Universal Express Inc fka USXP

[jking1999]

Here's the text:

BARRY SCHAEVITZ, ESQ (BS-3405)
JACOB MEDINGER & FINNEGAN, LLP
Local Counsel for Defendants Universal
Express, Inc., Richard A. Altomare and
Chris G. Gunderson
1270 Avenue of the Americas, 31st Floor
New York, NY 10020
[phone] (telephone)
[phone] (facsimile)
and
ARTHUR W. TIFFORD, ESQ.
TIFFORD AND TIFFORD, P.A.
Lead Counsel for Defendants Universal
Express, Inc., Richard A. Altomare and
Chris G. Gunderson
1385 N.W. 15th Street
Miami, FL 33125
[phone] (telephone)
[phone] (facsimile)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
CASE NO. 04-CV-02322-GEL
U.S. SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
v.
UNIVERSAL EXPRESS, INC., etc., et al.,
Defendants.
_______________________________________________/
MOTION OF DEFENDANTS UNIVERSAL EXPRESS, INC.,
RICHARD A. ALTOMARE AND CHRIS G. GUNDERSON
FOR PARTIAL SUMMARY JUDGMENT OF DISMISSAL AND
SUPPORTING MEMORANDUM OF LAW
(ELECTRONICALLY FILED)
2
Defendants Universal Express, Inc. (“Universal” or “USXP”),
Richard A. Altomare (“Altomare”) and Chris G. Gunderson
(“Gunderson”), by their undersigned attorneys and pursuant to
Rule 56, Federal Rules of Civil Procedure, respectfully move for
the entry of an order in the above styled civil action awarding
them a partial summary judgment of dismissal. As demonstrated in
the following memorandum of law, there exist no genuine issues
of material fact and, as a matter of law, Universal, Altomare
and Gunderson are entitled to the dismissal of the Complaint’s
First Claim For Relief, which alleges violations of §§ 5(a) and
5(c) of the Securities Act of 1933, 15 U.S.C. §§ 77e(a)1 and
1 Section 5(a) of the Securities Act of 1933, 15 U.S.C. §
77e(a), is entitled “Sale or delivery after sale of unregistered
securities” and provides:
Unless a registration statement is in effect as to a
security, it shall be unlawful for any person,
directly or indirectly--
(1) to make use of any means or instruments
of transportation or communication in
interstate commerce or of the mails to sell
such security through the use or medium of
any prospectus or otherwise; or
(2) to carry or cause to be carried through
the mails or in interstate commerce, by any
means or instruments of transportation, any
such security for the purpose of sale or for
delivery after sale.
3
77e(c).2
MEMORANDUM OF LAW
I THE FACTUAL SETTING; STATEMENT OF UNDISPUTED FACTS.
As their statement of undisputed facts the movants
incorporate by reference the factual setting below, the facts
set forth in the below memorandum of law and the declaration of
Chris G. Gunderson and its exhibits.
Universal was organized in the State of Delaware on January
16, 1986. It merged into Packaging Plus Services, Inc. (“PPS”),
a Nevada corporation, pursuant to a merger agreement entered
into on April 2, 1986, and filed in the State of Nevada on June
2, 1986. The Nevada corporation, which survived the merger and
changed its domicile to the State of Delaware, was a dormant
2 Section 5(c) of the Securities Act of 1933, 15 U.S.C. §
77e(c), is entitled “Necessity of filing registration statement”
and provides:
It shall be unlawful for any person, directly or
indirectly, to make use of any means or instruments of
transportation or communication in interstate commerce
or of the mails to offer to sell or offer to buy
through the use or medium of any prospectus or
otherwise any security, unless a registration
statement has been filed as to such security, or while
the registration statement is the subject of a refusal
order or stop order or (prior to the effective date of
the registration statement) any public proceeding or
examination under section 77h of this title.
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public company organized on April 8, 1983, by Mr. Jerry
Beagelman as Silver-Gold Reclamation, Ltd.
On December 19, 1991, PPS filed for reorganization under
Chapter 11, Bankruptcy Code, in the U.S. Bankruptcy Court,
Eastern District of New York (“the Bankruptcy Court”). In re:
Packaging Plus Services, Inc., Debtor, Case No. 191-18486-260
(Hon. Conrad B. Duberstein, U.S. Bankruptcy Judge). Thereafter,
pursuant to an order of the Bankruptcy Court, Mr. Beagelman and
members of his family were removed from all offices and
directorships of PPS and Altomare was installed as its President
and Chief Executive Officer, which positions he continues to
hold.
The Bankruptcy Court, on February 18, 1994, in Case No.
191-18486-260, confirmed PPS’s Plan of Reorganization (“the
Chapter 11 Plan”). Thereafter PPS changed its name to Universal
Express, Inc., and Gunderson was appointed as its General
Counsel, which position he has held to this date.
II THE STATUTORY FRAMEWORK
Section 1123, Bankruptcy Code, 11 U.S.C. §1123, provides in
pertinent part:
(a) Notwithstanding any otherwise applicable nonbankruptcy
law, a plan shall
* * *
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(5) provide adequate means for the plan’s implementation
such as
* * *
(j) issuance of securities of the debtor…for cash, for
property, for existing securities, or in exchange for
claims or interests, or for
any other appropriate purpose;…(emphasis added)
Section 1125, Bankruptcy Code, 11 U.S.C. § 1125, is
entitled “Post petition disclosure and solicitation” and in
pertinent part provides:
(e) A person that solicits acceptance or rejection of
a plan, in good faith and in compliance with the
applicable provisions of this title, or that
participates, in good faith and in compliance with the
applicable provisions of this title, in the offer,
issuance, sale, or purchase of a security, offered or
sold under the plan, of the debtor, of an affiliate
participating in a joint plan with the debtor, or of a
newly organized successor to the debtor under the
plan, is not liable, on account of such solicitation
or participation, for violation of any applicable law,
rule, or regulation governing solicitation of
acceptance or rejection of a plan or the offer,
issuance, sale, or purchase of securities.
Section 1145, Bankruptcy Code, 11 U.S.C. § 1145, is
entitled “Exemption from Securities Laws” and in pertinent part
provides:
(a) Except with respect to an entity that is an
underwriter as defined in subsection (b) of this
section, section 5 of the Securities Act of 1933 and
any State or local law requiring registration for
offer or sale of a security or registration or
licensing of an issuer of, underwriter of, or broker
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or dealer in, a security do not apply to--
(1) the offer or sale under a plan of a
security of the debtor, of an affiliate
participating in a joint plan with the
debtor, or of a successor to the debtor
under the plan--
(A) in exchange for a claim
against, an interest in, or a
claim for an administrative
expense in the case concerning,
the debtor or such affiliate; or
(B) principally in such exchange
and partly for cash or property;
(2) the offer of a security through any
warrant, option, right to subscribe, or
conversion privilege that was sold in the
manner specified in paragraph (1) of this
subsection, or the sale of a security upon
the exercise of such a warrant, option,
right, or privilege;
(3) the offer or sale, other than under a
plan, of a security of an issuer other than
the debtor or an affiliate, if--
(A) such security was owned by
the debtor on the date of the
filing of the petition;
(B) the issuer of such security
is--
(I) required to file
reports under section 13
or 15(d) of the
Securities Exchange Act
of 1934; and
(ii) in compliance with
the disclosure and
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reporting provision of
such applicable section;
and
(C) such offer or sale is of
securities that do not exceed--
(I) during the two-year
period immediately
following the date of
the filing of the
petition, four percent
of the securities of
such class outstanding
on such date; and
(ii) during any 180-day
period following such
two-year period, one
percent of the
securities outstanding
at the beginning of such
180-day period; or
(4) a transaction by a stockbroker in a
security that is executed after a
transaction of a kind specified in paragraph
(1) or (2) of this subsection in such
security and before the expiration of 40
days after the first date on which such
security was bona fide offered to the public
by the issuer or by or through an
underwriter, if such stockbroker provides,
at the time of or before such transaction by
such stockbroker, a disclosure statement
approved under section 1125 of this title,
and, if the court orders, information
supplementing such disclosure statement.
III THE PLAN’S EXHIBIT “I”
Exhibit “I” to the Chapter 11 Plan was a document entitled
“1994 Stock Option Plan”, also regularly referred to by
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Universal as the “Stock Incentive Plan”, which in pertinent part
provided:
This Plan shall be known as the “1994 Stock Option
Plan”, (the “Plan”). The purpose of this Plan is to
provide a method to give incentive to those persons or
entities who, in the sole and absolute discretion of
the Board of Directors of Packaging Plus Services,
Inc., a Delaware corporation (“the Company”), are
responsible for the management, growth, and/or
protection of the Company’s business and who are
making and can continue to make substantial
contributions to the success of the Company’s business
including, but not limited to, present and future
officers, directors, employees, consultants,
franchisees and professional advisors of the Company
or any future Parent or Subsidiary.
It is anticipated that the Plan will encourage them to
acquire capital stock ownership in the Company, thus
giving them a, or increasing their, proprietary
interest in the Company, providing them with greater
incentive and encouraging their continuance in the
service, and promoting the interests, of the Company
and all of its stockholders...
* * * * * * * * *
The shares to be issued upon exercise of options which
are granted pursuant to this Plan shall be made
available, at the discretion of the Board of
Directors, either from the authorized but unissued
shares of Common Stock or from shares of Common Stock
which are reacquired by the Company, including shares
which are purchased in the open market.
There will be reserved for use upon the exercise of
options which may be granted pursuant to this Plan an
aggregate of 1,250,000 shares of Common Stock.
* * * * * * * * *
However,
9
If the number of outstanding shares of Common Stock of
the Company shall be changed by reason of any
recapitalization, stock split, or stock dividend, the
aggregate number and kind of shares for which options
may thereafter be granted under this Plan and the
number of shares subject to options theretofore
granted under and the price per share payable upon
exercise of such options shall be adjusted as
determined by the Plan Administrators, in their sole
and absolute discretion, so as to reflect such change;
provided, however, that no such adjustment shall be
made by reason of the issuance of additional shares of
the Company for services, property or money regardless
of whether the Company received adequate
consideration.
* * * * * * * * *
And,
Unless sooner terminated, this Plan shall terminate on
the tenth (10th) anniversary date of the earlier of the
date upon which this Plan is adopted or the date upon
which this Plan is approved by the stockholders of the
Company; provided, however, that all options which are
granted under this plan shall continue in full force
and effect until terminated in accordance with the
terms and conditions of the options and this Plan.
This Plan will be submitted to the stockholders of the
Company for approval by the holders of a majority of
the outstanding shares of Common Stock of the Company.
IV THE CONFIRMED CHAPTER 11 PLAN
Paragraph VI.F of the confirmed Chapter 11 Plan provided:
The protection afforded by Bankruptcy Code section
1125 with regard to the solicitation of acceptances or
rejections of the Plan and with regard to the offer,
issuance, sale, or purchase of the Post petition
Senior Secured Notes and the New Common Stock and New
Warrants issued and distributed to the holders of
Claims and Administrative Claims or in connection with
the Plan and the Confirmation Order, shall apply to
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the full extent provided by law. The entry of the
Confirmation Order shall constitute the determination
by the Bankruptcy Court that Reorganized PPS, PPS, and
each of their respective officers, directors,
partners, employees, members or agents, and each
Professional Person, attorney, accountant, or other
professional employed by any of them, shall have acted
in good faith and in compliance with the applicable
provisions of the Bankruptcy Code pursuant to
Bankruptcy Code section 1125 and the federal
securities laws. In addition, the exemption from the
requirements of section 5 of the Securities Act and
any state or local law requiring registration for the
offer or sale of a security provided for in Bankruptcy
Code section 1145 shall apply to the New Common Stock,
the New Warrants, and the Warrants Shares to be issued
under the Plan in exchange for any Claim against or
interest in PPS. Entry of the Confirmation Order
shall also constitute an order of the Bankruptcy Court
that the Debtor has, by virtue of its public filings,
complied with the reporting requirements of the
Securities Act of 1934 through the Effective Date.
Upon Confirmation, however, as a publicly held
corporation the Debtor remains subject to Securities
and Exchange Commission reporting requirements and
subsequent to Confirmation of the Plan and the
Reorganized PPS intends to comply with all periodic
reporting requirements including Section 12(g) of the
Securities Exchange Act of 1934.
V THE GUNDERSON DECLARATION
The Gunderson Declaration, the contents of which are
incorporated herein by reference (“the Gunderson declaration”).
The Gunderson declaration establishes that the shares of
Universal’s common stock referred to in the Complaint in this
civil action were issued in accordance with and pursuant to
Exhibit “I” of the confirmed Chapter 11 Plan.
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VI ARGUMENT
Because the shares of Universal’s common stock referred to
in the Complaint in this civil action were issued in accordance
with and pursuant to Exhibit “I” of the confirmed Chapter 11
Plan, under §§ 1125(e) and 1145(a) of the Bankruptcy Code,
supra, they were exempt from the registration requirements of §§
5(a) and 5(c) of the Securities Act of 1933, 15 U.S.C. §§ 77e(a)
and 77e(c), supra. Consequently, Universal, Altomare and
Gunderson are entitled to a partial summary judgment dismissing
the Complaint’s First Claim For Relief.
VII CONCLUSION
The motion of Universal, Altomare and Gunderson for partial
summary judgment of dismissal should be granted and the First
Claim For Relief should be dismissed.
Respectfully submitted,
TIFFORD & TIFFORD, P.A.
Lead counsel for Universal,
Altomare and Gunderson
1385 N.W. 15th Street
Miami, FL 33125
[phone]
FAX: [phone]
BY /S/
ARTHUR W. TIFFORD
(NY ID- 011481)
CERTIFICATE OF SERVICE
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I hereby certify that on August 18, 2006, I electronically
filed the foregoing with the Clerk of the Court by using the
CM/ECF System, which will send notice of electronic filing to
the following:
Julie K. Lutz, Esq.
Attorney for Plaintiff
U.S. Securities and Exchange Commission
Central Regional Office
1801 California Street, Suite 4800
Denver, CO 80202-2648
Robert B. Blackburn, Esq.
Attorney for Plaintiff
U.S. Securities and Exchange Commission
233 Broadway, 11th Floor
New York, NY 10279
Marvin Pickholz, Esq.
Jason Pickholz, Esq.
Akerman Senterfitt LLP
335 Madison Avenue
Suite 2600
New York, NY 10017
John B. Harris, Esq.
Stillman & Friedman
425 Park Avenue
New York, NY 10022
Harry H. Wise, III, Esq.
770 Lexington Avenue, 6th Floor
New York, NY 10021
John A. Hutchings, Esq.
Dill Dill Carr Stonebraker & Hutchings, P.C.
455 Sherman Street, Suite 300
Denver, CO 80203