby approved.
7. Except for New Common Stock issued to an entity that is an
underwriter within the meaning of Section 1145(b) of the Bankruptcy Code, the
offer and sale under the Plan of the New Common Stock in exchange for claims
against or equity security interests in the Debtor, TCC or TDL, or
principally in exchange for such claims and interests and partly for cash or
property, are exempt from the provisions of Section 5 of the Securities Act
of 1933, as amended, and any state or local law requiring the registration or
qualification for offer or sale of the New Common Stock or
ORDER CONFIRMING DEBTOR'S
PLAN OF REORGANIZATION
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registration or licensing of an issuer of, underwriter of, or broker or
dealer in the New Common Stock. In addition, the offer and sale of New
Common Stock in the manner stated in the preceding sentence shall be deemed
to be a public offering.
8. All fees of the U.S. Trustee required under 28 U.S.C. Section
1930 and earned prior to the Effective Date shall be paid not later than the
Effective Date.
9. The Debtor shall file, on or before December 31, 2000, either
an application for final decree or a status report identifying all steps
required before the case can be fully administered and such application
filed.
10. Proofs of claim based on claims arising from rejection of
executory contracts under the Plan shall be filed not later than 30 days
after the entry of this order.
11. Except for notice of entry of this order, all notices required
or permitted to be given after Confirmation to all creditors or other parties
in interest pursuant to Rule 2002 shall be deemed appropriate and in
compliance with such rule if given only to the Debtor, the United States
Trustee, the parties who were members of the Committee, and any parties who
requested in writing copies of this Plan pursuant to Rule 3017(a). This
provision shall not be interpreted as modifying the rights of the Debtor's
shareholders to receive notices and other information as required by the
California Corporations Code or federal or state securities laws.
12. The claim of any party which (i) asserts a claim solely against
TCC or TDL and has not at any time asserted a claim against the Debtor, (ii)
has not previously filed a proof of claim in this case, and (iii) files a
proof of claim within 30 days after the date first set for a hearing on
Confirmation shall not be subject to objection on the ground that the party
failed to timely file a proof of claim. Any party who asserts a claim against
TCC or TDL shall be forever barred from participation in this case and shall
not be entitled to payment from the Debtor or its assets (including assets
transferred from TDL or TCC pursuant to this Plan) unless such party has
filed a proof of claim on or before such date or such a claim is listed in
the schedules filed by the Debtor under Rule 1007(b) and is not listed as
contingent, disputed or unliquidated.
13. All parties who assert claims entitled to priority under
Section 507(a)(1) of the Code shall file requests for payment of such
claims, and serve them on the Debtor and the U.S. Trustee, not later than
sixty days after the Effective Date. Professionals employed by the Debtor
shall file applications for allowance of their compensation and costs not
ORDER CONFIRMING DEBTOR'S
PLAN OF REORGANIZATION
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later than 120 days after the Effective Date. Any claim asserting
entitlement to such priority shall be forever barred and not entitled to
payment unless it is filed and served on or before the applicable date in the
preceding sentences.
14. The stay set forth in Fed. R. Bankr. P. Rule 3002(e) shall not
apply to this order.
15. This court hereby retains jurisdiction as set forth in the Plan.
16. The Attached Exhibit A is incorporated herein.
Dated: June 28, 2000
/S/ DENNIS MONTALI
-------------------------------
United States Bankruptcy Judge
ORDER CONFIRMING DEBTOR'S
PLAN OF REORGANIZATION
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TELEGEN CORPORATION, CASE NO.: 98-3486DM
EXHIBIT A TO ORDER CONFIRMING DEBTOR'S PLAN OF REORGANIZATION.
16. The Plan is amended as follows:
(a) Class D-5 is added to Section 2.4 consisting of the
warrant held by W. Edward Naugler, Jr., to acquire 500,000 shares of TDL, and
such warrant shall be excluded from Class D-4.
(b) Section 4.5 (e) is added to the Plan and shall read as
follows:
"W. Edward Naugler, Jr., shall receive $100,000 on account
of the warrant in Class D-5, not later than 10 days after the Effective
Date and such warrant shall thereupon be canceled."
(c) A new Section 5.23 is added to the Plan and shall read as
follows:
In any future litigation by and between W. Edward Naugler, Jr.,
("Naugler"), David Guo ("Guo") and/or Display Research Laboratories, Inc.
("DRL") (individually and collectively, the "Naugler Parties"), on the one
hand and Debtor, reorganized Debtor, TCC, TDL and/or any of their successors
(including New TDL) (individually and collectively the "Reorganized Debtor"),
and/or their respective officers and directors, on the other hand with
respect to (1) claims arising out of or related to conduct by Naugler, Guo
and/or DRL arising out of the relating to ownership or use of the technology
described in the Debtor's Second Amended Disclosure Statement in the section
captioned "HGED FLAT PANEL DISPLAY BUSINESS," the prevailing party or parties
shall be entitled to recover reasonable attorneys' fees and costs from either
the Naugler Parties or the Reorganized Debtor as applicable. As used herein
"litigation" shall include, without limitation lawsuits, appeals and
post-judgment enforcement actions.
The entitlement to such fees and costs shall not be determined until
final resolution of the litigation after exhaustion of all appeals, if any.
ORDER CONFIRMING DEBTOR'S
PLAN OF REORGANIZATION
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