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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
)
In re: ) Chapter 11
)
APC AUTOMOTIVE TECHNOLOGIES
INTERMEDIATE HOLDINGS, LLC, et al.,1
)
)
Case No. 20-[______] (___)
)
Debtors. ) (Joint Administration Requested)
)
DISCLOSURE STATEMENT
FOR THE JOINT PREPACKAGED
CHAPTER 11 PLAN OF REORGANIZATION OF APC
AUTOMOTIVE TECHNOLOGIES INTERMEDIATE HOLDINGS, LLC AND ITS
DEBTOR AFFILIATES PURSUANT TO CHAPTER 11 OF THE BANKRUPTCY CODE
Jonathan S. Henes, P.C. (pro hac vice pending) Domenic E. Pacitti (DE Bar No. 3989)
George Klidonas (pro hac vice pending) Michael W. Yurkewicz (DE Bar No. 4165)
KIRKLAND & ELLIS LLP KLEHR HARRISON HARVEY BRANZBURG LLP
KIRKLAND & ELLIS INTERNATIONAL LLP 919 North Market Street, Suite 1000
601 Lexington Avenue Wilmington, Delaware 19801
New York, New York 10022 Telephone: (302) 426-1189
Telephone: (212) 446-4800 Facsimile: (302) 426-9193
Facsimile: (212) 446-4900
-and-
Morton R. Branzburg (pro hac vice pending)
KLEHR HARRISON HARVEY BRANZBURG LLP
1835 Market Street, Suite 1400
Philadelphia, Pennsylvania 19103
Telephone: (215) 569-3007
Facsimile: (215) 568-6603
Proposed Co-Counsel to the Debtors and Debtors in Possession
1 The anticipated debtors (collectively, the “Debtors”) in these chapter 11 cases, along with the last four digits of
each Debtor’s federal tax identification number, include: APC Automotive Technologies Intermediate Holdings,
LLC (0991); APC Automotive Technologies, LLC (6651); CWD Acquisition, LLC (4286); CWD Holding Corp.
(7381); CWD Intermediate Corp. (7285); CWD, LLC (5832); Qualis Enterprises, Inc. (6610); Qualis Automotive,
LLC (7291); AP Emissions Technologies, LLC (8219); AP Exhaust Products Disc, Inc. (0288); Eastern
Manufacturing, LLC (2410); Airtek, LLC (1239); Aristo, LLC (4541). The Debtors’ service address is: 10822
West Toller Drive, Suite 370, Littleton, Colorado 80127.
SOLICITATION VERSION
THIS IS A SOLICITATION OF VOTES TO ACCEPT OR REJECT THE PLAN IN ACCORDANCE
WITH BANKRUPTCY CODE SECTION 1125 AND WITHIN THE MEANING OF
BANKRUPTCY CODE SECTION 1126, 11 U.S.C. §§ 1125, 1126. THIS DISCLOSURE STATEMENT
HAS NOT BEEN APPROVED BY THE BANKRUPTCY COURT. THE DEBTORS INTEND TO SUBMIT
THIS DISCLOSURE STATEMENT TO THE BANKRUPTCY COURT FOR APPROVAL FOLLOWING
SOLICITATION AND THE DEBTORS’ FILING FOR RELIEF UNDER CHAPTER 11 OF THE
BANKRUPTCY CODE. THE INFORMATION IN THIS DISCLOSURE STATEMENT IS SUBJECT TO
CHANGE AND SUBJECT TO THE RESTRUCTURING SUPPORT AGREEMENT AND THE RELATED
TERM SHEETS. THIS DISCLOSURE STATEMENT IS NOT AN OFFER TO SELL ANY SECURITIES
AND IS NOT SOLICITING AN OFFER TO BUY ANY SECURITIES.
IMPORTANT INFORMATION REGARDING THIS DISCLOSURE STATEMENT FOR SOLICITATION
OF VOTES ON THE JOINT PREPACKAGED CHAPTER 11 PLAN OF REORGANIZATION OF APC
AUTOMOTIVE TECHNOLOGIES INTERMEDIATE HOLDINGS, LLC AND ITS DEBTOR
AFFILIATES PURSUANT TO CHAPTER 11 OF THE BANKRUPTCY CODE FROM THE HOLDERS OF
OUTSTANDING:
VOTING CLASS NAME OF CLASS UNDER THE PLAN
CLASS 4 TERM CLAIMS
IF YOU ARE IN CLASS 4, YOU ARE RECEIVING THIS DOCUMENT AND THE ACCOMPANYING
MATERIALS BECAUSE YOU ARE ENTITLED TO VOTE ON THE PLAN
DELIVERY OF BALLOTS
BALLOTS MUST BE ACTUALLY RECEIVED BY THE SOLICITATION AGENT BY THE VOTING
DEADLINE, WHICH IS 5:00 P.M. (PREVAILING EASTERN TIME) ON JUNE 24, 2020 VIA THE
ENCLOSED PRE-PAID, PRE-ADDRESSED RETURN ENVELOPE
OR
AT THE FOLLOWING ADDRESS:
VIA FIRST-CLASS MAIL, OVERNIGHT COURIER, OR HAND DELIVERY TO:
APC AUTOMOTIVE TECHNOLOGIES INTERMEDIATE HOLDINGS, LLC BALLOTS
PROCESSING
C/O STRETTO
410 EXCHANGE, SUITE 100
IRVINE, CA 92602
OR
VIA THE E-BALLOT PORTAL USING THE E-BALLOT ID ON YOUR BALLOT AT:
HTTPS://BALLOTING.STRETTO.COM/
PLEASE CHOOSE ONLY ONE METHOD TO RETURN YOUR BALLOT
BALLOTS RECEIVED VIA ELECTRONIC MEANS (OTHER THAN E-BALLOT)
WILL NOT BE COUNTED
ii
IF YOU HAVE ANY QUESTIONS ON THE PROCEDURES FOR VOTING ON THE
PLAN, PLEASE CONTACT STRETTO (THE DEBTORS’ SOLICITATION AGENT) AT:
(855) 260-9397 (TOLL FREE)
(949) 407-8590 (INTERNATIONAL)
OR VIA EMAIL: [email protected]
This disclosure statement (as may be amended, supplemented, or otherwise modified from time to time,
this “Disclosure Statement”) provides information regarding the Joint Prepackaged Chapter 11 Plan of
Reorganization of APC Automotive Technologies Intermediate Holdings, LLC. and Its Debtor Affiliates Pursuant
to Chapter 11 of the Bankruptcy Code (as may be amended, supplemented, or otherwise modified from time to
time, the “Plan”),2 which the Debtors are seeking to have confirmed by the Bankruptcy Court. A copy of the
Plan is attached hereto as Exhibit A. The Debtors are providing the information in this Disclosure Statement
to certain Holders of Claims for purposes of soliciting votes to accept or reject the Plan.
Pursuant to the Restructuring Support Agreement, the Plan is currently supported by the Debtors and
Holders of approximately 74% of the amount of Term Claims. The Consenting Sponsors have also executed
the Restructuring Support Agreement and, therefore, support the Debtors’ Plan.
The consummation and effectiveness of the Plan are subject to certain material conditions precedent
described herein and set forth in Article VIII of the Plan. There is no assurance that the Bankruptcy Court
will confirm the Plan or, if the Bankruptcy Court does confirm the Plan, that the conditions necessary for the
Plan to become effective will be satisfied or, in the alternative, waived.
You are encouraged to read this Disclosure Statement (including “Certain Factors to Be Considered”
described in Article VII hereof) and the Plan in their entirety before submitting your Ballot to vote on the Plan.
The Debtors urge each Holder of a Claim or Interest to consult with its own advisors with respect to
any legal, financial, securities, tax, or business advice in reviewing this Disclosure Statement, the Plan, and each
transaction contemplated by the Plan.
The Debtors strongly encourage Holders of Claims in Class 4 read this Disclosure Statement and the
Plan in their entirety before voting to accept or reject the Plan. Assuming the requisite acceptances to the Plan
are obtained, the Debtors will seek the Bankruptcy Court’s approval of the Plan at the Confirmation Hearing.
RECOMMENDATION BY THE DEBTORS
EACH DEBTOR’S BOARD OF MANAGERS, GENERAL PARTNER, MEMBER, OR MANAGER, AS
APPLICABLE, HAS APPROVED THE TRANSACTIONS CONTEMPLATED BY THE PLAN AND
DESCRIBED IN THIS DISCLOSURE STATEMENT, AND EACH DEBTOR BELIEVES THAT THE
PLAN IS FAIR AND EQUITABLE, MAXIMIZES THE VALUE OF EACH OF THE DEBTOR’S
ESTATES, AND PROVIDES THE BEST RECOVERY TO CLAIM HOLDERS. AT THIS TIME, EACH
DEBTOR BELIEVES THAT THE PLAN AND RELATED TRANSACTIONS REPRESENT THE BEST
ALTERNATIVE FOR ACCOMPLISHING THE DEBTORS’ OVERALL RESTRUCTURING
OBJECTIVES. EACH OF THE DEBTORS, THEREFORE, STRONGLY RECOMMENDS THAT ALL
HOLDERS OF CLAIMS WHOSE VOTES ARE BEING SOLICITED SUBMIT BALLOTS TO ACCEPT
THE PLAN BY RETURNING THEIR BALLOTS SO AS TO BE ACTUALLY RECEIVED BY THE
SOLICITATION AGENT NO LATER THAN JUNE 24, 2020 AT 5:00 P.M. (PREVAILING EASTERN
TIME) PURSUANT TO THE INSTRUCTIONS SET FORTH HEREIN AND IN THE BALLOTS.
2 Capitalized terms used but not immediately defined herein have the meanings given to such terms elsewhere in
the Disclosure Statement or in the Plan.
iii
SPECIAL NOTICE REGARDING FEDERAL AND STATE SECURITIES LAWS
The Bankruptcy Court has not reviewed this Disclosure Statement or the Plan, and the securities to be
issued on or after the Effective Date will not have been the subject of a registration statement filed with the
United States Securities and Exchange Commission (the “SEC”) under the United States Securities Act of 1933
(as amended, the “Securities Act”) or any securities regulatory authority of any state under any state securities
law (“Blue Sky Laws”). The Plan has not been approved or disapproved by the SEC or any state regulatory
authority and neither the SEC nor any state regulatory authority has passed upon the accuracy or adequacy
of the information contained in this Disclosure Statement or the Plan. Any representation to the contrary is a
criminal offense. The Debtors are relying on section 4(a)(2) of the Securities Act, and similar Blue Sky Laws
provisions, to exempt from registration under the Securities Act and Blue Sky Laws the offer to certain Holders
of Term Claims of new securities prior to the Petition Date, including in connection with the solicitation of votes
to accept or reject the Plan (the “Solicitation”).
After the Petition Date, the Debtors will rely on section 1145(a) of the Bankruptcy Code, Section 4(a)(2)
of the Securities Act, and/or other exemptions under the Securities Act to exempt from registration under the
Securities Act and Blue Sky Laws the offer, issuance, and distribution of New Common Equity and New
Warrants under the Plan and the shares of New Common Equity issuable upon exercise of the New Warrants.
Neither the Solicitation nor this Disclosure Statement constitutes an offer to sell or the solicitation of an offer
to buy securities in any state or jurisdiction in which such offer or solicitation is not authorized.
Except to the extent publicly available, this Disclosure Statement, the Plan, and the information set
forth herein and therein are confidential. This Disclosure Statement and the Plan may contain material
non-public information concerning the Debtors, their subsidiaries, and their respective debt and Securities.
Each recipient hereby acknowledges that it (a) is aware that the federal securities laws of the United States
prohibit any person who has material non-public information about a company, which is obtained from the
company or its representatives, from purchasing or selling Securities of such company or from communicating
the information to any other person under circumstances in which it is reasonably foreseeable that such person
is likely to purchase or sell such Securities and (b) is familiar with the United States Securities Exchange Act
of 1934 (as amended, the “Securities Exchange Act”) and the rules and regulations promulgated thereunder.
iv
DISCLAIMER
This Disclosure Statement contains summaries of certain provisions of the Plan and certain other documents
and financial information. The information included in this Disclosure Statement is provided solely for the purpose
of soliciting acceptances of the Plan and should not be relied upon for any purpose other than to determine whether
and how to vote on the Plan. All Holders of Claims entitled to vote are advised and encouraged to read this Disclosure
Statement and the Plan in their entirety before voting. The Debtors believe that these summaries are fair and accurate.
The summaries of the financial information and the documents that are attached to, or incorporated by reference in,
this Disclosure Statement are qualified in their entirety by reference to such information and documents. In the event
of any inconsistency or discrepancy between a description in this Disclosure Statement, on the one hand, and the terms
and provisions of the Plan or the financial information and documents incorporated in this Disclosure Statement by
reference, on the other hand, the Plan or the financial information and documents, as applicable, shall govern for all
purposes.
Except as otherwise provided in the Plan or in accordance with applicable law, the Debtors are under no duty
to update or supplement this Disclosure Statement. The Bankruptcy Court’s approval of this Disclosure Statement
does not constitute a guarantee of the accuracy or completeness of the information contained herein or the
Bankruptcy Court’s endorsement of the merits of the Plan. The statements and financial information contained in this
Disclosure Statement have been made as of the date hereof unless otherwise specified. Holders of Claims reviewing
the Disclosure Statement should not assume at the time of such review that there have been no changes in the facts set
forth in this Disclosure Statement since the date of this Disclosure Statement. No Holder of a Claim or Interest should
rely on any information, representations, or inducements that are not contained in or are inconsistent with the
information contained in this Disclosure Statement, the documents attached to this Disclosure Statement, and the Plan.
This Disclosure Statement does not constitute legal, business, financial, or tax advice. Any Person or Entity desiring
any such advice should consult with their own advisors. Additionally, this Disclosure Statement has not been approved
or disapproved by the Bankruptcy Court, the SEC, or any securities regulatory authority of any state under Blue Sky
Laws. The Debtors are soliciting acceptances to the Plan prior to commencing any cases under chapter 11 of the
Bankruptcy Code.
The financial information contained in or incorporated by reference into this Disclosure Statement has not
been audited, except as specifically indicated otherwise. The Debtors’ management, in consultation with their
advisors, has prepared the financial projections attached hereto as Exhibit E and described in this
Disclosure Statement. The financial projections, while presented with numerical specificity, necessarily were based
on a variety of estimates and assumptions that are inherently uncertain and may be beyond the control of the Debtors’
management. Important factors that may affect actual results and cause the management forecasts not to be achieved
include, but are not limited to, risks and uncertainties relating to the Debtors’ businesses (including their ability to
achieve strategic goals, objectives, and targets over applicable periods), industry performance, the regulatory
environment, general business and economic conditions, and other factors. The Debtors caution that no
representations can be made as to the accuracy of these projections or to their ultimate performance compared to the
information contained in the forecasts or that the forecasted results will be achieved. Therefore, the financial
projections may not be relied upon as a guarantee or other assurance that the actual results will occur.
Regarding contested matters, adversary proceedings, and other pending, threatened, or potential litigation or
other actions, this Disclosure Statement does not constitute, and may not be construed as, an admission of fact, liability,
stipulation, or waiver by the Debtors or any other party, but rather as a statement made in the context of settlement
negotiations in accordance with Rule 408 of the Federal Rules of Evidence and any analogous state or foreign laws or
rules. As such, this Disclosure Statement shall not be construed to be conclusive advice on the tax, securities, financial
or other effects of the Plan to Holders of Claims against or Interests in, the Debtors or any other party in interest.
Please refer to Article VII of this Disclosure Statement, entitled “Certain Factors to Be Considered” for a discussion
of certain risk factors that Holders of Claims voting on the Plan should consider.
Except as otherwise expressly set forth herein, all information, representations, or statements contained
herein have been provided by the Debtors. No person is authorized by the Debtors in connection with this Disclosure
Statement, the Plan, or the Solicitation to give any information or to make any representation or statement regarding
this Disclosure Statement, the Plan, or the Solicitation, in each case, other than as contained in this Disclosure
Statement and the exhibits attached hereto or as otherwise incorporated herein by reference or referred to herein.
v
If any such information, representation, or statement is given or made, it may not be relied upon as having been
authorized by the Debtors.
This Disclosure Statement contains certain forward-looking statements, all of which are based on various
estimates and assumptions. Such forward-looking statements are subject to inherent uncertainties and to a wide variety
of significant business, economic, and competitive risks, including, but not limited to, those summarized herein.
When used in this Disclosure Statement, the words “anticipate,” “believe,” “estimate,” “will,” “may,” “intend,” and
“expect” and similar expressions generally identify forward-looking statements. Although the Debtors believe that
their plans, intentions, and expectations reflected in the forward-looking statements are reasonable, they cannot be
sure that they will be achieved. These statements are only predictions and are not guarantees of future performance
or results. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ
materially from those contemplated by a forward-looking statement. All forward-looking statements attributable to
the Debtors or Persons or Entities acting on their behalf are expressly qualified in their entirety by the cautionary
statements set forth in this Disclosure Statement. Forward-looking statements speak only as of the date on which they
are made. Except as required by law, the Debtors expressly disclaim any obligation to update any forward-looking
statement, whether as a result of new information, future events, or otherwise.
vi
TABLE OF CONTENTS
EXECUTIVE SUMMARY ......................................................................................................................................... 1
INTRODUCTION ....................................................................................................................................................... 3
ARTICLE II THE PLAN ............................................................................................................................................ 4 2.1 Treatment of Claims and Interests .................................................................................................... 4 2.2 Compromise and Settlement of Claims, Interests, and Controversies .............................................. 5 2.3 New Capital Structure ....................................................................................................................... 5 2.4 Unclassified Claims .......................................................................................................................... 6 2.5 Liquidation Analysis ....................................................................................................................... 14 2.6 Valuation Analysis .......................................................................................................................... 14 2.7 Financial Information and Projections ............................................................................................ 15
ARTICLE III VOTING PROCEDURES AND REQUIREMENTS ..................................................................... 15 3.1 Class Entitled to Vote on the Plan ................................................................................................... 15 3.2 Votes Required for Acceptance by a Class ..................................................................................... 16 3.3 Certain Factors to Be Considered Prior to Voting .......................................................................... 16 3.4 Classes Not Entitled To Vote on the Plan ....................................................................................... 16 3.5 Solicitation Procedures ................................................................................................................... 17 3.6 Voting Procedures ........................................................................................................................... 18
ARTICLE IV BUSINESS DESCRIPTIONS........................................................................................................... 19 4.1 Overview of the Debtors’ Business ................................................................................................. 19 4.2 Organization and Capital Structure ................................................................................................. 21 4.3 The Debtors’ Board Members and Executives................................................................................ 22
ARTICLE V EVENTS LEADING TO THE CHAPTER 11 CASES ................................................................... 24 5.1 Industry-Wide Headwinds and Consequent Capital and Liquidity Constraints .............................. 24 5.2 Prepetition Restructuring Initiatives and Engagement with Creditors ............................................ 24 5.3 The Restructuring Support Agreement, DIP Facilities, and Chapter 11 Cases ............................... 27 5.4 Importance of Deleveraging ............................................................................................................ 27
ARTICLE VI OTHER KEY ASPECTS OF THE PLAN ...................................................................................... 28 6.1 Distributions .................................................................................................................................... 28 6.2 Timing and Calculation of Amounts to Be Distributed................................................................... 28 6.3 Substantive Consolidation ............................................................................................................... 31 6.4 General Settlement of Claims and Interests .................................................................................... 31 6.5 Restructuring Transactions.............................................................................................................. 31 6.6 Corporate Existence ........................................................................................................................ 32 6.7 Vesting of Assets in the Reorganized Debtors ................................................................................ 32 6.8 Cancellation of Agreements, Securities Interests, and Other Interests ............................................ 33 6.9 Sources for Plan Distributions and Transfers of Funds Among Debtors ........................................ 33 6.10 New Equity Documents .................................................................................................................. 33 6.11 Exemption from Registration Requirements ................................................................................... 33 6.12 Organizational Documents .............................................................................................................. 34 6.13 Exemption from Certain Transfer Taxes and Recording Fees ........................................................ 34 6.14 Directors and Officers of the Reorganized Debtors ........................................................................ 34 6.15 Directors and Officers Insurance Policies ....................................................................................... 35 6.16 Other Insurance Policies ................................................................................................................. 35 6.17 Preservation of Rights of Action ..................................................................................................... 35 6.18 Corporate Action ............................................................................................................................. 36 6.19 Effectuating Documents; Further Transactions ............................................................................... 36 6.20 Management Incentive Plan ............................................................................................................ 36 6.21 Workers’ Compensation Programs ................................................................................................. 36
vii
6.22 Treatment of Executory Contracts and Unexpired Leases .............................................................. 37 6.23 Employee Compensation and Benefits ........................................................................................... 38 6.24 Release, Injunction, and Related Provisions ................................................................................... 39 6.25 Setoffs and Recoupment ................................................................................................................. 42 6.26 Release of Liens .............................................................................................................................. 43 6.27 Modification of Plan ....................................................................................................................... 43 6.28 Effect of Confirmation on Modifications ........................................................................................ 43 6.29 Revocation of Plan .......................................................................................................................... 43 6.30 Reservation of Rights ...................................................................................................................... 43 6.31 Conditions Precedent to the Effective Date .................................................................................... 44 6.32 Waiver of Conditions Precedent ..................................................................................................... 45 6.33 Effect of Non-Occurrence of Conditions to the Effective Date ...................................................... 45
ARTICLE VII CERTAIN FACTORS TO BE CONSIDERED ............................................................................ 45 7.1 General ............................................................................................................................................ 45 7.2 Risks Relating to the Plan and Other Bankruptcy Law Considerations .......................................... 45 7.3 Risks Relating to the Restructuring Transactions ........................................................................... 51 7.4 Risks Relating to the New Common Equity and New Warrants ..................................................... 53 7.5 Risks Relating to the Debtors’ Businesses ...................................................................................... 54 7.6 Certain Tax Implications of the Chapter 11 Cases and the Plan ..................................................... 56 7.7 Disclosure Statement Disclaimer .................................................................................................... 56
ARTICLE VIII CONFIRMATION PROCEDURES ............................................................................................. 58 8.1 The Confirmation Hearing .............................................................................................................. 58 8.2 Confirmation Standards .................................................................................................................. 58 8.3 Best Interests Test / Liquidation Analysis ....................................................................................... 59 8.4 Feasibility ........................................................................................................................................ 60 8.5 Confirmation Without Acceptance by All Impaired Classes .......................................................... 60 8.6 Alternatives to Confirmation and Consummation of the Plan ........................................................ 61
ARTICLE IX IMPORTANT SECURITIES LAW DISCLOSURE ..................................................................... 61 9.1 New Common Equity and New Warrants ....................................................................................... 61 9.2 Issuance and Resale of New Common Equity and New Warrants .................................................. 61 9.3 Resales of New Common Equity and New Warrants; Definition of Underwriter .......................... 62 9.4 New Common Equity & Management Incentive Plan .................................................................... 63
ARTICLE X CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE
PLAN ............................................................................................................................................................ 63 10.1 Introduction ..................................................................................................................................... 63
ARTICLE XI CONCLUSION AND RECOMMENDATION ............................................................................... 73
viii
EXHIBITS
Exhibit A Joint Prepackaged Chapter 11 Plan of Reorganization
Exhibit B Restructuring Support Agreement (and exhibits thereto)
Exhibit C Liquidation Analysis
Exhibit D Valuation Analysis
Exhibit E Financial Projections
Exhibit F Corporate Organizational Chart
EXECUTIVE SUMMARY
The Plan implements a pre-packaged restructuring agreed to among the Debtors and the Debtors’ major
stakeholders, including an ad hoc committee comprised of holders of approximately 74% of the Term Claims and the
Consenting Sponsors, which restructuring will result in a significant deleveraging of the Debtors’ capital structure, as
reflected in the chart below:
Capital Structure as of May 31, 2020 Post-Emergence Capital Structure
Principal
Outstanding
Principal
Outstanding
ABL Loans $78.4 million ABL Exit Facility $82.0 million
Undrawn LOC’s (decreases
ABL Loan availability)
$4.4 million Undrawn LOC’s (decreases
ABL Loan availability)
$4.4 million
Term Credit Facility $348.4 million Term Exit Facility $52.5 million3
Total $431.2 million Total $138.9 million
The anticipated benefits of the Plan include, without limitation the following:
(a) The ABL Facility and the ABL DIP Facility will roll into the ABL Exit Facility;
(b) A new $50 million senior secured term loan facility;
(c) Conversion of approximately $348.4 million of Term Credit Facility debt into Equity Interests;
(d) Cancellation of all Equity Interests in APC;
(e) Payment of general unsecured creditors in the ordinary course; and
(f) Prompt emergence from chapter 11.
The Plan provides for a comprehensive restructuring of the Debtors’ prepetition obligations, preserves the
going-concern value of the Debtors’ businesses, maximizes all creditor recoveries, and protects the jobs of the
Debtors’ invaluable employees. To evidence their support of the Debtors’ restructuring, the Debtors and their key
stakeholders executed the Restructuring Support Agreement, a copy of which is attached hereto as Exhibit B. As
described in further detail below, under the terms of the Plan, among other things:
(a) Each Holder of an Allowed Other Secured Claim shall receive the following, at the option of
the applicable Debtor:
(i) payment in full in Cash in the ordinary course of business;
(ii) the collateral securing its Allowed Other Secured Claim and payment of any interest
required under section 506(b) of the Bankruptcy Code;
(iii) Reinstatement of such Allowed Other Secured Claim; or
(iv) such other treatment rendering such Allowed Other Secured Claim Unimpaired.
(b) Each Holder of such Allowed Other Priority Claim shall receive the following at the option of
the applicable Debtor:
3 Includes capitalization of fees paid-in-kind, subject to Court approval.
2
(i) payment in full in Cash in the ordinary course of business;
(ii) Reinstatement of such Allowed Other Priority Claim; or
(iii) such other treatment rendering such Allowed Other Secured Claim Unimpaired.
(c) Each Holder of an Allowed ABL Claim will receive new loans under the ABL Exit Facility in
an amount equal to the principal amount of loans under the ABL Credit Agreement held by
such Holder as of the Effective Date.
(d) Each Holder of an Allowed Term A Claim shall receive, in full and final satisfaction of its Term
A Claims, its Pro Rata Share of 100% of the New Common Equity, subject to dilution by the
New Warrants, the DIP Fee, and the Management Incentive Plan.
(e) Each Holder of an Allowed Term B Claim that is a Consenting Term Loan Lender or that
otherwise votes in favor of the Plan shall receive its Pro Rata share of the New Warrants.
(f) All General Unsecured Claims will be Reinstated and will be paid in full in the ordinary course
of business.
(g) All Intercompany Claims will be Reinstated, compromised, or cancelled at the election of the
Debtors or the Reorganized Debtors, as applicable.
(h) All Intercompany Interests will be Reinstated, compromised, or cancelled at the election of the
Debtors or the Reorganized Debtors, as applicable.
(i) All Equity Interests in APC shall be deemed cancelled and extinguished and shall be of no
further force and effect, whether surrendered for cancelation or otherwise, and there shall be no
distributions to Holders of Equity Interests in APC.
The purpose of this Disclosure Statement is to provide Holders of Claims entitled to vote to accept or reject
the Plan with adequate information about (i) the Debtors’ businesses and certain historical events, (ii) the Chapter 11
Cases, (iii) the rights of Holders of Claims and Interests under the Plan, and (iv) other information necessary to enable
each Holder of a Claim to make an informed judgment as to whether to vote to accept or reject the Plan.
3
INTRODUCTION
This is an unprecedented and uncertain time. Prior to the COVID-19 pandemic, APC Automotive
Technologies Intermediate Holdings, LLC (“APC”) and its Debtor affiliates (collectively, the “Debtors” or the
“Company”) were navigating significant headwinds caused by a combination of rising Platinum Group Metals
(“PGM”)4 costs, significant debt, and constrained liquidity. Due to these headwinds, the Debtors were considering
different options to strengthen their business, including a consensual restructuring. When the COVID-19 pandemic
hit, the Debtors’ constrained liquidity reached crisis mode and the significant drop in revenue made it clear that the
Debtors’ capital structure was unsustainable. Due to the liquidity crisis, the Debtors needed to move with urgent speed
to organize their term loan lenders and ABL lenders and patch together a restructuring plan to secure necessary
liquidity to preserve their business in the short term and reduce its indebtedness for long term health. The liquidity
crisis resulted in difficult discussions with the term loan lenders and the ABL lenders as a new infusion of cash was
necessary to keep the business operating. Fortunately, the Debtors were able to negotiate a restructuring support
agreement (the “Restructuring Support Agreement”) with its term loan lenders and equity holders, which provides the
Debtors with sufficient liquidity to continue operating and substantially reduces their debt. This allows the Debtors,
and their approximate 1,200 employees and other workers, 900 vendors, and 1,400 customers to continue as a going
concern.
Since their beginning in 1927 as a family-run, automotive exhaust system business, the Debtors have grown
into one of the largest North American automotive aftermarket parts suppliers of underbody products for passenger
vehicles and light to heavy-duty and commercial vehicles. They have become the only true full-line underbody
supplier in today’s market for brake, chassis, and exhaust replacement parts. In May 2017, AP Exhaust Intermediate
Holdings, LLC5 entered into a transformative merger (“2017 Merger”) with CWD Holding Corporation (“Centric”),
whereby the Debtors acquired a dominant market share as a supplier of automotive aftermarket brake and chassis
parts, with deep relationships with clients spanning across passenger vehicles, medium duty trucks, fleet vehicles,
high performance vehicles, and racecars. Between 2017 and 2019, the market presented significant challenges
including historically high PGM costs, a difficult international trade environment, increased import tariffs, and a
consolidating customer base, all of which negatively impacted the Debtors’ revenue and profit margins. These
headwinds, combined with a burdensome balance sheet, led to multiple ratings downgrades by credit ratings agencies.
The Debtors, however, successfully navigated the last several years through a combination of efforts, including
optimizing operations, reducing expenses, maximizing liquidity, and de-leveraging their balance sheet.
In September of 2019, the Debtors faced capital structure and liquidity issues. Consequently, the Debtors,
their sponsors, and a group of first-lien term loan lenders (“Term Lenders”) negotiated and effectuated a liability
management transaction that reduced the Debtors’ interest expense by approximately $14 million annually and
increased liquidity by $40 million. Yet, in October 2019, shortly after completing the 2020 budget, market conditions
began to further deteriorate and the Debtors’ liquidity became severely strained. Despite increasing prices, reducing
costs, and maximizing liquidity, the Debtors began to focus on restructuring efforts and strategic alternatives.
In March 2020, COVID-19 hit the United States in earnest, causing federal, state, and local governments to
close non-essential businesses and require people to stay at home. This was the straw that broke the camel’s back.
COVID-19 caused a liquidity crisis for the Debtors and the resulting decrease in sales and revenue made it clear that
the Debtors’ capital structure was unsustainable. Thus, in April 2020, the Debtors and an ad hoc group of term loan
lenders (the “Term Loan Lender Group”) began discussing a potential comprehensive restructuring transaction. To
facilitate these discussions, several members of the Term Loan Lender Group became restricted under confidentiality
agreements, and the Debtors provided requested diligence to the Term Loan Lender Group and its advisors. The
4 PGM consists of six transitional metal elements, including palladium and rhodium, both of which are used in
catalytic converters–AP Exhaust’s main product–to treat exhaust emissions.
5 On November 30, 2017, AP Exhaust Intermediate Holdings changed its name to APC Automotive Technologies
Intermediate Holdings, LLC (together with its subsidiaries, “AP Exhaust”) to reflect the Debtors’ expanded focus
in the automotive aftermarket industry.
4
Debtors pursued various alternatives with the Term Loan Lender Group in an effort to provide a longer runway to
determine a value-maximizing path forward.
Following significant diligence and several weeks of negotiations, and with liquidity running out, on May
31, 2020, the Debtors reached an agreement and executed the Restructuring Support Agreement with their key
stakeholders, attached hereto as Exhibit B. As discussed below, the Restructuring Support Agreement contemplates
a prepackaged restructuring pursuant to the Plan, filed contemporaneously herewith. The restructuring is expected
result in a substantial deleveraging of the Debtors’ balance sheet in excess of $290 million, while paying all general
unsecured claims in the ordinary course.
Given the support for the Debtors’ restructuring by the ABL Lenders, Term Loan Lenders, and Sponsors, the
Debtors elected to pursue a prepackaged restructuring in the weeks leading up to the solicitation period to maximize
value by minimizing both the costs of restructuring and the impact on the Debtors’ businesses. Among other things,
the Debtors intend to file motions to avoid the need for schedules of assets and liabilities and statements of financial
affairs, which will provide them with significant cost savings. In addition, implementing the restructuring
contemplated by the Plan in a “prepackaged” manner, will obviate the need for an unsecured creditors’ committee and
the expenses associated therewith that would otherwise be borne by the Debtors’ estates. The Debtors believe that the
Plan represents the most efficient route to consummate their restructuring and best position the Debtors, their trade
partners, and other stakeholders going forward.
If confirmed and consummated, the Plan will: (i) significantly deleverage the Debtors’ balance sheet;
(ii) provide the Debtors with working capital to fund ongoing operations post-emergence through the Term Exit
Facility (subject to the Term DIP Lenders consent to entry into an Alternative Term Exit Facility); (iii) roll the ABL
Facility and ABL DIP Facility into the ABL Exit Facility; (iv) distribute the New Common Equity to Holders of
Allowed Term A Claims; (v) distribute the New Warrants to Holders of Allowed Term B Claims that are Consenting
Term B Loan Lenders; (vi) cancel all Equity Interests in APC; (vii) allow Holders of General Unsecured Claims to
remain Unimpaired; and (viii) maximize recoveries for all key stakeholders.
The formulation of the Restructuring Support Agreement and Plan contemplated thereunder is a significant
achievement for the Debtors in the face of their liquidity issues and operating environment. Each of the Debtors
strongly believes that the Plan is in the best interests of each of their estates and represents the best available alternative
for all of their stakeholders. Given the Debtors’ core strengths, including their experienced management team and
strategic business plan going-forward, the Debtors are confident that they can implement the Plan’s balance sheet
restructuring to ensure the Debtors’ long-term viability. To effectuate the Plan, the Debtors will pursue a prepackaged
chapter 11 plan of reorganization, and intend to emerge from chapter 11 pursuant to the Plan on an expedited timeline
and on a schedule to be established by the Bankruptcy Court.
ARTICLE II
THE PLAN
2.1 Treatment of Claims and Interests
The Plan provides for the treatment of Claims against and Interests in the Debtors through, among other
things, the following: (a) the issuance of New Common Equity and New Warrants; (b) the Unimpaired treatment of
certain Claims and Interests; and (c) conversion of certain Claims into the Term Exit Facility (subject to the Term DIP
Lenders consent to entry into an Alternative Term Exit Facility) or the ABL Exit Facility, as applicable. As more
fully described herein and in the Plan:
Holders of Allowed Other Secured Claims and Allowed Other Priority Tax Claims will (i) be paid in full
in Cash in the ordinary course of business, (ii) be Reinstated, (iii) receive the collateral securing the
Claim, or (iv) be otherwise rendered Unimpaired, each as applicable;
Holders of Allowed ABL Claims shall receive new loans under the ABL Exit Facility in an amount equal
to the principal amount of loans outstanding under the ABL Credit Agreement held by such Holder as
of the Effective Date;
5
Holders of Allowed Term A Claims shall receive, in full and final satisfaction of its Term A Claims, its
Pro Rata Share of 100% of the New Common Equity, subject to dilution by the New Warrants, the DIP
Fee, and the Management Incentive Plan;
No distributions to Holders of Allowed Term B Claims; provided, however that each Holder of an
Allowed Term B Claim that is a Consenting Term Loan Lender or that otherwise votes in favor of the
Plan shall receive their Pro Rata Share of the New Warrants;
Holders of Allowed General Unsecured Claims (other than any Sponsor Claims or other Claims arising
from the ownership of any instrument evidencing an ownership interest in a Debtor) shall have their
Claims Reinstated as of the Effective Date as an obligation of the applicable Reorganized Debtor and
shall be satisfied in full in the ordinary course of business in accordance with the terms and conditions
of the particular transaction giving rise to such Allowed General Unsecured Claim;
Intercompany Claims shall be Reinstated, compromised, or cancelled at the election of the Debtors or
the Reorganized Debtors, as applicable;
Intercompany Interests shall be Reinstated, compromised, or cancelled at the election of the Debtors or
the Reorganized Debtors, as applicable; and
All Equity Interests in APC shall be deemed cancelled and extinguished and shall be of no further force
and effect, whether surrendered for cancellation or otherwise, and there shall be no distributions to
Holders of Equity Interests in APC on account of any such Interests.
As described below, you are receiving this Disclosure Statement because you are a Holder of a Claim entitled
to vote to accept or reject the Plan. Prior to voting on the Plan, you are encouraged to read this Disclosure Statement
and all documents attached to this Disclosure Statement in their entirety. As reflected in this Disclosure Statement,
there are risks, uncertainties, and other important factors that could cause the Debtors’ actual performance or
achievements to be materially different from those they may project, and the Debtors undertake no obligation to update
any such statement. Certain of these risks, uncertainties, and factors are described in Article VII of this Disclosure
Statement, entitled “Risk Factors.”
2.2 Compromise and Settlement of Claims, Interests, and Controversies
The Plan provides that, pursuant to section 1123 of the Bankruptcy Code and Bankruptcy Rule 9019, and in
consideration for the distributions and other benefits provided pursuant to the Plan, the provisions of the Plan shall
constitute a good-faith compromise and settlement of all Claims, Interests, and controversies relating to the
contractual, legal, and subordination rights that a Holder of a Claim or Interest may have with respect to any Allowed
Claim or Interest or any distribution to be made on account of such Allowed Claim or Interest. The entry of the
Confirmation Order shall constitute the Bankruptcy Court’s approval of the compromise or settlement of all such
Claims, Interests, and controversies as well as a finding by the Bankruptcy Court that such compromise or settlement
is in the best interests of the Debtors, their Estates, and Holders of Claims and Interests and is fair, equitable, and
reasonable. In accordance with the provisions of the Plan, pursuant to Bankruptcy Rule 9019, without any further
notice to or action, order, or approval of the Bankruptcy Court, after the Effective Date, the Reorganized Debtors may
compromise and settle Claims against and Interests in the Debtors and their Estates and Causes of Action against other
Entities.
2.3 New Capital Structure
On the Effective Date, the Debtors or Reorganized Debtors, as applicable, will effectuate the Restructuring
Transactions by, among other things: (a) terminating the ABL Facility and incurring the ABL Exit Facility in
accordance with the ABL Exit Facility Documents; (b) terminating the Term Credit Facility and DIP Credit Facility
and incurring the Term Exit Facility in accordance with the Term Exit Facility Documents (subject to the Term DIP
Lenders consent to entry into an Alternate Term Exit Facility); (c) cancelling all Equity Interests in APC; (d) issuing
New Common Equity to Holders of Allowed Term A Claims as set forth in the Plan, Restructuring Support
6
Agreement, and the New Common Equity Documents; and (e) issuing the New Warrants to certain Holders of Allowed
Term B Claims as set forth in the Plan and the New Warrant Documents. All above-listed documents shall become
effective in accordance with their terms and the Plan.
2.4 Unclassified Claims
(a) Unclassified Claims Summary
In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Claims, DIP Facility Claims
(if any), Professional Claims, and Priority Tax Claims have not been classified and thus are excluded from the Classes
of Claims set forth in Article III of the Plan. The recoveries for such unclassified Claims are set forth below:
Claim Plan Treatment Projected Plan
Recovery
Administrative Claims Paid in Full in Cash 100%
DIP Facility Claims Pro Rata Share of ABL Exit Facility or Term Exit
Facility, as applicable 100%
Accrued Professional
Compensation Claims Paid in Full in Cash 100%
Priority Tax Claims Paid in Full in Cash 100%
(b) Unclassified Claims
(1) General Administrative Claims
Subject to the provisions of sections 328, 330(a), and 331 of the Bankruptcy Code and except to the extent
that a Holder of an Allowed General Administrative Claim and the applicable Debtor before the Effective Date or the
applicable Reorganized Debtor after the Effective Date agree to less favorable treatment, each Holder of an Allowed
General Administrative Claim will be paid the full unpaid amount of such Allowed General Administrative Claim in
Cash: (a) if such Allowed General Administrative Claim is based on liabilities that the Debtors incurred in the ordinary
course of business after the Petition Date, in accordance with the terms and conditions of the particular transaction
giving rise to such Allowed General Administrative Claim and without any further action by any Holder of such
Allowed General Administrative Claim; (b) if such Allowed General Administrative Claim is due, on the Effective
Date, or, if such Allowed General Administrative Claim is not due as of the Effective Date, on the date that such
Allowed General Administrative Claim becomes due or as soon as reasonably practicable thereafter; (c) if a General
Administrative Claim is not Allowed as of the Effective Date, on the date that is no later than sixty (60) days after the
date on which an order Allowing such General Administrative Claim becomes a Final Order of the Bankruptcy Court
or as soon as reasonably practicable thereafter; or (d) at such time and upon such terms as set forth in a Final Order of
the Bankruptcy Court.
(2) Professional Compensation Claims
A. Final Fee Applications
All final requests for Accrued Professional Compensation Claims shall be filed no later than sixty (60) days
after the Effective Date. The amount of Accrued Professional Compensation Claims owed to the Retained
Professionals shall be paid in Cash to such Retained Professionals from funds held in the Professional Fee Escrow
Account after such Claims are Allowed by a Final Order. To the extent that funds held in the Professional Fee Escrow
Account are unable to satisfy the amount of Accrued Professional Compensation Claims owed to the Retained
Professionals, such Retained Professionals shall have an Allowed Administrative Claim for any such deficiency,
which shall be satisfied in accordance with Article II.A of the Plan. After all Allowed Accrued Professional
Compensation Claims have been paid in full, any excess amounts remaining in the Professional Fee Escrow Account
shall be returned to the Reorganized Debtors.
7
B. Professional Fee Escrow Account
On the Effective Date, the Debtors or Reorganized Debtors, as applicable, shall establish and fund the
Professional Fee Escrow Account with Cash equal to the Professional Fee Reserve Amount. The Professional Fee
Escrow Account shall be maintained in trust solely for the Retained Professionals. Such funds shall not be considered
property of the Estates of the Debtors or the Reorganized Debtors.
C. Professional Fee Reserve Account
To receive payment for unbilled fees and expenses incurred through the Confirmation Date, the Retained
Professionals shall estimate in good faith their Accrued Professional Compensation Claims (taking into account any
retainers) prior to and as of the Confirmation Date and shall deliver such estimate to the Debtors and counsel to the
Requisite Consenting Term Loan Lenders at least three (3) calendar days prior to the Confirmation Date. If a Retained
Professional does not provide such estimate, the Reorganized Debtors may estimate the unbilled fees and expenses of
such Retained Professional; provided that such estimate shall not be considered an admission or limitation with respect
to the fees and expenses of such Retained Professional. The total amount so estimated as of the Confirmation Date
shall comprise the Professional Fee Reserve Amount.
D. Post-Confirmation Date Fees and Expenses
Upon the Confirmation Date, any requirement that Retained Professionals comply with sections 327 through
331 and 1103 of the Bankruptcy Code in seeking retention or compensation for services rendered after such date shall
terminate. Each Debtor or Reorganized Debtor, as applicable, may employ and pay any fees and expenses of any
professional, including any Retained Professional, in the ordinary course of business without any further notice to or
action, order, or approval of the Bankruptcy Court, including with respect to any transaction, reorganization, or success
fees payable by virtue of the consummation of the Plan or the occurrence of the Effective Date.
The Debtors and Reorganized Debtors, as applicable, shall pay, within ten (10) Business Days after
submission of a detailed invoice to the Debtors or Reorganized Debtors, as applicable, all outstanding reasonable and
documented fees and out-of-pocket expenses of the advisors to the Term Loan Lender Group. If the Debtors or the
Reorganized Debtors dispute the reasonableness of any such invoice, the Debtors or Reorganized Debtors, as
applicable, or the affected professional may submit such dispute to the Bankruptcy Court for a determination of the
reasonableness of any such invoice, and the disputed portion of such invoice shall not be paid until the dispute is
resolved. The undisputed portion of such reasonable fees and expenses shall be paid as provided herein.
E. Substantial Contribution Compensation and Expenses
Except as otherwise specifically provided in the Plan, any Entity that requests compensation or expense
reimbursement for making a substantial contribution in the Chapter 11 Cases pursuant to sections 503(b)(3), (4), and
(5) of the Bankruptcy Code must file an application and serve such application on counsel for the Debtors or
Reorganized Debtors, as applicable, and as required by the Bankruptcy Court, the Bankruptcy Code, and the
Bankruptcy Rules on or before three (3) Business Days after the Confirmation Date.
(3) DIP Facility Claims
Notwithstanding anything to the contrary herein, Holders of Allowed DIP Facility Claims, in exchange for
full and final satisfaction, settlement, release, and discharge of all DIP Facility Claims (other than Claims under the
DIP Facilities that expressly survive the termination thereof), on the Effective Date, all amounts outstanding under
the DIP Facilities on the Effective Date, unless a Holder agrees to less favorable treatment, shall receive (1) solely
with respect to the ABL DIP Lenders, its pro rata share of the ABL Exit Facility and (2) solely with respect to the
Term DIP Lenders, its pro rata share of the Term Exit Facility, unless the required Term DIP Lenders have consented
to the Reorganized Debtors entering into an Alternate Term Exit Facility in connection with the occurrence of the
Effective Date, in which case, the DIP Term Loans shall be repaid in full in cash on the Effective Date from the
proceeds of the Alternate Term Exit Facility.
8
(4) Priority Tax Claims
Except to the extent that a Holder of an Allowed Priority Tax Claim agrees to a less favorable treatment, in
exchange for full and final satisfaction, settlement, release, and discharge of each Allowed Priority Tax Claim, each
Holder of an Allowed Priority Tax Claim due and payable on or prior to the Effective Date shall be treated pursuant
to section 1129(a)(9)(C) of the Bankruptcy Code. To the extent any Allowed Priority Tax Claim is not due and owing
on or before the Effective Date, such Claim shall be paid in full in Cash in accordance with the terms of any agreement
between the Debtors and such Holder or as may be due and payable under applicable non-bankruptcy law or in the
ordinary course of business.
(5) United States Trustee Statutory Fees
The Debtors and the Reorganized Debtors, as applicable, will pay fees payable pursuant to
28 U.S.C § 1930(a), including fees and expenses payable to the United States Trustee, as determined by the
Bankruptcy Court at a hearing pursuant to section 1128 of the Bankruptcy Code, for each quarter (including any
fraction thereof) until the Chapter 11 Cases are converted, dismissed, or closed, whichever occurs first.
(c) Classified Claims and Interests Summary
The Plan establishes a comprehensive classification of Claims and Interests. The table below summarizes
the classification, treatment, voting rights, and estimated recoveries, estimated as of July 10, 2020, of the Claims and
Interests, by Class, under the Plan. Amounts in the far right column under the heading “Liquidation Recovery” are
estimates only and are based on certain assumptions described herein and set forth in greater detail in the Liquidation
Analysis (as defined below) attached hereto as Exhibit C. Accordingly, recoveries actually received by Holders of
Claims and Interests in a liquidation scenario may differ materially from the projected liquidation recoveries listed in
the table below.
The “Projected Plan Recovery” figures included in the table below are shown prior to any impact of the
Management Incentive Plan. The figures reflect the full range of the Debtors’ valuation analysis; however, for the
avoidance of doubt, the Exchange Benchmark Value is fixed at the midpoint of the Debtors’ equity valuation, or
$94 million.
Class Claim
Voting
Rights Treatment
Projected Plan
Recovery
Liquidation
Recovery
1 Other Secured
Claims
Presumed
to Accept
(i) Payment in full in Cash in the
ordinary course of business, (ii) the
collateral securing such Allowed
Other Secured Claim and payment
of any interest required under
section 506(b) of the Bankruptcy
Code; (iii) Reinstatement, or (iv)
such other treatment rendering
such Claim Unimpaired
100% 100%
2 Other Priority
Claims
Presumed
to Accept
(i) Payment in full in Cash in the
ordinary course of business, (ii)
Reinstatement, or (iii) such other
treatment rendering such Claim
Unimpaired
100% 100%
9
3 ABL Claims Presumed
to Accept
Each Holder of an Allowed ABL
Claim shall receive new loans
under the ABL Exit Facility in an
amount equal to the principal
amount of loans outstanding under
the ABL Credit Agreement held by
such Holder as of the Effective
Date
100% 100%
4 Term Claims Entitled to
Vote
Each Holder of Allowed Term A
Claims shall receive its Pro Rata
share of 100% of the New
Common Equity, subject to
dilution by the New Warrants, the
DIP Fee, and the Management
Incentive Plan
All Term B Claims shall be
deemed cancelled and
extinguished and shall be of no
further force and effect, whether
surrendered for cancellation or
otherwise, and there shall be no
distributions to Holders of Term B
Claims on account of any such
Interests; provided, however, that
each Holder of an Allowed Term B
Claim that is a Consenting Term
Loan Lender or that otherwise
votes in favor of the Plan shall
receive its Pro Rata Share of the
New Warrants
Term A: 45%
Term B: 0%
Term A: 15%
Term B: 0%
5
General
Unsecured
Claims
Presumed
to Accept
Each Holder of an Allowed
General Unsecured Claim (other
than any Sponsor Claims or other
Claims arising from the ownership
of any instrument evidencing an
ownership interest in a Debtor)
shall have its Claim Reinstated as
of the Effective Date as an
obligation of the applicable
Reorganized Debtor and shall be
satisfied in full in the ordinary
course of business in accordance
with the terms and conditions of
the particular transaction giving
rise to such Allowed General
Unsecured Claim
100% 0%
6 Intercompany
Claims
Presumed
to Accept/
Deemed to
Reject
Reinstated, compromised, or
cancelled at the election of the
Debtors or the Reorganized
Debtors, as applicable
0% / 100% 0% / 100%
7 Intercompany
Interests
Presumed
to Accept /
Deemed to
Reject
Reinstated, compromised, or
cancelled at the election of the
Debtors or the Reorganized
Debtors, as applicable
0% / 100% N/A
10
8 Equity
Interests
Deemed to
Reject
All Equity Interests in APC shall
be deemed cancelled and
extinguished and shall be of no
further force and effect, whether
surrendered for cancellation or
otherwise, and there shall be no
distributions to Holders of Equity
Interests in APC on account of any
such Interests
0% 0%
(d) Classified Claims and Interests Details6
Except to the extent that the Debtors and a Holder of an Allowed Claim or Allowed Interest, as applicable,
agree to less favorable treatment, such Holder shall receive under the Plan the treatment described below in full and
final satisfaction, settlement, release, and discharge of and in exchange for such Holder’s Allowed Claim or Allowed
Interest. Unless otherwise indicated, the Holder of an Allowed Claim or Allowed Interest, as applicable, shall receive
such treatment on the Effective Date.
(1) Class 1 — Other Secured Claims
A. Classification: Class 1 consists of all Other Secured Claims.
B. Treatment: Except to the extent that a Holder of an Allowed Other Secured Claim
agrees to less favorable treatment, in exchange for full and final satisfaction,
settlement, release, and discharge of each Other Secured Claim, each Holder of
an Allowed Other Secured Claim shall receive the following, at the option of the
applicable Debtor:
(i) payment in full in Cash in the ordinary course of business;
(ii) the collateral securing its Allowed Other Secured Claim and
payment of any interest required under section 506(b) of the
Bankruptcy Code;
(iii) Reinstatement of such Allowed Other Secured Claim; or
(iv) such other treatment rendering such Allowed Other Secured
Claim Unimpaired.
C. Voting: Class 1 is Unimpaired, and Holders of Class 1 Other Secured Claims are
conclusively presumed to have accepted the Plan pursuant to section 1126(f) of
the Bankruptcy Code. Therefore, Holders of Class 1 Other Secured Claims are
not entitled to vote to accept or reject the Plan.
(2) Class 2 — Other Priority Claims
A. Classification: Class 2 consists of all Other Priority Claims.
B. Treatment: Except to the extent that a Holder of an Allowed Other Priority Claim
agrees to less favorable treatment, in exchange for full and final satisfaction,
settlement, release, and discharge of each Other Priority Claim, each Holder of
6 Allowed Claim amounts referenced in this section are subject to adjustment to reflect any changes to the
outstanding principal amounts prior to the Effective Date.
11
such Allowed Other Priority Claim shall receive the following at the option of the
applicable Debtor:
(i) payment in full in Cash in the ordinary course of business;
(ii) Reinstatement of such Allowed Other Priority Claim; or
(iii) such other treatment rendering such Allowed Other Priority
Claim Unimpaired.
C. Voting: Class 2 is Unimpaired, and Holders of Class 2 Other Priority Claims are
conclusively presumed to have accepted the Plan pursuant to section 1126(f) of
the Bankruptcy Code. Therefore, Holders of Class 2 Other Priority Claims are
not entitled to vote to accept or reject the Plan.
(3) Class 3 — ABL Claims
A. Classification: Class 3 consists of ABL Claims.
B. Allowance: Upon entry of the Interim DIP Order, all loans under the ABL Credit
Facility and all accrued and unpaid interest thereon and outstanding fees and
expenses shall be fully-rolled into the ABL DIP Credit Facility, and upon the
Effective Date, the ABL Exit Facility.
C. Treatment: Solely to the extent of any outstanding Allowed ABL Claims that
were not rolled-up into the ABL DIP Credit Facility, except to the extent that a
Holder of an Allowed ABL Claim agrees to less favorable treatment, in exchange
for full and final satisfaction, settlement, release, and discharge of each ABL
Claim, each Holder of an Allowed ABL Claim shall receive new loans under the
ABL Exit Facility in an amount equal to the principal amount of loans outstanding
under the ABL Credit Agreement held by such Holder as of the Effective Date.
D. Voting: Class 3 is Unimpaired, and Holders of Class 3 ABL Claims are
conclusively presumed to have accepted the Plan pursuant to section 1126(f) of
the Bankruptcy Code. Therefore, Holders of Class 3 ABL Claims are not entitled
to vote to accept or reject the Plan.
(4) Class 4 — Term Claims
A. Classification: Class 4 consists of Term Claims.
B. Allowance: On the Effective Date, Term Claims shall be deemed Allowed in the
aggregate principal amount of $348.4 million, consisting of $206.2 million in the
aggregate principal amount of Term A Claims and $142.2 million aggregate
principal amount of Term B Claims, plus all interest, fees, expenses, costs, and
other charges due under the Term Credit Agreement. As the Term A Claims and
Term B Claims are subject to the same Term Credit Agreement, such Claims shall
be treated in accordance with the Term Credit Agreement as set forth below.
C. Term A Claim Treatment: Except to the extent that a Holder of an Allowed Term
A Claim agrees to less favorable treatment, in exchange for full and final
satisfaction, settlement, release, and discharge of each Term A Claim, on the
Effective Date, each Holder of an Allowed Term A Claim shall receive, in full
and final satisfaction of its Term A Claims, its Pro Rata Share (in relation to the
aggregate amount of all Allowed Term A Claims) of 100% of the New Common
12
Equity, subject to dilution by the New Warrants, the DIP Fee, and the
Management Incentive Plan.
D. Term B Claim Treatment: On the Effective Date, all Term B Claims shall be
deemed cancelled and extinguished and shall be of no further force and effect,
whether surrendered for cancellation or otherwise, and there shall be no
distributions to Holders of Term B Claims on account of any such Interests;
provided, however, that each Holder of an Allowed Term B Claim that is a
Consenting Term Loan Lender or that otherwise votes in favor of the Plan shall
receive its Pro Rata Share of the New Warrants.7
E. Voting: Class 4 is Impaired, and Holders of Class 4 Term Claims are entitled to
vote to accept or reject the Plan.
(5) Class 5 — General Unsecured Claims
A. Classification: Class 5 consists of all General Unsecured Claims.
B. Treatment: Except to the extent that a Holder of an Allowed General Unsecured
Claim agrees to a less favorable treatment of its Allowed Claim, in exchange for
full and final satisfaction, settlement, release, and discharge of each Allowed
General Unsecured Claim, each Holder of an Allowed General Unsecured Claim
(other than any Sponsor Claims or other Claims arising from the ownership of any
instrument evidencing an ownership interest in a Debtor) shall have its Claim
Reinstated as of the Effective Date as an obligation of the applicable Reorganized
Debtor and shall be satisfied in full in the ordinary course of business in
accordance with the terms and conditions of the particular transaction giving rise
to such Allowed General Unsecured Claim.
C. Voting: Class 5 is Unimpaired, and Holders of Class 5 General Unsecured Claims
are conclusively deemed to have accepted the Plan pursuant to section 1126(f) of
the Bankruptcy Code. Therefore, Holders of Class 5 General Unsecured Claims
are not entitled to vote to accept or reject the Plan.
(6) Class 6 — Intercompany Claims
A. Classification: Class 6 consists of all Intercompany Claims.
7 In the event the treatment of the Allowed Term A Claims and Allowed Term B Claims described in the two
immediately preceding paragraphs is not permitted by the Bankruptcy Court, the Holders of Allowed Term Claims
shall be treated as follows under the Plan:
Except to the extent that a Holder of an Allowed Term Claim agrees to less favorable treatment, in
exchange for full and final satisfaction, settlement, release, and discharge of each Term Claim, on
the Effective Date, each Holder of an Allowed Term Claim shall receive, in full and final satisfaction
of its Term A Claims, its Pro Rata Share of 100% of the New Common Equity, subject to dilution
by the New Warrants, the DIP Fee, and the Management Incentive Plan. The Application of
Proceeds provision set forth in Section 7.04 of the Term Credit Agreement shall remain in full force
and effect and govern any distributions made pursuant to the Plan, including the distribution of New
Common Equity in accordance hereto.
13
B. Treatment: On the Effective Date, Intercompany Claims shall be Reinstated,
compromised, or cancelled at the election of the Debtors or the Reorganized
Debtors, as applicable.
C. Voting: Holders of Claims in Class 6 are conclusively deemed to have accepted
or rejected the Plan pursuant to section 1126(f) or section 1126(g) of the
Bankruptcy Code, respectively. Therefore, such Holders are not entitled to vote
to accept or reject the Plan.
(7) Class 7 — Intercompany Interests
A. Classification: Class 7 consists of all Intercompany Interests.
B. Treatment: On the Effective Date, Intercompany Interests shall be Reinstated,
compromised, or cancelled at the election of the Debtors or the Reorganized
Debtors, as applicable.
C. Voting: Holders of Class 7 Intercompany Interests are conclusively deemed to
have accepted or rejected the Plan pursuant to section 1126(f) or section 1126(g)
of the Bankruptcy Code, respectively. Therefore, Holders of Intercompany
Interests are not entitled to vote to accept or reject the Plan.
(8) Class 8 — Equity Interests in APC
A. Classification: Class 8 consists of all Equity Interests in APC.
B. Treatment: On the Effective Date, all Equity Interests in APC shall be deemed
cancelled and extinguished and shall be of no further force and effect, whether
surrendered for cancellation or otherwise, and there shall be no distributions to
Holders of Equity Interests in APC on account of any such Interests.
C. Voting: Class 8 is Impaired, and Holders of Class 8 Equity Interests are
conclusively deemed to have rejected the Plan pursuant to section 1126(g) of the
Bankruptcy Code.
(e) Special Provision Governing Unimpaired Claims
Except as otherwise provided in the Plan, nothing under the Plan shall affect the Debtors’ or the Reorganized
Debtors’ rights with respect to any Unimpaired Claim, including all legal and equitable defenses to or setoffs or
recoupments against any such Unimpaired Claim.
(f) Voting Classes; Presumed Acceptance by Non-Voting Classes
If a Class contains Claims or Interests eligible to vote, and no Holders of Claims or Interests eligible to vote
in such Class vote to accept or reject the Plan, the Plan shall be deemed accepted by the Holders of such Claims or
Interests in such Class.
(g) Controversy Concerning Impairment
If a controversy arises as to whether any Claims or Interests or any Class thereof is Impaired, the Bankruptcy
Court shall, after notice and a hearing, determine such controversy on or before the Confirmation Date.
14
(h) Confirmation Pursuant to Section 1129(a)(10) and 1129(b) of the Bankruptcy Code
Section 1129(a)(10) of the Bankruptcy Code shall be satisfied for purposes of Confirmation by acceptance
of the Plan by an Impaired Class of Claims. The Debtors shall seek Confirmation pursuant to section 1129(b) of the
Bankruptcy Code with respect to any rejecting Class of Claims or Interests.
(i) Subordinated Claims
The allowance, classification, and treatment of all Allowed Claims and Interests and the respective
distributions and treatments under the Plan shall take into account and conform to the relative priority and rights of
the Claims and Interests in each Class in connection with any contractual, legal, and equitable subordination rights
relating thereto, whether arising under general principles of equitable subordination, contract (including the Term
Credit Agreement), section 510(b) of the Bankruptcy Code, or otherwise. Pursuant to section 510 of the Bankruptcy
Code, the Debtors or the Reorganized Debtors, as applicable, reserve the right to re-classify any Allowed Claim or
Allowed Interest in accordance with any contractual, legal, or equitable subordination relating thereto.
(a) Elimination of Vacant Classes
Any Class of Claims or Interests that does not have a Holder of an Allowed Claim or Allowed Interest or a
Claim or Interest temporarily Allowed by the Bankruptcy Court as of the date of the Confirmation Hearing shall be
deemed eliminated from the Plan for purposes of voting to accept or reject the Plan and for purposes of determining
acceptances or rejection of the Plan by such Class pursuant to section 1129(a)(8) of the Bankruptcy Code.
(b) Intercompany Interests
To the extent Reinstated under the Plan, distributions on account of Intercompany Interests are not being
received by Holders of such Intercompany Interests on account of their Intercompany Interests but for the purposes
of administrative convenience and due to the importance of maintaining the corporate structure for the ultimate benefit
of the Holders that receive New Equity in exchange for the Debtors’ and Reorganized Debtors’ agreement under the
Plan to make certain distributions on account of such Holders’ Allowed Claims.
2.5 Liquidation Analysis
The Debtors believe that the Plan provides a greater recovery for Holders of Allowed Claims as would be
achieved in the Debtors’ liquidation under chapter 7 of the Bankruptcy Code. This belief is based on a number of
considerations, including: (a) the Debtors’ primary assets are intangible and include goodwill and customer
relationships, which would have little to no value in a chapter 7 liquidation; (b) the additional Administrative Claims
generated by conversion to a chapter 7 case and any related costs in connection with a chapter 7 liquidation; and (c) the
absence of a robust market for the liquidation of the Debtors’ assets and services.
The Debtors, with the assistance of WeinsweigAdvisors, have prepared an unaudited liquidation analysis,
which is attached hereto as Exhibit C (the “Liquidation Analysis”), to assist Holders of Claims and Interests in
evaluating the Plan. The Liquidation Analysis compares the projected recoveries that would result from the liquidation
of the Debtors in a hypothetical case under chapter 7 of the Bankruptcy Code with the estimated distributions to
Holders of Allowed Claims and Interests under the Plan. The Liquidation Analysis is based on the value of the
Debtors’ assets and liabilities as of a certain date and incorporates various estimates and assumptions, including a
hypothetical conversion to a chapter 7 liquidation as of a certain date. Further, the Liquidation Analysis is subject to
potentially material changes, including with respect to economic and business conditions and legal rulings. Therefore,
the actual liquidation value of the Debtors could vary materially from the estimate provided in the Liquidation
Analysis.
2.6 Valuation Analysis
The Plan provides for the distribution of the New Common Equity and New Warrants to Holders of Allowed
Term Claims. Accordingly, Jefferies, at the request of the Debtors, has performed an analysis, which is attached
hereto as Exhibit D, of the estimated implied value of the Debtors on a going-concern basis as of June 30, 2020
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(the “Valuation Analysis”). The Valuation Analysis, including the procedures followed, assumptions made,
qualifications, and limitations on review undertaken described therein, should be read in conjunction with Article VII
of this Disclosure Statement, entitled “Certain Factors To Be Considered.” The Valuation Analysis is based on data
and information as of June 30, 2020 through and including December 31, 2020. Jefferies makes no representations
as to changes to such data and information that may have occurred since the date of the Valuation Analysis.
THE VALUATION ANALYSIS REPRESENTS A HYPOTHETICAL VALUATION OF THE
REORGANIZED DEBTORS AND THEIR ASSETS AND BUSINESSES, WHICH ASSUMES THAT SUCH
REORGANIZED DEBTORS CONTINUE AS AN OPERATING BUSINESS IN SUBSTANTIALLY THE SAME
CORPORATE STRUCTURE. THE ESTIMATED VALUE SET FORTH IN THE VALUATION ANALYSIS DOES
NOT PURPORT TO CONSTITUTE AN APPRAISAL OR NECESSARILY REFLECT THE ACTUAL MARKET
VALUE THAT MIGHT BE REALIZED THROUGH A SALE OR LIQUIDATION OF THE REORGANIZED
DEBTORS, THEIR SECURITIES OR THEIR ASSETS, WHICH MAY BE MATERIALLY DIFFERENT THAN
THE ESTIMATES SET FORTH IN THE VALUATION ANALYSIS. ACCORDINGLY, SUCH ESTIMATED
VALUE IS NOT NECESSARILY INDICATIVE OF THE PRICES AT WHICH ANY SECURITIES OF THE
REORGANIZED DEBTORS MAY TRADE AFTER GIVING EFFECT TO THE RESTRUCTURING
TRANSACTIONS SET FORTH IN THE PLAN. ANY SUCH PRICES MAY BE MATERIALLY DIFFERENT
THAN INDICATED BY THE VALUATION ANALYSIS.
2.7 Financial Information and Projections
In connection with planning and developing the Plan, the Debtors, with the assistance of their advisors,
prepared projections for the fiscal years 2020 through 2023, which are attached hereto as Exhibit E
(the “Financial Projections”), including management’s assumptions related thereto. For purposes of the Financial
Projections, the Debtors have assumed an Effective Date of July 10, 2020. The Financial Projections assume that the
Plan will be implemented in accordance with its stated terms. The Debtors are unaware of any circumstances as of
the date of this Disclosure Statement that would require the re-forecasting of the Financial Projections due to a material
change in the Debtors’ prospects.
The Financial Projections are based on forecasts of key economic variables and may be significantly impacted
by, among other factors, changes in the competitive environment, commodity prices, regulatory changes, and/or a
variety of other factors, including the factors listed in this Disclosure Statement. Accordingly, the estimates and
assumptions underlying the Financial Projections are inherently uncertain and are subject to significant business,
economic, and competitive uncertainties. Therefore, such projections, estimates, and assumptions are not necessarily
indicative of current values or future performance, which may be significantly less or more favorable than set forth
herein. The Financial Projections should be read in conjunction with the assumptions, qualifications, and explanations
set forth in this Disclosure Statement.
ARTICLE III
VOTING PROCEDURES AND REQUIREMENTS
3.1 Class Entitled to Vote on the Plan
The following Class is entitled to vote to accept or reject the Plan (collectively, the “Voting Class”):
Class Claim or Interest Status
4 Term Claims Impaired
If your Claim or Interest is not included in the Voting Class, you are not entitled to vote and you will not
receive a Solicitation Package (as defined below), including a ballot setting forth detailed voting instructions. If you
are a Holder of a Claim in the Voting Class, you should read your ballot and carefully follow the instructions included
in the ballot. Please use only the ballot that accompany the applicable Solicitation Package, if any, or the ballot that
the Debtors, or Bankruptcy Management Solutions (“Stretto”) (the “Solicitation Agent”) on behalf of the Debtors,
otherwise provided to you.
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3.2 Votes Required for Acceptance by a Class
Under the Bankruptcy Code, acceptance of a plan of reorganization by a class of claims or interests is
determined by calculating the amount and, if a class of claims, the number, of claims and interests voting to accept,
as a percentage of the allowed claims or interests, as applicable, that have voted. Acceptance by a class of claims
requires an affirmative vote of more than one-half in number of total allowed claims that have voted and an affirmative
vote of at least two-thirds in dollar amount of the total allowed claims that have voted. Acceptance by a class of
interests requires an affirmative vote of at least two-thirds in amount of the total allowed interests that have voted.
3.3 Certain Factors to Be Considered Prior to Voting
There are a variety of factors that all Holders of Claims entitled to vote on the Plan should consider prior to
voting to accept or reject the Plan. These factors may impact recoveries under the Plan and include, among other
things:
unless otherwise specifically indicated, the financial information contained in the Disclosure
Statement has not been audited and is based on an analysis of data available at the time of the
preparation of the Plan and the Disclosure Statement;
although the Debtors believe that the Plan complies with all applicable provisions of the
Bankruptcy Code, the Debtors can neither assure such compliance nor that the
Bankruptcy Court will confirm the Plan;
the Debtors may request Confirmation without the acceptance of the Plan by all Impaired
Classes in accordance with section 1129(b) of the Bankruptcy Code; and
any delays of either Confirmation or Consummation could result in, among other things,
increased Administrative Claims and Professional Claims.
While these factors could affect distributions available to Holders of Allowed Claims and Interests under the
Plan, the occurrence or impact of such factors may not necessarily affect the validity of the vote of the Voting Classes
or necessarily require a re-solicitation of the votes of Holders of Claims in the Voting Classes pursuant to section 1127
of the Bankruptcy Code.
For a further discussion of risk factors, please refer to “Certain Factors to Be Considered” described in Article
VII of this Disclosure Statement.
3.4 Classes Not Entitled To Vote on the Plan
Under the Bankruptcy Code, holders of claims and interests are not entitled to vote if their contractual rights
are unimpaired by the proposed plan or if they will receive no property under the plan. Accordingly, the following
Classes of Claims against and Interests in the Debtors are not entitled to vote to accept or reject the Plan:
Class Claim or Interest Status Voting Rights
1 Other Secured Claims Unimpaired Not Entitled to Vote
(Presumed to Accept)
2 Other Priority Claims Unimpaired Not Entitled to Vote
(Presumed to Accept)
3 ABL Claims Unimpaired Not Entitled to Vote
(Presumed to Accept)
5 General Unsecured Claims Unimpaired Not Entitled to Vote
(Presumed to Accept)
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Class Claim or Interest Status Voting Rights
6 Intercompany Claims Unimpaired / Impaired Not Entitled to Vote
(Presumed to Accept /
Deemed to Reject)
7 Intercompany Interests Unimpaired / Impaired Not Entitled to Vote
(Presumed to Accept /
Deemed to Reject)
8 Equity Interests Impaired Not Entitled to Vote
(Deemed to Reject)
3.5 Solicitation Procedures
(a) Solicitation Agent
The Debtors have retained Stretto to act as, among other things, the Solicitation Agent in connection with the
solicitation of votes to accept or reject the Plan.
(b) Solicitation Package
The following materials constitute the solicitation package (collectively, the “Solicitation Package”)
distributed to Holders of Claims in the Voting Class:
• the form of the notice of the combined hearing to consider approval of the adequacy of the
Disclosure Statement and confirmation the Plan;
• the Debtors’ cover letter in support of the Plan;
• a Ballot and applicable voting instructions, together with a pre-paid, pre-addressed return
envelope; and
• this Disclosure Statement and all exhibits hereto, including the Plan and all exhibits thereto.
(c) Distribution of the Solicitation Package and Plan Supplement
The Debtors will cause the Solicitation Agent to distribute the Solicitation Package to Holders of Claims in
the Voting Classes on May 31, 2020, which is twenty-four days before the Voting Deadline (i.e., 5:00 p.m. (prevailing
Eastern Time) on June 24, 2020.
The Solicitation Package (except the Ballots) may also be obtained from the Solicitation Agent by: (i) calling
the Solicitation Agent at (855) 260-9397 (toll free) or (949) 407-8590 (international), (ii) emailing
[email protected] and referencing “APC Automotive Technologies Intermediate Holdings, LLC” in the subject
line, and/or (iii) writing to the Solicitation Agent at APC Automotive Technologies Intermediate Holdings, LLC Ballot
Processing, c/o Stretto, 410 Exchange, Suite 100, Irvine, CA 92602. After the Debtors file the Chapter 11 Cases, you
may also obtain copies of any pleadings filed with the Bankruptcy Court for free by visiting the Debtors’ restructuring
website, https://cases.stretto.com/APC, or for a fee via PACER at https://www.pacer.gov/.
The Debtors shall file the Plan Supplement with the Bankruptcy Court no later than two (2) calendar days
before the Voting Deadline. If the Plan Supplement is updated or otherwise modified, such modified or updated
documents will be made available on the Debtors’ restructuring website. The Debtors will not serve copies of the
Plan Supplement; however, parties may obtain a copy of the Plan Supplement from the Solicitation Agent by:
(i) calling the Solicitation Agent at the telephone numbers set forth above; (ii) visiting the Debtors’ restructuring
website, https://cases.stretto.com/APC, or (iii) writing to the Solicitation Agent at APC Automotive Technologies
Intermediate Holdings, LLC Ballot Processing, c/o Stretto, 410 Exchange, Suite 100, Irvine, CA 92602.
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3.6 Voting Procedures
May 30, 2020 (the “Voting Record Date”) is the date that was used for determining which Holders of Claims
are entitled to vote to accept or reject the Plan and receive the Solicitation Package in accordance with the solicitation
procedures. Except as otherwise set forth herein, the Voting Record Date and all of the Debtors’ solicitation and
voting procedures shall apply to all of the Debtors’ creditors and other parties in interest.
In order for the Holder of a Claim in the Voting Class to have its Ballot counted as a vote to accept or reject
the Plan, such Holder’s Ballot must be properly completed, executed, and delivered by (a) using the enclosed pre-
paid, pre-addressed return envelope, (b) via first class mail, overnight courier, or hand delivery to APC Automotive
Technologies Intermediate Holdings, LLC Ballot Processing, c/o Stretto, 410 Exchange, Suite 100, Irvine, CA 92602,
or (c) via the e-ballot portal using the e-ballot ID on the Holder’s ballot at https://balloting.stretto.com/, so that such
Holder’s ballot is actually received by the Solicitation Agent on or before the Voting Deadline, which is June 24, 2020
at 5:00 p.m. (prevailing Eastern Time).
If a Holder of a Claim in a Voting Class transfers all of such Claim to one or more parties on or after the
Voting Record Date and before the Holder has cast its vote on the Plan, such Claim Holder is automatically deemed
to have provided a voting proxy to the purchasers of the Holder’s Claim, and such purchasers shall be deemed to be
the Holders thereof as of the Voting Record Date for purposes of voting on the Plan.
You may receive more than one Ballot if you hold Claims through one or more affiliated funds, in which
case the vote cast by each such affiliated fund will be covered separately. Separate Claims held by affiliated funds in
a particular Class shall not be aggregated, and the vote of each such affiliated fund related to its Claims shall be treated
as a separate vote to accept or reject the Plan, as applicable. If you hold any portion of a single Claim, you and all
other Holders of any portion of such Claim will be (a) treated as a single creditor for voting purposes and (b) required
to vote every portion of such Claim collectively to either accept or reject the Plan.
IF A BALLOT IS RECEIVED AFTER THE VOTING DEADLINE, IT WILL NOT BE COUNTED
UNLESS THE DEBTORS DETERMINE OTHERWISE OR AS ORDERED BY THE BANKRUPTCY COURT.
ANY BALLOT THAT IS PROPERLY EXECUTED BY THE HOLDER OF A CLAIM BUT THAT DOES
NOT CLEARLY INDICATE AN ACCEPTANCE OR REJECTION OF THE PLAN OR ANY BALLOT THAT
INDICATES BOTH AN ACCEPTANCE AND A REJECTION OF THE PLAN WILL NOT BE COUNTED FOR
PURPOSES OF ACCEPTING OR REJECTING THE PLAN.
EACH HOLDER OF A CLAIM MUST VOTE ALL OF ITS CLAIMS OR INTERESTS WITHIN A
PARTICULAR CLASS EITHER TO ACCEPT OR REJECT THE PLAN AND MAY NOT SPLIT SUCH VOTES.
BY SIGNING AND RETURNING A BALLOT, EACH HOLDER OF A CLAIM OR INTEREST WILL CERTIFY
TO THE BANKRUPTCY COURT AND THE DEBTORS THAT NO OTHER BALLOTS WITH RESPECT TO
SUCH CLAIM HAVE BEEN CAST OR, IF ANY OTHER BALLOTS HAVE BEEN CAST WITH RESPECT TO
SUCH CLASS OF CLAIMS OR INTERESTS, SUCH OTHER BALLOTS INDICATED THE SAME VOTE TO
ACCEPT OR REJECT THE PLAN. IF A HOLDER CASTS MULTIPLE BALLOTS WITH RESPECT TO THE
SAME CLAIM AND THOSE BALLOTS ARE IN CONFLICT WITH EACH OTHER, SUCH BALLOTS WILL
NOT BE COUNTED FOR PURPOSES OF ACCEPTING OR REJECTING THE PLAN.
IT IS IMPORTANT THAT THE HOLDER OF A CLAIM IN THE VOTING CLASS FOLLOWS THE
SPECIFIC INSTRUCTIONS PROVIDED ON SUCH HOLDER’S BALLOT AND THE ACCOMPANYING
INSTRUCTIONS. SUBJECT TO THE TERMS OF THE RESTRUCTURING SUPPORT AGREEMENT, NO
BALLOT MAY BE WITHDRAWN OR MODIFIED AFTER THE VOTING DEADLINE WITHOUT APC’S
PRIOR CONSENT OR PERMISSION OF THE BANKRUPTCY COURT. UPON ANY TERMINATION DATE
(AS DEFINED IN THE RESTRUCTURING SUPPORT AGREEMENT), ANY VOTES OR CONSENTS GIVEN
BY A CONSENTING TERM LENDER, PRIOR TO SUCH TERMINATION SHALL AUTOMATICALLY BE
DEEMED, FOR ALL PURPOSES, TO BE NULL AND VOID AB INITIO AND SHALL NOT BE CONSIDERED
OR OTHERWISE USED IN ANY MANNER BY THE PARTIES IN CONNECTION WITH THE
RESTRUCTURING AND THE RESTRUCTURING SUPPORT AGREEMENT AND SUCH CONSENTS OR
BALLOTS MAY BE CHANGED OR RESUBMITTED REGARDLESS OF WHETHER THE APPLICABLE
VOTING DEADLINE HAS PASSED (WITHOUT THE NEED TO SEEK AN ORDER OF A COURT OF
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COMPETENT JURISDICTION OR CONSENT FROM THE COMPANY OR ANY OTHER APPLICABLE
PARTY ALLOWING SUCH CHANGE OR RESUBMISSION).
ARTICLE IV
BUSINESS DESCRIPTIONS
4.1 Overview of the Debtors’ Business
The Debtors are one of the largest North American aftermarket suppliers of brake, chassis, exhaust, and
emissions parts for passenger vehicles, trucks, and commercial vehicles. The Debtors were formed through the merger
of two companies in 2017, AP Exhaust and Centric.
AP Exhaust was founded in 1927 to serve the emerging automotive repair market with replacement mufflers,
pipes, and exhaust installation products. In 1990, the Proimos family founded Aristo Catalyst Technologies and
CATCO Catalytic Converter. In 1998, AP Exhaust was acquired by the Proimos family and merged with Aristo
Catalyst Technologies and CATCO Catalytic Converter to form a family-run business based in automotive exhaust
systems. AP Exhaust has grown significantly and expanded its reach throughout North America, providing high-
quality mufflers, exhaust pipes, and catalytic converters to its commercial customers and auto service professionals.
AP Exhaust made two acquisitions prior to its sale to Audax in January 2014. Specifically, AP Exhaust acquired
ANSA Automotive in 2011, IMCO/Maremont Exhaust in 2013, and Eastern Catalytic in 2015. AP Exhaust is a known
leader in manufacturing and distributing exhaust and emission products. Prior to the 2017 Merger, Audax8 acquired
a majority stake in AP Exhaust.
Founded in Southern California in 2000, Centric grew into North America’s leading distributor and supplier
of aftermarket brake and chassis components for passenger vehicles, medium duty trucks, fleet vehicles, high
performance vehicles, and race cars. Since its founding, Centric enjoyed solid growth and its brand has grown to
become the industry leader. Originally focused on replacement parts for everyday use, Centric expanded into the
original equipment, armored vehicles, and racing and performance markets. Centric’s catalogs, a practical standard
in the industry, now contain over 145,000 brake and chassis parts supporting nearly every make and model of
passenger vehicle and medium duty truck manufactured since 1937. Audax acquired Centric in 2008 and held both
AP Exhaust and Centric as separate portfolio companies.
In May 2017, Harvest9 and Audax created APC Automotive Technologies Intermediate Holdings, LLC
through the merger of AP Exhaust and Centric. Specifically, AP Exhaust Intermediate Holdings, LLC (“Intermediate
Holdings”)10 and certain of its subsidiaries acquired CWD11 and formed APC Automotive Technologies. As part of
the 2017 Merger, Harvest acquired an equity interest in Intermediate Holdings. Audax, the former majority
shareholder of both the AP Emissions Group and Centric Group, continues to retain an ownership stake in APC
Automotive Technologies Holdings, LLC.
The 2017 Merger and formation of APC created a unified brand portfolio, combining emissions technology
and manufacturing with brake and chassis systems design. As a result, the Debtors have become the industry’s leading
8 Audax Private Equity Fund IV AIV, L.P., AG PE Fund IV Exhaust-Aristo, LLC, Audax Co-Invest IV, L.P., AG
TCI Exhaust-Aristo, LLC, AFF Co-Invest, L.P., and AG Grey Goose Holdings, LLC (collectively, “Audax”).
9 Harvest Partners VII, L.P., Harvest Partners VII (Parallel), L.P., Harvest Strategic Associates VII, L.P, Harvest
APC Holdings, LLC, and Harvest APC Blocker Purchaser, L.P. (collectively, “Harvest”).
10 Through its wholly owned subsidiaries, Intermediate Holdings owns the AP Emissions Group, which consists of
the following entities: AP Emissions Technologies, LLC (AP Exhaust); AirTek, LLC (AirTek); Aristo, LLC
(Aristo); and Eastern Manufacturing, LLC (Eastern).
11 Through its subsidiaries, CWD Holding owns the Centric Group, which consists of CWD, LLC (Centric) and
Qualis Enterprises, Inc. (Qualis).
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supplier of automotive aftermarket parts and one of the nation’s only “one-stop shop” for undercar replacement parts.
The Debtors are headquartered in Littleton, Colorado and operate across North America with distribution centers in
North Carolina, Indiana, and California, manufacturing and research and development centers in Pennsylvania,
Indiana, North Carolina, and California, and a sales office in Tennessee. Certain of the Debtor entities, including APC
Automotive Technologies Intermediate Holdings, LLC, APC Automotive Technologies, LLC, and AP Emissions
Technologies, LLC are incorporated in Delaware.
Approximately 30 percent of the Debtors’ revenue originates from the AP Exhaust division generated from
approximately 900 customers and 74 percent from Centric generated from approximately 500 customers. There are
less than a handful of large competitors in each of the Debtors’ two businesses, which means that there is a high
concentration of market share for the Debtors and each of their competitors. This also means that the Debtors hold
relevant market share positions and are critical to the industry, given the competitive landscape in this industry.
Among its products, AP Exhaust supplies catalytic converters, diesel aftertreatment, mufflers, exhaust pipes and
systems (including performance exhaust), and accessories covering nearly every aftermarket application from light-
to heavy-duty vehicles. AP Exhaust has developed and acquired the industry’s top exhaust and emissions brands,
including the following: ANSA®, AP®, CATCO®, Cherry Bomb®, DieselTech™, DuraFit®, Eastern Catalyst®,
Maremont®, Silverline®, and Xlerator®. Centric has been the fastest-growing full-line distributer of replacement brake
components in North America over the last decade and now includes the following industry-leading brands: Centric®,
C-Tek®, Posi Quiet®, PQ Pro® and StopTech®.
The Debtors have built a vast customer base, across the United States, Mexico, Canada and parts of Europe,
which spans from small scale “mom and pops” to large scale retailers and distributors in the automotive industry.
Some examples of the Debtors’ large scale customers are Autozone, O’Reilly’s, Parts Authority, Fast Undercar, FMP,
Team Allied Distribution, and Fisher Auto Parts. The Debtors have approximately 1,200 employees with
manufacturing, distribution, and research and development locations spread across North America.
(a) Supply Chain
The Debtors source over 95% of their products from China. The AP Exhaust division primarily focuses on
manufacturing exhaust and emissions components. The exhaust parts are manufactured in North Carolina, Indiana,
and Pennsylvania. From there, the products are collected at a distribution center in North Carolina and then shipped
to customers.
Centric is a redistribution business, in which products are bought from various suppliers, a majority of which
are located in China. The products are shipped directly to the Debtors’ customers or brought to a warehouse and
distribution center in California. In addition, Centric has a remanufacturing business centered in Mexico. The
products manufactured in Mexico are sent to Texas and then distributed to the customers.
(b) The Debtors’ Products and Inventory
The Debtors’ merchandising strategy is focused on providing the full range of aftermarket undercar
replacement parts, including brake, chassis, exhaust, and emissions parts for passenger vehicles, trucks, and
commercial vehicles. The AP Exhaust division of APC manufactures a full line of aftermarket exhaust products,
including universal and direct-fit catalytic converters, mufflers, pipes, and diesel exhaust components. In each product
category, AP Exhaust is amongst the top two suppliers in the United States exhaust system aftermarket and has over
13,000 active SKUs across vehicle make, model, and engine specifications. AP Exhaust has developed a vertically-
integrated platform that allows it to quickly respond to our customers’ frequent and diverse product orders while
maintaining strict quality control standards.
The Centric division of APC is a foundational thought leader in replacement brake and system technology.
Centic has been the fastest-growing, full-line manufacturer and distributor of replacement brake components in North
America over the last decade. The Centric division has been the first-to-market with new products covering nearly
every light and medium-duty vehicle on the road today and has a portfolio of brands spanning the complete value-
spectrum. Centric’s award-winning product catalog includes over 100,000 SKUs sold under a number of channel-
specific brands and on a private label basis.
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(c) The Debtors’ Employees
As of May 2020, APC employed approximately 1,200 employees, consisting of approximately 880 full-time
employees, approximately 1 part-time employee, and approximately 400 contract workers. In addition to their
employees, APC periodically retains specialized individuals as independent contractors as well as temporary workers
to fulfill certain duties on a short-term basis. APC’s workforce is spread across the United States and parts of Mexico.
4.2 Organization and Capital Structure
(a) Organizational Structure
An organizational chart illustrating the corporate structure of the Debtors is annexed hereto as Exhibit F.
(b) The Debtors’ Capital Structure
As of the date hereof, the Debtors have outstanding funded debt obligations in the aggregate principal amount
of approximately $431.2 million, including the following:
approximately $82.8 million outstanding under the ABL Facility, including $4.4 million in undrawn
LOC’s; and
approximately $348.4 million in principal amount outstanding under the Term Credit Facility.
(1) ABL Credit Facility
In connection with the 2017 Merger, on May 10, 2017, various Debtor entities entered into that certain credit
and security agreement (as amended, restated, modified, supplemented, or replaced from time to time, the “ABL Credit
Agreement”) governing the ABL credit facility, by and among APC, CWD Acquisition, LLC, and CWD, as borrowers
thereunder, certain of its subsidiaries, as guarantors (collectively, the “ABL Loan Parties”), the lenders thereof (the
“ABL Lenders”),12 and Wells Fargo Bank, National Association, as administrative agent and collateral agent.
Subsequently, in connection with the 2019 restructuring (the “2019 Out-of-Court Restructuring”), the ABL Credit
Agreement was amended on February 28, 2019 (the “First ABL Amendment”) to increase the facility from $75 million
to $90 million. The ABL Credit Agreement was further amended on April 29, 2020 (the “Second ABL Amendment,”
and together with the ABL Credit Agreement and the First ABL Amendment, the “ABL Facility”) to extend the
deadline to deliver the required annual audit.
As of the Petition Date, the Debtors were jointly and severally liable to the ABL Agent and the ABL Lenders
for all obligations under the ABL Facility, and other obligations described therein and payable thereunder in the
aggregate principal amount of approximately $82.8 million. Pursuant to the ABL Facility arrangement, the ABL
Lenders extended credit in the form of revolving loans, with a $90 million line cap. The ABL Facility matures on
February 28, 2024 and requires quarterly interest payments. Pursuant to the Plan and Restructuring Support
Agreement, the ABL Facility will roll into, or be refinanced by, the ABL DIP Facility and upon the Effective Date,
the ABL Exit Facility.
(2) Term Credit Facility
In connection with the 2017 Merger, on May 10, 2017, the Debtors entered into that certain first lien credit
agreement (as amended, restated, or otherwise modified from time to time, the “Term Credit Agreement”) by and
among APC, CWD Acquisition, LLC, and CWD, as borrowers thereunder, certain of its subsidiaries, as guarantors
(collectively, the “Term Loan Parties”), the lenders from time to time party thereto (collectively, the “Term Loan
Lenders”). Subsequently, in connection with the 2019 Out-of-Court Restructuring, the Term Credit Agreement was
amended on November 2, 2019 (the “First Amendment,” and together with the Term Credit Agreement, the “Term
Credit Facility”). On May 13, 2020, Jefferies Finance LLC resigned as first lien agent and collateral agent and
12 Wells Fargo holds 100% percent of the outstanding commitments under the ABL Facility.
22
Wilmington Trust, National Association (the “Term Agent”) was appointed as successor administrative agent and
collateral agent.
Under the First Amendment, the following term loans were extended to the borrowers: (a) term A-1 new
money loans in the amount of $25 million; (b) a term A-2 loans in the amount of $155 million; (c) a term A-3 new
money loans in the amount of $25 million (collectively, with the term A-1 loans and the term A-2 loans, the “Term A
Loans,” and the holders of such, the “Term A Lenders”); and (d) a term B loans in the approximate amount of $142.9
million (the “Term B Loans,” and the holders of such, the “Term B Lenders”). Pursuant to the Term Credit Agreement
waterfall, the Term B Loans are subordinate to the Term A Loans. As of the Petition Date, the Debtors were jointly
and severally liable to the Term Agent and the Term Loan Lenders for all obligations under the Term Credit Facility,
and other obligations described therein and payable thereunder in the aggregate principal amount of approximately
$348 million. The Term A Loans and Term B Loans were set to mature on May 10, 2025 and May 10, 2024,
respectively.
4.3 The Debtors’ Board Members and Executives
As of the date hereof, set forth below are the names, positions, and biographical information of the current
Board of Managers of Debtor APC Automotive Technologies Intermediate Holdings, LLC as well as current key
executive officers for the Debtors. These individuals oversee the businesses and affairs of the Debtors.
(a) Executives
Patricia W. Warfield, Manager and Chief Executive Officer. Ms. Warfield has been the Chief Executive
Officer of APC since June 2019. She previously served as Senior Vice President of Business Development and
Strategy at Nitta Corporation of America. Prior to that, Ms. Warfield was the Senior Vice President and General
Manager of the Fluid Power and Automation, Control, and Energy Divisions of Kaman Corporation. Ms. Warfield
also served at Gates Corporation for over twenty-five years in global roles spanning Operations and Commercial
positions, including serving as the President of the North American Commercial and Power Transmission Divisions.
Ms. Warfield holds a B.B.A. from National University in international business and a degree from Cranfield
University’s School of Management. Ms. Warfield is actively engaged in numerous professional organizations and
continues to serve as a Board Advisor to the University of Colorado Denver Business School and adjunct professor at
University of Denver Daniels College of Business for MBA’s on the topic of global business.
Marc Weinsweig, Interim Chief Financial Officer. Mr. Weinsweig joined APC as Interim Chief Financial
Officer in April 2020. Prior to Mr. Weinsweig’s position as Interim Chief Financial Officer, he founded
WeinsweigAdvisors LLC, a boutique firm that specializes in business restructuring, performance improvement, due
diligence, and litigation support, and has been a principal since 2010. Before founding WeinsweigAdvisors, LLC,
Mr. Weinsweig spent eight years as a Senior Management Director at FTI Consulting and eight years as a Director at
PricewaterhouseCoopers. Mr. Weinsweig has over twenty-five years of experience in the restructuring industry and
has served in interim chief executive officer, chief operating officer, chief financial officer, receiver, trustee, and chief
restructuring positions to preserve and enhance the value of companies during periods of transition. Mr. Weinsweig
has an undergraduate degree from Pennsylvania State University and an MBA degree from Carnegie Mellon
University. Mr. Weinsweig is actively involved in numerous professional organizations and frequently serves as an
adjunct professor at the Georgetown University McDonough School of Business for MBA’s on the topic of corporate
restructuring.
James McCoy, Chief Operating Officer. Mr. McCoy has served as the Chief Operating Officer of APC since
May 2019. Prior to joining APC, Mr. McCoy served as Senior Vice President of Operations at Forterra, Inc. for three
years. Prior to Forterra, Inc., Mr. McCoy served as Vice President of Global Operation at Pentair and as Vice President
of Operations at Tarkett. Prior to Pentair and Tarkett, Mr. McCoy spent four years at Gates Power Transmission as
Vice President of Operation and four years at Danaher as Director of Operations. Mr. McCoy received a M.B.A. and
B.A. from the University of Arkansas.
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Barbara Hicks, Chief Human Resources Officer. Ms. Hicks joined APC in June 2018 with over twenty years
of human resources experience. Ms. Hicks previously served as Human Resources Director for Fluid Power and
Automation, Control, and Energy Divisions at Kaman Distribution. Prior to Kaman Distribution, Ms. Hicks served
as Human Resources Director at Sierra-Cedar and Vice President of Human Resources and Program Director at
Arcadis. Ms. Hicks also spent twelve years at Gates Corporation as the Human Resources Director of North America
Operation. She holds a B.A. in Organizational Development from Regis University.
(b) Board of Managers
Nick Romano. Mr. Romano is a partner at Harvest Partners LP. He has been with Harvest Partners LP since
2015. Prior to joining Harvest Partners LP, he was a principal at Audax Private Equity, where he focused on leveraged
buyout transactions. Mr. Romano also has served as a senior associate in the Private Equity Practice at the Parthenon
Group. Mr. Romano also currently serves on the Board of Directors of Neighborly. Mr. Romano received his A.B.
from Duke University.
Harold (Beau) Thomas. Mr. Thomas has been with Audax Group for over ten years and currently serves as
a Managing Director. Mr. Thomas holds an A.B. in economics from Princeton University.
Matthew Ray. Mr. Ray is the Founder and Managing Partner of Portage Point Partners LLC, where he has
served as Chief Restructuring Officer, Chief Executive Officer, Chairman, Lead Independent Director, Special
Restructuring Committee Chairman and Strategic Advisor leading wide-ranging transformations and restructurings
for both private and public companies. Prior to founding Portage Point, Mr. Ray co-founded Victory Park Capital
where he served as Senior Partner and Member of the Investment, Valuation and Management Committees. Mr. Ray
has served as a director on more than ten corporate boards in roles of Executive Chairman, Chairman, Lead
Independent Director, Lender and Investor Representative, Special Restructuring Committee Chairman and has
substantial committee experience. Mr. Ray currently serves on the Board of Directors of Ascent Aviation Services
and Dayco. He is also member of the Dean’s Advisory Council at Indiana University’s Kelley School of Business.
He holds a B.A. in finance from the Kelley School of Business at Indiana University.
Young Lee. Mr. Lee is a Managing Director at Audax Group, which he joined in 2000. Prior to Audax, Mr.
Lee was previously with Donaldson, Lufkin & Jenrette, Inc., where he worked with both its merchant banking and
leveraged finance groups. He also worked at JPMorgan Chase & Co. in its merger and acquisitions group. Mr. Lee
received an M.B.A. from Harvard Business School and an A.B., cum laude, from Harvard College.
Vange Proimos. Prior to the 2017 Merger, Mr. Proimos served as executive chairman of AP Exhaust. Mr.
Proimos entered the automotive industry in 1975 as an undercar repair shop franchisee. He founded AirTek, Inc. and
Aristo in 1993 and bought AP Exhaust in 1998. Mr. Proimos is a past member of SEMA and MECA and served on
their Board of Directors. He also served on the Board of Directors for both AASA and MEMA.
Mike DeFlorio. Mr. DeFlorio has been with Harvest Partners LP since 2003 and currently serves as
President. Prior to joining Harvest, Mr. DeFlorio was a partner at J.H. Whitney & Co. Prior to this, Mr. DeFlorio
also held positions at American Industrial Partners where he focused on acquiring middle market manufacturing
businesses and Lufkin & Jenrette in corporate finance. Mr. DeFlorio currently serves on the Boards of Lazer Spot,
MRI Software, OnPoint Group, Yellowstone Landscape, and Valet Living. He previously served on the Boards of
Aquilex, Bartlett Holdings, Continuum Energy, CSC, FCX Performance, Natural Products Group and U.S. Silica. Mr.
DeFlorio holds a B.S. in economics from the Wharton School of the University of Pennsylvania and an M.B.A. from
Harvard Business School.
James Mitchel. Mr. Mitchel has been with Harvest Partners LP since 2009 and currently serves as a partner.
Prior to joining Harvest, Mr. Mitchel was an analyst at Moelis & Company and an analyst at Jefferies & Company.
Mr. Mitchel currently serves on the Boards of Lazer Spot and Insight Global. Mr. Mitchel has a B.S. in economics
from the Wharton School of the University of Pennsylvania.
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ARTICLE V
EVENTS LEADING TO THE CHAPTER 11 CASES
As stated above, the Debtors intend to file the Chapter 11 Cases to implement a prepackaged chapter 11 plan
of reorganization that provides for a comprehensive balance sheet restructuring of their funded debt obligations with
the consent of the Consenting Lenders and the Sponsors. Given the events described in greater detail below and other
considerations, the Debtors have concluded in the exercise of their business judgment and as fiduciaries for all of the
Debtors’ stakeholders that the best path to maximize the value of their businesses is a strategic prepackaged chapter 11
filing to implement the Plan in accordance with the terms of the Restructuring Support Agreement.
5.1 Industry-Wide Headwinds and Consequent Capital and Liquidity Constraints
The Debtors’ difficulties are consistent with those faced industry-wide. In the recent years, unprecedented
volatility caused by soaring PGM prices, as well as increased steel prices, have challenged the aftermarket automotive
part suppliers.13 Between October 2019 and March 2020, palladium prices increased from $1,700 to a high of $2,700
per t-oz and rhodium prices increased from $5,000 to $12,560 per t-oz, reducing the Debtors’ cash flow by
approximately $5.6 million from October 2019 to March 2020.
As a result of the significant pricing challenges coupled with customer consolidation and China tariffs, the
Debtors’ revenue and EBITDA have materially declined in both core business segments, AP Exhaust and Centric.
Largely driven by increased PGM and steel prices, AP Exhaust’s gross margin decreased from 27.1 percent in 2017
to 19.8 percent and 15.5 percent in 2018 and 2019, respectively. From 2017 to 2019, AP Exhaust’s business segment
EBITDA declined by approximately $23.2 million. Centric’s gross margin declined from 23.8 percent in 2017 to 19.9
percent in 2019, primarily driven by customer consolidation and China tariffs. Over the same time period, Centric’s
business segment EBITDA declined by approximately $14 million. The Debtors’ liquidity position has also been
constrained, decreasing from $105 million in December 2017 to $50 million in December 2019.
5.2 Prepetition Restructuring Initiatives and Engagement with Creditors
(a) Cost Reduction Initiatives.
Beginning in 2019, in response to market pressures and declining revenue, the Debtors’ management put in
place a variety of cost-saving programs aimed at reducing general and administrative costs. Through these initiatives,
the Debtors achieved approximately $21.2 million of cost savings through fiscal year 2019. Management is in the
process of implementing additional cost reduction measures in 2020, which could result in approximately $9.6 million
in additional savings.
(b) 2019 Out-of-Court Restructuring.
In late September 2019, the Debtors began engaging with their first and second lien lenders and equity
sponsors to accomplish a deleveraging transaction and improve the Debtor’s liquidity position. In November 2019,
after extensive negotiations, the Debtors reached an agreement with their equity sponsors and their first lien and second
lien lenders pursuant to which the Debtors received $50 million in new money financing (the “New Money
Financing”), $10 million was applied to prepay certain first lien term loans at par (the “Term Loan Prepayment”) and
$40 million was funded to the balance sheet of the Debtors. Further, the Debtors were able to reduce their annual
interest burden due to the fact that certain of the existing term lenders agreed to accept interest paid-in-kind rather
than cash interest In addition, $125 million of second lien term loans were equitized in full.
13 Palladium and rhodium are two of the six traditional metal elements in the PGM. Both palladium and rhodium
are crucial in manufacturing catalytic converters–the primary exhaust part manufactured and sold by the AP
Exhaust division. The raw materials purchased to build a catalytic converter are the largest cost driver of the
manufacturing process (approximately eighty percent of total cost), and the two largest raw materials required to
build a catalytic converter are steel and PGM.
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The equity sponsors provided $25 million of the New Money Financing and certain of the existing first lien
lenders agreed to backstop $25 million of the New Money Financing (the “Backstop Lenders”) that was offered, on a
ratable basis after taking into account the Participation Fee (defined below) paid to the Backstop Lenders, to all
existing first lien lenders. In exchange for backstopping $25 million of the New Money Financing, the Backstop
Lenders received a fee paid in the form on additional participation in the $25 million (the “Participation Fee”).
The New Money Financing is a “first-out” financing, which entitles it to be paid in full prior to the payment
of the remaining first lien term loans. The option to participate in the New Money Financing was offered to all existing
term lenders and to the extent a term lender elected to participate in the New Money Financing, a ratable portion of
such lender’s existing term claims were converted into a new class of term loans receiving the same “first-out”
payment priority status as the New Money Financing thereby making it pari passu in right of payment with the New
Money Financing and senior in right of payment to the claims of any term lenders that elected not to participate in the
New Money Financing (the New Money Financing, together with any such class of term loans, the “Term A Loans”).
Term lenders that declined to fund their ratable piece of the New Money Financing but otherwise consented
to the consummation of the New Money Financing received their ratable piece of the Term Loan Prepayment but such
term lenders did not get the benefit of the improved payment priority status of the Term A Loans. 100% of the existing
term lenders supported the New Money Financing transaction either in the form of funding their ratable piece of the
New Money Financing or consenting to the transaction in exchange for receiving its ratable piece of the Term Loan
Prepayment.
The 2019 Out-of-Court Restructuring was consummated with the efforts of the Debtors’ management team
and advisors to focus on a value-maximizing path for all stakeholders. The Debtors and the Board believed the 2019
Out-of-Court Restructuring improved the likelihood of the Debtors’ long-term viability.
The Debtors’ equity holders’ composition as of May 6, 2020 is as follows:
Equity Holder Approximate Percentage of
Equity Held14
Applicable Affiliates of Harvest 54.5%
Applicable Affiliates of Audax 23.2%
Applicable Affiliates of Crescent 12.5%
VAP 6.9%
(c) 2020 Headwinds.
The Debtors’ revenues and profitability substantially depend on the price of PGM. Prices began to slowly
stabilize until the COVID-19 pandemic hit and caused even greater volatility. Due to mine shutdowns around the
globe, in attempt to slow the spread of COVID, the supply of PGM dropped significantly. As supplies decreased,
prices skyrocketed. Between October 2019 and March 2020, palladium prices increased from $1,700 to a high of
$2,700 per t-oz and rhodium prices increased from $5,000 to $12,560 per t-oz. Due to their crucial role in the
manufacturing of catalytic converters, a significant price increase in these commodities immediately impacts the
Debtors’ cash and revenues. As of the Petition Date, these prices remain volatile due to uncertainty around supply
and demand challenges, further straining the Debtors’ liquidity to a point where the Debtors’ balance sheet could no
longer support their current debt load. Consequently, the Debtors were forced to reevaluate their financial position
and decide on immediate next steps.
At the same time, in March 2020, drastic and unprecedented global events, including the macroeconomic and
unprecedented effects of the COVID-19 pandemic, further exacerbated the Debtors’ liquidity position. COVID-19
caused an unheard of planet shutdown and has had a significant impact on the Debtors’ business, both in the context
of consumer demand and production capacity. On a macro level, this pandemic has dampened global growth and
14 Ownership information reflects the Equity Holders’ percentage holdings on a non-diluted basis.
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ultimately led to an economic recession. Consequently, demand for automotive parts has declined, which has
negatively impacted the Debtors’ financial performance. In addition, government lockdowns and employee infections
have inhibited the Debtors’ ability to manufacture and distribute their products. This diminished manufacturing and
distribution capacity has also negatively affect the Debtors’ financial performance. For example, because Centric
sources over 95% of their products from China, the Debtors have experienced extended Chinese supplier shutdowns
and shipping delays, which has heavily impacted the Debtors’ supply chains. In addition, Centric’s remanufacturing
business is located in Mexico, which has also been subject to delays and shutdowns due to the COVID-19 pandemic.
As the pandemic continues to spread, the Debtors have also witnessed significant reduction in sales in the United
States due to business closings and reduced customer demand.
(d) DOJ Settlement.
On November 27, 2017, the Company received a summons (the “Subpoena”) from the Department of
Homeland Security (the “DHS”) requiring it to produce documents for a 5-year period (2012-2017) pertaining to the
Debtors’ tariff classification for their imported brake pads. Specifically, the Subpoena sought documents to assess
whether the Company properly classified approximately 3,000 imported brake pad entries and paid the required import
duties of 2.5% (the “Tariff Issue”). With the assistance of counsel, the Debtors cooperated with the DHS investigation
and timely responded to the Subpoena with productions of materials.
On March 13, 2020, the Debtors received a Civil Investigative Demand (“CID”) from the U.S. Department
of Justice (the “DOJ”) confirming the existence of a DOJ civil investigation and related whistleblower litigation under
the False Claims Act into the Tariff Issue (the “DOJ FCA Investigation”) and requiring the Debtors to produce relevant
information for the time period from 2007 to the present.
The Debtors fully cooperated with the DOJ FCA Investigation. Following weeks of negotiations with the
government to settle both the DOJ and DHS investigations, the parties reached a settlement for a total of $8 million
(the “DOJ Settlement”) with the following material termss:
Cash in the amount of $4 million on the Effective Date;
Cash in the amount of no greater than $300,000 for attorneys’ fees in connection with the Relator
Claims;
Cash in the amount of $2 million plus accrued interest to be paid on or before January 31, 2021;
Cash in the amount of $2 million plus accrued interest to be paid on or before December 31, 2021;
To the extent the reorganized Debtors effectuate a sale of their assets or equity before December 31,
2021, and Settlement Consideration is outstanding, DOJ shall be paid the outstanding balance of the
Settlement Consideration on the closing date of such sale;
For any outstanding amounts owed to the DOJ on or after the Effective Date, the DOJ shall have a
lien on the reorganized Debtors’ collateral, and such lien shall be junior to the ABL Exit Facility
and Term Exit Facility; and
Releases provided by the DOJ provided that the following shall not be released: (i) prior individual
officers, directors, or employees involved in the DOJ Litigation or any related issue; (ii) criminal
liability associated with the DOJ Litigation or any related issue; and (iii) personal claims asserted
by the whistleblower in which DOJ has no interest.
(e) Engagement with Lenders, the May 15 Interest Payment, Negotiations, and Forbearance
Agreement.
In March 2020, in light of the Debtors’ significant cash interest obligations and severe liquidity constraints,
the Debtors viewed a comprehensive debt restructuring as the necessary next step. In April 2020, the Debtors engaged
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with the Term Loan Lender Group, the ABL Lenders, and its equity sponsors to begin negotiations regarding a
potential restructuring transaction.
As part of these discussions, the Debtors sought to secure incremental financing to improve the Debtors’
liquidity and provide a longer runway to determine a value-maximizing path forward. The financing would have been
either super senior in priority to all existing term debt or pari passu with existing Term A Loans. However, the
proposed transaction required certain lender consents and the Term Loan Lender Group was unable to reach sufficient
consensus. Subsequently, the Debtors pivoted to a debt-for-equity exchange.
Meanwhile, given the liquidity crisis, the Debtors chose to withhold a $4.8 million interest payment under
the Term Credit Facility on May 12, 2020 for the purposes of maintaining liquidity to fund ongoing operations. After
negotiating the terms of a forbearance agreement (the “Term Loan Forbearance Agreement”) with the Term Loan
Lender Group, the Debtors and the applicable parties agreed to the terms of the Term Loan Forbearance Agreement
with respect to the Term Facility through May 25, 2020. Simultaneously, the Debtors and the ABL Lenders agreed
to a forbearance agreement with respect to certain events of defaults for the same period (“ABL Forbearance
Agreement”). The forbearance period was ultimately extended by agreement of all parties through June 1, 2020,
which enabled the Debtors and the Term Loan Lender Group and the Consenting Sponsors to negotiate a fully
consensual prepackaged restructuring as contemplated under the Restructuring Support Agreement.
5.3 The Restructuring Support Agreement, DIP Facilities, and Chapter 11 Cases
After several weeks of negotiations, on May 31, 2020, the Debtors reached an agreement and executed the
Restructuring Support Agreement with their key stakeholders, including the Consenting Sponsors and 74 percent of
their Term Loan Lenders under the Term Credit Agreement (the “Consenting Term Loan Lenders”).
The Restructuring Support Agreement contemplates a comprehensive reorganization achieved through the
Plan that will provide the Debtors with debtor-in-possession financing consisting of (i) access to the ABL Facility (the
“ABL DIP Facility”) and (ii) a debtor-in-possession term loan credit facility in aggregate principal amount of $50
million (the “Term DIP Facility” and, together with the ABL DIP Facility, the “DIP Facilities”). 15 On the Effective
Date, the Debtors will enter into a new $50 million senior secured term loan facility (the “Term Exit Facility”) and a
new revolving loan facility (the “ABL Exit Facility”), while paying all general unsecured claims in the ordinary course.
In order to consummate this exchange out-of-court, the consent of one hundred percent of the Term Loan Lender
Group was required. Unable to acquire unanimous consent, the Debtors and their advisors filed these pre-packaged
chapter 11 cases.
5.4 Importance of Deleveraging
As the Debtors’ financial performance has suffered, their capital structure has become increasingly
unsustainable, and debt-service obligations have consumed an increasing percentage of the Debtors’ free cash flow.
Given recent performance, business plan projections, and the lack of free cash flow needed to make critical
investments in their businesses, the Debtors have determined that deleveraging the capital structure is an absolute
necessity. Accordingly, the Debtors intend to commence the Chapter 11 Cases primarily to implement the balance
sheet restructuring contemplated under the Restructuring Support Agreement and to best position themselves to
execute on their new business plan and capitalize on their growth opportunities.
Significantly, the restructuring carries the support of each class of the Debtors’ secured creditors, as
approximately 74% of its Term Loan Lenders and the Sponsors are signatories to the Restructuring Support
Agreement, pursuant to which such parties have agreed to support a reorganization contemplated under the Plan in
accordance with and subject to the terms of the Restructuring Support Agreement. This level of consensus for a
comprehensive reorganization reflects the enormous efforts undertaken by the Debtors and the RSA Parties over recent
months.
15 As of the Petition Date, of the $50 million, $43.5 million has been committed by certain Term Loan Lenders and
the remaining $6.5 million shall be committed to by the date of the Plan Supplement.
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ARTICLE VI
OTHER KEY ASPECTS OF THE PLAN
6.1 Distributions
One of the key concepts under the Bankruptcy Code is that only claims and interests that are “allowed” may
receive distributions under a chapter 11 plan. This term is used throughout the Plan and the descriptions below. In
general, an Allowed Claim or Interest means that the Debtors agree, or if there is a dispute, the Bankruptcy Court
determines, that the Claim or Interest, and the amount thereof, is in fact a valid Claims against or Interest in the
Debtors.
6.2 Timing and Calculation of Amounts to Be Distributed
Unless otherwise provided in the Plan, on the Effective Date, the Debtors shall distribute the full amount of
the distributions that the Plan provides for the ABL Claims, Term A Claims, and Term B Claims, and all other Holders
of Allowed Claims or Interests shall receive on the Effective Date (or, if a Claim or Interest is not an Allowed Claim
or Interest on the Effective Date, on the date that such Claim becomes an Allowed Claim or Interest) or as soon as
reasonably practicable thereafter (or, in the case of Allowed General Unsecured Claims, in accordance with the terms
and conditions of the particular transaction giving rise to such Allowed General Unsecured Claims), the full amount
of the distributions that the Plan provides for such Allowed Claims or Interests, in each applicable Class, and in the
manner provided in the Plan. If any payment or act under the Plan is required to be made or performed on a date that
is not a Business Day, then the making of such payment or the performance of such act may be completed on the next
succeeding Business Day but shall be deemed to have been completed as of the required date. If and to the extent that
there are any Disputed Claims or Interests, distributions on account of any such Disputed Claims or Interests shall be
made pursuant to the provisions set forth in Article VII of the Plan.
(a) Delivery of Distributions
(1) Delivery of Distributions on Account of DIP Facility Claims
The ABL DIP Agent and Term DIP Agent shall be deemed to be the Holder of any and all ABL DIP Facility
Claims and Term DIP Facility Claims, respectively, for purposes of distributions to be made hereunder, and any
distributions on account of such DIP Facility Claims shall be made to the applicable DIP Agent. As soon as practicable
following compliance with the requirements set forth in Article VI of the Plan, the DIP Agents shall arrange to deliver
or direct the delivery of such distributions to or on behalf of the Holders of DIP Facility Claims in accordance with
the terms of the applicable DIP Facility, subject to any modifications to such distributions in accordance with the
terms of the Plan. Notwithstanding anything in the Plan to the contrary and without limiting the exculpation and
release provisions of the Plan, the DIP Agents shall not have any liability to any Entity with respect to distributions
made or directed to be made by the DIP Agents.
(2) Delivery of Distributions on Account of ABL Claims
The ABL Agent shall be deemed to be the Holder of all Allowed ABL Claims for purposes of distributions
to be made hereunder, and all distributions on account of such Allowed Claims shall be made to the ABL Agent. As
soon as practicable following compliance with the requirements set forth in Article VI of the Plan, if applicable, the
ABL Agent shall arrange to deliver or direct the delivery of such distributions to or on behalf of the Holders of Allowed
ABL Claims in accordance with the terms of the ABL Credit Agreement and the Plan. Notwithstanding anything in
the Plan to the contrary and without limiting the exculpation and release provisions of the Plan, the ABL Agent shall
not have any liability to any Entity with respect to distributions made or directed to be made by the ABL Agent.
(3) Delivery of Distributions on Account of Term Claims
The Term Agent shall be deemed to be the Holder of all Allowed Term Claims for purposes of distributions
to be made hereunder, and all distributions on account of such Allowed Claims shall be made to or at the direction of
the Term Agent. As soon as practicable following compliance with the requirements set forth in 6.1 of the Plan, the
29
Term Agent shall arrange to deliver or direct the delivery of such distributions to or on behalf of the Holders of
Allowed Term Claims, as applicable, in accordance with the terms of the Term Credit Agreement and the Plan.
Notwithstanding anything in the Plan to the contrary and without limiting the exculpation and release provisions of
the Plan, the Term Agent shall not have any liability to any Entity with respect to distributions made or directed to be
made by the Term Agent.
(4) Distribution by Distribution Agents
The Debtors and the Reorganized Debtors, as applicable, shall have the authority to enter into agreements
with one or more Distribution Agents to facilitate the distributions required hereunder. To the extent the Debtors and
the Reorganized Debtors, as applicable, determine to utilize a Distribution Agent to facilitate the distributions under
the Plan to Holders of Allowed Claims, any such Distribution Agent would first be required to: (a) affirm its obligation
to facilitate the prompt distribution of any documents; (b) affirm its obligation to facilitate the prompt distribution of
any recoveries or distributions required under the Plan; (c) waive any right or ability to setoff, deduct from, or assert
any lien or encumbrance against the distributions required under the Plan to be distributed by such Distribution Agent;
and (d) post a bond, obtain a surety, or provide some other form of security for the performance of its duties, and the
costs and expenses of procuring such forms of security shall be borne by the Debtors or the Reorganized Debtors, as
applicable.
The Debtors or the Reorganized Debtors, as applicable, shall pay to the Distribution Agents all reasonable
and documented fees and expenses of the Distribution Agents without the need for any approvals, authorizations,
actions, or consents. The Distribution Agents shall submit detailed invoices to the Debtors or the Reorganized
Debtors, as applicable, for all fees and expenses for which the Distribution Agent seeks reimbursement, and the
Debtors or the Reorganized Debtors, as applicable, shall pay those amounts that they, in their sole discretion, deem
reasonable, and shall object in writing to those fees and expenses, if any, that the Debtors or the Reorganized Debtors,
as applicable, deem to be unreasonable. In the event that the Debtors or the Reorganized Debtors, as applicable, object
to all or any portion of the amounts requested to be reimbursed in a Distribution Agent’s invoice, the Debtors or the
Reorganized Debtors, as applicable, and such Distribution Agent shall endeavor, in good faith, to reach mutual
agreement on the amount of the appropriate payment of such disputed fees and/or expenses. In the event that the
Debtors or the Reorganized Debtors, as applicable, and a Distribution Agent are unable to resolve any differences
regarding disputed fees or expenses, either party shall be authorized to move to have such dispute heard by the
Bankruptcy Court.
(5) Minimum Distributions
Notwithstanding anything in the Plan to the contrary, the Reorganized Debtors and the Distribution Agents
shall not be required to make distributions or payments of less than $100 (whether Cash or otherwise) and shall not
be required to make partial distributions or payments of fractions of dollars. Whenever any payment or distribution
of a fraction of a dollar or fractional share of New Equity under the Plan would otherwise be called for, the actual
payment or distribution will reflect a rounding of such fraction to the nearest whole dollar or share of New Equity (up
or down), with half dollars and half shares of New Equity or less being rounded down. The total number of authorized
shares of New Common Equity or of the New Warrants, as applicable, shall be adjusted as necessary to account for
the foregoing rounding.
(b) Undeliverable Distributions
If any distribution to a Holder of an Allowed Claim made in accordance herewith is returned to the
Reorganized Debtors (or their Distribution Agent) as undeliverable, no further distributions shall be made to such
Holder unless and until the Distribution Agent is notified in writing of such Holder’s then-current address or other
necessary information for delivery, at which time such undelivered distribution shall be made to such Holder within
ninety (90) days of receipt of such Holder’s then-current address or other necessary information; provided that any
such undelivered distribution shall be deemed unclaimed property under section 347(b) of the Bankruptcy Code at the
expiration of six (6) months from the later of (a) the Effective Date and (b) the date of the initial attempted distribution.
After such date, all unclaimed property or interests in property shall revert to the Reorganized Debtors automatically
and without need for a further order by the Bankruptcy Court (notwithstanding any applicable non-bankruptcy escheat,
30
abandoned, or unclaimed property laws to the contrary), and the right, title, and interest of any Holder to such property
or interest in property shall be discharged and forever barred.
(c) Manner of Payment
At the option of the Distribution Agent, any Cash payment to be made under the Plan may be made by check
or wire transfer or as otherwise required or provided in applicable agreements.
(d) No Postpetition or Default Interest on Claims
Unless otherwise specifically provided for in the Plan or the Confirmation Order and notwithstanding any
documents that govern the Debtors’ prepetition indebtedness to the contrary, (1) postpetition and/or default interest
shall not accrue or be paid on any Claims, and (2) no Holder of a Claim shall be entitled to (a) interest accruing on or
after the Petition Date on any such Claim or (b) interest at the contract default rate, each as applicable.
(e) Compliance with Tax Requirements/Allocations
In connection with the Plan, to the extent applicable, the Debtors, Reorganized Debtors, and other applicable
withholding and reporting agents shall comply with all tax withholding and reporting requirements imposed on them
by any Governmental Unit, and all distributions pursuant hereto shall be subject to such withholding and reporting
requirements. Notwithstanding any provision in the Plan to the contrary, the Debtors, Reorganized Debtors, and other
applicable withholding and reporting agents and the Distribution Agent shall be authorized to take all actions necessary
or appropriate to comply with such withholding and reporting requirements, including liquidating a portion of the
distribution to be made under the Plan to generate sufficient funds to pay applicable withholding taxes, withholding
distributions pending receipt of information necessary to facilitate such distributions, or establishing any other
mechanisms they believe are reasonable and appropriate. The Debtors, Reorganized Debtors, and other applicable
withholding agents reserve the right to allocate all distributions made under the Plan in compliance with all applicable
wage garnishments, alimony, child support and other spousal awards, liens, and encumbrances. For tax purposes,
distributions in full or partial satisfaction of Allowed Claims shall be allocated first to the principal amount of Allowed
Claims, with any excess allocated to unpaid interest that accrued on such Claims.
(f) Surrender of Cancelled Instruments or Securities
On the Effective Date, each Holder of a certificate or instrument evidencing a Claim or an Equity Interest
shall be deemed to have surrendered such certificate or instrument to the Distribution Agent. Such surrendered
certificate or instrument shall be cancelled solely with respect to the Debtors, and such cancellation shall not alter the
obligations or rights of any non-Debtor third parties vis-à-vis one another with respect to such certificate or instrument,
including with respect to any indenture or agreement that governs the rights of the Holder of a Claim or Equity Interest,
which shall continue in effect for purposes of allowing Holders to receive distributions under the Plan, charging liens,
priority of payment, and indemnification rights. Notwithstanding anything to the contrary in the Plan, this paragraph
shall not apply to certificates or instruments evidencing Claims that are Unimpaired under the Plan.
(g) Claims Paid or Payable by Third Parties
(1) Claims Payable by Insurance
No distributions under the Plan shall be made on account of an Allowed Claim that is payable pursuant to
one of the Debtors’ insurance policies until the Holder of such Allowed Claim has exhausted all remedies with respect
to such insurance policy.
(2) Applicability of Insurance Policies
Except as otherwise provided in the Plan, distributions to Holders of Allowed Claims shall be in accordance
with the provisions of any applicable insurance policy. Nothing contained in the Plan shall constitute or be deemed a
waiver of any Cause of Action that the Debtors or any Entity may hold against any other Entity, including insurers
31
under any policies of insurance, nor shall anything contained in the Plan constitute or be deemed a waiver by such
insurers of any defenses, including coverage defenses, held by such insurers.
6.3 Substantive Consolidation
The Plan is being proposed as a joint plan of reorganization of the Debtors for administrative purposes only
and constitutes a separate chapter 11 plan of reorganization for each Debtor. The Plan is not premised upon the
substantive consolidation of the Debtors with respect to the Classes of Claims or Interests set forth in the Plan;
provided that the Reorganized Debtors may consolidate Allowed Claims on a per Class basis for voting purposes.
6.4 General Settlement of Claims and Interests
As discussed further herein and as otherwise provided in the Plan, pursuant to section 1123 of the Bankruptcy
Code and Bankruptcy Rule 9019 and in consideration for the classification, distributions, releases, and other benefits
provided under the Plan, upon the Effective Date, the provisions of the Plan shall constitute a good faith compromise
and settlement of Claims, Interests, and controversies relating to the contractual, legal, and subordination rights that
Holders of Claims or Interests might have with respect to any Claim or Interest under the Plan. Distributions made to
Holders of Allowed Claims in any Class are intended to be final.
6.5 Restructuring Transactions
On the Effective Date, the Debtors, the Reorganized Debtors, or any other entities may take all actions as
may be necessary or appropriate to effect any transaction described in, approved by, contemplated by, or necessary to
effectuate the Plan (subject to the Restructuring Support Agreement), including: (a) the execution and delivery of
appropriate agreements or other documents of merger, consolidation, or reorganization containing terms that are
consistent with the terms of the Plan and that satisfy the requirements of applicable law; (b) the execution and delivery
of appropriate instruments of transfer, assignment, assumption, or delegation of any property, right, liability, duty, or
obligation on terms consistent with the terms of the Plan; (c) the filing of appropriate certificates of incorporation,
merger, or consolidation with the appropriate governmental authorities pursuant to applicable law; and (d) all other
actions that the Debtors or the Reorganized Debtors, as applicable, and the Requisite Consenting Term Loan Lenders
determine are necessary or appropriate.
The Confirmation Order shall and shall be deemed to, pursuant to both section 1123 and section 363 of the
Bankruptcy Code, authorize, among other things, all actions as may be necessary or appropriate to effect any
transaction described in, approved by, contemplated by, or necessary to effectuate the Plan.
(a) Exit Facilities
On the Effective Date, the Exit Facilities Documents and Alternate Term Exit Facility Documents (as
applicable) shall constitute legal, valid, binding, and authorized obligations of either the Reorganized Debtors or the
Debtors, as applicable, and following the consummation of the Restructuring Transactions, the Exit Facilities
Documents and Alternate Term Exit Facility Document (as applicable) shall constitute legal, valid, binding, and
authorized obligations of the applicable Reorganized Debtors, enforceable in accordance with their terms. The
financial accommodations to be extended pursuant to the Exit Facilities Documents and Alternate Term Exit Facility
Documents (as applicable) are being extended and shall be deemed to have been extended in good faith and for
legitimate business purposes and are reasonable and shall not be subject to avoidance, recharacterization, or
subordination (including equitable subordination) for any purposes whatsoever and shall not constitute preferential
transfers, fraudulent conveyances, or other voidable transfers under the Bankruptcy Code or any other applicable non-
bankruptcy law. On the Effective Date, all of the Liens and security interests to be granted in accordance with the
Exit Facilities Documents and Alternate Term Exit Facility Documents (as applicable) (a) shall be deemed to be
granted, (b) shall be legal, binding, and enforceable Liens on and security interests in the collateral granted thereunder
in accordance with the terms of the Exit Facilities Documents and Alternate Term Exit Facility Documents (as
applicable), (c) shall be deemed automatically perfected on the Effective Date (without any further action being
required by the Debtors, the Reorganized Debtors, as applicable, the applicable agent, or any of the applicable lenders),
having the priority set forth in the Exit Facilities Documents and Alternate Term Exit Facility Documents (as
applicable) and subject only to such Liens and security interests as may be permitted under the Exit Facilities
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Documents and Alternate Term Exit Facility Documents (as applicable), and (d) shall not be subject to avoidance,
recharacterization, or subordination (including equitable subordination) for any purposes whatsoever and shall not
constitute preferential transfers, fraudulent conveyances, or other voidable transfers under the Bankruptcy Code or
any applicable non-bankruptcy law. The Debtors, the Reorganized Debtors, as applicable, and the Entities granted
such Liens and security interests are authorized to make all filings and recordings and to obtain all governmental
approvals and consents necessary to establish and perfect such Liens and security interests under the provisions of the
applicable state, provincial, federal, or other law (whether domestic or foreign) that would be applicable in the absence
of the Plan and the Confirmation Order (it being understood that perfection shall occur automatically by virtue of the
entry of the Confirmation Order, and any such filings, recordings, approvals, and consents shall not be required) and
will thereafter cooperate to make all other filings and recordings that otherwise would be necessary under applicable
law to give notice of such Liens and security interests to third parties.
(1) ABL Exit Facility
The capital structure of the Reorganized Debtors upon the Effective Date shall consist of the ABL Exit
Facility, which shall be entered into on terms and conditions to be agreed with the ABL Exit Lenders in the ABL Exit
Facility Documents, subject to any applicable the consent rights under Section 3 of the Restructuring Support
Agreement.
(2) Term Exit Facility
The capital structure of the Reorganized Debtors upon the Effective Date shall consist of the Term Exit
Facility (subject to the Term DIP Lenders consent upon entry into an Alternate Term Exit Facility), which shall be
entered into on terms and conditions to be agreed with the Term Exit Lenders in the Term Exit Facility Documents,
subject to any applicable the consent rights under Section 3 of the Restructuring Support Agreement.
(b) New Equity
On the Effective Date, a Reorganized Debtor entity (as determined in accordance with the terms and
conditions of the Restructuring Support Agreement) shall issue or reserve for issuance all of the New Equity issued
or issuable in accordance with the terms herein, subject to dilution on the terms described herein and in the
Restructuring Support Agreement. The (a) issuance of the New Equity for distribution pursuant to the Plan, and (b) the
New Common Equity issuable upon exercise of the New Warrants issued under the Plan, are authorized without the
need for further corporate action, and all of the shares of New Common Equity issued or issuable pursuant to the Plan
shall be duly authorized, validly issued, fully paid, and non-assessable.
6.6 Corporate Existence
Except as otherwise provided in the Plan or the Restructuring Transactions Memorandum, each Debtor shall
continue to exist as of the Effective Date as a separate corporate Entity, limited liability company, partnership, or other
form, as the case may be, with all the powers of a corporation, limited liability company, partnership, or other form,
as the case may be, pursuant to the applicable law in the jurisdiction in which each applicable Debtor is incorporated
or formed and pursuant to the respective certificate of incorporation and bylaws (or other formation documents) in
effect prior to the Effective Date, except to the extent such certificate of incorporation and bylaws (or other formation
documents) are amended by the Plan or otherwise, and to the extent such documents are amended, such documents
are deemed to be pursuant to the Plan and require no further action or approval.
6.7 Vesting of Assets in the Reorganized Debtors
Except as otherwise provided in the Plan or any agreement, instrument, or other document incorporated
herein, on the Effective Date, all property in each Estate, all Causes of Action, and any property acquired by any of
the Debtors pursuant to the Plan shall vest in each respective Reorganized Debtor, free and clear of all Liens, Claims,
charges, or other encumbrances. On and after the Effective Date, except as otherwise provided in the Plan, each
Reorganized Debtor may operate its business and may use, acquire, or dispose of property and compromise or settle
any Claims, Interests, or Causes of Action without supervision or approval by the Bankruptcy Court and free of any
restrictions of the Bankruptcy Code or Bankruptcy Rules.
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6.8 Cancellation of Agreements, Securities Interests, and Other Interests
On the Effective Date, except to the extent otherwise provided in the Plan (including with respect to
Unimpaired Claims and all Executory Contracts and Unexpired Leases to be assumed pursuant to the Plan), all notes,
instruments, certificates, and other documents evidencing Claims or Interests, including the Secured Lender Claims,
Sponsor Claims, and the Interests in APC, shall be cancelled and the obligations of the Debtors or the Reorganized
Debtors and any non-Debtor Affiliates thereunder or in any way related thereto shall be discharged, the Agents
thereunder shall be discharged from all obligations thereunder, and all security interests and/or Liens granted under
the ABL Facility and the Term Credit Facility and/or any other Secured Claims shall be automatically released,
discharged, terminated, and of no further force and effect; provided that, notwithstanding Confirmation or the
occurrence of the Effective Date, any credit document or agreement that governs the rights of any Holder of a Claim
or Interest shall continue in effect solely for purposes of (1) allowing Holders of Allowed Claims or Interests to receive
distributions under the Plan and (2) allowing and preserving the rights of the Agents or representative of Holders of
Claims or Interests, as applicable, to make distributions on account of Allowed Claims or Interests, as provided herein;
and (3) preserve any rights of the Term Agent and any respective predecessor thereof under the Term Credit
Agreement (and related documents), including as against any money or property distributable to Term Loan Lenders,
and any priority in respect of payment of fees, expenses or indemnification and the right to exercise any charging lien.
Except as provided in the Plan, on the Effective Date, the DIP Agents and Term Agent, and their respective agents,
successors and assigns shall be automatically and fully discharged of all their duties and obligations associated with
the DIP Facility Documents and the Term Credit Agreement (and related documents), as applicable. The commitments
and obligations (if any) of the Term Loan Lenders and/or the DIP Lender to extend any further or further or future
credit or financial accommodations to any of the Debtors, any of their respective subsidiaries or any of their respective
successors or assigns under the DIP Facilities Documents or the Term Credit Agreement (and related documents), as
applicable, shall fully terminate and be of no further force or effect on the Effective Date. To the extent that any
provision of the DIP Credit Agreements or DIP Order are of a type that survives repayment of the subject indebtedness,
such provisions shall remain in effect notwithstanding satisfaction of the DIP Facilities Claims.
6.9 Sources for Plan Distributions and Transfers of Funds Among Debtors
The Debtors shall fund distributions under the Plan with cash on hand, the proceeds of the Exit Facilities and
Alternate Term Exit Facility (as applicable) and by the issuance of the New Equity. The Reorganized Debtors will be
entitled to transfer funds between and among themselves as they determine to be necessary or appropriate to enable
the Reorganized Debtors to satisfy their obligations under the Plan. Except as set forth herein, any changes in
intercompany account balances resulting from such transfers will be accounted for and settled in accordance with the
Debtors’ historical intercompany account settlement practices and will not violate the terms of the Plan.
From and after the Effective Date, the Reorganized Debtors, subject to any applicable limitations set forth in
any post-Effective Date agreement (including the Exit Facilities Documents, Alternate Term Exit Facility Documents
(as applicable), the New Common Equity Documents, the New Warrants Documents, and any other documents,
agreements, or instruments relating to the New Equity), shall have the right and authority without further order of the
Bankruptcy Court to raise additional capital and obtain additional financing as the boards of directors of the applicable
Reorganized Debtors deem appropriate.
6.10 New Equity Documents
On the Effective Date, the parent company of the Reorganized Debtors and the Holders of the New Equity
shall enter into the New Equity Documents in substantially the form included in the Plan Supplement. The New
Equity Documents shall be deemed to be valid, binding, and enforceable in accordance with their terms, and each
holder of the New Equity shall be bound thereby, in each case without the need for execution by any party thereto
other than the parent company of the Reorganized Debtors.
6.11 Exemption from Registration Requirements
The offering, issuance, and distribution of any Securities, including the New Equity, pursuant to the Plan,
shall be exempt from, among other things, the registration requirements of section 5 of the Securities Act pursuant to
section 1145 of the Bankruptcy Code. Except as otherwise provided in the Plan or the governing and organizational
documents, any and all New Common Equity and New Warrants issued under the Plan will be freely tradable under
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the Securities Act by the recipients thereof, subject to: (1) the provisions of section 1145(b)(1) of the Bankruptcy
Code relating to the definition of an underwriter in section 2(a)(11) of the Securities Act, and compliance with any
applicable state or foreign securities laws, if any, and any rules and regulations of the SEC, if any, applicable at the
time of any future transfer of such Securities or instruments, including any such restrictions in the New Equity
Documents; (2) the restrictions, if any, on the transferability of such Securities and instruments; and (3) any other
applicable regulatory approval.
The offering, issuance and distribution of New Common Equity and the New Warrants pursuant to the Plan
shall be exempt from, among other things, the registration requirements of section 5 of the Securities Act pursuant to
section 4(a)(2) of the Securities Act and/or another exemption from registration under the Securities Act. Any and all
such Securities shall be deemed “restricted securities” that may not be offered, sold, exchanged, assigned, or otherwise
transferred unless they are registered under the Securities Act or an exemption from registration under the Securities
Act is available and in compliance with any applicable state or foreign securities laws.
6.12 Organizational Documents
Subject to Article V.D of the Plan, the Reorganized Debtors shall enter into such agreements and amend their
corporate governance documents to the extent necessary to implement the terms and provisions of the Plan. Pursuant
to section 1123(a)(6) of the Bankruptcy Code, the organizational documents of each of the Reorganized Debtors will
prohibit the issuance of non-voting equity securities. After the Effective Date, the Reorganized Debtors may amend
and restate their respective organizational documents, and the Reorganized Debtors may file their respective
certificates or articles of incorporation, bylaws, or such other applicable formation documents, and other constituent
documents as permitted by the laws of the respective states, provinces, or countries of incorporation and the
organization documents of each of the Reorganized Debtors.
6.13 Exemption from Certain Transfer Taxes and Recording Fees
To the fullest extent permitted by section 1146(a) of the Bankruptcy Code, any transfer from a Debtor to a
Reorganized Debtor or to any Entity pursuant to, in contemplation of, or in connection with the Plan or pursuant to:
(1) the issuance, distribution, transfer, or exchange of any debt, securities, or other interest in the Debtors or the
Reorganized Debtors; (2) the creation, modification, consolidation, or recording of any mortgage, deed of trust or
other security interest, or the securing of additional indebtedness by such or other means; (3) the making, assignment,
or recording of any lease or sublease; or (4) the making, delivery, or recording of any deed or other instrument of
transfer under, in furtherance of, or in connection with, the Plan, including any deeds, bills of sale, assignments, or
other instrument of transfer executed in connection with any transaction arising out of, contemplated by, or in any
way related to the Plan, shall not be subject to any document recording tax, stamp tax, conveyance fee, intangibles, or
similar tax, mortgage tax, real estate transfer tax, mortgage recording tax, Uniform Commercial Code filing or
recording fee, regulatory filing or recording fee, or other similar tax or governmental assessment, and the appropriate
state or local governmental officials or agents shall forego the collection of any such tax or governmental assessment
and to accept for filing and recordation any of the foregoing instruments or other documents without the payment of
any such tax or governmental assessment.
6.14 Directors and Officers of the Reorganized Debtors
(a) The New Board
The New Board will initially consist of nine (9) members, including the then-serving chief executive officer
and eight (8) other members who will be designated in accordance with the terms of the Restructuring Support
Agreement and the New Equity Documents. The identity of the New Board members will be disclosed in the Plan
Supplement or at or prior to the Confirmation Hearing to the extent not known. The existing directors of each of the
Debtors’ subsidiaries shall remain in their current capacities as directors of the applicable Reorganized Debtor, subject
to the Restructuring Support Agreement, until replaced or removed in accordance with the organizational documents
of the applicable Reorganized Debtors.
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(b) Senior Management
On the Effective Date, the officers of the Reorganized Debtors shall be substantially the same and their
employment shall be subject to the ordinary rights and powers of the New Board to remove or replace them in
accordance with the Reorganized Debtors’ organizational documents and any applicable employment agreements that
are assumed pursuant to the Plan.
6.15 Directors and Officers Insurance Policies
Notwithstanding anything in the Plan to the contrary, each of the D&O Liability Insurance Policies in
existence as of the Effective Date (including a six-year “tail policy” in favor of the D&O Indemnified Persons as
defined below) shall be reinstated and, to the extent applicable, the Reorganized Debtors shall be deemed to have
assumed all of the Debtors’ D&O Liability Insurance Policies pursuant to section 365(a) of the Bankruptcy Code
effective as of the Effective Date. Entry of the Confirmation Order will constitute the Bankruptcy Court’s approval
of the Reorganized Debtors’ foregoing assumption of the unexpired D&O Liability Insurance Policies.
Notwithstanding anything to the contrary contained in the Plan, Confirmation of the Plan shall not discharge, impair,
or otherwise modify any indemnity obligations assumed by the foregoing assumption of the D&O Liability Insurance
Policies, and each such indemnity obligation will be deemed and treated as an Executory Contract that has been
assumed by the Debtors under the Plan as to which no Proof of Claim need be filed.
In addition, after the Effective Date, none of the Reorganized Debtors shall terminate or otherwise reduce the
coverage under any D&O Liability Insurance Policies (including a six-year “tail policy” purchased prior to the Petition
Date) in effect on the Petition Date, with respect to conduct occurring prior thereto, and all directors and officers of
the Debtors who served in such capacity on or at any time prior to the Effective Date shall be entitled to the full
benefits of any such policy for the full term of such policy regardless of whether such directors and officers remain in
such positions after the Effective Date.
6.16 Other Insurance Policies
On the Effective Date, each of the Debtors’ insurance policies in existence as of the Effective Date shall be
Reinstated and continued in accordance with their terms and, to the extent applicable, shall be deemed assumed by
the applicable Reorganized Debtor pursuant to section 365 of the Bankruptcy Code and Article V of the Plan. Nothing
in the Plan shall affect, impair, or prejudice the rights of the insurance carriers, the insureds, or the Reorganized
Debtors under the insurance policies in any manner, and such insurance carriers, the insureds, and Reorganized
Debtors shall retain all rights and defenses under such insurance policies. The insurance policies shall apply to and
be enforceable by and against the insureds and the Reorganized Debtors in the same manner and according to the same
terms and practices applicable to the Debtors, as existed prior to the Effective Date.
6.17 Preservation of Rights of Action
In accordance with section 1123(b) of the Bankruptcy Code but subject to the releases set forth in Article IX
of the Plan and Section 6.23 of this Disclosure Statement, all Causes of Action that a Debtor may hold against any
Entity shall vest in the applicable Reorganized Debtor on the Effective Date. Thereafter, the Reorganized Debtors
shall have the exclusive right, authority, and discretion to determine, initiate, file, prosecute, enforce, abandon, settle,
compromise, release, withdraw, or litigate to judgment any such Causes of Action, whether arising before or after the
Petition Date, and to decline to do any of the foregoing without the consent or approval of any third party or further
notice to or action, order, or approval of the Bankruptcy Court. Subject to the releases set forth in Article IX of the
Plan and Section 6.23 of this Disclosure Statement, no Entity may rely on the absence of a specific reference in
the Plan, the Plan Supplement, or the Disclosure Statement to any specific Cause of Action as any indication
that the Debtors or Reorganized Debtors, as applicable, will not pursue any and all available Causes of Action.
The Debtors or Reorganized Debtors, as applicable, expressly reserve all rights to prosecute any and all Causes
of Action against any Entity, except as otherwise expressly provided in the Plan, and, therefore, no preclusion
doctrine, including the doctrines of res judicata, collateral estoppel, issue preclusion, claim preclusion, estoppel
(judicial, equitable, or otherwise) or laches, shall apply to any Cause of Action upon, after, or as a consequence of the
Confirmation or the occurrence of the Effective Date.
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6.18 Corporate Action
Subject to the Restructuring Support Agreement, upon the Effective Date, all actions contemplated by the
Plan and the Restructuring Transactions Memorandum shall be deemed authorized, approved, and, to the extent taken
prior to the Effective Date, ratified without any requirement for further action by Holders of Claims or Interests,
directors, managers, or officers of the Debtors, the Reorganized Debtors, or any other Entity, including: (1)
assumption of Executory Contracts and Unexpired Leases; (2) selection of the directors, managers, and officers for
the Reorganized Debtors; (3) the execution of and entry into the Exit Facilities Documents, Alternate Term Exit
Facility Documents (as applicable), the New Common Equity Documents, and the New Warrants Documents; (4) the
issuance and distribution of the New Equity as provided herein; and (5) all other acts or actions contemplated or
reasonably necessary or appropriate to promptly consummate the transactions contemplated by the Plan (whether to
occur before, on, or after the Effective Date). All matters provided for in the Plan involving the company structure of
the Debtors and any company action required by the Debtors in connection therewith shall be deemed to have occurred
on and shall be in effect as of the Effective Date without any requirement of further action by the security holders,
directors, managers, authorized persons, or officers of the Debtors.
On or prior to the Effective Date, the appropriate officers, directors, managers, or authorized persons of the
Debtors (including any president, vice-president, chief executive officer, treasurer, general counsel, or chief financial
officer thereof) shall be authorized and directed to issue, execute, and deliver the agreements, documents, securities,
certificates of incorporation, certificates of formation, bylaws, operating agreements, and instruments contemplated
by the Plan (or necessary or desirable to effect the transactions contemplated by the Plan) in the name of and on behalf
of the Debtors or the Reorganized Debtors, as applicable, including (1) the Exit Facilities Documents, Alternate Term
Exit Facility Documents (as applicable), the New Common Equity Documents, and the New Warrants Documents
and (2) any and all other agreements, documents, securities, and instruments relating to the foregoing. The
authorizations and approvals contemplated by the Plan shall be effective notwithstanding any requirements under non-
bankruptcy law.
6.19 Effectuating Documents; Further Transactions
Prior to, on, and after the Effective Date, the Debtors and Reorganized Debtors and the directors, managers,
officers, authorized persons, and members of the boards of directors or managers and directors thereof, are authorized
to and may issue, execute, deliver, file, or record such contracts, securities, instruments, releases, and other agreements
or documents and take such actions as may be necessary or appropriate to effectuate, implement, and further evidence
the terms and provisions of the Plan, the Exit Facilities Documents, Alternate Term Exit Facility Documents (as
applicable), the New Common Equity Documents, the New Warrants Documents, and any securities issued pursuant
to the Plan in the name of and on behalf of the Reorganized Debtors, without the need for any approvals,
authorizations, actions, or consents except for those expressly required pursuant to the Plan or the Restructuring
Support Agreement.
6.20 Management Incentive Plan
Effective as of the Effective Date, shares will be reserved for continuing employees of the Debtors and
members of the New Board, providing for up to 10% of the New Common Equity issued and outstanding on the
Effective Date (on a fully diluted basis and fully distributed basis). The New Board will determine the amount and
form or forms of incentive interests to be granted upon the Effective Date and the terms and conditions of such awards.
6.21 Workers’ Compensation Programs
As of the Effective Date, except as set forth in the Plan Supplement, the Debtors and the Reorganized Debtors
shall continue to honor their obligations under (1) all applicable workers’ compensation laws in states in which the
Reorganized Debtors operate and (2) the Debtors’ written contracts, agreements, agreements of indemnity,
self-insured workers’ compensation bonds, policies, programs, and plans, in each case, for workers’ compensation
and workers’ compensation insurance. Any and all Proofs of Claims on account of workers’ compensation shall be
deemed withdrawn automatically and without any further notice to or action, order, or approval of the Bankruptcy
Court; provided that nothing in the Plan shall limit, diminish, or otherwise alter the Debtors’ or Reorganized Debtors’
defenses, Causes of Action, or other rights under applicable non-bankruptcy law with respect to any such contracts,
37
agreements, policies, programs, and plans; provided, further, that nothing herein shall be deemed to impose any
obligations on the Debtors in addition to what is provided for under applicable state law.
6.22 Treatment of Executory Contracts and Unexpired Leases
(a) Assumption of Executory Contracts and Unexpired Leases
On the Effective Date, except as otherwise provided in the Plan or in any contract, instrument, release,
indenture, or other agreement or document entered into in connection with the Plan, all Executory Contracts and
Unexpired Leases shall be deemed assumed without the need for any further notice to or action, order, or approval of
the Bankruptcy Court as of the Effective Date under section 365 of the Bankruptcy Code; provided that the
Restructuring Support Agreement shall be deemed assumed as of the Confirmation Date; provided, further, that, upon
the occurrence of the Effective Date, the Restructuring Support Agreement will terminate in accordance with its terms.
Entry of the Confirmation Order shall constitute a Bankruptcy Court Final Order approving the assumption
or assumption and assignment, as applicable, of such Executory Contracts or Unexpired Leases as set forth in the Plan,
pursuant to sections 365(a) and 1123 of the Bankruptcy Code. Unless otherwise indicated, the assumption or
assumption and assignment of Executory Contracts and Unexpired Leases pursuant to the Plan are effective as of the
Effective Date. Each Executory Contract or Unexpired Lease assumed pursuant to the Plan or a Bankruptcy Court
Final Order but not assigned to a third party before the Effective Date shall re-vest in and be fully enforceable by the
applicable contracting Reorganized Debtor in accordance with its terms, except as such terms may have been modified
in the Plan or any Final Order of the Bankruptcy Court authorizing and providing for its assumption under applicable
federal law.
To the maximum extent permitted by law, to the extent that any provision in any Executory Contract or
Unexpired Lease assumed or assumed and assigned pursuant to the Plan restricts or prevents, purports to restrict or
prevent, or is breached or deemed breached by the assumption or assumption and assignment of such Executory
Contract or Unexpired Lease (including any “change of control” provision), such provision shall be deemed modified
such that the transactions contemplated by the Plan shall not entitle the non-Debtor party thereto to terminate such
Executory Contract or Unexpired Lease or to exercise any other default-related rights with respect thereto.
(b) Cure of Defaults for Assumed Executory Contracts and Unexpired Leases
Any monetary defaults under each Executory Contract and Unexpired Lease to be assumed pursuant to the
Plan shall be satisfied, pursuant to section 365(b)(1) of the Bankruptcy Code, by payment of the default amount in
Cash on the Effective Date or in the ordinary course of business, subject to the limitation described below, or on such
other terms as the parties to such Executory Contracts or Unexpired Leases may otherwise agree. In the event of a
dispute regarding (1) the amount of any payments to cure such a default, (2) the ability of the Reorganized Debtors or
any assignee to provide “adequate assurance of future performance” (within the meaning of section 365 of the
Bankruptcy Code) under the Executory Contract or Unexpired Lease to be assumed, or (3) any other matter pertaining
to assumption, the Bankruptcy Court shall hear such dispute prior to the assumption becoming effective. The cure
payments required by section 365(b)(1) of the Bankruptcy Code shall be made following the entry of a Final Order or
orders resolving the dispute and approving the assumption and shall not prevent or delay implementation of the Plan
or the occurrence of the Effective Date.
Assumption of any Executory Contract or Unexpired Lease pursuant to the Plan or otherwise and payment
of the applicable cure amount shall result in the full release and satisfaction of any Claims or defaults, whether
monetary or nonmonetary, including defaults of provisions restricting the change in control or ownership interest
composition or other bankruptcy-related defaults, arising under any assumed Executory Contract or Unexpired Lease
at any time prior to the effective date of assumption. Any proof of claim filed with respect to an Executory Contract
or Unexpired Lease that is assumed shall be deemed disallowed and expunged, without further notice to or action,
order or approval of the Bankruptcy Court.
(c) Contracts and Leases Entered into After the Petition Date
Contracts and leases entered into after the Petition Date by any Debtor, including any Executory Contracts
and Unexpired Leases assumed by such Debtor, will be performed by the Debtor or Reorganized Debtor liable
38
thereunder in the ordinary course of its business. Accordingly, such contracts and leases (including any assumed
Executory Contracts and Unexpired Leases) will survive and remain unaffected by entry of the Confirmation Order.
(d) Indemnification and Reimbursement Obligations
On and as of the Effective Date, the Indemnification Provisions will be assumed and irrevocable and will
survive the effectiveness of the Plan, and the Reorganized Debtors’ governance documents will provide for the
indemnification, defense, reimbursement, exculpation, and/or limitation of liability of and advancement of fees and
expenses to the Debtors’ and the Reorganized Debtors’ current and former directors, officers, direct or indirect
equityholders, employees, and agents (each, a “D&O Indemnified Person”) to the fullest extent permitted by law and
at least to the same extent as the certificate of incorporation, bylaws, or similar organizational documents of each of
the respective Debtors as of the Petition Date, against any claims or Causes of Action whether direct or derivative,
liquidated or unliquidated, fixed, or contingent, disputed or undisputed, matured or unmatured, known or unknown,
foreseen or unforeseen, asserted or unasserted. None of the Reorganized Debtors shall amend and/or restate its
certificate of incorporation, bylaws, or similar organizational document before or after the Effective Date to terminate
or materially adversely affect (1) any of the Reorganized Debtors’ obligations referred to in the immediately preceding
sentence or (2) the rights of such D&O Indemnified Persons referred to in the immediately preceding sentence.
Notwithstanding anything to the contrary herein, the Reorganized Debtors shall not be required to indemnify the D&O
Indemnified Persons for any claims or Causes of Action for which indemnification is barred under applicable law, the
Debtors’ organizational documents, or applicable agreements governing the Debtors’ indemnification obligations.
For the avoidance of doubt, each Debtor shall continue after the Effective Date, to the fullest extent permitted
by applicable law, to (i) indemnify and hold harmless (and release from any liability to the Debtors), the D&O
Indemnified Persons against all D&O Expenses (as defined below), losses, claims, damages, judgments or amounts
paid in settlement (collectively, “D&O Costs”) in respect of any threatened, pending or completed claim, action, suit
or proceeding, whether criminal, civil, administrative or investigative, based on or arising out or relating to the fact
that such D&O Indemnified Person is or was a director or officer of any Debtor arising out of acts or omissions
occurring on or prior to the Effective Date (a “D&O Indemnifiable Claim”) and (ii) advance to such D&O Indemnified
Persons all D&O Expenses incurred in connection with any D&O Indemnifiable Claim (including in circumstances
where the D&O Indemnifying Party has assumed the defense of such claim) promptly after receipt of reasonably
detailed statements therefor; provided, however, that the D&O Indemnified Person to whom D&O Expenses are to be
advanced provides an undertaking to repay such advances if it is ultimately determined that such D&O Indemnified
Person is not entitled to indemnification. Any D&O Indemnifiable Claims will continue until such D&O Indemnifiable
Claim is disposed of or all judgments, orders, decrees or other rulings in connection with such D&O Indemnifiable
Claim are fully satisfied. For the purposes of this paragraph, “D&O Expenses” will include attorneys' fees and all
other costs, charges and expenses paid or incurred in connection with investigating, defending, being a witness in or
participating in (including on appeal), or preparing to defend, to be a witness in or participate in any D&O
Indemnifiable Claim, but will exclude losses, claims, damages, judgments and amounts paid in settlement (which
items are included in the definition of D&O Costs).
On and as of the Effective Date, any of the Debtors’ indemnification obligations with respect to any contract
or agreement that is the subject of or related to any litigation against the Debtors or Reorganized Debtors (including
any indemnification obligation under the Equity Purchase Agreement dated March 28, 2017 by and among AP Exhaust
Holdings, LLC, Harvest APC Holdings LLC and AG Grey Goose Holdings, LLC), as applicable, shall be assumed by
the Reorganized Debtors and otherwise remain unaffected by the Chapter 11 Cases; provided that the Reorganized
Debtors shall not indemnify the Debtors’ directors for any claims or causes of action for which indemnification is
barred under applicable law, the Debtors’ organizational documents, or applicable agreements governing the Debtors’
indemnification obligations.
6.23 Employee Compensation and Benefits
(a) Compensation and Benefits Programs
Subject to the provisions of the Plan and the Restructuring Support Agreement, all Compensation and
Benefits Programs shall be treated as Executory Contracts under the Plan and deemed assumed on the Effective Date
pursuant to the provisions of sections 365 and 1123 of the Bankruptcy Code; provided that with respect to
management, any provision relating to equity-based awards, including any termination-related provisions with respect
39
to equity based awards, will be replaced and superseded in its entirety by the Management Incentive Plan. The
Reorganized Debtors shall honor, in the ordinary course of business, Claims of employees employed as of the Effective
Date for accrued vacation time arising prior to the Petition Date and not otherwise paid pursuant to a Bankruptcy
Court order.
Any assumption of Compensation and Benefits Programs pursuant to the terms herein shall not be deemed
to trigger any applicable change of control, immediate vesting, termination, or similar provisions therein. No
counterparty shall have rights under a Compensation and Benefits Program assumed pursuant to the Plan other than
those applicable immediately prior to such assumption.
6.24 Release, Injunction, and Related Provisions
(a) Discharge of Claims and Termination of Interests; Compromise and Settlement of Claims,
Equity Interests, and Controversies
Pursuant to and to the fullest extent permitted by section 1141(d) of the Bankruptcy Code and except as
otherwise specifically provided in the Plan, the distributions, rights, and treatments that are provided in the Plan shall
be in full and final satisfaction, settlement, release, and discharge, effective as of the Effective Date, of all Interests
and Claims of any nature whatsoever, including any interest accrued on Claims from and after the Petition Date,
whether known or unknown, against, liabilities of, Liens on, obligations of, rights against the Debtors, the Reorganized
Debtors or any of their assets or properties, regardless of whether any property shall have been distributed or retained
pursuant to the Plan on account of such Claims or Interests, including demands, liabilities, and Causes of Action that
arose before the Effective Date, any contingent or non-contingent liability on account of representations or warranties
issued on or before the Effective Date, and all debts of the kind specified in sections 502(g), 502(h), or 502(i) of the
Bankruptcy Code, in each case whether or not: (1) a Proof of Claim or Interest is filed or deemed filed pursuant to
section 501 of the Bankruptcy Code; (2) a Claim or Interest is Allowed; or (3) the Holder of such Claim or Interest
has accepted the Plan. Except as otherwise provided herein, any default by the Debtors or their Affiliates with respect
to any Claim or Interest that existed immediately prior to or on account of the filing of the Chapter 11 Cases shall be
deemed cured on the Effective Date. The Confirmation Order shall be a judicial determination of the discharge of all
Claims and Interests subject to the Effective Date occurring, except as otherwise expressly provided in the Plan. For
the avoidance of doubt, nothing in Article IX.A of the Plan shall affect the rights of Holders of Claims and Interests
to seek to enforce the Plan, including the distributions to which Holders of Allowed Claims and Interests are entitled
under the Plan.
Pursuant to Bankruptcy Rule 9019 and in consideration for the distributions and other benefits provided
pursuant to the Plan, the provisions of the Plan shall constitute a good faith compromise of all Claims, Interests, and
controversies relating to the contractual, legal, and subordination rights that a Holder of a Claim or Interest may have
with respect to any Allowed Claim or Interest or any distribution to be made on account of such Allowed Claim or
Interest. The entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of the compromise or
settlement of all such Claims, Interests, and controversies as well as a finding by the Bankruptcy Court that such
compromise or settlement is in the best interests of the Debtors, their Estates, and Holders of Claims and Interests and
is fair, equitable, and reasonable. In accordance with the provisions of the Plan, pursuant to Bankruptcy Rule 9019,
without any further notice to or action, order, or approval of the Bankruptcy Court, after the Effective Date, the
Reorganized Debtors may compromise and settle Claims against the Debtors and their Estates and Causes of Action
against other Entities.
(b) Releases by the Debtors
NOTWITHSTANDING ANYTHING CONTAINED IN THE PLAN TO THE CONTRARY,
PURSUANT TO SECTION 1123(B) OF THE BANKRUPTCY CODE, FOR GOOD AND VALUABLE
CONSIDERATION, ON AND AFTER THE EFFECTIVE DATE, EACH RELEASED PARTY IS DEEMED
RELEASED AND DISCHARGED BY THE DEBTORS, THE REORGANIZED DEBTORS, AND THEIR
ESTATES FROM ANY AND ALL CLAIMS AND CAUSES OF ACTION, WHETHER KNOWN OR
UNKNOWN, INCLUDING ANY DERIVATIVE CLAIMS, ASSERTED ON BEHALF OF THE DEBTORS,
THAT THE DEBTORS, THE REORGANIZED DEBTORS, OR THEIR ESTATES WOULD HAVE BEEN
LEGALLY ENTITLED TO ASSERT IN THEIR OWN RIGHT (WHETHER INDIVIDUALLY OR
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COLLECTIVELY) OR ON BEHALF OF THE HOLDER OF ANY CLAIM AGAINST, OR INTEREST IN,
A DEBTOR OR OTHER ENTITY, BASED ON OR RELATING TO, OR IN ANY MANNER ARISING
FROM, IN WHOLE OR IN PART, THE DEBTORS (INCLUDING THE MANAGEMENT, OWNERSHIP,
OR OPERATION THEREOF, OR OTHERWISE), ANY SECURITIES ISSUED BY THE DEBTORS AND
THE OWNERSHIP THEREOF, THE DEBTORS’ IN- OR OUT-OF-COURT RESTRUCTURING
EFFORTS, ANY AVOIDANCE ACTIONS, INTERCOMPANY TRANSACTIONS, THE CHAPTER 11
CASES, THE FORMULATION, PREPARATION, DISSEMINATION, NEGOTIATION, OR FILING OF
THE RESTRUCTURING SUPPORT AGREEMENT, THE DISCLOSURE STATEMENT, THE DIP
FACILITIES, THE DIP FACILITIES DOCUMENTS, THE EXIT FACILITIES, THE EXIT FACILITIES
DOCUMENTS, THE ALTERNATE TERM EXIT FACILITY AND THE ALTERNATE TERM EXIT
FACILITY DOCUMENTS (AS APPLICABLE), THE PLAN, THE PLAN SUPPLEMENT, OR ANY
RESTRUCTURING TRANSACTION, CONTRACT, INSTRUMENT, RELEASE, OR OTHER
AGREEMENT OR DOCUMENT CREATED OR ENTERED INTO IN CONNECTION WITH THE
RESTRUCTURING SUPPORT AGREEMENT, THE DISCLOSURE STATEMENT, THE DIP FACILITIES,
THE EXIT FACILITIES, THE ALTERNATE TERM EXIT FACILITY (AS APPLICABLE), THE PLAN,
THE PLAN SUPPLEMENT, THE CHAPTER 11 CASES, THE FILING OF THE CHAPTER 11 CASES, THE
PURSUIT OF CONFIRMATION, THE PURSUIT OF THE DIP FACILITIES, THE PURSUIT OF THE
EXIT FACILITIES AND THE ALTERNATE TERM EXIT FACILITY (AS APPLICABLE), THE PURSUIT
OF CONSUMMATION, THE ADMINISTRATION AND IMPLEMENTATION OF THE PLAN,
INCLUDING THE ISSUANCE OR DISTRIBUTION OF SECURITIES PURSUANT TO THE PLAN, OR
THE DISTRIBUTION OF PROPERTY UNDER THE PLAN OR ANY OTHER RELATED AGREEMENT,
OR UPON ANY OTHER RELATED ACT OR OMISSION, TRANSACTION, AGREEMENT, EVENT, OR
OTHER OCCURRENCE TAKING PLACE ON OR BEFORE THE EFFECTIVE DATE.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE FOREGOING, THE RELEASES SET
FORTH ABOVE DO NOT RELEASE (A) ANY POST-EFFECTIVE DATE OBLIGATIONS OF ANY
PARTY OR ENTITY UNDER THE PLAN, ANY RESTRUCTURING TRANSACTION, OR ANY
DOCUMENT, INSTRUMENT, OR AGREEMENT (INCLUDING THOSE SET FORTH IN THE PLAN
SUPPLEMENT) EXECUTED TO IMPLEMENT THE PLAN OR (B) ANY INDIVIDUAL FROM ANY
CLAIM OR CAUSES OF ACTION RELATED TO AN ACT OR OMISSION THAT IS DETERMINED IN A
FINAL ORDER BY A COURT OF COMPETENT JURISDICTION TO HAVE CONSTITUTED ACTUAL
INTENTIONAL FRAUD, WILLFUL MISCONDUCT, OR GROSS NEGLIGENCE OF SUCH RELEASED
PARTY.
ENTRY OF THE CONFIRMATION ORDER SHALL CONSTITUTE THE BANKRUPTCY
COURT’S APPROVAL, PURSUANT TO BANKRUPTCY RULE 9019, OF THE DEBTOR RELEASE,
WHICH INCLUDES BY REFERENCE EACH OF THE RELATED PROVISIONS AND DEFINITIONS
CONTAINED IN THE PLAN, AND FURTHER, SHALL CONSTITUTE THE BANKRUPTCY COURT’S
FINDING THAT THE DEBTOR RELEASE IS: (A) IN EXCHANGE FOR THE GOOD AND VALUABLE
CONSIDERATION PROVIDED BY THE RELEASED PARTIES, INCLUDING, WITHOUT LIMITATION,
THE RELEASED PARTIES’ CONTRIBUTIONS TO FACILITATING THE RESTRUCTURING AND
IMPLEMENTING THE PLAN; (B) A GOOD FAITH SETTLEMENT AND COMPROMISE OF THE
CLAIMS RELEASED BY THE DEBTOR RELEASE; (C) IN THE BEST INTERESTS OF THE DEBTORS
AND ALL HOLDERS OF CLAIMS AND INTERESTS; (D) FAIR, EQUITABLE, AND REASONABLE; (E)
GIVEN AND MADE AFTER DUE NOTICE AND OPPORTUNITY FOR HEARING; AND (F) A BAR TO
ANY OF THE DEBTORS, THE REORGANIZED DEBTORS, OR THE DEBTORS’ ESTATES ASSERTING
ANY CLAIM OR CAUSE OF ACTION RELEASED PURSUANT TO THE DEBTOR RELEASE.
(c) Releases by the Releasing Parties
NOTWITHSTANDING ANYTHING CONTAINED IN THE PLAN TO THE CONTRARY, AS OF
THE EFFECTIVE DATE, EACH RELEASING PARTY IS DEEMED TO HAVE RELEASED AND
DISCHARGED EACH DEBTOR, REORGANIZED DEBTOR, AND RELEASED PARTY FROM ANY AND
ALL CLAIMS AND CAUSES OF ACTION, WHETHER KNOWN OR UNKNOWN, INCLUDING ANY
DERIVATIVE CLAIMS, ASSERTED ON BEHALF OF THE DEBTORS, THAT SUCH ENTITY WOULD
HAVE BEEN LEGALLY ENTITLED TO ASSERT (WHETHER INDIVIDUALLY OR COLLECTIVELY),
BASED ON OR RELATING TO, OR IN ANY MANNER ARISING FROM, IN WHOLE OR IN PART, THE
41
DEBTORS (INCLUDING THE MANAGEMENT, OWNERSHIP OR OPERATION THEREOF, OR
OTHERWISE), ANY SECURITIES ISSUED BY THE DEBTORS AND THE OWNERSHIP THEREOF, THE
DEBTORS’ IN- OR OUT-OF-COURT RESTRUCTURING EFFORTS, ANY AVOIDANCE ACTIONS,
INTERCOMPANY TRANSACTIONS, THE CHAPTER 11 CASES, THE FORMULATION,
PREPARATION, DISSEMINATION, NEGOTIATION, OR FILING OF THE RESTRUCTURING
SUPPORT AGREEMENT, THE DISCLOSURE STATEMENT, THE DIP FACILITIES, THE DIP
FACILITIES DOCUMENTS, THE EXIT FACILITIES, THE EXIT FACILITIES DOCUMENTS, THE
ALTERNATE TERM EXIT FACILITY AND THE ALTERNATE TERM EXIT FACILITY DOCUMENTS
(AS APPLICABLE), THE PLAN, THE PLAN SUPPLEMENT, OR ANY RESTRUCTURING
TRANSACTION, CONTRACT, INSTRUMENT, RELEASE, OR OTHER AGREEMENT OR DOCUMENT
CREATED OR ENTERED INTO IN CONNECTION WITH THE RESTRUCTURING SUPPORT
AGREEMENT, THE DISCLOSURE STATEMENT, THE DIP FACILITIES, THE EXIT FACILITIES, THE
ALTERNATE TERM EXIT FACILITY (AS APPLICABLE), THE PLAN, THE PLAN SUPPLEMENT, THE
CHAPTER 11 CASES, THE FILING OF THE CHAPTER 11 CASES, THE PURSUIT OF CONFIRMATION,
, THE PURSUIT OF THE DIP FACILITIES, THE PURSUIT OF THE EXIT FACILITIES AND THE
ALTERNATE TERM EXIT FACILITY (AS APPLICABLE), THE PURSUIT OF CONSUMMATION, THE
ADMINISTRATION AND IMPLEMENTATION OF THE PLAN, INCLUDING THE ISSUANCE OR
DISTRIBUTION OF SECURITIES PURSUANT TO THE PLAN, OR THE DISTRIBUTION OF PROPERTY
UNDER THE PLAN OR ANY OTHER RELATED AGREEMENT, OR UPON ANY OTHER RELATED
ACT OR OMISSION, TRANSACTION, AGREEMENT, EVENT, OR OTHER OCCURRENCE TAKING
PLACE ON OR BEFORE THE EFFECTIVE DATE. NOTWITHSTANDING ANYTHING TO THE
CONTRARY IN THE FOREGOING, THE RELEASES SET FORTH ABOVE DO NOT RELEASE (A) ANY
POST-EFFECTIVE DATE OBLIGATIONS OF ANY PARTY OR ENTITY UNDER THE PLAN, ANY
RESTRUCTURING TRANSACTION, OR ANY DOCUMENT, INSTRUMENT, OR AGREEMENT
(INCLUDING THOSE SET FORTH IN THE PLAN SUPPLEMENT) EXECUTED TO IMPLEMENT THE
PLAN OR (B) ANY INDIVIDUAL FROM ANY CLAIM OR CAUSES OF ACTION RELATED TO AN ACT
OR OMISSION THAT IS DETERMINED IN A FINAL ORDER BY A COURT OF COMPETENT
JURISDICTION TO HAVE CONSTITUTED ACTUAL INTENTIONAL FRAUD, WILLFUL
MISCONDUCT, OR GROSS NEGLIGENCE OF SUCH RELEASED PARTY.
ENTRY OF THE CONFIRMATION ORDER SHALL CONSTITUTE THE BANKRUPTCY
COURT’S APPROVAL, PURSUANT TO BANKRUPTCY RULE 9019, OF THE THIRD-PARTY RELEASE,
WHICH INCLUDES BY REFERENCE EACH OF THE RELATED PROVISIONS AND DEFINITIONS
CONTAINED HEREIN, AND, FURTHER, SHALL CONSTITUTE THE BANKRUPTCY COURT’S
FINDING THAT THE THIRD-PARTY RELEASE IS: (A) CONSENSUAL; (B) ESSENTIAL TO THE
CONFIRMATION OF THE PLAN; (C) GIVEN IN EXCHANGE FOR THE GOOD AND VALUABLE
CONSIDERATION PROVIDED BY THE RELEASED PARTIES; (D) A GOOD FAITH SETTLEMENT
AND COMPROMISE OF THE CLAIMS RELEASED BY THE THIRD-PARTY RELEASE; (E) IN THE
BEST INTERESTS OF THE DEBTORS AND THEIR ESTATES; (F) FAIR, EQUITABLE, AND
REASONABLE; (G) GIVEN AND MADE AFTER DUE NOTICE AND OPPORTUNITY FOR HEARING;
AND (H) A BAR TO ANY OF THE RELEASING PARTIES ASSERTING ANY CLAIM OR CAUSE OF
ACTION RELEASED PURSUANT TO THE THIRD-PARTY RELEASE.
(d) Exculpation
EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THE PLAN, NO EXCULPATED
PARTY SHALL HAVE OR INCUR LIABILITY FOR AND EACH EXCULPATED PARTY IS RELEASED
AND EXCULPATED FROM ANY CAUSE OF ACTION FOR ANY CLAIM RELATED TO ANY ACT OR
OMISSION IN CONNECTION WITH, RELATING TO, OR ARISING OUT OF, THE CHAPTER 11 CASES,
THE FORMULATION, PREPARATION, DISSEMINATION, NEGOTIATION, OR FILING OF THE
RESTRUCTURING SUPPORT AGREEMENT AND RELATED PREPETITION TRANSACTIONS, THE
DIP FACILITIES, THE DIP FACILITIES DOCUMENTS,, THE EXIT FACILITIES, THE EXIT
FACILITIES DOCUMENTS, THE ALTERNATE TERM EXIT FACILITY AND THE ALTERNATE TERM
EXIT FACILITY DOCUMENTS (AS APPLICABLE), THE DISCLOSURE STATEMENT, THE PLAN, THE
PLAN SUPPLEMENT, OR ANY RESTRUCTURING TRANSACTION, CONTRACT, INSTRUMENT,
42
RELEASE, OR OTHER AGREEMENT OR DOCUMENT CREATED OR ENTERED INTO IN
CONNECTION WITH THE RESTRUCTURING SUPPORT AGREEMENT, THE DIP FACILITIES, THE
EXIT FACILITIES, THE ALTERNATE TERM EXIT FACILITY (AS APPLICABLE), THE DISCLOSURE
STATEMENT, THE PLAN, THE PLAN SUPPLEMENT, THE CHAPTER 11 CASES, THE FILING OF THE
CHAPTER 11 CASES, THE PURSUIT OF CONFIRMATION, THE PURSUIT OF THE DIP FACILITIES,
THE PURSUIT OF THE EXIT FACILITIES AND THE ALTERNATE TERM EXIT FACILITY (AS
APPLICABLE), THE PURSUIT OF CONSUMMATION, THE ADMINISTRATION AND
IMPLEMENTATION OF THE PLAN, INCLUDING THE ISSUANCE OR DISTRIBUTION OF
SECURITIES PURSUANT TO THE PLAN, OR THE DISTRIBUTION OF PROPERTY UNDER THE PLAN
OR ANY OTHER RELATED AGREEMENT, OR UPON ANY OTHER RELATED ACT OR OMISSION,
TRANSACTION, AGREEMENT, EVENT, OR OTHER OCCURRENCE TAKING PLACE ON OR
BEFORE THE EFFECTIVE DATE, EXCEPT FOR CLAIMS RELATED TO ANY ACT OR OMISSION
THAT IS DETERMINED IN A FINAL ORDER BY A COURT OF COMPETENT JURISDICTION TO
HAVE CONSTITUTED ACTUAL INTENTIONAL FRAUD, WILLFUL MISCONDUCT, OR GROSS
NEGLIGENCE OF SUCH PERSON, BUT IN ALL RESPECTS SUCH ENTITIES SHALL BE ENTITLED
TO REASONABLY RELY UPON THE ADVICE OF COUNSEL WITH RESPECT TO THEIR DUTIES AND
RESPONSIBILITIES PURSUANT TO THE PLAN.
THE EXCULPATED PARTIES HAVE, AND UPON CONFIRMATION OF THE PLAN SHALL BE
DEEMED TO HAVE, PARTICIPATED IN GOOD FAITH AND IN COMPLIANCE WITH THE
APPLICABLE LAWS WITH REGARD TO THE SOLICITATION OF VOTES AND DISTRIBUTION OF
CONSIDERATION PURSUANT TO THE PLAN AND, THEREFORE, ARE NOT, AND ON ACCOUNT OF
SUCH DISTRIBUTIONS SHALL NOT BE, LIABLE AT ANY TIME FOR THE VIOLATION OF ANY
APPLICABLE LAW, RULE, OR REGULATION GOVERNING THE SOLICITATION OF
ACCEPTANCES OR REJECTIONS OF THE PLAN OR SUCH DISTRIBUTIONS MADE PURSUANT TO
THE PLAN.
(e) Injunction
EXCEPT AS OTHERWISE PROVIDED IN THE PLAN OR THE CONFIRMATION ORDER, ALL
ENTITIES WHO HAVE HELD, HOLD, OR MAY HOLD CLAIMS, INTERESTS, CAUSES OF ACTION,
OR LIABILITIES THAT: (A) ARE SUBJECT TO COMPROMISE AND SETTLEMENT PURSUANT TO
THE TERMS OF THE PLAN; (B) HAVE BEEN RELEASED PURSUANT TO ARTICLE IX.B OF THIS
PLAN; (C) HAVE BEEN RELEASED PURSUANT TO ARTICLE IX.C OF THIS PLAN, (D) ARE SUBJECT
TO EXCULPATION PURSUANT TO ARTICLE IX.D OF THIS PLAN (BUT ONLY TO THE EXTENT OF
THE EXCULPATION PROVIDED IN ARTICLE IX.D OF THIS PLAN), OR (E) ARE OTHERWISE
DISCHARGED, SATISFIED, STAYED, RELEASED, OR TERMINATED PURSUANT TO THE TERMS OF
THE PLAN, ARE PERMANENTLY ENJOINED AND PRECLUDED, FROM AND AFTER THE
EFFECTIVE DATE, FROM COMMENCING OR CONTINUING IN ANY MANNER, ANY ACTION OR
OTHER PROCEEDING, INCLUDING ON ACCOUNT OF ANY CLAIMS, INTERESTS, CAUSES OF
ACTION, OR LIABILITIES THAT HAVE BEEN COMPROMISED OR SETTLED AGAINST THE
DEBTORS, THE REORGANIZED DEBTORS, OR ANY ENTITY SO RELEASED OR EXCULPATED (OR
THE PROPERTY OR ESTATE OF ANY ENTITY, DIRECTLY OR INDIRECTLY, SO RELEASED OR
EXCULPATED) ON ACCOUNT OF, OR IN CONNECTION WITH OR WITH RESPECT TO, ANY
DISCHARGED, RELEASED, SETTLED, COMPROMISED, OR EXCULPATED CLAIMS, INTERESTS,
CAUSES OF ACTION, OR LIABILITIES.
6.25 Setoffs and Recoupment
Except as otherwise provided herein, each Reorganized Debtor pursuant to the Bankruptcy Code (including
section 553 of the Bankruptcy Code), applicable non-bankruptcy law, or as may be agreed to by the Holder of an
Allowed Claim may setoff or recoup against any Allowed Claim and the distributions to be made pursuant to the Plan
on account of such Allowed Claim, any Claims, rights, and Causes of Action of any nature that the applicable Debtor
or Reorganized Debtor may hold against the Holder of such Allowed Claim, to the extent such Claims, rights, or
Causes of Action have not been otherwise compromised or settled on or prior to the Effective Date (whether pursuant
to the Plan, a Final Order or otherwise); provided that neither the failure to effect such a setoff or recoupment nor the
43
allowance of any Claim pursuant to the Plan shall constitute a waiver or release by such Reorganized Debtor of any
such Claims, rights, and Causes of Action.
6.26 Release of Liens
Except as otherwise provided in the Plan or in any contract, instrument, release, or other agreement or
document created pursuant to the Plan, on the Effective Date and concurrently with the applicable distributions made
pursuant to the Plan, all mortgages, deeds of trust, Liens, pledges, or other security interests against any property of
the Estates shall be fully released and discharged, and all of the right, title, and interest of any Holder of such
mortgages, deeds of trust, Liens, pledges, or other security interests shall revert to the applicable Reorganized Debtor
and its successors and assigns.
To the extent that any Holder of a Secured Claim has had such Claim satisfied or discharged in full pursuant
to the Plan or any agent for such Holder has filed or recorded publicly any Liens and/or security interests to secure
such Holder’s Secured Claim, as soon as practicable on or after the Effective Date, such Holder (or the agent for such
Holder) shall take any and all steps requested by the Debtors, the Reorganized Debtors, or any administrative agent
under the Exit Facilities Documents and Alternate Term Exit Facility Documents (as applicable) that are necessary or
desirable to record or effectuate the cancellation and/or extinguishment of such Liens and/or security interests,
including the making of any applicable filings or recordings, and the Reorganized Debtors shall be entitled to make
any such filings or recordings on such Holder’s behalf.
6.27 Modification of Plan
Subject to the limitations contained in the Plan, the Debtors reserve the right, in accordance with the
Bankruptcy Code, the Bankruptcy Rules, and the Restructuring Support Agreement (1) to amend or modify the Plan
prior to the entry of the Confirmation Order, including amendments or modifications to satisfy section 1129(b) of the
Bankruptcy Code, and (2) after the entry of the Confirmation Order, the Debtors or the Reorganized Debtors, as the
case may be, may, upon order of the Bankruptcy Court, amend or modify the Plan, in accordance with section 1127(b)
of the Bankruptcy Code and the Restructuring Support Agreement, or remedy any defect or omission or reconcile any
inconsistency in the Plan in such manner as may be necessary to carry out the purpose and intent of the Plan.
6.28 Effect of Confirmation on Modifications
Entry of the Confirmation Order shall mean that all modifications or amendments to the Plan since the
solicitation thereof are approved pursuant to section 1127(a) of the Bankruptcy Code and do not require additional
disclosure or re-solicitation under Bankruptcy Rule 3019.
6.29 Revocation of Plan
Subject to the conditions to the Effective Date, the Debtors reserve the right, subject to the terms of the
Restructuring Support Agreement, to revoke or withdraw the Plan prior to the entry of the Confirmation Order and to
file subsequent plans of reorganization. If the Debtors revoke or withdraw the Plan with the prior reasonable consent
of the Required Parties, if entry of the Confirmation Order or the Effective Date does not occur, or if the Restructuring
Support Agreement terminates in accordance with its terms, then (1) the Plan shall be null and void in all respects,
(2) any settlement or compromise embodied in the Plan, assumption of executory contracts or leases effected by the
Plan, and any document or agreement executed pursuant hereto shall be deemed null and void, and (3) nothing
contained in the Plan shall (a) constitute a waiver or release of any claims by or against or any Equity Interests in such
Debtor or any other Entity, (b) prejudice in any manner the rights of the Debtors or any other Entity, or (c) constitute
an admission of any sort by the Debtors or any other Entity.
6.30 Reservation of Rights
The Plan shall have no force or effect unless and until the Bankruptcy Court enters the Confirmation Order.
None of the filing of the Plan, any statement or provision contained in the Plan, or the taking of any action by any
Debtor with respect to the Plan, the Disclosure Statement, or the Plan Supplement shall be or shall be deemed to be
44
an admission or waiver of any rights of any Debtor with respect to the Holders of Claims or Interests prior to the
Effective Date.
6.31 Conditions Precedent to the Effective Date
The following are conditions precedent to the Effective Date that must be satisfied or waived:
1. The Bankruptcy Court shall have approved the Disclosure Statement as containing adequate
information with respect to the Plan within the meaning of section 1125 of the Bankruptcy Code.
2. The Confirmation Order shall have been entered and shall be in full force and effect and such
Confirmation Order shall be a Final Order.
3. The Debtors shall have obtained any authorization, consents, regulatory approvals, rulings, or
documents that are necessary to implement and effectuate the Plan and each of the other transactions
contemplated by the Restructuring Transactions.
4. All actions, documents, certificates, and agreements necessary to implement the Plan shall have
been effected or executed and delivered to the required parties and, to the extent required, filed with
the applicable Governmental Units in accordance with applicable laws.
5. All conditions precedent to the effectiveness of the Exit Facilities Documentation and Alternate
Term Exit Facility Documents (as applicable) shall have been satisfied contemporaneously
therewith or duly waived.
6. All conditions precedent to the issuance of the New Common Equity, including the New Warrants,
shall have been satisfied or duly waived.
7. All documents and agreements necessary to implement the DOJ Settlement, which shall be in form
and substance reasonable acceptable to the Requisite Consenting Term Loan Lenders, shall have
been executed and tendered for delivery.
8. The DOJ Settlement shall be approved by the Bankruptcy Court and any required non-Bankruptcy
Court and subsequently finalized by the Debtors and the DOJ.
9. All documents and agreements necessary to implement the Plan shall have been executed and
tendered for delivery. All conditions precedent to the effectiveness of such documents and
agreements shall have been satisfied or waived pursuant to the terms thereof (or will be satisfied
and waived substantially concurrently with the occurrence of the Effective Date).
10. The final version of the Plan Supplement and all of the schedules, documents, and exhibits contained
therein and all other schedules, documents, supplements, and exhibits to the Plan shall be consistent
with the Restructuring Support Agreement and Article I.E of the Plan.
11. All of the other Definitive Documents not expressly set forth in Article VIII of the Plan shall have
been executed in accordance with section 2 of the Restructuring Support Agreement and Article I.E
of the Plan.
12. The Restructuring Support Agreement shall not have been terminated in accordance with its terms
and shall be in full force and effect.
13. The Professional Fee Escrow Account shall have been established and funded.
14. All Accrued Professional Compensation Claims and expenses of Retained Professionals required to
be approved by the Bankruptcy Court shall have been paid in full or amounts sufficient to pay such
45
fees and expenses after the Effective Date shall have been placed in the Professional Fee Escrow
Account pending approval by the Bankruptcy Court.
15. All invoiced reasonable and documented fees and out-of-pocket expenses payable pursuant to the
Restructuring Support Agreement, Article II.A.2 of the Plan, or an order of the Bankruptcy Court
shall have been paid in full.
16. The Debtors and Reorganized Debtors, as applicable, shall have implemented the restructuring in a
manner consistent in all respects with the Plan and the Restructuring Support Agreement.
6.32 Waiver of Conditions Precedent
The Debtors or the Reorganized Debtors, as applicable, subject to the Restructuring Support Agreement, may
waive any of the conditions to the Effective Date set forth above at any time, without any notice to parties in interest
and without any further notice to or action, order, or approval of the Bankruptcy Court and without any formal action
other than a proceeding to confirm the Plan.
6.33 Effect of Non-Occurrence of Conditions to the Effective Date
If the Effective Date does not occur on or before the termination of the Restructuring Support Agreement,
then (1) the Plan shall be null and void in all respects, (2) any settlement or compromise embodied in the Plan,
assumption of Executory Contracts or Unexpired Leases effected under the Plan, and document or agreement executed
pursuant to the Plan shall be deemed null and void, and (3) nothing contained in the Plan, the Confirmation Order, or
the Disclosure Statement shall (a) constitute a waiver or release of any Claims, Interests, or Causes of Action, (b)
prejudice in any manner the rights of the Debtors or any other Entity, or (c) constitute an admission, acknowledgement,
offer, or undertaking of any sort by the Debtors or any other Entity.
ARTICLE VII
CERTAIN FACTORS TO BE CONSIDERED
PRIOR TO VOTING TO ACCEPT OR REJECT THE PLAN, ALL HOLDERS OF CLAIMS THAT
ARE IMPAIRED SHOULD READ AND CAREFULLY CONSIDER THE FACTORS SET FORTH HEREIN,
AS WELL AS ALL OTHER INFORMATION SET FORTH OR OTHERWISE REFERENCED IN THIS
DISCLOSURE STATEMENT.
ALTHOUGH THESE RISK FACTORS ARE MANY, THESE FACTORS SHOULD NOT BE
REGARDED AS CONSTITUTING THE ONLY RISKS PRESENT IN CONNECTION WITH THE
DEBTORS’ BUSINESSES OR THE PLAN AND ITS IMPLEMENTATION.
7.1 General
The following provides a summary of various important considerations and risk factors associated with the
Plan; however, it is not exhaustive. In considering whether to vote to accept or reject the Plan, Holders of Claims
should read and carefully consider the factors set forth below, as well as all other information set forth or otherwise
incorporated by reference in this Disclosure Statement.
7.2 Risks Relating to the Plan and Other Bankruptcy Law Considerations
(a) A Holder of a Claim or Interest May Object to, and the Bankruptcy Court May Disagree
with, the Debtors’ Classification of Claims and Interests
Section 1122 of the Bankruptcy Code provides that a plan may place a claim or an equity interest in a
particular class only if such claim or equity interest is substantially similar to the other claims or equity interests in
such class. The Debtors believe that the classification of Claims and Interests under the Plan complies with the
requirements set forth in the Bankruptcy Code because the Debtors created eight (8) Classes of Claims and Interests,
46
each encompassing Claims or Interests, as applicable, that are substantially similar to the other Claims and Interests
in each such Class. However, a Holder of a Claim or Interest could challenge the Debtors’ classification. In such an
event, the cost of the Chapter 11 Cases and the time needed to confirm the Plan may increase, and there can be no
assurance that the Bankruptcy Court will agree with the Debtors’ classification. If the Bankruptcy Court concludes
that the classifications of Claims and Interests under the Plan do not comply with the requirements of the Bankruptcy
Code, the Debtors may need to modify the Plan. Such modification could require re-solicitation of votes on the Plan.
The Plan may not be confirmed if the Bankruptcy Court determines that the Debtors’ classification of Claims and
Interests is not appropriate.
(b) The Debtors May Not Be Able to Satisfy the Voting Requirements for Confirmation of the
Plan
If votes are received in number and amount sufficient to enable the Bankruptcy Court to confirm the Plan,
the Debtors may seek, as promptly as practicable thereafter, Confirmation. If the Plan does not receive the required
support from Class 4, the Debtors may elect to amend the Plan, seek to sell their assets pursuant to section 363 of the
Bankruptcy Code, or proceed with liquidation. There can be no assurance that the terms of any such alternative chapter
11 plan or sale pursuant to section 363 of the Bankruptcy Code would be similar or as favorable to the Holders of
Allowed Claims as the Restructuring Transactions contemplated by the Plan.
(c) The Bankruptcy Court May Not Confirm the Plan or May Require the Debtors to Re-Solicit
Votes with Respect to the Plan
The Debtors cannot assure you that the Plan will be confirmed by the Bankruptcy Court. Section 1129 of
the Bankruptcy Code, which sets forth the requirements for confirmation of a plan of reorganization, requires, among
other things, a finding by the Bankruptcy Court that the plan of reorganization is “feasible,” that all claims and interests
have been classified in compliance with the provisions of section 1122 of the Bankruptcy Code, and that, under the
plan of reorganization, each holder of a claim or interest within each impaired class either accepts the plan of
reorganization or receives or retains cash or property of a value, as of the date the plan of reorganization becomes
effective, that is not less than the value such holder would receive or retain if the debtor were liquidated under chapter
7 of the Bankruptcy Code. With respect to impaired classes of claims or interests that do not accept the plan, section
1129(b) requires that the plan be fair and equitable (including, without limitation the “absolute priority rule”) and not
discriminate unfairly with respect to such classes. There can be no assurance that the Bankruptcy Court will conclude
that the feasibility test and other requirements of section 1129 of the Bankruptcy Code (including, without limitation,
finding that the Plan satisfies the “new value” exception to the absolute priority rule, if applicable) have been met with
respect to the Plan. If and when the Plan is filed, there can be no assurance that modifications to the Plan would not
be required for Confirmation, or that such modifications would not require a re-solicitation of votes on the Plan.
The Bankruptcy Court could fail to approve this Disclosure Statement and determine that the votes in favor
of the Plan should be disregarded. The Debtors then would be required to recommence the solicitation process, which
would include re-filing a plan of reorganization and disclosure statement. Typically, this process involves a 60- to
90-day period and includes a Bankruptcy Court hearing with respect to the required approval of a disclosure statement,
followed (after Bankruptcy Court approval) by solicitation of claim and interest holder votes for the plan of
reorganization, followed by a confirmation hearing at which the Bankruptcy Court will determine whether the
requirements for confirmation have been satisfied, including the requisite claim and interest holder acceptances.
If the Plan is not confirmed, the Chapter 11 Cases may be converted into cases under chapter 7 of the
Bankruptcy Code, pursuant to which a trustee would be appointed or elected to liquidate the Debtors’ assets for
distribution in accordance with the priorities established by the Bankruptcy Code. A discussion of the effects that a
chapter 7 liquidation would have on the recoveries of Holders of Claims and Interests and the Debtors’ analysis thereof
are set forth in the unaudited Liquidation Analysis, attached hereto as Exhibit C. The Debtors believe that liquidation
under chapter 7 of the Bankruptcy Code would result in, among other things, smaller distributions being made to
creditors and interest holders than those provided for in the Plan because of:
the likelihood that the Debtors’ assets would have to be sold or otherwise disposed of in a disorderly
fashion over a short period of time rather than reorganizing or selling in a controlled manner, affecting
the business as a going concern;
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additional administrative expenses involved in the appointment of a chapter 7 trustee; and
additional expenses and Claims, some of which would be entitled to priority, that would be generated
during the liquidation, and including Claims resulting from the rejection of Unexpired Leases and other
Executory Contracts in connection with cessation of operations.
(d) Even if the Debtors Receive All Necessary Acceptances for the Plan to Become Effective, the
Debtors May Fail to Meet All Conditions Precedent to Effectiveness of the Plan
Although the Debtors believe that the Effective Date would occur very shortly after the Confirmation Date,
there can be no assurance as to such timing. The Confirmation and effectiveness of the Plan are subject to certain
conditions that may or may not be satisfied. The Debtors cannot assure you that all requirements for Confirmation
and effectiveness required under the Plan will be satisfied. If each condition precedent to Confirmation is not met or
waived, the Plan will not be confirmed, and if each condition precedent to consummation is not met or waived, the
Effective Date will not occur. In the event that the Plan is not Confirmed or is not consummated, the Debtors may
seek Confirmation of an alternative plan of reorganization.
(e) Contingencies May Affect Distributions to Holders of Allowed Claims and Interests
The distributions available to Holders of Allowed Claims under the Plan can be affected by a variety of
contingencies, including, without limitation, whether the Bankruptcy Court orders certain Allowed Claims to be
subordinated to other Allowed Claims. The occurrence of any and all such contingencies, which could affect
distributions available to Holders of Allowed Claims and Allowed Interests under the Plan, will not affect the validity
of the vote taken by the Impaired Classes to accept or reject the Plan or require any sort of revote by the Impaired
Classes.
(f) The Bankruptcy Court May Find the Solicitation of Acceptances Inadequate
Usually, votes to accept or reject a plan of reorganization are solicited after the filing of a petition
commencing a chapter 11 case. Nevertheless, a debtor may solicit votes prior to the commencement of a chapter 11
case in accordance with sections 1125(g) and 1126(b) of the Bankruptcy Code and Bankruptcy Rule 3018(b). Sections
1125(g) and 1126(b) of the Bankruptcy Code and Bankruptcy Rule 3018(b) require that:
solicitation comply with applicable nonbankruptcy law;
the plan of reorganization be transmitted to substantially all creditors and other interest holders
entitled to vote; and
the time prescribed for voting is not unreasonably short.
In addition, Bankruptcy Rule 3018(b) provides that a holder of a claim or interest who has accepted or
rejected a plan before the commencement of the case under the Bankruptcy Code will not be deemed to have accepted
or rejected the plan if the court finds after notice and a hearing that the plan was not transmitted in accordance with
reasonable solicitation procedures. Section 1126(b) of the Bankruptcy Code provides that a holder of a claim or
interest that has accepted or rejected a plan before the commencement of a case under the Bankruptcy Code is deemed
to have accepted or rejected the plan if (i) the solicitation of such acceptance or rejection was in compliance with
applicable nonbankruptcy law, rule or regulation governing the adequacy of disclosure in connection with such
solicitation or (ii) there is no such law, rule, or regulation, and such acceptance or rejection was solicited after
disclosure to such holder of adequate information (as defined by section 1125(a) of the Bankruptcy Code). While the
Debtors believe that the requirements of sections 1125(g) and 1126(b) of the Bankruptcy Code and Bankruptcy Rule
3018(b) will be met, there can be no assurance that the Bankruptcy Court will reach the same conclusion.
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(g) There is a Risk of Termination of the Restructuring Support Agreement
To the extent that events giving rise to termination of the Restructuring Support Agreement occur, the
Restructuring Support Agreement may terminate prior to the Confirmation or Consummation of the Plan, which could
result in the loss of support for the Plan by important creditor constituencies and could result in the loss of use of cash
collateral by the Debtors under certain circumstances. Any such loss of support could adversely affect the Debtors’
ability to confirm and consummate the Plan.
(h) The Bankruptcy Court May Dismiss Some or All of the Chapter 11 Cases
Certain parties in interest may contest the Debtors’ authority to commence and/or prosecute the Chapter 11
Cases. If, pursuant to any such proceeding, the Bankruptcy Court finds that some or all of the Debtors could not
commence the Chapter 11 Cases for any reason, the Debtors may be unable to consummate the transactions
contemplated by the Restructuring Support Agreement and the Plan. If some or all of the Chapter 11 Cases are
dismissed, the Debtors may be forced to cease operations due to insufficient funding and/or liquidate their businesses
in another forum to the detriment of all parties in interest.
(i) The United States Trustee or Other Parties May Object to the Plan on Account of the
Debtors Releases, Third-Party Releases, Exculpations, or Injunction Provisions
Any party in interest, including the United States Trustee (the “U.S. Trustee”), could object to the Plan on
the grounds that the (a) debtor release contained Article IX of the Plan is to be given without adequate consideration,
(b) third-party release contained in Article IX of the Plan is not given consensually or in a permissible non-consensual
manner, (c) exculpation contained in Article IX of the Plan cannot extend to non-estate fiduciaries, or (d) the
injunction contained in Article IX of the Plan is overly broad. In response to such an objection, the Bankruptcy Court
could determine that any of these provisions are not valid under the Bankruptcy Code. If the Bankruptcy Court makes
such a determination, the Plan could not be confirmed without modifying the Plan to alter or remove the applicable
provision. This could result in substantial delay in Confirmation of the Plan or the Plan not being confirmed at all.
(j) The Debtors May Seek To Amend, Waive, Modify, or Withdraw the Plan at Any Time Prior
to Confirmation
The Debtors, reserve the right, in accordance with the Bankruptcy Code, the Bankruptcy Rules, and the
Restructuring Support Agreement, and consistent with the terms of the Plan, to amend the terms of the Plan or waive
any conditions thereto if and to the extent such amendments or waivers are consistent with the terms of the
Restructuring Support Agreement and necessary or desirable to consummate the Plan. The potential impact of any
such amendment or waiver on the Holders of Claims and Interests cannot presently be foreseen but may include a
change in the economic impact of the Plan on some or all of the proposed Classes or a change in the relative rights of
such Classes. All Holders of Claims and Interests will receive notice of such amendments or waivers required by
applicable law and the Bankruptcy Court. If, after receiving sufficient acceptances, but prior to Confirmation of the
Plan, the Debtors seek to modify the Plan, the previously solicited acceptances will be valid only if (1) all classes of
adversely affected creditors and interest holders accept the modification in writing, or (2) the Bankruptcy Court
determines, after notice to designated parties, that such modification was de minimis or purely technical or otherwise
did not adversely change the treatment of Holders of accepting Claims and Interests or is otherwise permitted by the
Bankruptcy Code.
(k) The Plan May Have Material Adverse Effects on the Debtors’ Operations
The solicitation of acceptances of the Plan and commencement of the Chapter 11 Cases could adversely
affect the relationships between the Debtors and their respective customers, employees, partners, and other parties.
Such adverse effects could materially impair the Debtors’ operations.
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(l) The Debtors Cannot Predict the Amount of Time Spent in Bankruptcy for the Purpose of
Implementing the Plan, and a Lengthy Bankruptcy Proceeding Could Disrupt the Debtors’
Businesses, as Well as Impair the Prospect for Reorganization on the Terms Contained in the
Plan
The Debtors estimate that the process of obtaining Confirmation of the Plan by the Bankruptcy Court will
last between forty-five (45) and sixty (60) days from the Petition Date, but it could last considerably longer if, for
example, Confirmation is contested or the conditions to Confirmation or Consummation are not satisfied or waived.
Although the Plan is designed to minimize the length of the bankruptcy proceedings, it is impossible to
predict with certainty the amount of time that the Debtors may spend in bankruptcy, and the Debtors cannot be certain
that the Plan will be confirmed. Even if confirmed on a timely basis, a bankruptcy proceeding to confirm the Plan
could itself have an adverse effect on the Debtors’ businesses. There is a risk, due to uncertainty about the Debtors’
futures that, among other things:
customers could move to the Debtors’ competitors;
employees could be distracted from performance of their duties or more easily attracted to other
career opportunities; and
suppliers, vendors, or other business partners could terminate their relationships with the
Debtors or demand financial assurances or enhanced performance, any of which could impair
the Debtors’ future prospects.
A lengthy bankruptcy proceeding also would involve additional expenses and divert the attention of
management from the operation of the Debtors’ businesses.
The disruption that the bankruptcy process would have on the Debtors’ businesses could increase with the
length of time it takes to complete the Chapter 11 Cases. If the Debtors are unable to obtain Confirmation of the Plan
on a timely basis, because of a challenge to the Plan or otherwise, the Debtors may be forced to operate in bankruptcy
for an extended period of time while they try to develop a different plan of reorganization that can be confirmed.
A protracted bankruptcy case could increase both the probability and the magnitude of the adverse effects described
above.
(m) Other Parties in Interest Might Be Permitted to Propose Alternative Plans of Reorganization
That May Be Less Favorable to Certain of the Debtors’ Constituencies Than the Plan
Other parties in interest could seek authority from the Bankruptcy Court to propose an alternative plan of
reorganization to the Plan. Under the Bankruptcy Code, a debtor in possession initially has the exclusive right to
propose and solicit acceptances of a plan of reorganization for a period of 120 days from the Petition Date. However,
such exclusivity period can be reduced or terminated upon order of the Bankruptcy Court. If such an order were to be
entered, parties in interest other than the Debtors would then have the opportunity to propose alternative plans of
reorganization.
If another party in interest were to propose an alternative plan of reorganization following expiration or
termination of the Debtors’ exclusivity period, such a plan may be less favorable to existing Holders of Claims and
Interests and may seek to exclude such Holders from retaining any equity under their proposed plan.
The Debtors consider maintaining relationships with their stakeholders, customers, and other partners as
critical to maintaining the value of their enterprise following the Effective Date and have sought to treat those
constituencies accordingly. However, proponents of alternative plans of reorganization may not share the Debtors’
assessments and may seek to impair the Claims or Interests of such constituencies to a greater degree. If there were
competing plans of reorganization, the Chapter 11 Cases likely would become longer, more complicated, more
litigious, and much more expensive. If this were to occur, or if the Debtors’ stakeholders or other constituencies
important to the Debtors’ business were to react adversely to an alternative plan of reorganization, the adverse
consequences discussed in the foregoing sections also could occur.
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(n) The Debtors’ Business May Be Negatively Affected if the Debtors Are Unable to Assume
Their Executory Contracts
An executory contract is a contract on which performance remains due to some extent by both parties to the
contract. The Plan provides for the assumption of all Executory Contracts and Unexpired Leases. The Debtors intend
to preserve as much of the benefit of their existing Executory Contracts and Unexpired Leases as possible. However,
with respect to some limited classes of Executory Contracts, including licenses with respect to patents or trademarks,
the Debtors may need to obtain the consent of the counterparty to maintain the benefit of the contract. There is no
guarantee that such consent either would be forthcoming or that conditions would not be attached to any such consent
that makes assuming the contracts unattractive. The Debtors then would be required to either forego the benefits
offered by such contracts or to find alternative arrangements to replace them.
(o) Material Transactions Could Be Set Aside as Fraudulent Conveyances
or Preferential Transfers
Certain payments received by stakeholders prior to the bankruptcy filing could be challenged under
applicable debtor/creditor or bankruptcy laws as either a “fraudulent conveyance” or a “preferential transfer.”
A fraudulent conveyance occurs when a transfer of a debtor’s assets is made with the intent to defraud creditors or in
exchange for consideration that does not represent reasonably equivalent value to the property transferred.
A preferential transfer occurs upon a transfer of property of the debtor while the debtor is insolvent for the benefit of
a creditor on account of an antecedent debt owed by the debtor that was made on or within ninety (90) days before the
petition date or one year before the petition date, if the creditor, at the time of such transfer, was an insider. If any
transfer were challenged in the Bankruptcy Court and found to have occurred with regard to any of the Debtors’
material transactions, the Bankruptcy Court could order the recovery of all amounts received by the recipient of the
transfer.
(p) The Debtors May Be Unsuccessful in Obtaining First Day Orders To Permit Them to Pay
Their Vendors or Continue Operating Their Businesses in the Ordinary Course of Business
The Debtors have attempted to address potential concerns of their customers, vendors, and other key parties
in interest that might arise from the filing of the Plan through a variety of provisions incorporated into or contemplated
by the Plan, including the Debtors’ intention to seek appropriate Bankruptcy Court orders to permit the Debtors to pay
their prepetition and postpetition accounts payable to parties in interest in the ordinary course. However, there can be
no guarantee that the Debtors will be successful in obtaining the necessary approvals of the Bankruptcy Court for such
arrangements or for every party in interest the Debtors may seek to treat in this manner, and, as a result, the Debtors’
businesses might suffer.
(q) The Bankruptcy Court May Not Approve the Debtors’ Use of Cash Collateral or the DIP
Facilities
Upon commencing the Chapter 11 Cases, the Debtors will ask the Bankruptcy Court to authorize the Debtors
to enter into postpetition financing arrangements and/or use cash collateral to fund the Chapter 11 Cases and to provide
customary adequate protection to the Secured Lenders under the applicable prepetition debt documents, which
requests will be in accordance with the terms of the Restructuring Support Agreement. Such access to postpetition
financing and/or cash collateral will provide liquidity during the pendency of the Chapter 11 Cases. There can be no
assurance that the Bankruptcy Court will approve the DIP Facilities and/or such use of cash collateral on the terms
requested. Moreover, if the Chapter 11 Cases take longer than expected to conclude, the Debtors may exhaust their
available cash collateral. There is no assurance that the Debtors will be able to obtain an extension of the right to
obtain further postpetition financing and/or use cash collateral, in which case, the liquidity necessary for the orderly
functioning of the Debtors’ businesses may be impaired materially.
(r) Certain Claims May Not Be Discharged and Could Have a Material Adverse Effect on the
Debtors’ Financial Condition and Results of Operations
The Bankruptcy Code provides that the confirmation of a plan of reorganization discharges a debtor from
substantially all debts arising prior to confirmation. With few exceptions, all Claims that arise prior to the Debtors’
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filing of their Petitions or before confirmation of the plan of reorganization (a) would be subject to compromise and/or
treatment under the plan of reorganization and/or (b) would be discharged in accordance with the terms of the plan of
reorganization. Any Claims not ultimately discharged through a plan of reorganization could be asserted against the
reorganized entity and may have an adverse effect on the Reorganized Debtors’ financial condition and results of
operations on a post-reorganization basis.
7.3 Risks Relating to the Restructuring Transactions
(a) The Debtors Will Be Subject to Business Uncertainties and Contractual Restrictions Prior to
the Effective Date
Uncertainty about the effects of the Plan on employees may have an adverse effect on the Debtors. These
uncertainties may impair the Debtors’ ability to retain and motivate key personnel and could cause customers and
others that deal with the Debtors to defer entering into contracts with the Debtors or making other decisions concerning
the Debtors or seek to change existing business relationships with the Debtors. In addition, the Debtors are highly
dependent on the efforts and performance of their senior management team. If key employees depart because of
uncertainty about their future roles and potential complexities of the Restructuring Transactions, the Debtors’ business,
financial condition, liquidity, and results of operations could be adversely affected.
(b) The Support of the RSA Parties Is Subject to the Terms of the Restructuring Support
Agreement Which Is Subject to Termination in Certain Circumstances
Pursuant to the Restructuring Support Agreement, the RSA Parties have agreed to support the restructuring
transactions set forth in the Plan. Nevertheless, the Restructuring Support Agreement is subject to termination upon
the occurrence of certain termination events. Accordingly, the Restructuring Support Agreement may be terminated
after the date of this Disclosure Statement, and such a termination would present a material risk to Confirmation and/or
consummation of the Plan because the Plan may no longer have the support of the RSA Parties.
(c) There Is Inherent Uncertainty in the Debtors’ Financial Projections Such that the
Reorganized Debtors May Not Be Able to Meet the Projections
The Financial Projections attached hereto as Exhibit E includes projections covering the Debtors’
operations through 2022. These projections are based on assumptions that are an integral part of the projections,
including Confirmation and consummation of the Plan in accordance with its terms, the anticipated future performance
of the Debtors, industry performance, general business and economic conditions, and other matters, many of which
are beyond the control of the Debtors and some or all of which may not materialize.
In addition, unanticipated events and circumstances occurring after the date hereof may affect the actual
financial results of the Debtors’ operations. These variations may be material and may adversely affect the value of
the New Common Equity and New Warrants and the ability of the Debtors to make payments with respect to their
indebtedness. Because the actual results achieved may vary from projected results, perhaps significantly, the Financial
Projections should not be relied upon as a guarantee or other assurance of the actual results that will occur.
Further, during the Chapter 11 Cases, the Debtors expect that their financial results will continue to be
volatile as restructuring activities and expenses, contract terminations and rejections, and claims assessments
significantly impact the Debtors’ consolidated financial statements. As a result, the Debtors’ historical financial
performance likely will not be indicative of their financial performance after the Petition Date. In addition, if the
Debtors emerge from the Chapter 11 Cases, the amounts reported in subsequent consolidated financial statements may
materially change relative to historical consolidated financial statements, including as a result of revisions to the
Debtors’ operating plans pursuant to a plan of reorganization. The Debtors also may be required to adopt fresh start
accounting, in which case their assets and liabilities will be recorded at fair value as of the fresh start reporting date,
which may differ materially from the recorded values of assets and liabilities on the Debtors’ consolidated balance
sheets. The Debtors’ financial results after the application of fresh start accounting also may be different from
historical trends.
Lastly, the business plan was developed by the Debtors with the assistance of their advisors. There can be
no assurances that the Debtors’ business plan will not change, perhaps materially, as a result of decisions that the
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Board of Directors may make after reevaluating the strategic direction of the Debtors and their business plan.
Any deviations from the Debtors’ existing business plan would necessarily cause a deviation from the Financial
Projections, and could result in materially different outcomes from those projected.
(d) Failure to Implement the Restructuring Transactions and Confirm and Consummate the
Plan Could Negatively Impact the Debtors
If the Restructuring Transactions are not implemented, the Debtors may consider other restructuring
alternatives available at that time, subject to the Restructuring Support Agreement, which may include the filing of an
alternative chapter 11 plan, conversion to chapter 7, commencement of section 363 sales of the Debtors’ assets, or any
other transaction that would maximize value of the Debtors’ estates. Any alternative restructuring proposal may be
on terms less favorable to Holders of Claims against and Interests in the Debtors than the terms of the Plan as described
herein.
Any material delay in Confirmation of the Plan, or the Chapter 11 Cases, or the threat of rejection of the Plan
by the Bankruptcy Court, would add substantial expense and uncertainty to the process.
If the Plan is not confirmed and consummated, the ongoing businesses of the Debtors may be adversely
affected and there may be various consequences, including:
the adverse impact to the Debtors’ businesses caused by the failure to pursue other beneficial
opportunities due to the focus on the Restructuring Transactions, without realizing any of the
anticipated benefits of the Restructuring Transactions;
the incurrence of substantial costs by the Debtors in connection with the Restructuring
Transactions, without realizing any of the anticipated benefits of the Restructuring
Transactions;
the possibility, for the Debtors, of being unable to repay indebtedness when due and payable;
and
the Debtors pursuing traditional chapter 11 or chapter 7 proceedings, resulting in recoveries for
creditors and interest holders that are less than contemplated under the Plan, or resulting in no
recovery for certain creditors and interest holders.
(e) Failure to Fill the Open Commitment May Result in an Event of Default and Could Impact
the Debtors’ Ability to Confirm or Consummate the Plan
If by no later than the date of the Plan Supplement, the Debtors do not receive a commitment by one or more
of the lenders under the Term DIP Facility (or such other party after approval by the Required Lenders (as defined in
the Term DIP Credit Agreement)) of an additional $6.5 million to be funded as part of the final draw under the Term
DIP Facility following the entry of the order approving the Term DIP Facility on a final basis, the Debtors face a risk
of an Event of Default (under and as defined in either of the DIP Facilities), the Debtors will fail to meet a Milestones
set forth in the Restructuring Support Agreement and will risk a termination of the Restructuring Support Agreement,
and the Debtors may be unable to confirm or consummate the Plan.
(f) Even if the Restructuring Transactions are Successful, the Debtors Will Continue to Face
Risks
The Restructuring Transactions are generally designed to reduce the amount of the Debtors’ cash interest
expense and improve the Debtors’ liquidity and financial and operational flexibility to generate long-term growth.
Even if the Restructuring Transactions are implemented, the Debtors will continue to face a number of risks, including
certain risks that are beyond the Debtors’ control, such as changes in economic conditions, changes in the Debtors’
industry, and changes in commodity prices. As a result of these risks and others, there is no guarantee that the
Restructuring Transactions will achieve the Debtors’ stated goals.
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7.4 Risks Relating to the New Common Equity and New Warrants
(a) The Value of the New Common Equity and New Warrants Cannot Be Stated With Certain
Despite the Debtors’ best efforts to value the New Common Equity and New Warrants, various uncertainties
and contingencies, including market conditions, the Debtors’ potential inability to implement their business plan or
lack of a market for the New Common Equity and New Warrants may cause fluctuations or variations in value of the
New Common Equity and New Warrants not fully accounted for herein. All of these factors are difficult to
predict. Actual market prices of such securities at issuance will depend upon, among other things, prevailing interest
rates, conditions in the financial markets and other factors that generally influence the prices of securities. Actual
market prices of such securities also may be affected by other factors not possible to predict.
(b) The Plan Exchanges Senior Indebtedness for Junior Securities
If the Plan is confirmed and consummated, certain Holders of Term Claims will receive the New Common
Equity and the New Warrants, as applicable. Thus, in agreeing to the Plan, certain of such Holders will be consenting
to the exchange of their interests in senior debt, which has, among other things, a stated interest rate, a maturity date,
and a liquidation preference over equity securities, for the New Common Equity and the New Warrants, which will
be subordinate to all future creditor claims.
(c) A Liquid Trading Market for the New Common Equity and the New Warrants May Not
Develop
The Debtors make no assurance that liquid trading markets for the New Common Equity and the New
Warrants will develop. The liquidity of any market for the New Common Equity and the New Warrants will depend,
among other things, upon the number of Holders of New Common Equity and New Warrants, the Reorganized
Debtors’ financial performance, and the market for similar securities, none of which can be determined or predicted.
Therefore, the Debtors cannot assure that an active trading market will develop or, if a market develops, what the
liquidity or pricing characteristics of that market will be.
(d) The Debtors May Be Controlled by Significant Holders
Under the Plan, certain Holders of Allowed Claims may receive New Common Equity and New Warrants.
If Holders of a significant portion of the New Common Equity were to act as a group, such Holders might be in a
position to control the outcome of actions requiring shareholder approval, including the election of directors. In
addition, the New Board shall consist of the following: (i) the then serving Chief Executive Officer of Ultimate Parent
(both as defined in the New Common Equity Documents); (ii) three (3) directors appointed by Apollo Capital
Management, L.P. (together with its applicable Affiliates and/or managed funds, “Apollo”), for so long as Apollo
holds not less than 25% of the issued and outstanding New Common Equity; if Apollo holds between 15% and 25%
of the issued and outstanding New Common Equity, then Apollo will have the right to appoint two directors; if Apollo
holds between 5% and 15% of the issued and outstanding New Common Equity, then Apollo will have the right to
appoint one director; (iii) two (2) directors appointed by Special Situations Investing Group, Inc., (together with its
applicable Affiliates and/or managed funds, “SSIG”), for so long as SSIG holds not less than 15% of the issued and
outstanding New Common Equity; if SSIG holds between 5% and 15% of the issued and outstanding New Common
Equity, then SSIG will have the right to appoint one director; (iv) one (1) director appointed by the Stockholders
holding at least 75% of the issued and outstanding New Common Equity; (v) one (1) director appointed by First Eagle
Alternative Credit, LLC (together with its applicable Affiliates and/or managed funds, “First Eagle”, and together with
Apollo and SSIG, the “Designating Stockholders”), for so long as First Eagle holds not less than 5% of the issued and
outstanding New Common Equity; and one (1) independent director, who shall initially serve as the Chairperson of
the Board, appointed by the Stockholders holding at least 75% of the issued and outstanding New Common Equity.
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7.5 Risks Relating to the Debtors’ Businesses
(a) The Debtors May Not Be Able To Implement the Business Plan
The Debtors may not achieve their business plan and financial restructuring strategy. In such event, the
Reorganized Debtors may be unable to restructure their funded debt or be forced to sell all or parts of their business,
develop and implement further restructuring plans not contemplated in this Disclosure Statement, or become subject
to further insolvency proceedings.
(b) The Debtors’ Financial Projections Are Subject to Inherent Uncertainty Due to the
Numerous Assumptions Upon Which They Are Based
The Debtors’ Financial Projections are based on numerous assumptions including: timely Confirmation and
Consummation pursuant to the terms of the Plan; the anticipated future performance of the Debtors; industry
performance; general business and economic conditions; and other matters, many of which are beyond the control of
the Debtors and some or all of which may not materialize. In addition, unanticipated events and circumstances
occurring subsequent to the date that the Disclosure Statement is approved by the Bankruptcy Court may affect the
actual financial results of the Debtors’ operations. These variations may be material and may adversely affect the
ability of the Debtors to make payments with respect to indebtedness following consummation. Because the actual
results achieved throughout the periods covered by the projections may vary from the projected results, the projections
should not be relied upon as an assurance of the actual results that will occur. Except with respect to the projections
and except as otherwise specifically and expressly stated, the Disclosure Statement does not reflect any events that
may occur subsequent to the date of the Disclosure Statement. Such events may have a material impact on the
information contained in the Disclosure Statement. The Debtors do not intend to update the Financial Projections and
therefore the Financial Projections will not reflect the impact of any subsequent events not already accounted for in
the assumptions underlying the Financial Projections.
(c) The Debtors May Not Be Able to Generate Sufficient Cash to Service All of Their Indebtedness
The Debtors’ ability to make scheduled payments on, or refinance their debt obligations, depends on the
Debtors’ financial condition and operating performance, which are subject to prevailing economic, industry, and
competitive conditions and to certain financial, business, legislative, regulatory, and other factors beyond the Debtors’
control. The Debtors may be unable to maintain a level of cash flow from operating activities sufficient to permit the
Debtors to pay the principal, premium, if any, and interest on their indebtedness, including, without limitation,
borrowings in connection with emergence.
(d) The Debtors’ Substantial Liquidity Needs May Impact Revenue
The Debtors operate in a capital-intensive industry. The Debtors’ principal sources of liquidity historically
have been cash flow from operations, borrowings under their Prepetition Secured Debt, and issuances of equity
securities. If the Debtors’ cash flow from operations remains depressed, or continues to decrease as a result of higher
PGM prices or decreased customer demand, the Debtors may not have the ability to expend the capital necessary to
improve or maintain their current operations, resulting in decreased revenues over time.
The Debtors face uncertainty regarding the adequacy of their liquidity and capital resources and have
extremely limited, if any, access to additional financing. In addition to the cash necessary to fund ongoing operations,
the Debtors have incurred significant professional fees and other costs in connection with preparing for the Chapter 11
Cases and expect to continue to incur significant professional fees and costs throughout the Chapter 11 Cases.
The Debtors cannot guarantee that cash on hand, cash flow from operations, and cash provided by the DIP Facilities
will be sufficient to continue to fund their operations and allow the Debtors to satisfy obligations related to the
Chapter 11 Cases until the Debtors are able to emerge from bankruptcy protection.
The Debtors’ liquidity, including the ability to meet ongoing operational obligations, will be dependent upon,
among other things: (a) their ability to comply with the terms and condition of any debtor-in-possession financing
and/or cash collateral order entered by the Bankruptcy Court in connection with the Chapter 11 Cases; (b) their ability
to maintain adequate cash on hand; (c) their ability to generate cash flow from operations; (d) their ability to develop,
55
confirm, and consummate a chapter 11 plan or other alternative restructuring transaction; (e) the availability of
incremental draws under the DIP Facilities; and (f) the cost, duration, and outcome of the Chapter 11 Cases.
The Debtors’ ability to maintain adequate liquidity depends, in part, upon industry conditions and general economic,
financial, competitive, regulatory, and other factors beyond the Debtors’ control. In the event that cash on hand, cash
flow from operations, and cash provided under the DIP Facilities are not sufficient to meet the Debtors’ liquidity
needs, the Debtors may be required to seek additional financing. The Debtors can provide no assurance that additional
financing would be available or, if available, offered to the Debtors on acceptable terms. The Debtors’ access to
additional financing is, and for the foreseeable future likely will continue to be, extremely limited if it is available at
all. In addition, the Debtors’ ability to consummate the Plan is dependent on their ability to satisfy the conditions
precedent to the ABL Exit Facility and the Term Exit Facility. The Debtors can provide no assurance that such
conditions will be satisfied. The Debtors’ long-term liquidity requirements and the adequacy of the capital resources
are difficult to predict at this time.
(e) Existing and Increased PGM Prices, or Decreasing Customer Demand, May Adversely
Affect the Debtors’ Business, Results of Operations, and Financial Condition
The Debtors’ revenues and profitability substantially depend on the price of PGM. In the recent years,
unprecedented volatility caused by soaring PGM prices have challenged aftermarket automotive parts suppliers.
Prices began to slowly stabilize until the COVID-19 pandemic hit and caused even greater volatility. Due to mine
shutdowns around the globe, in attempt to slow the spread of COVID, the supply of PGM dropped significantly. As
supplies decreased, prices skyrocketed. Between October 2019 and March 2020, palladium prices increased from
$1,700 to a high of $2,700 per t-oz and rhodium prices increased from $5,000 to $12,560 per t-oz. It is impossible to
tell with certainty whether mines will reopen and whether said reopenings would ultimately correct PGM prices.
Further, it is impossible to tell with certainty how, or to what degree, the COVID-19 pandemic will affect the macro-
economy and PGM prices in the long term.
(f) The Debtors’ Operations or Ability to Emerge from Bankruptcy May Be Impacted By the
Continuing COVID-19 Pandemic
The continued spread of COVID-19 could have a significant impact on the Debtors’ business, both in the
context of consumer demand and production capacity. On a macro level, this pandemic could dampen global
growth and ultimately lead to an economic recession. If this occurs, demand for automotive parts would likely
decline. Such a scenario would negatively impact the Debtors’ financial performance. In addition, government
lockdowns and employee infections could both inhibit the Debtors’ ability to manufacture and distribute their
products. This diminished manufacturing and distribution capacity would negatively affect the Debtors’ financial
performance.
(g) The Debtors Must Continue to Retain, Motivate, and Recruit Executives and Other Key
Employees, Which May Be Difficult in Light of Uncertainty Regarding the Plan, and Failure
To Do So Could Negatively Affect the Debtors’ Businesses
The Reorganized Debtors’ success will depend, in part, on the efforts of their executive officers and other
key employees, none of whom are covered by key person insurance policies. These individuals possess sales,
marketing, financial, administrative, and technological skills that are critical to the operation of the Debtors’ business.
If the Reorganized Debtors lose or suffer an extended interruption in the services of one or more of their executive
officers or other key employees, the Reorganized Debtors’ business, operational results, and financial condition may
be negatively impacted.
(h) The Reorganized Debtors May Be Adversely Affected by Potential Litigation, Including
Litigation Arising Out of the Chapter 11 Cases
In the future, the Debtors may become a party to litigation. In general, litigation can be expensive and time
consuming to bring or defend against. Such litigation could result in settlements or damages that could significantly
affect the Debtors’ financial results. It is also possible that certain parties will commence litigation with respect to the
treatment of their Claims under the Plan. It is not possible to predict the potential litigation that the Debtors may
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become party to, nor the final resolution of such litigation. The impact of any such litigation on the Reorganized
Debtors’ businesses and financial stability, however, could be material.
7.6 Certain Tax Implications of the Chapter 11 Cases and the Plan
Holders of Allowed Term Claims should carefully review Article X of this Disclosure Statement, “Certain
U.S. Federal Income Tax Consequences,” to determine how the tax implications of the Plan and the Chapter 11 Cases
may adversely affect the Debtors, Reorganized Debtors, and Holders of such Claims.
7.7 Disclosure Statement Disclaimer
(a) Information Contained Herein Is Solely for Soliciting Votes
The information contained in this Disclosure Statement is for the purpose of soliciting acceptances of the
Plan and may not be relied upon for any other purpose. Specifically, this Disclosure Statement is not legal advice to
any Person or Entity. The contents of this Disclosure Statement should not be construed as legal, business, or tax
advice. Each reader should consult its own legal counsel and accountant with regard to any legal, tax, and other
matters concerning its Claim or Interest. This Disclosure Statement may not be relied upon for any purpose other than
to determine how to vote to accept or reject the Plan and whether to object to Confirmation.
(b) Disclosure Statement May Contain Forward-Looking Statements
This Disclosure Statement may contain “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, as amended. Such statements consist of any statement other than a recitation
of historical fact and can be identified by the use of forward-looking terminology such as “may,” “expect,”
“anticipate,” “estimate,” or “continue,” the negative thereof, or other variations thereon or comparable terminology.
The Debtors consider all statements regarding anticipated or future matters, including the following, to be
forward-looking statements:
• any future effects as a result of the filing or
pendency of the Chapter 11 Cases;
• projected and estimated liability costs, including
tort, and environmental costs and costs of
environmental remediation;
• financing plans; • growth opportunities for existing products and
services;
• competitive position; • results of litigation;
• business strategy; • disruption of operations;
• budgets; • contractual obligations;
• projected cost reductions; • projected general market conditions;
• projected dividends; • plans and objectives of management for future
operations;
• projected price increases; • off-balance sheet arrangements;
• effect of changes in accounting due to recently
issued accounting standards;
the Debtors’ expected future financial position,
liquidity, results of operations, profitability, and
cash flows; and
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growth opportunities for existing products and
services.
Statements concerning these and other matters are not guarantees of the Debtors’ future performance.
The reader is cautioned that all forward-looking statements are necessarily speculative. The Valuation Analysis, the
Liquidation Analysis, the recovery projections, and other information contained herein and attached hereto are
estimates only, and the timing and amount of actual distributions to Holders of Allowed Claims and Interests may be
affected by many factors that cannot be predicted. Forward-looking statements represent the Debtors’ estimates and
assumptions only as of the date such statements were made. There are risks, uncertainties, and other important factors
that could cause the Debtors’ actual performance or achievements to be materially different from those they may
project, and the Debtors undertake no obligation to update any such statement.
(c) No Legal, Business, or Tax Advice Is Provided to You by This Disclosure Statement
THIS DISCLOSURE STATEMENT IS NOT LEGAL, BUSINESS, OR TAX ADVICE TO YOU.
The contents of this Disclosure Statement should not be construed as legal, business, or tax advice. Each Holder of a
Claim or Interest should consult his or her own legal counsel and accountant with regard to any legal, tax, and other
matters concerning his or her Claim or Interest. This Disclosure Statement may not be relied upon for any purpose
other than to determine how to vote on the Plan or object to Confirmation.
(d) No Admissions Made
The information and statements contained in this Disclosure Statement will neither (1) constitute an
admission of any fact or liability by any entity (including the Debtors) nor (2) be deemed evidence of the tax or other
legal effects of the Plan on the Debtors, Holders of Allowed Claims or Interests, or any other parties-in-interest.
(e) Failure to Identify Litigation Claims or Projected Objections
No reliance should be placed on the fact that a particular litigation Claim or projected objection to a particular
Claim or Interest is, or is not, identified in this Disclosure Statement. All Parties, including the Debtors, reserve the
right to continue to investigate Claims and Interests and file and prosecute objections to Claims and Interests.
(f) No Waiver of Right to Object or Right to Recover Transfers and Assets
The vote by a Holder of an Allowed Claim or Interest for or against the Plan does not constitute a waiver or
release of any Claims or rights of the Debtors to object to that Holder’s Allowed Claim or Interest, or to bring Causes
of Action or recover any preferential, fraudulent, or other voidable transfer of assets, regardless of whether any Claims
or Causes of Action of the Debtors or their respective Estates are specifically or generally identified herein.
(g) Information Was Provided by the Debtors and Was Relied Upon by the Debtors’ Advisors
Counsel to and other advisors retained by the Debtors have relied upon information provided by the Debtors
in connection with the preparation of this Disclosure Statement. Although counsel to and other advisors retained by
the Debtors have performed certain limited due diligence in connection with the preparation of this Disclosure
Statement, they have not independently verified the information contained herein.
(h) The Potential Exists for Inaccuracies and the Debtors Have No Duty to Update
The Debtors make the statements contained in this Disclosure Statement as of the date hereof, unless
otherwise specified herein, and the delivery of this Disclosure Statement after that date does not imply that there has
not been a change in the information set forth herein since such date. Although the Debtors have used their reasonable
business judgment to ensure the accuracy of all of the information provided in this Disclosure Statement and in the
Plan, the Debtors nonetheless cannot, and do not, confirm the current accuracy of all statements appearing in this
Disclosure Statement. Further, although the Debtors may subsequently update the information in this Disclosure
Statement, the Debtors have no affirmative duty to do so unless ordered by the Bankruptcy Court.
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(i) No Representations Outside of the Disclosure Statement Are Authorized
No representations concerning or relating to the Debtors, the Chapter 11 Cases, or the Plan are authorized by
the Bankruptcy Court or the Bankruptcy Code, other than as set forth in this Disclosure Statement. In deciding whether
to vote to accept or reject the Plan, you should not rely upon any representations or inducements made to secure your
acceptance or rejection of the Plan that are other than as contained in, or included with, this Disclosure Statement,
unless otherwise indicated herein. You should promptly report unauthorized representations or inducements to the
counsel to the Debtors and the U.S. Trustee.
ARTICLE VIII
CONFIRMATION PROCEDURES
The following is a brief summary of the Confirmation process. Holders of Claims and Interests are
encouraged to review the relevant provisions of the Bankruptcy Code and to consult with their own advisors.
8.1 The Confirmation Hearing
Under section 1128(a) of the Bankruptcy Code, the Bankruptcy Court, after notice, may hold a hearing to
confirm a plan of reorganization. The Debtors will request, on the Petition Date, that the Bankruptcy Court approve
the Plan and Disclosure Statement. The Confirmation Hearing may, however, be continued from time to time without
further notice other than an adjournment announced in open court or a notice of adjournment filed with the Bankruptcy
Court and served in accordance with the Bankruptcy Rules, without further notice to parties in interest. The
Bankruptcy Court, in its discretion and prior to the Confirmation Hearing, may put in place additional procedures
governing the Confirmation Hearing. Subject to section 1127 of the Bankruptcy Code and the Restructuring Support
Agreement, the Plan may be modified, if necessary, prior to, during, or as a result of the Confirmation Hearing, without
further notice to parties in interest.
Additionally, section 1128(b) of the Bankruptcy Code provides that a party in interest may object to
Confirmation. The Debtors, in the same motion requesting a date for the Confirmation Hearing, will request that the
Bankruptcy Court set a date and time for parties in interest to file objections to Confirmation of the Plan. An objection
to Confirmation of the Plan must be filed with the Bankruptcy Court and served on the Debtors and certain other
parties in interest in accordance with the applicable order of the Bankruptcy Court so that it is actually received on or
before the deadline to file such objections as set forth therein.
8.2 Confirmation Standards
Among the requirements for Confirmation are that the Plan (a) is accepted by all Impaired Classes of Claims
and Interests or, if rejected by an Impaired Class, that the Plan “does not discriminate unfairly” and is “fair and
equitable” as to such Class; (b) is feasible; and (c) is in the “best interests” of Holders of Claims and Interests that are
Impaired under the Plan.
The following requirements must be satisfied pursuant to section 1129(a) of the Bankruptcy Code before a
bankruptcy court may confirm a plan of reorganization. The Debtors believe that the Plan fully complies with all the
applicable requirements of section 1129 of the Bankruptcy Code set forth below, other than those pertaining to voting,
which has not yet taken place.
The Plan complies with the applicable provisions of the Bankruptcy Code.
The Debtors (or any other proponent of the Plan) have complied with the applicable provisions
of the Bankruptcy Code.
The Plan has been proposed in good faith and not by any means forbidden by law.
Any payment made or to be made by the Debtors (or any other proponent of the Plan) or by a
Person issuing Securities or acquiring property under the Plan, for services or for costs and
59
expenses in or in connection with the Chapter 11 Cases, in connection with the Plan and incident
to the Chapter 11 Cases is subject to the approval of the Bankruptcy Court as reasonable.
The Debtors (or any other proponent of the Plan) have disclosed the identity and affiliations of
any individual proposed to serve, after Confirmation, as a director, or officer, the Reorganized
Debtors, any Affiliate of the Debtors reorganized under the Plan, or any successor to the
Debtors under the Plan, and the appointment to, or continuance in, such office of such individual
is consistent with the interests of creditors and equity security holders and with public policy.
The Debtors (or any other proponent of the Plan) have disclosed the identity of any Insider that
will be employed or retained the Reorganized Debtors and the nature of any compensation for
such Insider.
With respect to each Holder within an Impaired Class of Claims or Interests, as applicable, each
such Holder (a) has accepted the Plan or (b) will receive or retain under the Plan on account of
such Claim or Interest property of a value, as of the Effective Date, that is not less than the
amount that such Holder would so receive or retain if the Debtors were liquidated under chapter
7 of the Bankruptcy Code on such date.
With respect to each Class of Claims or Interests, such Class (a) has accepted the Plan or (b) is
Unimpaired under the Plan (subject to the “cram-down” provisions discussed below);
see Section 8.5 hereof (“Confirmation Without Acceptance by All Impaired Classes”).
The Plan provides for treatment of Claims, as applicable, in accordance with the provisions of
section 507(a) of the Bankruptcy Code.
If a Class of Claims is Impaired under the Plan, at least one Class of Claims that is Impaired
under the Plan has accepted the Plan, determined without including any acceptance of the Plan
by any Insider.
Confirmation is not likely to be followed by the liquidation, or the need for further financial
reorganization, of the Reorganized Debtors, or any successor to the Debtors under the Plan,
unless such liquidation or reorganization is proposed in the Plan.
All fees payable under 28 U.S.C. § 1930 have been paid or the Plan provides for the payment
of all such fees on the Effective Date.
The Plan provides for the continuation after its effective date of payment of all retiree benefits,
as that term is defined in section 1114 of the Bankruptcy Code, at the level established pursuant
to subsection (e)(1)(B) or (g) of section 1114 of the Bankruptcy Code, at any time prior to
Confirmation, for the duration of the period the applicable Debtor has obligated itself to provide
such benefits.
8.3 Best Interests Test / Liquidation Analysis
As described above, section 1129(a)(7) of the Bankruptcy Code requires that each Holder of an Impaired
Claim or Interest either (a) accept the Plan or (b) receive or retain under the Plan property of a value, as of the Effective
Date, that is not less than the value such Holder would receive if the Debtors were liquidated under chapter 7 of the
Bankruptcy Code. Based on the unaudited Liquidation Analysis attached hereto as Exhibit C, the Debtors believe
that the value of any distributions if the Chapter 11 Cases were converted to cases under chapter 7 of the Bankruptcy
Code would be no greater than the value of distributions under the Plan. As a result, the Debtors believe Holders of
Claims and Interests in all Impaired Classes will recover at least as much as a result of Confirmation of the Plan as
they would recover through a hypothetical chapter 7 liquidation.
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THE LIQUIDATION ANALYSIS HAS BEEN PREPARED SOLELY FOR USE IN THIS DISCLOSURE
STATEMENT AND DOES NOT REPRESENT VALUES THAT ARE APPROPRIATE FOR ANY OTHER
PURPOSE. NOTHING CONTAINED IN THE LIQUIDATION ANALYSIS IS INTENDED TO BE OR
CONSTITUTES A CONCESSION BY OR ADMISSION OF ANY DEBTOR FOR ANY PURPOSE.
8.4 Feasibility
The Bankruptcy Code requires that a debtor demonstrate that confirmation of a plan of reorganization is not
likely to be followed by liquidation or the need for further financial reorganization. For purposes of determining
whether the Plan meets this requirement, the Debtors have analyzed their ability to meet their obligations under the
Plan. As part of this analysis, the Debtors have prepared the Financial Projections, which, together with the
assumptions on which they are based, are attached hereto as Exhibit E. Based on such Financial Projections, the
Debtors believe that they will be able to make all payments required under the Plan while conducting ongoing business
operations. Therefore, Confirmation of the Plan is not likely to be followed by liquidation or the need for further
reorganization.
8.5 Confirmation Without Acceptance by All Impaired Classes
The Bankruptcy Code permits confirmation of a plan even if it is not accepted by all impaired classes, as
long as (a) the plan otherwise satisfies the requirements for confirmation, (b) at least one impaired class of claims has
accepted the plan without taking into consideration the votes of any insiders in such class and (c) the plan is “fair and
equitable” and does not “discriminate unfairly” as to any impaired class that has not accepted the plan. These so-
called “cram down” provisions are set forth in section 1129(b) of the Bankruptcy Code.
(a) No Unfair Discrimination
The no “unfair discrimination” test applies to Classes of Claims or Interests that are of equal priority and are
receiving different treatment under the Plan. The test does not require that the treatment be the same or equivalent,
but that such treatment be “fair.” The Debtors do not believe the Plan discriminates unfairly against any Impaired
Class of Claims or Interests. The Debtors believe the Plan and the treatment of all Classes of Claims and Interests
under the Plan satisfy the foregoing requirements for nonconsensual confirmation.
(b) Fair and Equitable Test
This test applies to Classes of different priority and status (e.g., secured versus unsecured) and includes the
general requirement that no Class of Claims or Interests receive more than 100% of the amount of the allowed Claims
or Interests in such Class. As to the dissenting Class, the test sets different standards depending on the type of Claims
or Interests in such Class. In order to demonstrate that a plan is fair and equitable, the plan proponent must
demonstrate:
Secured Creditors: Each holder of a secured claim: (1) retains its liens on the property, to the
extent of the allowed amount of its secured claim, and receives deferred cash payments having
a value, as of the effective date of the chapter 11 plan, of at least the allowed amount of such
claim; (2) has the right to credit bid the amount of its claim if its property is sold and retains its
liens on the proceeds of the sale (or if sold, on the proceeds thereof); or (3) receives the
“indubitable equivalent” of its allowed secured claim.
Unsecured Creditors: Either (1) each holder of an impaired unsecured claim receives or retains
under the chapter 11 plan property of a value equal to the amount of its allowed claim or (2) the
holders of claims and interests that are junior to the claims of the non-accepting class will not
receive any property under the chapter 11 plan.
Holders of Interests: Either (1) each holder of an impaired interest will receive or retain under
the chapter 11 plan property of a value equal to the greatest of the fixed liquidation preference
to which such holder is entitled, the fixed redemption price to which such holder is entitled, or
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the value of the interest or (2) the holders of interests that are junior to the non-accepting class
will not receive or retain any property under the chapter 11 plan.
The Debtors believe the Plan satisfies the “fair and equitable” requirement notwithstanding that Class 9
(Equity Interests in Holdings) are deemed to reject the Plan, because, as to such Class, there is no Class of equal
priority receiving more favorable treatment and no Class that is junior to such Classes will receive or retain any
property on account of the Claims or Interests in such Class.
The Debtors believe that the Plan and the treatment of all Classes of Claims and Interests under the Plan
satisfy the foregoing requirements for “cram down” (or non-consensual Confirmation of the Plan) pursuant to section
1129(b) of the Bankruptcy Code.
8.6 Alternatives to Confirmation and Consummation of the Plan
If the Plan cannot be confirmed, subject to the requirements of the Restructuring Support Agreement, the
Debtors may seek to (a) prepare and present to the Bankruptcy Court an alternative chapter 11 plan for confirmation,
(b) effect a merger or sale transaction, including, potentially, a sale of all or substantially all of the Debtors’ assets
pursuant to section 363 of the Bankruptcy Code, or (c) liquidate their assets and businesses under chapter 7 of the
Bankruptcy Code. If the Debtors were to pursue a liquidation of their assets and businesses in chapter 7, the Debtors
would convert the Chapter 11 Cases to cases under chapter 7 of the Bankruptcy Code, and a trustee would be appointed
to liquidate the assets of the Debtors for distribution in accordance with the priorities established by the Bankruptcy
Code. A discussion of the effects that a chapter 7 liquidation would have on creditors’ recoveries and the Debtors is
described in the unaudited Liquidation Analysis attached hereto as Exhibit C.
ARTICLE IX
IMPORTANT SECURITIES LAW DISCLOSURE
9.1 New Common Equity and New Warrants
As discussed herein, the Plan provides for the New Common Equity and the New Warrants to be distributed
to Holders of Term Claims in accordance with Article III of the Plan. The New Common Equity will also be
distributed under the Management Incentive Plan after the Effective Date.
The Debtors believe that the class of New Common Equity and the New Warrants will be “securities,” as
defined in section 2(a)(1) of the Securities Act, section 101 of the Bankruptcy Code and any applicable Blue Sky Law.
The Debtors further believe that the offer and sale of the New Common Equity and/or the New Warrants pursuant to
the Plan is, and subsequent transfers of the New Common Equity and/or New Warrants by the Holders thereof that
are not “underwriters” (as defined in section 2(a)(11) of the Securities Act and in the Bankruptcy Code) will be,
exempt from federal and state securities registration requirements under the Bankruptcy Code and any applicable state
Blue Sky Law as described in more detail below. New Equity distributed pursuant to the Management Incentive Plan
will be issued pursuant to another exemption from registration under the Securities Act and other applicable law.
9.2 Issuance and Resale of New Common Equity and New Warrants
All shares of the New Common Equity and the New Warrants issued pursuant to the Plan on account of
Claims and all shares of New Common Equity issued upon the exercise of the New Warrants will be issued without
registration under the Securities Act or any similar federal, state, or local law in reliance on Section 1145(a) of the
Bankruptcy Code. Section 1145 of the Bankruptcy Code provides that Section 5 of the Securities Act and any state
law requirements for the offer and sale of a security do not apply to the offer or sale of stock, options, warrants or
other securities by a debtor if (a) the offer or sale occurs under a plan of reorganization, (b) the recipients of the
securities hold a claim against, an interest in, or claim for administrative expense against, the debtor, and (c) the
securities are issued in exchange for a claim against or interest in a debtor or are issued principally in such exchange
or partly for cash and property. The Debtors believe that the offer and sale of the New Common Equity and New
Warrants in exchange for the Claims described above satisfy the requirements of section 1145(a) of the Bankruptcy
Code. The offering, issuance, and distribution of New Common Equity pursuant to the Plan shall be exempt from,
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among other things, the registration requirements of section 5 of the Securities Act pursuant to section 4(a)(2) of the
Securities Act and/or another exemption from registration under the Securities Act. Accordingly, no registration
statement will be filed under the Securities Act or any state securities laws. Recipients of the New Common Equity
and the New Warrants are advised to consult with their own legal advisors as to the availability of any exemption from
registration under the Securities Act and any applicable state Blue Sky Law. As discussed below, the exemptions
provided for in section 1145(a) do not apply to an entity that is deemed an “underwriter” as such term is defined in
section 1145(b) of the Bankruptcy Code.
9.3 Resales of New Common Equity and New Warrants; Definition of Underwriter
Section 1145(b)(1) of the Bankruptcy Code defines an “underwriter” as one who, except with respect to
“ordinary trading transactions” of an entity that is not an “issuer”: (a) purchases a claim against, interest in, or claim
for an administrative expense in the case concerning, the debtor, if such purchase is with a view to distribution of any
security received or to be received in exchange for such claim or interest; (b) offers to sell securities offered or sold
under a plan for the holders of such securities; (c) offers to buy securities offered or sold under a plan from the holders
of such securities, if such offer to buy is (i) with a view to distribution of such securities and (ii) under an agreement
made in connection with the plan, with the consummation of the plan, or with the offer or sale of securities under the
plan; or (d) is an issuer of the securities within the meaning of section 2(a)(11) of the Securities Act. In addition, a
person who receives a fee in exchange for purchasing an issuer’s securities could also be considered an underwriter
within the meaning of section 2(a)(11) of the Securities Act.
The definition of an “issuer” for purposes of whether a person is an underwriter under section 1145(b)(1)(D)
of the Bankruptcy Code, by reference to section 2(a)(11) of the Securities Act, includes as “statutory underwriters” all
“affiliates,” which are all persons who, directly or indirectly, through one or more intermediaries, control, are
controlled by, or are under common control with, an issuer of securities. The reference to “issuer,” as used in the
definition of “underwriter” contained in section 2(a)(11) of the Securities Act, is intended to cover “Controlling
Persons” of the issuer of the securities. “Control,” as defined in rule 405 of the Securities Act, means to possess,
directly or indirectly, the power to direct or cause to direct management and policies of a Person, whether through
owning voting securities, contract, or otherwise. Accordingly, an officer or director of a reorganized debtor or its
successor may be deemed to be a “controlling person” of the debtor or successor under a plan of reorganization,
particularly if the management position or directorship is coupled with ownership of a significant percentage of the
reorganized debtor’s or its successor’s voting securities.
Resales of the New Common Equity and/or the New Warrants offered, issued and distributed pursuant to the
Plan in reliance on Section 1145 of the Bankruptcy Code by entities deemed to be “underwriters” are not exempted
by section 1145 of the Bankruptcy Code from registration under the Securities Act or other applicable law.
Under certain circumstances, Holders of New Common Equity and/or New Warrants offered, issued and
distributed pursuant to the Plan in reliance on Section 1145 of the Bankruptcy Code who are deemed to be
“underwriters” may be entitled to resell their New Common Equity pursuant to the limited safe harbor resale
provisions of Rule 144 of the Securities Act. Any and all such Securities issued in reliance on Section 4(a)(2) of the
Securities Act and/or another exemption from registration under the Securities Act shall be deemed “restricted
securities” that may not be offered, sold, exchanged, assigned, or otherwise transferred unless they are registered under
the Securities Act or an exemption from registration under the Securities Act is available and in compliance with any
applicable state or foreign securities laws.
Generally, Rule 144 of the Securities Act would permit the public sale of securities received by such Person
if the required holding period has been met and, under certain circumstances, current information regarding the issuer
is publicly available and volume limitations, manner of sale requirements and certain other conditions are met.
Whether any particular Person would be deemed to be an “underwriter” with respect to the New Common Equity and
New Warrants would depend upon various facts and circumstances applicable to that Person. Accordingly, the
Debtors express no view as to whether any Person would be deemed an “underwriter” with respect to the New
Common Equity and/or New Warrants and, in turn, whether any Person may freely resell New Common Equity and/or
New Warrants. However, the Debtors do not intend to make publicly available the requisite information regarding
APC, and, as a result, after the holding period, Rule 144 will not be available for resales of the New Common Equity
or New Warrants by Persons deemed to be underwriters or otherwise.
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Accordingly, the Debtors recommend that potential recipients of the New Common Equity and the
New Warrants consult their own counsel concerning their ability to freely trade such securities without
compliance with the federal law and any applicable state Blue Sky Law. In addition, these securities will not
be registered under the Exchange Act or listed on any national securities exchange. The Debtors make no
representation concerning the ability of a person to dispose of the New Common Equity or the New Warrants.
9.4 New Common Equity & Management Incentive Plan
The Management Incentive Plan shall reserve no more than 10% of the fully diluted New Common Equity
to be awarded to participants on terms to be determined in accordance with the terms and conditions contained in the
Plan. The Management Incentive Plan shall be included in the Plan Supplement. The Confirmation Order shall
authorize the New Board to adopt and enter into the Management Incentive Plan. The New Common Equity issued
pursuant to the Management Incentive Plan shall dilute the New Common Equity outstanding at the time of such
issuance. New Equity distributed pursuant to the Management Incentive Plan will be issued pursuant to an exemption
from registration under the Securities Act and other applicable law.
ARTICLE X
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
10.1 Introduction
The Debtor group is composed of some entities taxed as partnerships for U.S. federal income tax purposes,
some entities taxed as corporations for U.S. federal income tax purposes, and some entities that are disregarded for
U.S. federal income tax purposes. APC Automotive Technologies Intermediate Holdings, LLC is a partnership, and
APC Automotive Technologies, LLC is a disregarded entity. APC Automotive Technologies, LLC owns CWD
Acquisition, LLC, which is taxed as a corporation. APC Automotive Technologies, LLC also owns AP Emissions
Technologies, LLC, AirTek, LLC, and Aristo, LLC, which are all disregarded entities. CWD Acquisition, LLC owns
CWD Holding Corp., and indirectly owns CWD Intermediate Holding Corp., and Qualis Enterprises, Inc., which are
corporations, and CWD, LLC and Qualis Automotive, LLC, which are both disregarded entities. AP Emissions
Technologies, LLC owns AP Exhaust Products DISC, Inc., which is a corporation, and Eastern Manufacturing, LLC,
which is a partnership. A portion of the debt is allocated to the entities taxed as corporations, and a portion of the debt
is allocated to the entities taxed as partnerships.
The following discussion is a summary of certain United States (“U.S.”) federal income tax consequences of
the consummation of the Plan to the Debtors and to certain Holders of Claims. The following summary does not
address the U.S. federal income tax consequences to Holders of Claims or Interests not entitled to vote to accept or
reject the Plan. This summary is based on the Internal Revenue Code of 1986, as amended (the “Tax Code”), the U.S.
Treasury Regulations promulgated thereunder (the “Treasury Regulations”), judicial authorities, published
administrative positions of the U.S. Internal Revenue Service (the “IRS”), and other applicable authorities, all as in
effect on the date of this Disclosure Statement and all of which are subject to change or differing interpretations,
possibly with retroactive effect. Due to the lack of definitive judicial and administrative authority in a number of
areas, substantial uncertainty may exist with respect to some of the tax consequences described below. No opinion of
counsel has been obtained and the Debtors do not intend to seek a ruling from the IRS as to any of the tax consequences
of the Plan discussed below. The discussion below is not binding upon the IRS or the courts. No assurance can be
given that the IRS would not assert, or that a court would not sustain, a different position than any position discussed
herein.
This discussion does not purport to address all aspects of U.S. federal income taxation that may be relevant
to the Debtors or to certain Holders of Claims in light of their individual circumstances. This discussion does not
address tax issues with respect to such Holders of Claims subject to special treatment under the U.S. federal income
tax laws (including, for example, banks, governmental authorities or agencies, pass-through entities, subchapter S
corporations, dealers and traders in securities, insurance companies, financial institutions, tax exempt organizations,
small business investment companies, foreign taxpayers, Persons who are related to the Debtors within the meaning
of the Tax Code, Persons using a mark-to-market method of accounting, Holders of Claims who are themselves in
bankruptcy, and regulated investment companies and those holding, or who will hold, Claims, or the New Common
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Equity or any other consideration to be received under the Plan, as part of a hedge, straddle, conversion, or other
integrated transaction). No aspect of state, local, estate, gift, or non-U.S. taxation is addressed. Furthermore, this
summary assumes that Holders of Claims hold only Claims in a single Class and holds Claims as “capital assets”
(within the meaning of section 1221 of the Tax Code). This summary does not address any special arrangements or
contractual rights that are not being received or entered into in respect of an underlying Claim, including the tax
treatment of any backstop fees or similar arrangements (including any ramifications such arrangements may have on
the treatment of a Holder under the Plan). This summary also assumes that the various debt and other arrangements
to which the Debtors are a party will be respected for U.S. federal income tax purposes in accordance with their form.
The U.S. federal income tax consequences of the implementation of the Plan to the Debtors and Holders of Claims
described below also may vary depending on the nature of any Restructuring Transactions that the Debtors engage in.
For purposes of this discussion, a “U.S. Holder” is a Holder that is: (1) an individual citizen or resident of
the United States for U.S. federal income tax purposes; (2) a corporation (or other entity treated as a corporation for
U.S. federal income tax purposes) created or organized under the laws of the United States, any state thereof or the
District of Columbia; (3) an estate the income of which is subject to U.S. federal income taxation regardless of the
source of such income; or (4) a trust (A) if a court within the United States is able to exercise primary jurisdiction over
the trust’s administration and one or more United States persons has authority to control all substantial decisions of
the trust or (B) that has a valid election in effect under applicable Treasury Regulations to be treated as a United States
person. For purposes of this discussion, a “Non-U.S. Holder” is any Holder that is not a U.S. Holder other than any
partnership (or other entity treated as a partnership or other pass-through entity for U.S. federal income tax purposes).
If a partnership (or other entity treated as a partnership or other pass-through entity for U.S. federal income
tax purposes) is a Holder of a Claim, the tax treatment of a partner (or other beneficial owner) generally will depend
upon the status of the partner (or other beneficial owner) and the activities of the partner (or other beneficial owner)
and the entity. Partners (or other beneficial owners) of partnerships (or other pass-through entities) that are Holders
of Claims or Interests should consult their respective tax advisors regarding the U.S. federal income tax consequences
of the Plan.
ACCORDINGLY, THE FOLLOWING SUMMARY OF CERTAIN U.S. FEDERAL INCOME TAX
CONSEQUENCES IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT A SUBSTITUTE FOR
CAREFUL TAX PLANNING AND ADVICE BASED UPON THE INDIVIDUAL CIRCUMSTANCES
PERTAINING TO A HOLDER OF A CLAIM OR INTEREST. ALL HOLDERS OF CLAIMS OR
INTERESTS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS FOR THE FEDERAL, STATE,
LOCAL, AND NON-U.S. TAX CONSEQUENCES OF THE PLAN.
(a) Certain U.S. Federal Income Tax Consequences of the Plan to the Debtors and the
Reorganized Debtors
(1) In General
APC Automotive Technologies Intermediate Holdings, LLC is taxed as a partnership for U.S. tax purposes,
and some of the other Debtors, which are all directly or indirectly owned by APC Automotive Technologies
Intermediate Holdings, LLC, are currently treated as disregarded entities for U.S. federal income tax purposes.
Accordingly, the U.S. federal income tax consequences of consummating the Plan will to some extent not be borne
by the Debtors, but by the Holders of APC Automotive Technologies Intermediate Holdings, LLC Interests.
The tax consequences of the implementation of the Plan to the Debtors will differ depending on whether the
Restructuring Transactions are structured as a taxable sale of the assets of any Debtor (a “Taxable Asset Sale
Transaction”) or as a recapitalization of the Debtors (a “Recapitalization Transaction”). Although not free from doubt,
the Debtors currently expect that the Restructuring Transactions will be structured as a Taxable Asset Sale Transaction.
The discussion below assumes that the Restructuring Transactions are structured as a Taxable Asset Sale Transaction.
If the Debtors (in conjunction with other parties in interest) determine, prior to the Effective Date, that the
Restructuring Transactions will be structured in whole or in part as a Recapitalization Transaction (or under another
alternative structure), a supplemental disclosure will be filed containing a discussion of certain tax consequences of
such Recapitalization Transaction (or other alternative structure).
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(2) Taxable Asset Sale Transaction
If the transactions pursuant to the Plan constitute a Taxable Asset Sale Transaction, the Debtors will recognize
gain or loss upon a transfer of all or a portion of their assets in an amount equal to the difference between the aggregate
fair market value of the assets transferred by the Debtors and the Debtors’ aggregate tax basis in such assets.
For U.S. federal income tax purposes, a portion of such gain or loss will be allocated to the Holders of APC
Automotive Technologies Intermediate Holdings, LLC Interests, and the remainder will be recognized by CWD
Acquisition LLC and its subsidiaries.
Realized gains, if any, may be offset by losses and deductions, which may include interest deductions that
may be (or become) available under Section 163(j) of the Tax Code, and losses that may be available with respect to
the equity of the Debtors; provided that any such gain that is ordinary in nature may not be offset by capital losses.
Any taxable gain remaining after such offsets would result in a cash tax liability. The Debtors currently anticipate
that the sale of assets will generate a loss and thus not give rise to material federal cash tax liabilities.
The Reorganized Debtors will take a fair market value basis in the acquired assets, and the Reorganized
Debtors will not inherit any of the NOLs or other tax attributes of the Debtors.
(3) Cancellation of Debt Income
In general, absent an exception, a debtor will realize and recognize cancellation of debt income (“COD
Income”) upon satisfaction of its outstanding indebtedness for total consideration less than the amount of such
indebtedness.
The amount of COD Income, in general, is the excess of (a) the adjusted issue price of the indebtedness
satisfied, over (b) the fair market value of any consideration given in satisfaction of such indebtedness at the time of
the exchange.
Under section 108 of the Tax Code, a taxpayer is not required to include COD Income in gross income (a) if
the taxpayer is under the jurisdiction of a court in a case under chapter 11 of the Bankruptcy Code and the discharge
of debt occurs pursuant to that case (the “Bankruptcy Exception”), or (b), to the extent that the taxpayer is insolvent
immediately before the discharge (the “Insolvency Exception”). Instead, as a consequence of such exclusion, a
taxpayer-debtor must reduce its tax attributes by the amount of COD Income that it excluded from gross income. In
general, tax attributes will be reduced in the following order: (a) net operating losses (“NOLs”); (b) most tax credits;
(c) capital loss carryovers; (d) tax basis in assets (but not below the amount of liabilities to which the debtor remains
subject); (e) passive activity loss and credit carryovers; and (f) foreign tax credits. Alternatively, the taxpayer can
elect first to reduce the basis of its depreciable assets pursuant to section 108(b)(5) of the Tax Code.
Under section 108(d)(6) of the Tax Code, when an entity that is taxed as a partnership (such as APC
Automotive Technologies Intermediate Holdings, LLC) realizes COD Income, its partners are treated as receiving
their allocable share of such COD Income and the Bankruptcy Exception and the Insolvency Exception (and related
attribute reduction) are applied at the partner level rather than at the entity level. Accordingly, the Holders of APC
Automotive Technologies Intermediate Holdings, LLC Interests will be treated as receiving their allocable share, if
any, of the COD Income realized by Automotive Technologies Intermediate Holdings, LLC. Such Holders will only
be able to exclude COD Income to the extent they themselves meet the Bankruptcy Exception or the Insolvency
Exception.
CWD Acquisition, LLC, CWD Holding Corp., and certain other Debtor entities that are part of the same
consolidated group (collectively, the “Corporate Debtors”) are classified as corporations for U.S. federal income tax
purposes. In connection with the Restructuring Transactions, the Corporate Debtors expect to realize significant COD
Income. The amount of the tax attributes required to be reduced pursuant to section 108 of the Tax Code will depend
on whether the transactions undertaken pursuant to the Plan are structured as a Taxable Asset Sale Transaction or
Recapitalization Transaction. Further, the exact amount of any COD Income that will be realized by the Corporate
Debtors will not be determinable until the consummation of the Plan. Regardless of the implemented structure,
however, the Corporate Debtors expect that the amount of such COD Income will be sufficient to eliminate most, if
not all, of any NOLs and tax credits remaining following the asset sale. In a Taxable Sale Transaction, any tax
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attributes remaining after reduction under section 108 of the Tax Code will not be conveyed to or retained by the
Reorganized Debtors.
As of the end of 2019, the Corporate Debtors estimate that they have no remaining federal net operating
losses (“NOLs”). However, the Corporate Debtors may generate additional NOLs in 2020.
The Corporate Debtors do not currently believe they have any net capital loss carry forwards or other tax
attributes, other than approximately $920 thousand of disallowed interest carryforwards that have been deferred under
section 163(j) of the Tax Code.
(b) Certain U.S. Federal Income Tax Consequences of the Plan to U.S. Holders of Term A
Claims and Term B Claims (“Term Claims”) (Class 4) (“U.S. Holders”)
The following discussion assumes that the Debtors will undertake the Restructuring Transactions currently
contemplated by the Plan. Holders of Claims are urged to consult their tax advisors regarding the tax consequences
of the Restructuring Transactions.
(1) U.S. Federal Income Tax Consequences of the Plan to U.S. Holders of Term A Claims
and Term B Claims (“Term Claims”)
Pursuant to the Plan, in exchange for full and final satisfaction, compromise, settlement, release, and
discharge of Term A Claims, each Holder thereof will receive its Pro Rata Share of the New Common Equity.
Pursuant to the Plan, in exchange for full and final satisfaction, compromise, settlement, release, and
discharge of Term B Claims, each Holder thereof will receive its Pro Rata Share of the New Warrants.
Each such Holder’s exchange of its Term A or Term B Claims (“Term Claims”) for such consideration should
be treated as a taxable exchange under Section 1001 of the Tax Code. Accordingly, other than with respect to any
amounts received that are attributable to accrued but unpaid interest (or original issue discount), each U.S. Holder
should recognize gain or loss in an amount equal to the difference, if any, between (x) the fair market value of the
New Common Equity or New Warrants, as applicable, and (y) such U.S. Holder’s adjusted basis, if any, in such Claim.
The character of such gain or loss will be determined by a number of factors, including, among other things, the tax
status of the U.S. Holder, the rules regarding “market discount” (described below) and accrued but unpaid interest (or
original issue discount), and whether and to what extent the U.S. Holder had previously claimed a bad-debt deduction
with respect to its Claim. If recognized gain or loss is capital in nature, it generally would be long-term capital gain
or loss if the U.S. Holder held its Claim for more than one year as of the Effective Date. Such U.S. Holder’s tax basis
in the New Common Equity or New Warrants, as applicable, should equal the fair market value of such property as
of the Effective Date. Such U.S. Holder’s holding period in the New Common Equity or New Warrants, as applicable
received should begin on the day after the Effective Date.
For the treatment of the exchange to the extent a portion of the consideration received is allocable to accrued
but unpaid interest, OID or market discount, see the sections entitled “Accrued but Untaxed Interest (or OID)” and
“Market Discount” below.
(2) Accrued but Untaxed Interest (or OID)
A portion of the consideration received by U.S. Holders of Claims may be attributable to accrued but untaxed
interest on such Claims. Such amount should be taxable to that U.S. Holder as ordinary interest income if such accrued
interest has not been previously included in the Holder’s gross income for U.S. federal income tax purposes.
Conversely, U.S. Holders of Claims may be able to recognize a deductible loss to the extent that any accrued interest
on the Claims was previously included in the Holder’s gross income but was not paid in full by the Debtors. Such
loss may be ordinary, but the tax law is unclear on this point.
If the fair value of the consideration is not sufficient to fully satisfy all principal and interest on Allowed
Claims, the extent to which such consideration will be attributable to accrued but untaxed interest is unclear. Under
the Plan, the aggregate consideration to be distributed to U.S. Holders of Allowed Claims in each Class will be
allocated first to the principal amount of Allowed Claims, with any excess allocated to untaxed interest that accrued
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on such Claims, if any. Certain legislative history indicates that an allocation of consideration as between principal
and interest provided in a chapter 11 plan of reorganization is binding for U.S. federal income tax purposes, while
certain Treasury Regulations treat payments as allocated first to any accrued but untaxed interest. The IRS could take
the position that the consideration received by the U.S. Holder should be allocated in some way other than as provided
in the Plan. Holders of Claims should consult their respective tax advisors regarding the proper allocation of the
consideration received by them under the Plan between principal and accrued but untaxed interest in such event.
(3) Market Discount
Under the “market discount” provisions of the Tax Code, some or all of any gain realized by a U.S. Holder
of an Allowed Claim may be treated as ordinary income (instead of capital gain), to the extent of the amount of “market
discount” on the debt instruments constituting the exchanged Claim. In general, a debt instrument is considered to
have been acquired with “market discount” if it is acquired other than on original issue and if the U.S. Holder’s
adjusted tax basis in the debt instrument is less than (a) the sum of all remaining payments to be made on the debt
instrument, excluding “qualified stated interest” or (b) in the case of a debt instrument issued with original issue
discount (“OID”), its adjusted issue price, in each case, by at least a de minimis amount (equal to 0.25% of the sum
of all remaining payments to be made on the debt instrument, excluding qualified stated interest, multiplied by the
number of remaining whole years to maturity).
Any gain recognized by a U.S. Holder on the taxable disposition of an Allowed Claim (as described below)
that was acquired with market discount should be treated as ordinary income to the extent of the market discount that
accrued thereon while such Claim was considered to be held by the Holder (unless the Holder elected to include market
discount in income as it accrued).
U.S. federal income tax laws enacted in December 2017 added section 451 of the Tax Code. This new
provision generally would require accrual method U.S. Holders that prepare an “applicable financial statement” (as
defined in section 451 of the Tax Code) to include certain items of income (such as market discount) no later than the
time such amounts are reflected on such a financial statement. The application of this rule to income of a debt
instrument with market discount is effective for taxable years beginning after December 31, 2018. However, the IRS
has issued proposed Treasury Regulations confirming that taxpayers may continue to defer income (including market
discount income) for tax purposes until there is a payment or sale at a gain. Accordingly, although market discount
may have to be included in income currently as it accrues for financial accounting purposes, taxpayers may continue
to defer the income for tax purposes. U.S. Holders are urged to consult their own tax advisors concerning the
application of the market discount rules to their Claims.
(4) Medicare Tax
Certain U.S. Holders that are individuals, estates, or trusts are required to pay an additional 3.8% tax on,
among other things, gains from the sale or other disposition of capital assets. U.S. Holders that are individuals, estates,
or trusts should consult their tax advisors regarding the effect, if any, of this tax provision on their ownership and
disposition of any consideration to be received under the Plan.
For a description of certain limitations on the deductibility of capital losses, see the section entitled
“Limitation on Use of Capital Losses” below.
(5) Limitation on Use of Capital Losses
A U.S. Holder of an Allowed Claim who recognizes capital losses as a result of the distributions under the
Plan will be subject to limits on its use of capital losses. For a non-corporate U.S. Holder, capital losses may be used
to offset any capital gains (without regard to holding periods) plus ordinary income to the extent of the lesser of (a)
$3,000 ($1,500 for married individuals filing separate returns) or (b) the excess of the capital losses over the capital
gains. A non-corporate U.S. Holder may carry over unused capital losses and apply them to capital gains and a portion
of their ordinary income for an unlimited number of years. For corporate U.S. Holders, losses from the sale or
exchange of capital assets may only be used to offset capital gains. A corporate U.S. Holder who has more capital
losses than can be used in a tax year may be allowed to carry over the excess capital losses for use in succeeding tax
years. Corporate U.S. Holders may only carry over unused capital losses for the five years following the capital loss
year, but are allowed to carry back unused capital losses to the three years preceding the capital loss year.
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(6) U.S. Federal Income Tax Consequences to Holders Regarding Owning and Disposing
of Shares of New Common Equity and New Warrants
A. Ownership and Disposition of Shares of New Common Equity
(i) Dividends on New Common Equity
Any distributions made on account of the New Common Equity will constitute dividends for U.S. federal
income tax purposes to the extent of the current or accumulated earnings and profits of the entity issuing the New
Common Equity as determined under U.S. federal income tax principles. “Qualified dividend income” received by a
non-corporate U.S. Holder is subject to preferential tax rates. To the extent that a U.S. Holder receives distributions
that would otherwise constitute dividends for U.S. federal income tax purposes but that exceed such current and
accumulated earnings and profits, such distributions will be treated first as a non-taxable return of capital reducing the
U.S. Holder’s basis in its shares of the New Common Equity. Any such distributions in excess of the U.S. Holder’s
basis in its shares (determined on a share-by-share basis) generally will be treated as capital gain.
Subject to applicable limitations, distributions treated as dividends paid to U.S. Holders that are corporations
generally will be eligible for the dividends-received deduction. However, the dividends-received deduction is only
available if certain holding period requirements are satisfied. The length of time that a shareholder has held its stock
is reduced for any period during which the shareholder’s risk of loss with respect to the stock is diminished by reason
of the existence of certain options, contracts to sell, short sales, or similar transactions. In addition, to the extent that
a corporation incurs indebtedness that is directly attributable to an investment in the stock on which the dividend is
paid, all or a portion of the dividends received deduction may be disallowed.
(ii) Sale, Redemption, or Repurchase of New Common Equity
Unless a non-recognition provision applies, and subject to the market discount rules discussed above, U.S.
Holders generally will recognize capital gain or loss upon the sale, redemption, or other taxable disposition of the
New Common Equity. Such capital gain will be long-term capital gain if at the time of the sale, redemption, or other
taxable disposition, the U.S. Holder held the New Common Equity for more than one year. Long-term capital gains
of an individual taxpayer generally are taxed at preferential rates. The deductibility of capital losses is subject to
certain limitations as described above.
B. Ownership, Exercise, and Disposition of New Warrants
A U.S. Holder that elects to exercise the New Warrants will be treated as purchasing, in exchange for its New
Warrants and the amount of Cash funded by the U.S. Holder to exercise the New Warrants, the New Common Equity
it is entitled to purchase pursuant to the New Warrants. Such a purchase will generally be treated as the exercise of
an option under general tax principles, and as such a U.S. Holder should not recognize income, gain or loss for U.S.
federal income tax purposes when it exercises the New Warrants. A U.S. Holder’s aggregate tax basis in the New
Common Equity received upon exercise will equal the sum of (i) the amount of Cash paid by the U.S. Holder to
exercise its New Warrants plus (ii) such U.S. Holder’s tax basis in its New Warrants immediately before the New
Warrants are exercised.
Under section 305 of the Tax Code, certain transactions that affect an increase in the proportionate interest
of a shareholder or warrant holder (treating warrants as stock for this purpose) in the corporation’s assets are treated
as creating deemed distributions to such shareholder or warrant holder in respect of such “stock” interest. Any deemed
distribution will be taxed and reported to the IRS in the same manner as an actual distribution on stock and thus could
potentially be taxable as a dividend (in whole or in part), despite the absence of any actual payment of cash (or
property) to the Holder in connection with such distribution.
A U.S. Holder that elects not to exercise the New Warrants may be entitled to claim a capital loss equal to
the amount of tax basis allocated to the New Warrants, subject to any limitations on such U.S. Holder’s ability to
utilize capital losses. Such U.S. Holders are urged to consult with their own tax advisors as to the tax consequences
of either electing to exercise or electing not to exercise the New Warrants.
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In the event that a U.S. Holder sells its New Warrants in a taxable transaction, the U.S. Holder will recognize
gain or loss upon such sale in an amount equal to the difference between the amount realized upon such sale and the
U.S. Holder’s tax basis in the New Warrants. Such gain or loss will be treated as gain or loss from the sale or exchange
of property which has the same character as the New Common Equity to which the New Warrants relate would have
had in the hands of the U.S. Holder if such stock had been acquired by the U.S. Holder upon exercise. If such sale
gives rise to capital gain or loss to the U.S. Holder, such gain or loss will be long-term or short-term in character based
upon the length of time such U.S. Holder has held his or her New Warrants.
(c) Certain U.S. Federal Income Tax Consequences to Non-U.S. Holders of Certain Claims
Entitled to Vote
The following discussion includes only certain U.S. federal income tax consequences to Non-U.S. Holders.
The discussion does not include any non-U.S. tax considerations. The rules governing the U.S. federal income tax
consequences to Non-U.S. Holders are complex. Each Non-U.S. Holder should consult its own tax advisor regarding
the U.S. federal, state, and local and the foreign tax consequences to such Non-U.S. Holder and the ownership and
disposition of the New Common Equity or New Warrants, as applicable.
(1) Gain Recognition.
Whether a Non-U.S. Holder realizes gain or loss on the exchange and the amount of such gain or loss is
determined in the same manner as set forth above in connection with U.S. Holders.
Any gain realized by a Non-U.S. Holder on the exchange of its Claim or Interest generally will not be subject
to U.S. federal income taxation unless (a) the Non-U.S. Holder is an individual who is present in the United States for
183 days or more during the taxable year in which the Sale Transaction occurs and certain other conditions are met or
(b) such gain is effectively connected with the conduct by such Non-U.S. Holder of a trade or business in the United
States (and if an income tax treaty applies, such gain is attributable to a permanent establishment maintained by such
Non-U.S. Holder in the United States).
If the first exception applies, to the extent that any gain is taxable, the Non-U.S. Holder generally will be
subject to U.S. federal income tax at a rate of 30 percent (or at a reduced rate or exemption from tax under an applicable
income tax treaty) on the amount by which such Non-U.S. Holder’s capital gains allocable to U.S. sources exceed
capital losses allocable to U.S. sources during the taxable year of the exchange. If the second exception applies, the
Non-U.S. Holder generally will be subject to U.S. federal income tax with respect to any gain realized on the exchange
if such gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States in
the same manner as a U.S. Holder. In order to claim an exemption from withholding tax, such Non-U.S. Holder will
be required to provide properly executed original copies of IRS Form W-8ECI (or such successor form as the IRS
designates). In addition, if such a Non-U.S. Holder is a corporation, it may be subject to a branch profits tax equal to
30 percent (or such lower rate provided by an applicable treaty) of its effectively connected earnings and profits for
the taxable year, subject to certain adjustments.
(2) Interest Payments; Accrued but Untaxed Interest.
Payments to a Non-U.S. Holder that are attributable to either (a) interest on (or OID accruals with respect to)
debt received under the Plan, or (b) accrued but untaxed interest on their Allowed Claim generally will not be subject
to U.S. federal income or withholding tax, provided that the withholding agent has received or receives, prior to
payment, appropriate documentation (generally, IRS Form W-8BEN or W-8BEN-E) establishing that the Non-U.S.
Holder is not a U.S. person, unless:
the Non-U.S. Holder actually or constructively owns 10 percent or more of the total combined voting
power of all classes of the Debtor obligor on a Claim (in the case of consideration received in respect
of accrued but unpaid interest), with respect to the debt received under the Plan (in the case of
interest payments with respect thereto);
the Non-U.S. Holder is a “controlled foreign corporation” that is a “related person” with respect to
the Debtors (each, within the meaning of the Tax Code);
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the Non-U.S. Holder is a bank receiving interested described in section 881(c)(3)(A) of the Tax
Code; or
such interest (or OID) is effectively connected with the conduct by the Non-U.S. Holder of a trade
or business within the United States (in which case, provided the Non-U.S. Holder provides a
properly executed IRS Form W-8ECI (or successor form) to the withholding agent), the Non-U.S.
Holder (i) generally will not be subject to withholding tax, but (ii) will be subject to U.S. federal
income tax in the same manner as a U.S. Holder (unless an applicable income tax treaty provides
otherwise), and a Non-U.S. Holder that is a corporation for U.S. federal income tax purposes may
also be subject to a branch profits tax with respect to such Non-U.S. Holder’s effectively connected
earnings and profits that are attributable to the accrued but untaxed interest at a rate of 30 percent
(or at a reduced rate or exemption from tax under an applicable income tax treaty).
A Non-U.S. Holder that does not qualify for exemption from withholding tax with respect to interest that is
not effectively connected income generally will be subject to withholding of U.S. federal income tax at a 30 percent
rate (or at a reduced rate or exemption from tax under an applicable income tax treaty) on (a) interest on debt received
under the Plan and (b) payments that are attributable to accrued but untaxed interest on such Non-U.S. Holder’s
Allowed Claim. For purposes of providing a properly executed IRS Form W-8BEN or W-8BEN-E, special procedures
are provided under applicable Treasury Regulations for payments through qualified foreign intermediaries or certain
financial institutions that hold customers’ securities in the ordinary course of their trade or business.
(3) U.S. Federal Income Tax Consequences to Non-U.S. Holders of Owning and
Disposing of New Common Equity and New Warrants
A. Dividends on New Common Equity
Any distributions made with respect to New Common Equity will constitute dividends for U.S. federal
income tax purposes to the extent of the current or accumulated earnings and profits of the entity issuing the New
Common Equity, as determined under U.S. federal income tax principles. Except as described below, dividends paid
with respect to New Common Equity held by a Non-U.S. Holder that are not effectively connected with such Non-
U.S. Holder’s conduct of a U.S. trade or business (and if an income tax treaty applies, are not attributable to a
permanent establishment maintained by such Non-U.S. Holder in the United States) will be subject to U.S. federal
withholding tax at a rate of 30% (or lower treaty rate or exemption from tax, if applicable). A Non-U.S. Holder
generally will be required to satisfy certain IRS certification requirements in order to claim a reduction of or exemption
from withholding under a tax treaty by filing IRS Form W-8BEN or W-8BEN-E, as applicable (or a successor form),
or other applicable IRS Form W-8, upon which the Non-U.S. Holder certifies, under penalties of perjury, its status as
a non-U.S. person and its entitlement to the lower treaty rate or exemption from tax with respect to such payments.
Dividends paid with respect to New Common Equity held by a Non-U.S. Holder that are effectively connected with
a Non-U.S. Holder’s conduct of a U.S. trade or business (and if an income tax treaty applies, are attributable to a
permanent establishment maintained by such Non-U.S. Holder in the United States) generally will not be subject to
withholding tax, provided the Non-U.S. Holder provides a properly executed IRS Form W-8ECI (or a successor form).
However, such dividends generally will be subject to U.S. federal income tax in the same manner as a U.S. Holder,
and a Non-U.S. Holder that is a corporation for U.S. federal income tax purposes may also be subject to a branch
profits tax with respect to such Non-U.S. Holder’s effectively connected earnings and profits that are attributable to
the dividends at a rate of 30% (or at a reduced rate or exemption from tax under an applicable income tax treaty).
B. Sale, Redemption, or Repurchase of New Common Equity
A Non-U.S. Holder generally will not be subject to U.S. federal income tax with respect to any gain realized
on the sale or other taxable disposition (including a cash redemption) of New Common Equity unless: (i) such Non-
U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition
and certain other conditions are met; (ii) such gain is effectively connected with such Non-U.S. Holder’s conduct of a
U.S. trade or business (and if an income tax treaty applies, such gain is attributable to a permanent establishment
maintained by such Non-U.S. Holder in the United States); or (iii) a Reorganized Debtor is or has been during a
specified testing period a “U.S. real property holding corporation” (“USRPHC”) for U.S. federal income tax purposes.
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If the first exception applies, the Non-U.S. Holder generally will be subject to U.S. federal income tax at a
rate of 30% (or at a reduced rate or exemption from tax under an applicable income tax treaty) on the amount by which
such Non-U.S. Holder’s capital gains allocable to U.S. sources exceed capital losses allocable to U.S. sources during
the taxable year of disposition of New Common Equity. If the second exception applies, the Non-U.S. Holder
generally will be subject to U.S. federal income tax with respect to such gain in the same manner as a U.S. Holder,
and a Non-U.S. Holder that is a corporation for U.S. federal income tax purposes may also be subject to a branch
profits tax with respect to earnings and profits effectively connected with a U.S. trade or business that are attributable
to such gains at a rate of 30% (or at a reduced rate or exemption from tax under an applicable income tax treaty). At
this time the Debtors do not anticipate that any of the Reorganized Debtors will be a USRPHC for U.S. federal income
tax purposes on the Effective Date. However, the Debtors cannot provide a guarantee of that result, nor can the
Debtors guarantee that a Reorganized Debtor will not become a USRPHC in the future.
C. Ownership, Exercise, and Disposition of the New Warrants
A Non-U.S. Holder that elects to exercise the New Warrants will be treated as purchasing, in exchange for
its New Warrants and the amount of Cash funded by the Non-U.S. Holder to exercise the New Warrants, the New
Common Equity it is entitled to purchase pursuant to the New Warrants. Such a purchase will generally be treated as
the exercise of an option under general tax principles, and as such a Non-U.S. Holder (to the extent such Non-U.S.
Holder is subject to U.S. federal income tax, as described above) should not recognize income, gain or loss for U.S.
federal income tax purposes when it exercises the New Warrants. A Non-U.S. Holder’s aggregate tax basis in the
New Common Equity will equal the sum of (i) the amount of Cash paid by the Non-U.S. Holder to exercise its New
Warrants plus (ii) such Non-U.S. Holder’s tax basis in its New Warrants immediately before the New Warrants are
exercised.
Any deemed distribution under section 305 of the Tax Code (as discussed above), will be taxed and reported
to the IRS in the same manner as an actual distribution on stock and will be subject to the rules described above under
“Dividends on New Common Equity” with respect to such Non-U.S. Holder.
In the event that a Non-U.S. Holder sells its New Warrants in a taxable transaction, the Non-U.S. Holder
generally will not be subject to U.S. federal income tax with respect to any gain realized on the sale or other taxable
disposition except as described above in “Sale, Redemption, or Repurchase of New Common Equity.” If a Non-U.S.
Holder is subject to U.S. federal income tax, any such gain or loss will be treated as gain or loss from the sale or
exchange of property which has the same character as the New Common Equity to which the New Warrants relate
would have had in the hands of the Non-U.S. Holder if such stock had been acquired by the Non-U.S. Holder upon
exercise. If such sale gives rise to capital gain or loss to the Non-U.S. Holder, such gain or loss will be long-term or
short-term in character based upon the length of time such Non-U.S. Holder has held his or her New Warrants.
Under Treasury Regulations issued pursuant to section 871(m) of the Tax Code, withholding at a rate of 30%
(subject to certain treaty considerations) would apply to certain “dividend equivalent” payments made or deemed
made to Non-U.S. Holders in respect of financial instruments that reference U.S. stocks. The section 871(m) Treasury
Regulations do not apply to a payment to the extent that the payment is already treated as a deemed dividend under
the rules described above, and therefore generally would not apply in respect of adjustments to the conversion rate of
the New Warrants. However, because the section 871(m) rules are complex, it is possible that they will apply in
certain circumstances in which the deemed dividend rules described above do not apply, in which case the section
871(m) rules might require withholding at a different time or amount than the deemed dividend. Importantly, in
Notice 2020-2, the IRS extended certain transition relief that makes section 871(m) of the Tax Code inapplicable to
instruments that are not so-called “delta one” instruments. The Debtors will make a determination regarding the
applicable of section 871(m) of the Tax Code to the New Warrants prior to the Effective Date.
(4) FATCA
Under legislation commonly referred to as the Foreign Account Tax Compliance Act (“FATCA”), foreign
financial institutions and certain other foreign entities must report certain information with respect to their U.S.
account holders and investors or be subject to withholding at a rate of 30 percent on the receipt of “withholdable
payments.” For this purpose, “withholdable payments” are generally U.S. source payments of fixed or determinable,
annual or periodical income (including dividends, if any, on shares of New Common Equity), and, subject to the
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discussion of proposed Treasury Regulations below, also include gross proceeds from the sale of any property of a
type which can produce U.S. source interest or dividends (which would include New Common Equity and the Claims).
FATCA withholding will apply even if the applicable payment would not otherwise be subject to U.S. federal
nonresident withholding.
Proposed Treasury Regulations eliminate FATCA withholding on payments of gross proceeds. Taxpayers
may rely on these proposed Treasury Regulations until final Treasury regulations are issued. There can be no assurance
that final Treasury Regulations would provide an exemption from FATCA Withholding for gross proceeds. Each
Non-U.S. Holder should consult its own tax advisor regarding the possible impact of these rules on such Non-U.S.
Holder’s ownership of the Claims or the Reorganized Debtors’ New Common Equity.
(5) Information Reporting and Withholding
The Debtors, Reorganized Debtors, and applicable withholding agents will withhold all amounts required by
law to be withheld from payments of interest and dividends, whether in connection with distributions under the Plan
or in connection with payments made on account of consideration received pursuant to the Plan, and will comply with
all applicable information reporting requirements. The IRS may make the information returns reporting such interest
and dividends and withholding available to the tax authorities in the country in which a Non-U.S. Holder is resident.
In general, information reporting requirements may apply to distributions or payments under the Plan. Additionally,
under the backup withholding rules, a Holder of a Claim may be subject to backup withholding (currently at a rate of
24 percent) with respect to distributions or payments made pursuant to the Plan unless that Holder: (a) comes within
certain exempt categories (which generally include corporations) and, when required, demonstrates that fact; or
(b) timely provides a correct taxpayer identification number and certifies under penalty of perjury that the taxpayer
identification number is correct and that the Holder is not subject to backup withholding (generally in the form of a
properly executed IRS Form W-9 for a U.S. Holder, and, for a Non-U.S. Holder, in the form of a properly executed
applicable IRS Form W-8 (or otherwise establishes such Non-U.S. Holder’s eligibility for an exemption)). Backup
withholding is not an additional tax but is, instead, an advance payment that may be refunded to the extent it results
in an overpayment of tax; provided that the required information is timely provided to the IRS.
In addition, from an information reporting perspective, Treasury Regulations generally require disclosure by
a taxpayer on its U.S. federal income tax return of certain types of transactions in which the taxpayer participated,
including, among other types of transactions, certain transactions that result in the taxpayer’s claiming a loss in excess
of specified thresholds. Holders of Claims subject to the Plan are urged to consult their tax advisors regarding these
regulations and whether the transactions contemplated by the Plan would be subject to these regulations and require
disclosure on the Holders’ tax returns.
THE FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN ARE COMPLEX. THE
FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF FEDERAL INCOME TAXATION
THAT MAY BE RELEVANT TO A PARTICULAR HOLDER IN LIGHT OF SUCH HOLDER’S
CIRCUMSTANCES AND INCOME TAX SITUATION. ALL HOLDERS OF CLAIMS AND EQUITY
INTERESTS SHOULD CONSULT WITH THEIR TAX ADVISORS AS TO THE PARTICULAR TAX
CONSEQUENCES TO THEM OF THE TRANSACTIONS CONTEMPLATED BY THE PLAN,
INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR NON-U.S. TAX LAWS,
AND OF ANY CHANGE IN APPLICABLE TAX LAWS.
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ARTICLE XI
CONCLUSION AND RECOMMENDATION
The Debtors believe that Confirmation and Consummation of the Plan is preferable to all other alternatives.
Consequently, the Debtors urge all Holders of Claims entitled to vote to accept the Plan and to evidence such
acceptance by returning their ballots so they will be received by the Solicitation Agent no later than 5:00 p.m.
(prevailing Eastern Time) on June 24, 2020.
Dated: May 31, 2020
Respectfully submitted,
APC Automotive Technologies Intermediate Holdings, LLC
on behalf of itself and each of its Debtor affiliates
By: /s/ Marc Weinsweig
Name:
Title:
Marc Weinsweig
Chief Financial Officer
Prepared by:
Jonathan S. Henes, P.C.
George Klidonas
KIRKLAND & ELLIS LLP
KIRKLAND & ELLIS INTERNATIONAL LLP
601 Lexington Avenue
New York, New York 10022
Telephone: (212) 446-4800
Facsimile: (212) 446-4900
Proposed Counsel for the Debtors and Debtors in Possession
EXHIBIT A
Joint Prepackaged Chapter 11 Plan of Reorganization
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
)
In re: ) Chapter 11
)
APC AUTOMOTIVE TECHNOLOGIES
INTERMEDIATE HOLDINGS, LLC, et al.,1
)
)
Case No. 20-[______] (___)
)
Debtors. ) (Joint Administration Requested)
)
JOINT PREPACKAGED CHAPTER 11 PLAN OF REORGANIZATION OF APC
AUTOMOTIVE TECHNOLOGIES INTERMEDIATE HOLDINGS, LLC AND ITS
DEBTOR AFFILIATES PURSUANT TO CHAPTER 11 OF THE BANKRUPTCY CODE
THIS CHAPTER 11 PLAN IS BEING SOLICITED FOR ACCEPTANCE OR REJECTION IN
ACCORDANCE WITH BANKRUPTCY CODE SECTION 1125 AND WITHIN THE MEANING OF
BANKRUPTCY CODE SECTION 1126. THIS CHAPTER 11 PLAN WILL BE SUBMITTED TO THE
BANKRUPTCY COURT FOR APPROVAL FOLLOWING SOLICITATION AND THE DEBTORS’
FILING FOR CHAPTER 11 BANKRUPTCY.
Jonathan S. Henes, P.C. (pro hac vice pending) Domenic E. Pacitti (DE Bar No. 3989)
George Klidonas (pro hac vice pending) Michael W. Yurkewicz (DE Bar No. 4165)
KIRKLAND & ELLIS LLP KLEHR HARRISON HARVEY BRANZBURG LLP
KIRKLAND & ELLIS INTERNATIONAL LLP 919 North Market Street, Suite 1000
601 Lexington Avenue Wilmington, Delaware 19801
New York, New York 10022 Telephone: (302) 426-1189
Telephone: (212) 446-4800 Facsimile: (302) 426-9193
Facsimile: (212) 446-4900
-and-
Morton R. Branzburg (pro hac vice pending)
KLEHR HARRISON HARVEY BRANZBURG LLP
1835 Market Street, Suite 1400
Philadelphia, Pennsylvania 19103
Telephone: (215) 569-3007
Facsimile: (215) 568-6603
Proposed Co-Counsel to the Debtors and Debtors in Possession
Dated: May 31, 2020
1The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification
number, are: APC Automotive Technologies Intermediate Holdings, LLC (0991); APC Automotive
Technologies, LLC (6651); CWD Acquisition, LLC (4286); CWD Holding Corp. (7381); CWD Intermediate
Corp. (7285); CWD, LLC (5832); Qualis Enterprises, Inc. (6610); Qualis Automotive, LLC (7291); AP Emissions
Technologies, LLC (8219); AP Exhaust Products Disc, Inc. (0288); Eastern Manufacturing, LLC (2410); Airtek,
LLC (1239); Aristo, LLC (4541). The Debtors’ service address is: 10822 West Toller Drive, Suite 370, Littleton,
Colorado 80127.
Solicitation Version
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TABLE OF CONTENTS
Page
Article I. DEFINED TERMS AND RULES OF INTERPRETATION ........................................................................ 1 A. Defined Terms .................................................................................................................................. 1 B. Rules of Interpretation .................................................................................................................... 12 C. Computation of Time ...................................................................................................................... 13 D. Controlling Document ..................................................................................................................... 13 E. Restructuring Support Agreement ................................................................................................... 13
Article II. ADMINISTRATIVE CLAIMS, DIP FACILITY CLAIMS, PRIORITY TAX CLAIMS, AND
UNITED STATES TRUSTEE STATUTORY FEES ................................................................................... 13 A. Administrative Claims .................................................................................................................... 13 B. DIP Facility Claims ......................................................................................................................... 15 C. Priority Tax Claims ......................................................................................................................... 15 D. United States Trustee Statutory Fees .............................................................................................. 15
Article III. CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS ........................................... 15 A. Classification of Claims .................................................................................................................. 15 B. Treatment of Claims and Interests .................................................................................................. 16 C. Special Provision Governing Unimpaired Claims .......................................................................... 19 D. Voting Classes; Presumed Acceptance by Non-Voting Classes ..................................................... 19 E. Controversy Concerning Impairment .............................................................................................. 19 F. Confirmation Pursuant to Section 1129(a)(10) and Section 1129(b) of the Bankruptcy
Code ................................................................................................................................................ 19 G. Subordinated Claims ....................................................................................................................... 19 H. Elimination of Vacant Classes ........................................................................................................ 20 I. Intercompany Interests .................................................................................................................... 20
Article IV. MEANS FOR IMPLEMENTATION OF THE PLAN .............................................................................. 20 A. Substantive Consolidation ............................................................................................................... 20 B. General Settlement of Claims and Interests .................................................................................... 20 C. Restructuring Transactions.............................................................................................................. 20 D. Corporate Existence ........................................................................................................................ 21 E. Vesting of Assets in the Reorganized Debtors ................................................................................ 21 F. Cancellation of Agreements, Security Interests, and Other Interests .............................................. 22 G. Sources for Plan Distributions and Transfers of Funds Among Debtors ........................................ 22 H. New Equity Documents .................................................................................................................. 22 I. Exemption from Registration Requirements ................................................................................... 22 J. Organizational Documents .............................................................................................................. 23 K. Exemption from Certain Transfer Taxes and Recording Fees ........................................................ 23 L. Directors and Officers of the Reorganized Debtors ........................................................................ 23 M. Directors and Officers Insurance Policies ....................................................................................... 24 N. Other Insurance Policies ................................................................................................................. 24 O. Preservation of Rights of Action ..................................................................................................... 24 P. Corporate Action ............................................................................................................................. 25 Q. Effectuating Documents; Further Transactions ............................................................................... 25 R. Management Incentive Plan ............................................................................................................ 25 S. Workers’ Compensation Programs ................................................................................................. 25
Article V. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES; EMPLOYEE
BENEFITS; AND INSURANCE POLICIES ............................................................................................... 26 A. Assumption of Executory Contracts and Unexpired Leases ........................................................... 26 B. Cure of Defaults for Assumed Executory Contracts and Unexpired Leases ................................... 26
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C. Contracts and Leases Entered into After the Petition Date ............................................................. 27 D. Indemnification and Reimbursement Obligations ........................................................................... 27 E. Employee Compensation and Benefits ........................................................................................... 27 F. Modifications, Amendments, Supplements, Restatements, or Other Agreements .......................... 28 G. Reservation of Rights ...................................................................................................................... 28 H. Nonoccurrence of Effective Date .................................................................................................... 28
Article VI. PROVISIONS GOVERNING DISTRIBUTIONS .................................................................................... 28 A. Timing and Calculation of Amounts to Be Distributed................................................................... 28 B. Delivery of Distributions ................................................................................................................ 29 C. Manner of Payment ......................................................................................................................... 30 D. No Postpetition or Default Interest on Claims ................................................................................ 30 E. Compliance with Tax Requirements/Allocations ............................................................................ 30 F. Surrender of Cancelled Instruments or Securities ........................................................................... 31 G. Claims Paid or Payable by Third Parties ......................................................................................... 31
Article VII. PROCEDURES FOR RESOLVING UNLIQUIDATED AND DISPUTED CLAIMS OR
EQUITY INTERESTS .................................................................................................................................. 31 A. Allowance of Claims and Interests ................................................................................................. 31 B. Proofs of Claim ............................................................................................................................... 32 C. Claims Administration Responsibilities .......................................................................................... 32 D. Estimation of Claims and Interests ................................................................................................. 32 E. Adjustment to Claims Without Objection ....................................................................................... 32 F. Disallowance of Certain Claims ...................................................................................................... 32 G. No Distributions Pending Allowance .............................................................................................. 33 H. Distributions After Allowance ........................................................................................................ 33 I. No Interest ....................................................................................................................................... 33
Article VIII. CONDITIONS PRECEDENT TO THE EFFECTIVE DATE ............................................................... 33 A. Conditions Precedent to the Effective Date .................................................................................... 33 B. Effect of Non-Occurrence of Conditions to the Effective Date ...................................................... 34 C. Waiver of Conditions ...................................................................................................................... 34
Article IX. RELEASE, INJUNCTION, AND RELATED PROVISIONS .................................................................. 34 A. Discharge of Claims and Termination of Interests; Compromise and Settlement of
Claims, Interests, and Controversies ............................................................................................... 34 B. Releases by the Debtors ................................................................................................................ 35 C. Releases by the Releasing Parties ................................................................................................ 36 D. Exculpation .................................................................................................................................... 37 E. Injunction....................................................................................................................................... 38 F. Setoffs and Recoupment ................................................................................................................. 38 G. Release of Liens .............................................................................................................................. 38
Article X. RETENTION OF JURISDICTION ............................................................................................................ 39
Article XI. MODIFICATION, REVOCATION, OR WITHDRAWAL OF PLAN .................................................... 40 A. Modification of Plan ....................................................................................................................... 40 B. Effect of Confirmation on Modifications ........................................................................................ 40 C. Revocation of Plan .......................................................................................................................... 41
Article XII. MISCELLANEOUS PROVISIONS ........................................................................................................ 41 A. Immediate Binding Effect ............................................................................................................... 41 B. Additional Documents .................................................................................................................... 41 C. Reservation of Rights ...................................................................................................................... 41 D. Successors and Assigns ................................................................................................................... 41 E. Service of Documents ..................................................................................................................... 41
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F. Term of Injunctions or Stays ........................................................................................................... 43 G. Entire Agreement ............................................................................................................................ 43 H. Plan Supplement Exhibits ............................................................................................................... 43 I. Governing Law ............................................................................................................................... 43 J. Nonseverability of Plan Provisions upon Confirmation .................................................................. 43 K. Closing of Chapter 11 Cases ........................................................................................................... 44 L. Section 1125(e) Good Faith Compliance ........................................................................................ 44
JOINT PREPACKAGED CHAPTER 11 PLAN OF REORGANIZATION
OF APC AUTOMOTIVE TECHNOLOGIES INTERMEDIATE HOLDINGS, LLC
AND ITS DEBTOR AFFILIATES PURSUANT TO CHAPTER 11 OF THE BANKRUPTCY CODE
AirTek, LLC, AP Emissions Technologies, LLC, AP Exhaust Products DISC, Inc., APC Automotive
Technologies Intermediate Holdings, LLC, APC Automotive Technologies, LLC, Aristo, LLC, CWD Acquisition,
LLC, CWD Holding Corp., CWD Intermediate Holding Corp., CWD, LLC, Eastern Manufacturing, LLC, Qualis
Automotive, L.L.C., and Qualis Enterprises, Inc. (each a “Debtor” and, collectively, the “Debtors”) propose this joint
prepackaged plan of reorganization for the resolution of outstanding claims against and equity interests in the Debtors.
Capitalized terms used in the Plan and not otherwise defined have the meanings ascribed to such terms in Article I.A
of this Plan.
Although proposed jointly for administrative purposes, the Plan constitutes a separate Plan for each Debtor
for the resolution of outstanding Claims and Interests pursuant to the Bankruptcy Code. The Debtors seek to
consummate the Restructuring Transactions on the Effective Date of the Plan. Each Debtor is a proponent of the Plan
within the meaning of section 1129 of the Bankruptcy Code. The classifications of Claims and Interests set forth in
Article III of this Plan shall be deemed to apply separately with respect to each Plan proposed by each Debtor, as
applicable. The Plan does not contemplate substantive consolidation of any of the Debtors.
Reference is made to the Disclosure Statement, filed contemporaneously with the Plan, for a discussion of
the Debtors’ history, businesses, historical financial information, valuation, liquidation analysis, projections, and
operations as well as a summary and analysis of the Plan and certain related matters, including distributions to be
made under this Plan.
ALL HOLDERS OF CLAIMS AND INTERESTS ARE ENCOURAGED TO READ THE PLAN AND THE
DISCLOSURE STATEMENT IN THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR REJECT THE PLAN.
Article I.
DEFINED TERMS AND RULES OF INTERPRETATION
A. Defined Terms
The following terms shall have the following meanings when used in capitalized form herein:
1. “ABL Agent” means Wells Fargo Bank, N.A. in its capacity as administrative agent and collateral
agent under the ABL Credit Agreement.
2. “ABL Claims” means any and all Claims derived from, based upon, or secured by the ABL Credit
Agreement or any other agreement, instrument, or document executed at any time in connection therewith, including
Claims for all principal amounts outstanding, interest, fees, expenses, costs, and other charges arising thereunder or
related thereto, in each case, with respect to the ABL Loans.
3. “ABL Credit Agreement” means that certain ABL Credit Agreement, dated May 10, 2017 (as
amended, restated, modified, supplemented, or replaced from time to time in accordance with its terms), by and among
APC and certain of its affiliates and subsidiaries, as borrower and guarantors, the ABL Agent, and the ABL Lenders.
4. “ABL DIP Agent” means Wells Fargo Bank, N.A. in its capacity as administrative agent and
collateral agent under the ABL DIP Facility.
5. “ABL DIP Credit Agreement” means the debtor-in-possession credit agreement (as amended,
restated, modified, supplemented, or replaced from time to time in accordance with its terms) to be entered into by the
Debtors, the ABL DIP Agent, and the ABL DIP Lenders.
6. “ABL DIP Facility” means that certain debtor-in-possession credit facility to be provided by the
ABL DIP Lenders on the terms of and subject to the conditions set forth in the ABL DIP Credit Agreement.
2
7. “ABL DIP Facility Claim” means any Claim derived from or based upon the ABL DIP Facility,
including Claims for all principal amounts outstanding, interest, fees, expenses, costs, and other charges arising under
or related to the ABL DIP Facility.
8. “ABL DIP Facility Documents” means any documentation necessary to effectuate the incurrence of
the ABL DIP Facility.
9. “ABL DIP Lenders” means the banks, financial institutions, and other lenders party to the ABL DIP
Facility from time to time.
10. “ABL Exit Facility” means the new $90 million asset-based revolving credit facility, which will
have the terms set forth in the ABL Exit Facility Documents.
11. “ABL Exit Facility Documents” means any documentation necessary to effectuate the incurrence of
the ABL Exit Facility.
12. “ABL Exit Lenders” means the banks, financial institutions, and other lenders party to the ABL Exit
Facility from time to time.
13. “ABL Facility” means that certain prepetition asset-based revolving loan facility provided for under
the ABL Credit Agreement.
14. “ABL Lenders” means the lenders party to the ABL Credit Agreement with respect to the “Loans”
and “Letters of Credit” as defined in the ABL Credit Agreement.
15. “ABL Loans” means the “Loans” and “Letters of Credit” as defined in the ABL Credit Agreement.
16. “Accrued Professional Compensation Claim” means, at any date, a Claim for all accrued fees and
reimbursable expenses for services rendered by a Retained Professional in the Chapter 11 Cases through and including
such date, to the extent that such fees and expenses have not been previously paid whether pursuant to a retention
order with respect to such Retained Professional or otherwise. To the extent that there is a Final Order denying some
or all of a Retained Professional’s fees or expenses, such denied amounts shall no longer be considered an Accrued
Professional Compensation Claim.
17. “Administrative Claim” means a Claim (other than DIP Facility Claims) for costs and expenses of
administration under sections 503(b), 507(b), or 1114(e)(2) of the Bankruptcy Code, including: (a) the actual and
necessary costs and expenses incurred after the Petition Date and through the Effective Date of preserving the Estates
and operating the businesses of the Debtors; and (b) Accrued Professional Compensation Claims (to the extent
Allowed by the Bankruptcy Court).
18. “Affiliate” means, with respect to any Entity, any other Entity that would fall within the meaning of
the term “affiliate” set forth in section 101(2) of the Bankruptcy Code, if such Entity was a debtor in a case under the
Bankruptcy Code; provided that in no event shall “affiliate” include any entity that is not directly or indirectly
controlled by or under common control with the party of which such entity is an affiliate with respect to the defined
terms Exculpated Party, Released Party, and Releasing Party in the Plan.
19. “Agents” means, collectively, (a) the DIP Agents, (b) the ABL Agent, (c) the Term Agent, and (d)
the Distribution Agent.
20. “Allowed” means (a) any Claim (or portion thereof) that (i) is not Disputed within the applicable
period of time, if any, fixed by the Bankruptcy Code, the Bankruptcy Rules, or the Bankruptcy Court, (ii) is allowed,
compromised, settled, or otherwise resolved pursuant to the terms of the Plan, in any stipulation that is approved by a
Final Order of the Bankruptcy Court, or pursuant to any contract, instrument, indenture, or other agreement entered
into or assumed in connection herewith, or (iii) has been allowed by a Final Order of the Bankruptcy Court or (b) an
Interest (or portion thereof) that is reflected as outstanding in the stock transfer ledger or similar register of the
applicable Debtor as of the Effective Date. For the avoidance of doubt, any Claim or Interest (or portion thereof) that
has been disallowed pursuant to a Final Order shall not be an “Allowed” Claim or Interest.
3
21. “Alternate Term Exit Facility” means an alternate term loan facility, as applicable, which will have
the terms set forth in the Plan Supplement and in the Alternate Term Exit Facility Documents.
22. “Alternate Term Exit Facility Documents” means any documentation necessary to effectuate the
incurrence of the Alternate Term Exit Facility.
23. “APC” means APC Automotive Technologies Intermediate Holdings, LLC, a Delaware limited
liability company.
24. “APC Holdings” means APC Automotive Technologies Holdings, LLC, a Delaware limited liability
company.
25. “Audax” means, collectively, Audax Private Equity Fund IV AIV, L.P., AG PE Fund IV Exhaust-
Aristo, LLC, Audax Co-Invest IV, L.P., AG TCI Exhaust-Aristo, LLC, AFF Co-Invest, L.P., and AG Grey Goose
Holdings, LLC.
26. “Avoidance Actions” means any and all avoidance, recovery, subordination, or other claims, actions,
or remedies that may be brought by or on behalf of the Debtors or their Estates or other authorized parties in interest
under the Bankruptcy Code or applicable non-bankruptcy law, including actions or remedies under sections 502, 510,
542, 544, 545, 547 through 553, and 724(a) of the Bankruptcy Code or under similar or related state or federal statutes
and common law, including fraudulent transfer laws.
27. “Ballot” means a ballot accompanying the Disclosure Statement upon which certain Holders of
Impaired Claims entitled to vote shall, among other things, indicate their acceptance or rejection of the Plan in
accordance with the Plan and the procedures governing the solicitation process.
28. “Bankruptcy Code” means title 11 of the United States Code, 11 U.S.C. §§ 101-1532, as amended
from time to time.
29. “Bankruptcy Court” means the United States Bankruptcy Court for the District of Delaware or such
other court having jurisdiction over the Chapter 11 Cases.
30. “Bankruptcy Rules” means the Federal Rules of Bankruptcy Procedure as promulgated by the United
States Supreme Court under section 2075 of title 28 of the United States Code, 28 U.S.C. § 2075, as applicable to the
Chapter 11 Cases, and the general, local, and chambers rules of the Bankruptcy Court.
31. “Business Day” means any day, other than a Saturday, Sunday, or “legal holiday” (as that term is
defined in Bankruptcy Rule 9006(a)).
32. “Cash” means the legal tender of the United States of America.
33. “Causes of Action” means any claims, interests, damages, remedies, causes of action, demands,
rights, actions, suits, obligations, liabilities, accounts, defenses, offsets, powers, privileges, licenses, liens, indemnities,
guaranties, and franchises of any kind or character whatsoever, whether known or unknown, foreseen or unforeseen,
existing or hereinafter arising, contingent or non-contingent, liquidated or unliquidated, secured or unsecured,
assertable, directly or derivatively, matured or unmatured, suspected or unsuspected, in contract, tort, law, equity, or
otherwise. Causes of Action also include: (a) all rights of setoff, counterclaim, or recoupment and claims under
contracts or for breaches of duties imposed by law; (b) the right to object to or otherwise contest Claims or Interests;
(c) claims pursuant to sections 362, 510, 542, 543, 544 through 550, or 553 of the Bankruptcy Code; and (d) such
claims and defenses as fraud, mistake, duress, and usury, and any other defenses set forth in section 558 of the
Bankruptcy Code.
34. “Chapter 11 Cases” means (a) when used with reference to a particular Debtor, the chapter 11 case
filed for that Debtor under chapter 11 of the Bankruptcy Code in the Bankruptcy Court and (b) when used with
reference to all Debtors, the jointly administered chapter 11 cases for all of the Debtors.
35. “Claim” means any claim, as defined in section 101(5) of the Bankruptcy Code, against any of the
Debtors.
4
36. “Class” means a category of Claims or Equity Interests as set forth in Article III of this Plan pursuant
to section 1122(a) of the Bankruptcy Code.
37. “Compensation and Benefits Programs” means all employment agreements and severance policies,
and all employment, compensation and benefit plans, policies, workers’ compensation programs, savings plans,
retirement plans, deferred compensation plans, supplemental executive retirement plans, healthcare plans, disability
plans, severance benefit plans, incentive plans, life and accidental death and dismemberment insurance plans, and
programs of the Debtors applicable to any of its employees and retirees.
38. “Confirmation” means the entry of the Confirmation Order by the Bankruptcy Court on the docket
of the Chapter 11 Cases.
39. “Confirmation Date” means the date upon which the Bankruptcy Court enters the
Confirmation Order on the docket of the Chapter 11 Cases.
40. “Confirmation Hearing” means the hearing(s) conducted by the Bankruptcy Court pursuant to
section 1128(a) of the Bankruptcy Code to consider confirmation of the Plan, as such hearing may be adjourned or
continued from time to time.
41. “Confirmation Order” means the order of the Bankruptcy Court confirming the Plan pursuant to
section 1129 of the Bankruptcy Code and approving the Disclosure Statement pursuant to section 1125 of the
Bankruptcy Code.
42. “Consenting Sponsors” means each of Audax, Crescent, Harvest, and VAP.
43. “Consenting Term Loan Lenders” means the Term Loan Lenders that are or become parties to the
Restructuring Support Agreement, solely in their capacity as such.
44. “Crescent” means Crescent Mezzanine Partners VII, L.P., Crescent Mezzanine Partners VII (LTL),
L.P., CBDC Universal Equity, Inc., CM7B APC Equity, LLC, and CM7C APC Equity, LLC.
45. “Cure” means all amounts, including an amount of $0.00, required to cure any monetary defaults
under any Executory Contract or Unexpired Lease (or such lesser amount as may be agreed upon by the parties under
an Executory Contract or Unexpired Lease) that is to be assumed by the Debtors pursuant to sections 365 or 1123 of
the Bankruptcy Code.
46. “Cure Claim” means a Claim based on the Debtors’ defaults on an Executory Contract or Unexpired
Lease at the time such Executory Contract or Unexpired Lease is assumed by the Debtors pursuant to sections 365 or
1123 of the Bankruptcy Code.
47. “D&O Liability Insurance Policies” means all insurance policies of any of the Debtors for directors’,
managers’, and officers’ liability existing as of the Petition Date.
48. “Debtor Release” means the releases set forth in Article IX.B of this Plan.
49. “Definitive Documents” means (a) the ABL Exit Facility Documents, (b) the Term Exit Facility
Documents; (c) the Alternate Term Exit Facility Documents (as applicable), (d) the New Common Equity Documents,
(e) the New Warrants Documents, (f) all agreements, interim and final orders, and/or amendments in connection with
the use of cash collateral, (g) all agreements, documents, interim and final orders, and/or amendments in connection
with the DIP Facilities, (h) the Plan, (i) the Plan Supplement, (j) the Disclosure Statement and related solicitation
materials, (k) the motions and related pleadings seeking approval of the Disclosure Statement and related solicitation
materials and scheduling a combined hearing for the Plan and the Disclosure Statement, and (l) the Confirmation
Order.
50. “DIP Agents” means, collectively, the ABL DIP Agent and the Term DIP Agent.
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51. “DIP Credit Agreements” means, collectively, the ABL DIP Credit Agreement and the Term DIP
Credit Agreement.
52. “DIP Facilities” means, collectively, the ABL DIP Facility and the Term DIP Facility.
53. “DIP Facilities Documents” means, collectively, the ABL DIP Facility Documents and the Term
DIP Facility Documents.
54. “DIP Facility Claims” means, collectively, the ABL DIP Facility Claims and the Term DIP Facility
Claims.
55. “DIP Fee” means 35% of the New Common Equity pursuant to the DIP Facilities Documents.
56. “DIP Lenders” means, collectively, the ABL DIP Lenders and the Term DIP Lenders.
57. “DIP Orders” means, collectively, the Interim DIP Order and the Final DIP Order.
58. “Disclosure Statement” means the disclosure statement for the Plan, including all exhibits and
schedules thereto, as amended, supplemented, or modified from time to time, that is prepared and distributed in
accordance with sections 1125, 1126(b), and 1145 of the Bankruptcy Code, Bankruptcy Rule 3018, and other
applicable law.
59. “Disputed” means, with respect to a Claim or Interest (or portion thereof), (a) that an objection to
such Claim or Interest (or portion thereof) has been filed on or before the Effective Date or (b) for which a proof of
such Claim or Interest is filed; provided that in no event shall a Claim or Interest (or portion thereof) that is deemed
Allowed pursuant to the Plan be a Disputed Claim or Interest.
60. “Distribution Agent” means the Debtors or any Entity or Entities chosen by the Debtors, which
Entities may include the Notice and Claims Agent, to make or to facilitate distributions required by the Plan.
61. “Distribution Record Date” means the date for determining which Holders of Claims are eligible to
receive distributions under the Plan, which date shall be the Confirmation Date.
62. “DOJ Settlement” means that certain settlement between the Debtors and the U.S. Department of
Justice regarding the civil investigation under the False Claims Act in connection with required import duties for
certain brake pad entries.
63. “Effective Date” means the date selected by the Debtors and the Requisite Consenting Term Loan
Lenders that is a Business Day no later than fourteen (14) calendar days after the Confirmation Order is entered and
which (a) no stay of the Confirmation Order is in effect and (b) all conditions specified in Article VIII.A of this Plan
have been (i) satisfied or (ii) waived pursuant to Article VIII.A of this Plan.
64. “Entity” means an “entity” as defined in section 101(15) of the Bankruptcy Code.
65. “Equity Interest” means any issued, unissued, authorized, or outstanding shares of common equity,
preferred stock, or other instrument evidencing an ownership interest in a Debtor, whether or not transferable, together
with any warrants, equity-based awards or contractual rights to purchase or acquire such equity interests at any time
and all rights arising with respect thereto that existed immediately before the Effective Date including any claims
arising from the ownership of any instrument evidencing an ownership interest in a Debtor; provided that Equity
Interest does not include any Intercompany Interest.
66. “Estate” means, as to each Debtor, the estate created for such Debtor in its Chapter 11 Case pursuant
to sections 301 and 541 of the Bankruptcy Code.
67. “Exculpated Party” means each of the following, solely in its capacity as such: (i)(a) the Debtors;
(b) the Reorganized Debtors; (c) APC Holdings; (d) with respect to each of the foregoing parties in clauses (i)(a) and
(i)(c), each of such Entity’s current and former Affiliates; and (e) with respect to each of the foregoing parties in
clauses (i)(a) through (i)(d), each of such party’s current and former directors, managers, officers, principals, members,
6
managed accounts or funds, fund advisors, employees, equity holders (regardless of whether such interests are held
directly or indirectly), predecessors, successors, assigns, subsidiaries, agents, advisory board members, financial
advisors, partners, attorneys, accountants, investment bankers, consultants, representatives, and other professionals;
and (ii)(a) the DIP Agents; (b) the DIP Lenders; (c) the ABL Agent; (d) the ABL Lenders; (e) the Consenting Term
Loan Lenders; (f) the Term Agent; (g) the Consenting Sponsors; (h) with respect to each of the foregoing parties in
clauses (ii)(a) through (ii)(g), each of such Entity’s current and former Affiliates; and (i) with respect to each of the
foregoing parties in clauses (ii)(a) through (ii)(h), each of such party’s current and former directors, managers, officers,
principals, members, employees, equity holders (regardless of whether such interests are held directly or indirectly),
predecessors, successors, assigns, subsidiaries, agents, advisory board members, financial advisors, investment
advisors, partners, attorneys, accountants, investment bankers, consultants, representatives, and other professionals;
provided that for purposes of this definition, in no event shall “Affiliate” include any entity that is not directly or
indirectly, controlled by, or under common control with, the party of which such entity is an affiliate.
68. “Executory Contract” means a contract or lease to which one or more of the Debtors is a party that
is subject to assumption or rejection under sections 365 or 1123 of the Bankruptcy Code.
69. “Exit Facilities” means, collectively, the ABL Exit Facility and the Term Exit Facility.
70. “Exit Facilities Documents” means the ABL Exit Facility Documents and the Term Exit Facility
Documents.
71. “Final DIP Order” means an order of the Bankruptcy Court authorizing, among other things, on a
final basis, the Debtors to (a) enter into the DIP Facilities and incur postpetition obligations thereunder and (b) use
cash collateral pursuant to the terms set forth therein.
72. “Final Order” means an order or judgment of the Bankruptcy Court or other court of competent
jurisdiction with respect to the relevant subject matter that has not been reversed, stayed, modified, or amended, and
as to which the time to appeal, seek reconsideration under Rule 59(b) or 59(e) of the Federal Rules of Civil Procedure,
seek a new trial, reargument, or rehearing and, where applicable, petition for certiorari has expired and no appeal,
motion for reconsideration under Rule 59(b) or 59(e) of the Federal Rules of Civil Procedure, motion for a new trial,
reargument or rehearing or petition for certiorari has been timely taken, or as to which any appeal that has been taken
or any petition for certiorari that has been or may be filed has been resolved by the highest court to which the order or
judgment was appealed or from which certiorari was sought, or as to which any motion for reconsideration that has
been filed pursuant to Rule 59(b) or 59(e) of the Federal Rules of Civil Procedure or any motion for a new trial,
reargument, or rehearing shall have been denied, resulted in no modification of such order, or has otherwise been
dismissed with prejudice; provided that the possibility that a motion pursuant to Rule 60 of the Federal Rules of Civil
Procedure or Bankruptcy Rule 9024, or any analogous rule, may be filed relating to such order or judgment shall not
cause such order or judgment not to be a Final Order.
73. “FTI” means FTI Consulting, Inc., as financial advisor to the Term Loan Lender Group.
74. “General Administrative Claim” means any Administrative Claim, other than an Accrued
Professional Compensation Claim and Claims for fees and expenses pursuant to 28 U.S.C § 1930(a).
75. “General Unsecured Claim” means any Claim against any Debtor as of Petition Date other than (a)
a DIP Facility Claim, (b) an Administrative Claim, (c) an Accrued Professional Compensation Claim, (d) a Priority
Tax Claim, (e) an Other Priority Claim, (f) an ABL Claim, (g) a Term Claim, (h) an Intercompany Claim against one
or more of the Debtors that is not entitled to priority under the Bankruptcy Code or Final Order of the Bankruptcy
Court, or (i) the Sponsor Claims.
76. “Governmental Unit” means a “governmental unit” as defined in section 101(27) of the
Bankruptcy Code.
77. “Harvest” means, collectively, Harvest Partners VII, L.P., Harvest Partners VII (Parallel), L.P.,
Harvest Strategic Associates VII, L.P., Harvest APC Holdings, LLC, and Harvest APC Blocker Purchaser, L.P.
78. “Holder” means an Entity holding a Claim or Interest.
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79. “Impaired” means “impaired” within the meaning of section 1124 of the Bankruptcy Code.
80. “Impaired Class” means a Class that is Impaired.
81. “Indemnification Provisions” means each of the Debtors’ indemnification provisions currently in
place, whether in the Debtors’ bylaws, certificates of incorporation or formation, limited liability company
agreements, other organizational or formation documents, board resolutions, management or indemnification
agreements, or employment contracts, for the Debtors’ current and former directors, officers, managers, employees,
attorneys, other professionals, and agents and such current and former directors, officers, and managers’ respective
Affiliates.
82. “Intercompany Claims” means, collectively, any Claim held by a Debtor against another Debtor or
an Affiliate of a Debtor or any Claim held by an Affiliate of a Debtor against a Debtor.
83. “Intercompany Interests” means an Equity Interest in a Debtor held by another Debtor.
84. “Interests” means, collectively, Equity Interests and Intercompany Interests.
85. “Interim DIP Order” means an order of the Bankruptcy Court authorizing, among other things, on
an interim basis, the Debtors to (a) enter into the DIP Facilities and incur postpetition obligations thereunder and
(b) use cash collateral pursuant to the terms set forth therein.
86. “King & Spalding” means King & Spalding LLP, as counsel to the Term Loan Lender Group.
87. “Lien” means a “lien” as defined in section 101(37) of the Bankruptcy Code.
88. “Local Bankruptcy Rules” means the Local Bankruptcy Rules for the District of Delaware.
89. “Management Incentive Plan” means a post-emergence customary management equity incentive
plan, in form and substance acceptable to the Requisite Consenting Term Loan Lenders and otherwise consistent with
the terms of the Restructuring Support Agreement, to be adopted by the New Board, under which 10% of the New
Common Equity on a fully diluted basis shall be reserved as of the Effective Date for issuance as awards thereunder
in the form of profits interests, restricted stock, and/or other forms of incentive based equity.
90. “New Board” means the board of directors of the parent company of the Reorganized Debtors, as
determined in accordance with the Restructuring Support Agreement and the New Common Equity Documents.
91. “New Common Equity” means a single class of equity interests in a Reorganized Debtor entity to be
authorized, issued, or reserved on the Effective Date pursuant to the Plan, in accordance with the terms and conditions
set forth in the Restructuring Support Agreement, and as provided in the Restructuring Transactions Memorandum.
92. “New Common Equity Documents” means any shareholder agreement, limited liability company
agreement, operating agreement, organizational or similar governing documents, evidence of equity interests
(including share or unit certificates or other mutually agreed evidence of equity interests to be issued in accordance
with the Restructuring Support Agreement), or other governance documents for the Reorganized Debtors.
93. “New Equity” means the New Common Equity and the New Warrants.
94. “New Equity Documents” means the New Common Equity Documents and the New Warrants
Documents.
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95. “New Warrants” means new warrants for 5% of the New Common Equity struck at an exercise price
equal to 105% of the sum of (i) the aggregate obligations under the DIP Facilities, (ii) the aggregate obligations under
the ABL Facility, and (iii) the outstanding Term A Debt immediately prior to the Plan Effective Date.
96. “New Warrants Documents” means the definitive documentation with respect to the New Warrants.
97. “Notice and Claims Agent” means Bankruptcy Management Solutions, Inc. d/b/a Stretto in its
capacity as noticing, claims, and solicitation agent for the Debtors, pursuant to an order of the Bankruptcy Court.
98. “Other Priority Claim” means any Claim entitled to priority in right of payment under section 507(a)
of the Bankruptcy Code, other than a Priority Tax Claim or Claims entitled to administrative expense priority pursuant
to section 503(b)(9) of the Bankruptcy Code.
99. “Other Secured Claim” means any Secured Claim against the Debtors other than the DIP Facility
Claims and the Secured Lender Claims.
100. “Petition Date” means the date on which each of the Debtors commenced the Chapter 11 Cases.
101. “Plan” means this joint prepackaged plan of reorganization under chapter 11 of the Bankruptcy
Code, either in its present form or as it may be altered, amended, modified, or supplemented from time to time in
accordance with the Bankruptcy Code, the Bankruptcy Rules, the Restructuring Support Agreement, or the terms
hereof, as the case may be, and the Plan Supplement, which is incorporated herein by reference, including all exhibits
and schedules hereto and thereto.
102. “Plan Supplement” means a supplemental appendix to the Plan that shall be filed by the Debtors no
later than two (2) days before the voting deadline to accept or reject the Plan or such later date as may be approved by
the Bankruptcy Court on notice to parties in interests and that shall include, among other things, draft forms of
documents (or term sheets thereof), schedules, and exhibits to the Plan, in each case subject to the terms and provisions
of the Restructuring Support Agreement (including any consent rights as to the form and substance of such documents
set forth therein) and as may be amended, modified, or supplemented from time to time on or prior to the Effective
Date in accordance with the terms hereof, the Bankruptcy Code, the Bankruptcy Rules, and the Restructuring Support
Agreement, including the following documents: (a) the New Equity Documents; (b) to the extent known, the identity
of the members of the New Board; (c) the Exit Facilities Documents; (d) the Restructuring Transactions Memorandum,
(e) the Alternate Term Exit Facility Documents (as applicable), and (f) any and all other documentation necessary to
effectuate the Restructuring Transactions or that is contemplated by the Plan.
103. “Priority Tax Claim” means a Claim of a Governmental Unit of the kind specified in
section 507(a)(8) of the Bankruptcy Code.
104. “Pro Rata Share” or “Pro Rata” means a distribution equal in amount to the ratio of the amount of
such Allowed Claim in relation to the aggregate amount of all Allowed Claims in its Class.
105. “Professional Fee Escrow Account” means an interest-bearing escrow account in an amount equal
to the Professional Fee Reserve Amount funded and maintained by the Reorganized Debtors on and after the
Effective Date solely for the purpose of paying all Allowed and unpaid fees and expenses of Retained Professionals
in the Chapter 11 Cases.
106. “Professional Fee Reserve Amount” means the aggregate Accrued Professional Compensation
through the Effective Date as estimated by the Retained Professionals in accordance with Article II.A.2.c of this Plan.
107. “Proof of Claim” means a proof of Claim filed against any Debtor in the Chapter 11 Cases.
108. “Reinstatement” or “Reinstated” means, with respect to Claims and Interests, that the Claim or
Interest shall be rendered Unimpaired in accordance with section 1124 of the Bankruptcy Code.
109. “Released Party” means each of the following, solely in its capacity as such: (i)(a) the Debtors; (b)
the Reorganized Debtors; (c) APC Holdings; (d) with respect to each of the foregoing parties in clauses (i)(a) and
(i)(c), each of such Entity’s current and former Affiliates and direct or indirect equity holders; and (e) with respect to
9
each of the foregoing parties in clauses (i)(a) through (i)(d), each of such party’s current and former directors,
managers, officers, principals, members, managed accounts or funds, fund advisors, employees, equity holders
(regardless of whether such interests are held directly or indirectly), predecessors, successors, assigns, subsidiaries,
agents, advisory board members, financial advisors, partners, attorneys, accountants, investment bankers, consultants,
representatives, and other professionals; and (ii)(a) the DIP Agents; (b) the DIP Lenders; (c) the ABL Agent; (d) the
ABL Lenders; (e) the Consenting Term Loan Lenders; (f) the Term Agent; (g) the Consenting Sponsors and their
Affiliates; (h) with respect to each of the foregoing parties in clauses (ii)(a) through (ii)(g), each of such Entity’s
current and former Affiliates; and (i) with respect to each of the foregoing parties in clauses (ii)(a) through (ii)(h),
each of such party’s current and former directors, managers, officers, principals, members, employees, equity holders
(regardless of whether such interests are held directly or indirectly), predecessors, successors, assigns, subsidiaries,
agents, advisory board members, financial advisors, investment advisors, partners, attorneys, accountants, investment
bankers, consultants, representatives, and other professionals; provided that for purposes of this definition, in no event
shall “Affiliate” include any entity that is not directly or indirectly, controlled by, or under common control with, the
party of which such entity is an affiliate; provided, further, that any holder of a Claim or Interest that opts out of, or
objects to, the releases contained in the Plan shall not be a “Released Party.”
110. “Releasing Party” means each of the following, solely in its capacity as such: (a) the DIP Agents;
(b) the DIP Lenders; (c) the ABL Agent; (d) the ABL Lenders; (e) the Consenting Term Loan Lenders; (f) the Term
Agent; (g) the Consenting Sponsors; (h) with respect to the foregoing clauses (a) through (g), each such Entity and its
current and former Affiliates; and (i) with respect to the foregoing clauses (a) through (h), each such party’s current
and former directors, managers, officers, principals, members, employees, equity holders (regardless of whether such
interests are held directly or indirectly), predecessors, successors, assigns, subsidiaries, agents, advisory board
members, financial advisors, investment advisors, partners, attorneys, accountants, investment bankers, consultants,
representatives, and other professionals; (j) without limiting the foregoing, (1) each holder of a Claim or Interest that
voted to accept the Plan, (2) each holder of a Claim or Interest that is Unimpaired under the Plan, where the applicable
Claims or Interests have been fully paid or otherwise satisfied in accordance with the Plan, (3) holders of Claims
whose vote to accept or reject the Plan was solicited but who did not vote either to accept or to reject the Plan, and
(4) holders of Claims who voted to reject the Plan and who did not opt out of granting the releases provided by the
Plan; provided that for purposes of this definition, in no event shall “Affiliate” include any entity that is not directly
or indirectly controlled by, or under common control with, the party of which such entity is an affiliate; provided,
further, that any holder of a Claim or Interest that validly opts out of, or objects to, the releases contained in the Plan
shall not be a “Releasing Party.”
111. “Reorganized Debtors” means the Debtors, as reorganized pursuant to and under the Plan, or any
successor thereto by merger, consolidation, or otherwise on or after the Effective Date, including any transferee,
assign, or successor of any Reorganized Debtor created to issue the New Common Equity as determined by the Debtors
and the Requisite Consenting Term Loan Lenders prior to the Effective Date.
112. “Representatives” means, with regard to an Entity, current and former officers, directors, members
(including ex officio members), managers, employees, partners, advisors, attorneys, professionals, accountants,
investment bankers, investment advisors, actuaries, Affiliates, financial advisors, consultants, agents, and other
representatives of each of the foregoing Entities (whether current or former, in each case in his, her or its capacity as
such).
113. “Requisite Consenting Sponsors” means each of Audax, Crescent, Harvest, and VAP.
114. “Requisite Consenting Term Loan Lenders” means the Consenting Term Loan Lenders who hold,
in the aggregate, greater than fifty (50) percent in principal amount outstanding of all Term Claims held by the
Consenting Term Loan Lenders.
115. “Required Parties” means, collectively, the Debtors, the Requisite Consenting Sponsors, and the
Requisite Consenting Term Loan Lenders.
116. “Restructuring Support Agreement” means that certain Restructuring Support Agreement (including
the exhibits and annexes attached thereto) entered into on May 30, 2020 (as amended or supplemented from time to
time in accordance with the terms thereof), by and among the Debtors, the Consenting Sponsors, the Consenting
10
Lenders, and any subsequent Entity that becomes a party thereto pursuant to the terms thereof, as attached to the
Disclosure Statement as Exhibit B.
117. “Restructuring Transactions” means the transactions described in Article IV.C of this Plan.
118. “Restructuring Transactions Memorandum” means that certain memorandum regarding the
Restructuring Transactions under the Plan that may be included in the Plan Supplement, which memorandum must be
consistent with the terms and conditions set forth in the Restructuring Support Agreement and otherwise in form and
substance reasonably acceptable to the Debtors and the Requisite Consenting Term Loan Lenders.
119. “Retained Professional” means an Entity: (a) employed in the Chapter 11 Cases pursuant to a Final
Order in accordance with sections 327 and 1103 of the Bankruptcy Code and to be compensated for services rendered
prior to the Effective Date, pursuant to sections 327, 328, 329, 330, or 331 of the Bankruptcy Code; or (b) for which
compensation and reimbursement has been allowed by the Bankruptcy Court pursuant to section 503(b)(4) of the
Bankruptcy Code.
120. “SEC” means the Securities and Exchange Commission.
121. “Secured Claim” means, when referring to a Claim, a Claim: (a) secured by a Lien on property in
which the Estate has an interest, which Lien is valid, perfected, and enforceable pursuant to applicable law or by Final
Order of the Bankruptcy Court, or that is subject to setoff pursuant to section 553 of the Bankruptcy Code, to the
extent of the value of the creditor’s interest in the Estate’s interest in such property or to the extent of the amount
subject to setoff, as applicable, as determined pursuant to section 506(a) of the Bankruptcy Code or (b) otherwise
Allowed pursuant to the Plan or Final Order of the Bankruptcy Court as a secured claim.
122. “Secured Lender Claims” means the ABL Claims and the Term Claims.
123. “Secured Lenders” means those Entities that are Holders of ABL Claims and/or Term Claims
124. “Securities” means any instruments that qualify under section 2(a)(1) of the Securities Act,
including the New Equity.
125. “Securities Act” means the Securities Act of 1933, as now in effect or hereafter amended, or any
regulations promulgated thereunder.
126. “Securities Exchange Act” means the Securities Exchange Act of 1934, as amended.
127. “Sponsor Claims” means any and all outstanding Claims that APC Holdings, the Consenting
Sponsors, and/or any controlled affiliates of the Consenting Sponsors, solely in their capacities as such, may have
against the Debtors; provided that the Sponsor Claims shall not include (a) any Term Claims held by any Consenting
Sponsor, (b) rights of any of the Consenting Sponsors based on, arising from, or related to the Plan, (c) Claims based
on, arising from, or related to any Indemnification Provisions or D&O Liability Insurance Policies, or (d) any Claims
entered into on an arm’s length basis in the ordinary course of business by any portfolio company of the Consenting
Sponsors.
128. “Term A Claims” means any and all Claims held by Term A Lenders derived from, based upon, or
secured by the Term Credit Agreement or any other agreement, instrument, or document executed at any time in
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connection therewith, including Claims for all principal amounts outstanding, interest, fees, expenses, costs, and other
charges arising thereunder or related thereto.
129. “Term A Debt” means the Term A-1 Loans, Term A-2 Loans, and Term A-3 Loans, as such terms
are defined in the Term Credit Agreement, outstanding under the Term Credit Agreement.
130. “Term A Lenders” means the lenders party to the Term Credit Agreement holding Term A Debt.
131. “Term Agent” means Wilmington Trust, N.A. in its capacity as administrative agent and collateral
agent under the Term Credit Agreement.
132. “Term B Claims” means any and all Claims held by Term B Lenders derived from, based upon, or
secured by the Term Credit Agreement or any other agreement, instrument, or document executed at any time in
connection therewith, including Claims for all principal amounts outstanding, interest, fees, expenses, costs, and other
charges arising thereunder or related thereto.
133. “Term B Debt” means the Term B Loans, as such term is defined in the Term Credit Agreement,
outstanding under the Term Credit Agreement.
134. “Term B Lenders” means the lenders party to the Term Credit Agreement holding Term B Debt.
135. “Term Claims” means the Term A Claims and the Term B Claims.
136. “Term Credit Agreement” means that certain First Lien Credit Agreement, dated May 10, 2017 (as
amended, restated, modified, supplemented, or replaced from time to time in accordance with its terms), by and among
APC and certain of its affiliates and subsidiaries, as borrowers and guarantors, the Term Agent, and the Term Loan
Lenders.
137. “Term Credit Facility” means that certain term loan facility provided for under the Term Credit
Agreement.
138. “Term DIP Agent” means Wilmington Trust, N.A. in its capacity as administrative agent and
collateral agent under the Term DIP Facility.
139. “Term DIP Credit Agreement” means, to the extent applicable, the debtor-in-possession credit
agreement (as amended, restated, modified, supplemented, or replaced from time to time in accordance with its terms)
to be entered into by the Debtors, the Term DIP Agent, and the Term DIP Lenders.
140. “Term DIP Facility” means a new money term debtor-in-possession credit facility in aggregate
principal amount of $50 million on the terms of and subject to the conditions set forth in the Term DIP Credit
Agreement.
141. “Term DIP Facility Claim” means any Claim derived from or based upon the Term DIP Facility,
including Claims for all principal amounts outstanding, interest, fees, expenses, costs, and other charges arising under
or related to the Term DIP Facility.
142. “Term DIP Facility Documents” means any documentation necessary to effectuate the incurrence
of the Term DIP Facility.
143. “Term DIP Lenders” means the banks, financial institutions, and other lenders party to the Term
DIP Facility from time to time.
144. “Term Exit Facility” means the $50 million term loan facility, which will have the terms set forth in
the Term Exit Facility Documents.
145. “Term Exit Facility Documents” means any documentation necessary to effectuate the incurrence
of the Term Exit Facility.
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146. “Term Exit Lenders” means the banks, financial institutions, and other lenders party to the Term
Exit Facility from time to time.
147. “Term Loan Lenders” means, collectively, the Term A Lenders and Term B Lenders.
148. “Term Loan Lender Group” means the ad hoc group of Consenting Term Loan Lenders represented
by King & Spalding and FTI.
149. “Term Debt” means the Term A Debt and the Term B Debt outstanding under the Term Credit
Agreement.
150. “Third-Party Release” means the releases set forth in Article IX.C of this Plan.
151. “Unexpired Lease” means a lease to which one or more of the Debtors is a party that is subject to
assumption or rejection under section 365 of the Bankruptcy Code.
152. “Unimpaired” means, with respect to a Claim, Equity Interest, or Class of Claims or Equity Interests,
not “impaired” within the meaning of sections 1123(a)(4) and 1124 of the Bankruptcy Code.
153. “United States Trustee” means the United States Trustee for the District of Delaware.
154. “VAP” means VAP Holdings, Inc.
B. Rules of Interpretation
1. For purposes herein: (a) in the appropriate context, each term, whether stated in the singular or the
plural, shall include both the singular and the plural, and pronouns stated in the masculine, feminine, or neuter gender
shall include the masculine, feminine, and the neuter gender; (b) unless otherwise specified, any reference herein to a
contract, instrument, release, indenture, or other agreement or document being in a particular form or on particular
terms and conditions means that the referenced document shall be substantially in that form or substantially on those
terms and conditions; (c) unless otherwise specified, any reference herein to an existing document or exhibit having
been filed or to be filed shall mean that document or exhibit, as it may thereafter be amended, modified, or
supplemented; (d) unless otherwise specified, all references herein to “Articles” are references to Articles of this Plan;
(e) the words ‘‘herein,’’ “hereof,” and ‘‘hereto’’ refer to the Plan in its entirety rather than to a particular portion of
the Plan; (f) the words “include” and “including” and variations thereof shall not be deemed to be terms of limitation
and shall be deemed to be followed by the words “without limitation”; (g) references to “shareholders,” “directors,”
and/or “officers” shall also include “members” and/or “managers,” as applicable, as such terms are defined under the
applicable state limited liability company laws; (h) references to “Proofs of Claim,” “holders of Claims,” “Disputed
Claims,” and the like shall include “Proofs of Interest,” “holders of Interests,” “Disputed Interests,” and the like, as
applicable; (i) captions and headings to Articles are inserted for convenience of reference only and are not intended to
be a part of or to affect the interpretation hereof; (j) unless otherwise specified herein, the rules of construction set
forth in section 102 of the Bankruptcy Code shall apply; (k) any term used in capitalized form herein that is not
otherwise defined but that is used in the Bankruptcy Code or the Bankruptcy Rules shall have the meaning assigned
to that term in the Bankruptcy Code or the Bankruptcy Rules, as the case may be; and (l) any effectuating provisions
may be interpreted by the Reorganized Debtors in such a manner that is consistent with the overall purpose and intent
of the Plan without further notice to or action, order, or approval of the Bankruptcy Court or any other Entity, subject
to the terms of the Restructuring Support Agreement, and such interpretation shall control.
2. All references in the Plan to monetary figures refer to currency of the United States of America,
unless otherwise expressly provided.
3. Except as otherwise specifically provided in the Plan to the contrary, references in the Plan to the
Debtors or to the Reorganized Debtors mean the Debtors and the Reorganized Debtors, as applicable, to the extent the
context requires.
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C. Computation of Time
Unless otherwise specifically stated in the Plan, the provisions of Bankruptcy Rule 9006(a) shall apply in
computing any period of time prescribed or allowed in the Plan. If the date on which a transaction may occur pursuant
to the Plan shall occur on a day that is not a Business Day, then such transaction shall instead occur on the next
succeeding Business Day. Any references to the Effective Date shall mean the Effective Date or as soon as reasonably
practicable thereafter unless otherwise specified herein.
D. Controlling Document
In the event of an inconsistency between the Plan, the Restructuring Support Agreement, and the Disclosure
Statement, the terms of the Plan shall control in all respects. In the event of an inconsistency between the Plan and
the Plan Supplement, the Plan shall control. In the event of an inconsistency between the Plan and the Confirmation
Order, the Confirmation Order shall control.
E. Restructuring Support Agreement
Notwithstanding anything to the contrary in the Plan, the Plan Supplement, the Confirmation Order, or the
Disclosure Statement, any and all consent rights in the Restructuring Support Agreement with respect to the form and
substance of the Plan, the Plan Supplement, and any other documents relating to the Restructuring Transactions,
including any amendments, restatements, supplements, or other modifications to such documents and any consents,
waivers, or other deviations under or from any such documents, shall be incorporated by reference herein and fully
enforceable as if stated in full herein. Solely with respect to any consent or consultation rights in this Plan, in the
event of an inconsistency between the Plan, the Plan Supplement, the Disclosure Statement, and the Restructuring
Support Agreement, the terms of the Restructuring Support Agreement shall control.
Article II.
ADMINISTRATIVE CLAIMS, DIP FACILITY CLAIMS,
PRIORITY TAX CLAIMS, AND UNITED STATES TRUSTEE STATUTORY FEES
In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Claims, DIP Facility Claims,
and Priority Tax Claims have not been classified and, thus, are excluded from the Classes of Claims and Interests set
forth in Article III of this Plan.
A. Administrative Claims
1. General Administrative Claims
Subject to the provisions of sections 328, 330(a), and 331 of the Bankruptcy Code and except to the extent
that a Holder of an Allowed General Administrative Claim and the applicable Debtor before the Effective Date or the
applicable Reorganized Debtor after the Effective Date agree to less favorable treatment, each Holder of an Allowed
General Administrative Claim will be paid the full unpaid amount of such Allowed General Administrative Claim in
Cash: (a) if such Allowed General Administrative Claim is based on liabilities that the Debtors incurred in the ordinary
course of business after the Petition Date, in accordance with the terms and conditions of the particular transaction
giving rise to such Allowed General Administrative Claim and without any further action by any Holder of such
Allowed General Administrative Claim; (b) if such Allowed General Administrative Claim is due as of the Effective
Date, on the Effective Date, or, if such Allowed General Administrative Claim is not due as of the Effective Date, on
the date that such Allowed General Administrative Claim becomes due or as soon as reasonably practicable thereafter;
(c) if a General Administrative Claim is not Allowed as of the Effective Date, on the date that is no later than sixty
(60) days after the date on which an order Allowing such General Administrative Claim becomes a Final Order of the
Bankruptcy Court or as soon as reasonably practicable thereafter; or (d) at such time and upon such terms as set forth
in a Final Order of the Bankruptcy Court.
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2. Professional Compensation Claims
a. Final Fee Applications
All final requests for Accrued Professional Compensation Claims shall be filed no later than sixty (60) days
after the Effective Date. The amount of Accrued Professional Compensation Claims owed to the Retained
Professionals shall be paid in Cash to such Retained Professionals from funds held in the Professional Fee Escrow
Account after such Claims are Allowed by a Final Order. To the extent that funds held in the Professional Fee Escrow
Account are unable to satisfy the amount of Accrued Professional Compensation Claims owed to the Retained
Professionals, such Retained Professionals shall have an Allowed Administrative Claim for any such deficiency,
which shall be satisfied in accordance with Article II.A.1 of this Plan. After all Allowed Accrued Professional
Compensation Claims have been paid in full, any excess amounts remaining in the Professional Fee Escrow Account
shall be returned to the Reorganized Debtors.
b. Professional Fee Escrow Account
On the Effective Date, the Debtors or Reorganized Debtors, as applicable, shall establish and fund the
Professional Fee Escrow Account with Cash equal to the Professional Fee Reserve Amount. The Professional Fee
Escrow Account shall be maintained in trust solely for the Retained Professionals. Such funds shall not be considered
property of the Estates of the Debtors or the Reorganized Debtors.
c. Professional Fee Reserve Amount
To receive payment for unbilled fees and expenses incurred through the Confirmation Date, the Retained
Professionals shall estimate in good faith their Accrued Professional Compensation Claims (taking into account any
retainers) prior to and as of the Confirmation Date and shall deliver such estimate to the Debtors and counsel to the
Term Loan Lender Group at least three (3) calendar days prior to the Confirmation Date. If a Retained Professional
does not provide such estimate, the Reorganized Debtors may estimate the unbilled fees and expenses of such Retained
Professional; provided that such estimate shall not be considered an admission or limitation with respect to the fees
and expenses of such Retained Professional. The total amount so estimated as of the Confirmation Date shall comprise
the Professional Fee Reserve Amount.
d. Post-Effective Date Fees and Expenses
Upon the Effective Date, any requirement that Retained Professionals comply with sections 327 through 331
and 1103 of the Bankruptcy Code in seeking retention or compensation for services rendered after such date shall
terminate. Each Debtor or Reorganized Debtor, as applicable, may employ and pay any fees and expenses of any
professional, including any Retained Professional, in the ordinary course of business without any further notice to or
action, order, or approval of the Bankruptcy Court, including with respect to any transaction, reorganization, or success
fees payable by virtue of the consummation of this Plan or the occurrence of the Effective Date.
The Debtors and Reorganized Debtors, as applicable, shall pay, within ten (10) Business Days after
submission of a detailed invoice to the Debtors or Reorganized Debtors, as applicable, all outstanding reasonable and
documented fees and out-of-pocket expenses of the advisors to the Term Loan Lender Group. If the Debtors or the
Reorganized Debtors dispute the reasonableness of any such invoice, the Debtors or Reorganized Debtors, as
applicable, or the affected professional may submit such dispute to the Bankruptcy Court for a determination of the
reasonableness of any such invoice, and the disputed portion of such invoice shall not be paid until the dispute is
resolved. The undisputed portion of such reasonable fees and expenses shall be paid as provided herein.
e. Substantial Contribution Compensation and Expenses
Except as otherwise specifically provided in the Plan, any Entity that requests compensation or expense
reimbursement for making a substantial contribution in the Chapter 11 Cases pursuant to sections 503(b)(3), (4), and
(5) of the Bankruptcy Code must file an application and serve such application on counsel for the Debtors or
Reorganized Debtors, as applicable, and as required by the Bankruptcy Court, the Bankruptcy Code, and the
Bankruptcy Rules on or before three (3) Business Days after the Confirmation Date.
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B. DIP Facility Claims
Notwithstanding anything to the contrary herein, Holders of Allowed DIP Facility Claims, in exchange for
full and final satisfaction, settlement, release, and discharge of all DIP Facility Claims (other than Claims under the
DIP Facilities that expressly survive the termination thereof), on the Effective Date, all amounts outstanding under
the DIP Facilities on the Effective Date, unless a Holder agrees to less favorable treatment, shall receive (1) solely
with respect to the ABL DIP Lenders, its pro rata share of the ABL Exit Facility and (2) solely with respect to the
Term DIP Lenders, its pro rata share of the Term Exit Facility, unless the required Term DIP Lenders have consented
to the Reorganized Debtors entering into an Alternate Term Exit Facility in connection with the occurrence of the
Effective Date, in which case, the DIP Term Loans shall be repaid in full in cash on the Effective Date from the
proceeds of the Alternate Term Exit Facility.
C. Priority Tax Claims
Except to the extent that a Holder of an Allowed Priority Tax Claim agrees to a less favorable treatment, in
exchange for full and final satisfaction, settlement, release, and discharge of each Allowed Priority Tax Claim, each
Holder of an Allowed Priority Tax Claim due and payable on or prior to the Effective Date shall be treated pursuant
to section 1129(a)(9)(C) of the Bankruptcy Code. To the extent any Allowed Priority Tax Claim is not due and owing
on or before the Effective Date, such Claim shall be paid in full in Cash in accordance with the terms of any agreement
between the Debtors and such Holder or as may be due and payable under applicable non-bankruptcy law or in the
ordinary course of business.
D. United States Trustee Statutory Fees
The Debtors and the Reorganized Debtors, as applicable, will pay fees payable pursuant to
28 U.S.C § 1930(a), including fees and expenses payable to the United States Trustee, as determined by the
Bankruptcy Court at a hearing pursuant to section 1128 of the Bankruptcy Code, for each quarter (including any
fraction thereof) until the Chapter 11 Cases are converted, dismissed, or closed, whichever occurs first.
Article III.
CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS
A. Classification of Claims
This Plan constitutes a separate chapter 11 plan of reorganization for each Debtor. Except for the Claims
addressed in Article II above (or as otherwise set forth herein), all Claims and Interests are placed in Classes for each
of the Debtors. In accordance with section 1123(a)(1) of the Bankruptcy Code, the Debtors have not classified
Administrative Claims, DIP Facility Claims, and Priority Tax Claims, as described in Article II.
The categories of Claims and Interests listed below classify Claims and Interests for all purposes, including
voting, Confirmation, and distribution pursuant hereto and pursuant to sections 1122 and 1123(a)(1) of the Bankruptcy
Code. The Plan deems a Claim or Interest to be classified in a particular Class only to the extent that the Claim or
Interest qualifies within the description of that Class and shall be deemed classified in a different Class to the extent
that any remainder of such Claim or Interest qualifies within the description of such different Class. A Claim or an
Interest is in a particular Class only to the extent that any such Claim or Interest is Allowed in that Class and has not
been paid or otherwise settled prior to the Effective Date.
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Summary of Classification and Treatment of Claims and Interests
Class Claim or Interest Status Voting Rights
1 Other Secured Claims Unimpaired Not Entitled to Vote
(Presumed to Accept)
2 Other Priority Claims Unimpaired Not Entitled to Vote
(Presumed to Accept)
3 ABL Claims Unimpaired Not Entitled to Vote
(Presumed to Accept)
4 Term Claims Impaired Entitled to Vote
5 General Unsecured Claims Unimpaired Not Entitled to Vote
(Presumed to Accept)
6 Intercompany Claims Unimpaired /
Impaired
Not Entitled to Vote
(Presumed to Accept /
Deemed to Reject)
7 Intercompany Interests Unimpaired /
Impaired
Not Entitled to Vote
(Presumed to Accept /
Deemed to Reject)
8 Equity Interests Impaired Not Entitled to Vote
(Deemed to Reject)
B. Treatment of Claims and Interests1
1. Class 1 — Other Secured Claims
a. Classification: Class 1 consists of all Other Secured Claims.
b. Treatment: Except to the extent that a Holder of an Allowed Other Secured Claim agrees
to less favorable treatment, in exchange for full and final satisfaction, settlement, release,
and discharge of each Other Secured Claim, each Holder of an Allowed Other Secured
Claim shall receive the following, at the option of the applicable Debtor:
(i) payment in full in Cash in the ordinary course of business;
(ii) the collateral securing its Allowed Other Secured Claim and payment of any
interest required under section 506(b) of the Bankruptcy Code;
(iii) Reinstatement of such Allowed Other Secured Claim; or
(iv) such other treatment rendering such Allowed Other Secured Claim Unimpaired.
c. Voting: Class 1 is Unimpaired, and Holders of Class 1 Other Secured Claims are
conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the
Bankruptcy Code. Therefore, Holders of Class 1 Other Secured Claims are not entitled to
vote to accept or reject the Plan.
2. Class 2 — Other Priority Claims
a. Classification: Class 2 consists of all Other Priority Claims.
1 Allowed Claim amounts referenced in this section are subject to adjustment to reflect any changes to the
outstanding principal amounts prior to the Effective Date.
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b. Treatment: Except to the extent that a Holder of an Allowed Other Priority Claim agrees
to less favorable treatment, in exchange for full and final satisfaction, settlement, release,
and discharge of each Other Priority Claim, each Holder of such Allowed Other Priority
Claim shall receive the following at the option of the applicable Debtor:
(i) payment in full in Cash in the ordinary course of business;
(ii) Reinstatement of such Allowed Other Priority Claim; or
(iii) such other treatment rendering such Allowed Other Priority Claim Unimpaired.
c. Voting: Class 2 is Unimpaired, and Holders of Class 2 Other Priority Claims are
conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the
Bankruptcy Code. Therefore, Holders of Class 2 Other Priority Claims are not entitled to
vote to accept or reject the Plan.
3. Class 3 — ABL Claims
a. Classification: Class 3 consists of ABL Claims.
b. Allowance: Upon entry of the Interim DIP Order, all loans under the ABL Credit Facility
and all accrued and unpaid interest thereon and outstanding fees and expenses shall be
fully-rolled into the ABL DIP Credit Facility, and upon the Effective Date, the ABL Exit
Facility.
c. Treatment: Solely to the extent of any outstanding Allowed ABL Claims that were not
rolled-up into the ABL DIP Credit Facility, except to the extent that a Holder of an Allowed
ABL Claim agrees to less favorable treatment, in exchange for full and final satisfaction,
settlement, release, and discharge of each ABL Claim, each Holder of an Allowed ABL
Claim shall receive new loans under the ABL Exit Facility in an amount equal to the
principal amount of loans outstanding under the ABL Credit Agreement held by such
Holder as of the Effective Date.
d. Voting: Class 3 is Unimpaired, and Holders of Class 3 ABL Claims are conclusively
presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.
Therefore, Holders of Class 3 ABL Claims are not entitled to vote to accept or reject the
Plan.
4. Class 4 — Term Claims
a. Classification: Class 4 consists of Term Claims.
b. Allowance: On the Effective Date, Term Claims shall be deemed Allowed in the aggregate
principal amount of $348.4 million, consisting of $206.2 million in the aggregate principal
amount of Term A Claims and $142.2 million aggregate principal amount of Term B
Claims, plus all interest, fees, expenses, costs, and other charges due under the Term Credit
Agreement. As the Term A Claims and Term B Claims are subject to the same Term Credit
Agreement, such Claims shall be treated in accordance with the Term Credit Agreement as
set forth below.
c. Term A Claim Treatment: Except to the extent that a Holder of an Allowed Term A Claim
agrees to less favorable treatment, in exchange for full and final satisfaction, settlement,
release, and discharge of each Term A Claim, on the Effective Date, each Holder of an
Allowed Term A Claim shall receive, in full and final satisfaction of its Term A Claims,
its Pro Rata Share (in relation to the aggregate amount of all Allowed Term A Claims) of
100% of the New Common Equity, subject to dilution by the New Warrants, the DIP Fee,
and the Management Incentive Plan.
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d. Term B Claim Treatment: On the Effective Date, all Term B Claims shall be deemed
cancelled and extinguished and shall be of no further force and effect, whether surrendered
for cancellation or otherwise, and there shall be no distributions to Holders of Term B
Claims on account of any such Interests; provided, however, that each Holder of an
Allowed Term B Claim that is a Consenting Term Loan Lender or that otherwise votes in
favor of the Plan shall receive its Pro Rata Share of the New Warrants.2
e. Voting: Class 4 is Impaired, and Holders of Class 4 Term Claims are entitled to vote to
accept or reject the Plan.
5. Class 5 — General Unsecured Claims
a. Classification: Class 5 consists of all General Unsecured Claims.
b. Treatment: Except to the extent that a Holder of an Allowed General Unsecured Claim
agrees to a less favorable treatment of its Allowed Claim, in exchange for full and final
satisfaction, settlement, release, and discharge of each Allowed General Unsecured Claim,
each Holder of an Allowed General Unsecured Claim (other than any Sponsor Claims or
other Claims arising from the ownership of any instrument evidencing an ownership
interest in a Debtor) shall have its Claim Reinstated as of the Effective Date as an obligation
of the applicable Reorganized Debtor and shall be satisfied in full in the ordinary course of
business in accordance with the terms and conditions of the particular transaction giving
rise to such Allowed General Unsecured Claim.
c. Voting: Class 5 is Unimpaired, and Holders of Class 5 General Unsecured Claims are
conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the
Bankruptcy Code. Therefore, Holders of Class 5 General Unsecured Claims are not
entitled to vote to accept or reject the Plan.
6. Class 6 — Intercompany Claims
a. Classification: Class 6 consists of all Intercompany Claims.
b. Treatment: On the Effective Date, Intercompany Claims shall be Reinstated,
compromised, or cancelled at the election of the Debtors or the Reorganized Debtors, as
applicable.
c. Voting: Holders of Claims in Class 6 are conclusively deemed to have accepted or rejected
the Plan pursuant to section 1126(f) or section 1126(g) of the Bankruptcy Code,
respectively. Therefore, such Holders are not entitled to vote to accept or reject the Plan.
2 In the event the treatment of the Allowed Term A Claims and Allowed Term B Claims described in the two
immediately preceding paragraphs is not permitted by the Bankruptcy Court, the Holders of Allowed Term Claims
shall be treated as follows under the Plan:
Except to the extent that a Holder of an Allowed Term Claim agrees to less favorable treatment, in
exchange for full and final satisfaction, settlement, release, and discharge of each Term Claim, on
the Effective Date, each Holder of an Allowed Term Claim shall receive, in full and final satisfaction
of its Term A Claims, its Pro Rata Share of 100% of the New Common Equity, subject to dilution
by the New Warrants, the DIP Fee, and the Management Incentive Plan. The Application of
Proceeds provision set forth in Section 7.04 of the Term Credit Agreement shall remain in full force
and effect and govern any distributions made pursuant to the Plan, including the distribution of New
Common Equity in accordance hereto.
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7. Class 7 — Intercompany Interests
a. Classification: Class 7 consists of all Intercompany Interests.
b. Treatment: On the Effective Date, Intercompany Interests shall be Reinstated,
compromised, or cancelled at the election of the Debtors or the Reorganized Debtors, as
applicable.
c. Voting: Holders of Class 7 Intercompany Interests are conclusively deemed to have
accepted or rejected the Plan pursuant to section 1126(f) or section 1126(g) of the
Bankruptcy Code, respectively. Therefore, Holders of Intercompany Interests are not
entitled to vote to accept or reject the Plan.
8. Class 8 — Equity Interests in APC
a. Classification: Class 8 consists of all Equity Interests in APC.
b. Treatment: On the Effective Date, all Equity Interests in APC shall be deemed cancelled
and extinguished and shall be of no further force and effect, whether surrendered for
cancellation or otherwise, and there shall be no distributions to Holders of Equity Interests
in APC on account of any such Interests.
c. Voting: Class 8 is Impaired, and Holders of Class 8 Equity Interests are conclusively
deemed to have rejected the Plan pursuant to section 1126(g) of the Bankruptcy Code.
C. Special Provision Governing Unimpaired Claims
Except as otherwise provided in the Plan, nothing under the Plan shall affect the Debtors’ or the Reorganized
Debtors’ rights with respect to any Unimpaired Claim, including all legal and equitable defenses to or setoffs or
recoupments against any such Unimpaired Claim.
D. Voting Classes; Presumed Acceptance by Non-Voting Classes
If a Class contains Claims or Interests eligible to vote, and no Holders of Claims or Interests eligible to vote
in such Class vote to accept or reject the Plan, the Plan shall be deemed accepted by the Holders of such Claims or
Interests in such Class.
E. Controversy Concerning Impairment
If a controversy arises as to whether any Claims or Interests or any Class thereof is Impaired, the Bankruptcy
Court shall, after notice and a hearing, determine such controversy on or before the Confirmation Date.
F. Confirmation Pursuant to Section 1129(a)(10) and Section 1129(b) of the Bankruptcy Code
Section 1129(a)(10) of the Bankruptcy Code shall be satisfied for purposes of Confirmation by acceptance
of the Plan by an Impaired Class of Claims. The Debtors shall seek Confirmation pursuant to section 1129(b) of the
Bankruptcy Code with respect to any rejecting Class of Claims or Interests.
G. Subordinated Claims
The allowance, classification, and treatment of all Allowed Claims and Interests and the respective
distributions and treatments under the Plan shall take into account and conform to the relative priority and rights of
the Claims and Interests in each Class in connection with any contractual, legal, and equitable subordination rights
relating thereto, whether arising under general principles of equitable subordination, contract (including the Term
Credit Agreement), section 510(b) of the Bankruptcy Code, or otherwise. Pursuant to section 510 of the Bankruptcy
Code, the Debtors or the Reorganized Debtors, as applicable, reserve the right to re-classify any Allowed Claim or
Allowed Interest in accordance with any contractual, legal, or equitable subordination relating thereto.
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H. Elimination of Vacant Classes
Any Class of Claims or Interests that does not have a Holder of an Allowed Claim or Allowed Interest or a
Claim or Interest temporarily Allowed by the Bankruptcy Court as of the date of the Confirmation Hearing shall be
deemed eliminated from the Plan for purposes of voting to accept or reject the Plan and for purposes of determining
acceptances or rejection of the Plan by such Class pursuant to section 1129(a)(8) of the Bankruptcy Code.
I. Intercompany Interests
To the extent Reinstated under the Plan, distributions on account of Intercompany Interests are not being
received by Holders of such Intercompany Interests, but rather only for the purposes of administrative convenience.
Due to the importance of maintaining the corporate structure for the benefit of Holders that receive New Equity, the
Reorganized Debtors require flexibility in connection with maintaining the corporate structure.
Article IV.
MEANS FOR IMPLEMENTATION OF THE PLAN
A. Substantive Consolidation
The Plan is being proposed as a joint plan of reorganization of the Debtors for administrative purposes only
and constitutes a separate chapter 11 plan of reorganization for each Debtor. The Plan is not premised upon the
substantive consolidation of the Debtors with respect to the Classes of Claims or Interests set forth in the Plan;
provided that the Reorganized Debtors may consolidate Allowed Claims on a per Class basis for voting purposes.
B. General Settlement of Claims and Interests
As discussed further in the Disclosure Statement and as otherwise provided herein, pursuant to section 1123
of the Bankruptcy Code and Bankruptcy Rule 9019 and in consideration for the classification, distributions, releases,
and other benefits provided under the Plan, upon the Effective Date, the provisions of the Plan shall constitute a good
faith compromise and settlement of Claims, Interests, and controversies relating to the contractual, legal, and
subordination rights that Holders of Claims or Interests might have with respect to any Claim or Interest under the
Plan. Distributions made to Holders of Allowed Claims in any Class are intended to be final.
C. Restructuring Transactions
1. Restructuring Transactions
On the Effective Date, the Debtors, the Reorganized Debtors, or any other entities may take all actions as
may be necessary or appropriate to effect any transaction described in, approved by, contemplated by, or necessary to
effectuate the Plan (subject to the Restructuring Support Agreement), including: (a) the execution and delivery of
appropriate agreements or other documents of merger, consolidation, or reorganization containing terms that are
consistent with the terms of the Plan and that satisfy the requirements of applicable law; (b) the execution and delivery
of appropriate instruments of transfer, assignment, assumption, or delegation of any property, right, liability, duty, or
obligation on terms consistent with the terms of the Plan; (c) the filing of appropriate certificates of incorporation,
merger, or consolidation with the appropriate governmental authorities pursuant to applicable law; and (d) all other
actions that the Debtors or the Reorganized Debtors, as applicable, and the Requisite Consenting Term Loan Lenders
determine are necessary or appropriate.
The Confirmation Order shall and shall be deemed to, pursuant to both section 1123 and section 363 of the
Bankruptcy Code, authorize, among other things, all actions as may be necessary or appropriate to effect any
transaction described in, approved by, contemplated by, or necessary to effectuate the Plan.
2. Exit Facilities
On the Effective Date, the Exit Facilities Documents and Alternate Term Exit Facility Documents (as
applicable) shall constitute legal, valid, binding, and authorized obligations of either the Reorganized Debtors or the
Debtors, as applicable, and following the consummation of the Restructuring Transactions, the Exit Facilities
21
Documents and Alternate Term Exit Facility Document (as applicable) shall constitute legal, valid, binding, and
authorized obligations of the applicable Reorganized Debtors, enforceable in accordance with their terms. The
financial accommodations to be extended pursuant to the Exit Facilities Documents and Alternate Term Exit Facility
Documents (as applicable) are being extended and shall be deemed to have been extended in good faith and for
legitimate business purposes and are reasonable and shall not be subject to avoidance, recharacterization, or
subordination (including equitable subordination) for any purposes whatsoever and shall not constitute preferential
transfers, fraudulent conveyances, or other voidable transfers under the Bankruptcy Code or any other applicable non-
bankruptcy law. On the Effective Date, all of the Liens and security interests to be granted in accordance with the
Exit Facilities Documents and Alternate Term Exit Facility Documents (as applicable) (a) shall be deemed to be
granted, (b) shall be legal, binding, and enforceable Liens on and security interests in the collateral granted thereunder
in accordance with the terms of the Exit Facilities Documents and Alternate Term Exit Facility Documents (as
applicable), (c) shall be deemed automatically perfected on the Effective Date (without any further action being
required by the Debtors, the Reorganized Debtors, as applicable, the applicable agent, or any of the applicable lenders),
having the priority set forth in the Exit Facilities Documents and Alternate Term Exit Facility Documents (as
applicable) and subject only to such Liens and security interests as may be permitted under the Exit Facilities
Documents and Alternate Term Exit Facility Documents (as applicable), and (d) shall not be subject to avoidance,
recharacterization, or subordination (including equitable subordination) for any purposes whatsoever and shall not
constitute preferential transfers, fraudulent conveyances, or other voidable transfers under the Bankruptcy Code or
any applicable non-bankruptcy law. The Debtors, the Reorganized Debtors, as applicable, and the Entities granted
such Liens and security interests are authorized to make all filings and recordings and to obtain all governmental
approvals and consents necessary to establish and perfect such Liens and security interests under the provisions of the
applicable state, provincial, federal, or other law (whether domestic or foreign) that would be applicable in the absence
of the Plan and the Confirmation Order (it being understood that perfection shall occur automatically by virtue of the
entry of the Confirmation Order, and any such filings, recordings, approvals, and consents shall not be required) and
will thereafter cooperate to make all other filings and recordings that otherwise would be necessary under applicable
law to give notice of such Liens and security interests to third parties.
3. New Equity
On the Effective Date, a Reorganized Debtor entity (as determined in accordance with the terms and
conditions of the Restructuring Support Agreement) shall issue or reserve for issuance all of the New Equity issued
or issuable in accordance with the terms herein, subject to dilution on the terms described herein and in the
Restructuring Support Agreement. The (a) issuance of the New Equity for distribution pursuant to the Plan, and (b) the
New Common Equity issuable upon exercise of the New Warrants issued under the Plan, are authorized without the
need for further corporate action, and all of the shares of New Common Equity issued or issuable pursuant to the Plan
shall be duly authorized, validly issued, fully paid, and non-assessable.
D. Corporate Existence
Except as otherwise provided in the Plan or the Restructuring Transactions Memorandum, each Debtor shall
continue to exist as of the Effective Date as a separate corporate Entity, limited liability company, partnership, or other
form, as the case may be, with all the powers of a corporation, limited liability company, partnership, or other form,
as the case may be, pursuant to the applicable law in the jurisdiction in which each applicable Debtor is incorporated
or formed and pursuant to the respective certificate of incorporation and bylaws (or other formation documents) in
effect prior to the Effective Date, except to the extent such certificate of incorporation and bylaws (or other formation
documents) are amended by the Plan or otherwise, and to the extent such documents are amended, such documents
are deemed to be pursuant to the Plan and require no further action or approval.
E. Vesting of Assets in the Reorganized Debtors
Except as otherwise provided in the Plan or any agreement, instrument, or other document incorporated
herein, on the Effective Date, all property in each Estate, all Causes of Action, and any property acquired by any of
the Debtors pursuant to the Plan shall vest in each respective Reorganized Debtor, free and clear of all Liens, Claims,
charges, or other encumbrances. On and after the Effective Date, except as otherwise provided in the Plan, each
Reorganized Debtor may operate its business and may use, acquire, or dispose of property and compromise or settle
any Claims, Interests, or Causes of Action without supervision or approval by the Bankruptcy Court and free of any
restrictions of the Bankruptcy Code or Bankruptcy Rules.
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F. Cancellation of Agreements, Security Interests, and Other Interests
On the Effective Date, except to the extent otherwise provided herein (including with respect to Unimpaired Claims
and all Executory Contracts and Unexpired Leases to be assumed pursuant to this Plan), all notes, instruments,
certificates, and other documents evidencing Claims or Interests, including the Secured Lender Claims, Sponsor
Claims, and the Interests in APC, shall be cancelled and the obligations of the Debtors or the Reorganized Debtors
and any non-Debtor Affiliates thereunder or in any way related thereto shall be discharged, the Agents thereunder
shall be discharged from all obligations thereunder, and all security interests and/or Liens granted under the ABL
Facility and the Term Credit Facility and/or any other Secured Claims shall be automatically released, discharged,
terminated, and of no further force and effect; provided that, notwithstanding Confirmation or the occurrence of the
Effective Date, any credit document or agreement that governs the rights of any Holder of a Claim or Interest shall
continue in effect solely for purposes of (1) allowing Holders of Allowed Claims or Interests to receive distributions
under the Plan; (2) allowing and preserving the rights of the Agents or representative of Holders of Claims or Interests,
as applicable, to make distributions on account of Allowed Claims or Interests, as provided herein; and (3) preserving
any rights of the Term Agent and any respective predecessor thereof under the Term Credit Agreement (and related
documents), including as against any money or property distributable to Term Loan Lenders, and any priority in
respect of payment of fees, expenses, or indemnification and the right to exercise any charging lien. Except as
provided in the Plan, on the Effective Date, the DIP Agents and Term Agent, and their respective agents, successors
and assigns shall be automatically and fully discharged of all their duties and obligations associated with the DIP
Facility Documents and the Term Credit Agreement (and related documents), as applicable. The commitments and
obligations (if any) of the Term Loan Lenders and/or the DIP Lenders to extend any further or further or future credit
or financial accommodations to any of the Debtors, any of their respective subsidiaries or any of their respective
successors or assigns under the DIP Facilities Documents or the Term Credit Agreement (and related documents), as
applicable, shall fully terminate and be of no further force or effect on the Effective Date. To the extent that any
provision of the DIP Credit Agreements or DIP Order are of a type that survives repayment of the subject indebtedness,
such provisions shall remain in effect notwithstanding satisfaction of the DIP Facilities Claims.
G. Sources for Plan Distributions and Transfers of Funds Among Debtors
The Debtors shall fund distributions under the Plan with cash on hand, the proceeds of the Exit Facilities and
Alternate Term Exit Facility (as applicable) and by the issuance of the New Equity. The Reorganized Debtors will be
entitled to transfer funds between and among themselves as they determine to be necessary or appropriate to enable
the Reorganized Debtors to satisfy their obligations under the Plan. Except as set forth herein, any changes in
intercompany account balances resulting from such transfers will be accounted for and settled in accordance with the
Debtors’ historical intercompany account settlement practices and will not violate the terms of the Plan.
From and after the Effective Date, the Reorganized Debtors, subject to any applicable limitations set forth in
any post-Effective Date agreement (including the Exit Facilities Documents, Alternate Term Exit Facility Documents
(as applicable), the New Common Equity Documents, the New Warrants Documents, and any other documents,
agreements, or instruments relating to the New Equity), shall have the right and authority without further order of the
Bankruptcy Court to raise additional capital and obtain additional financing as the boards of directors of the applicable
Reorganized Debtors deem appropriate.
H. New Equity Documents
On the Effective Date, the parent company of the Reorganized Debtors and the Holders of the New Equity
shall enter into the New Equity Documents in substantially the form included in the Plan Supplement. The New
Equity Documents shall be deemed to be valid, binding, and enforceable in accordance with their terms, and each
holder of the New Equity shall be bound thereby, in each case without the need for execution by any party thereto
other than the parent company of the Reorganized Debtors.
I. Exemption from Registration Requirements
The offering, issuance, and distribution of any Securities, including the New Equity, pursuant to the Plan,
shall be exempt from, among other things, the registration requirements of section 5 of the Securities Act pursuant to
section 1145 of the Bankruptcy Code. Except as otherwise provided in the Plan or the governing and organizational
documents, any and all New Common Equity and New Warrants issued under the Plan will be freely tradable under
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the Securities Act by the recipients thereof, subject to: (1) the provisions of section 1145(b)(1) of the Bankruptcy
Code relating to the definition of an underwriter in section 2(a)(11) of the Securities Act, and compliance with any
applicable state or foreign securities laws, if any, and any rules and regulations of the SEC, if any, applicable at the
time of any future transfer of such Securities or instruments, including any such restrictions in the New Equity
Documents; (2) the restrictions, if any, on the transferability of such Securities and instruments; and (3) any other
applicable regulatory approval.
The offering, issuance and distribution of New Common Equity and the New Warrants pursuant to the Plan
shall be exempt from, among other things, the registration requirements of section 5 of the Securities Act pursuant to
section 4(a)(2) of the Securities Act and/or another exemption from registration under the Securities Act. Any and all
such Securities shall be deemed “restricted securities” that may not be offered, sold, exchanged, assigned, or otherwise
transferred unless they are registered under the Securities Act or an exemption from registration under the Securities
Act is available and in compliance with any applicable state or foreign securities laws.
J. Organizational Documents
Subject to Article V.D of this Plan, the Reorganized Debtors shall enter into such agreements and amend
their corporate governance documents to the extent necessary to implement the terms and provisions of the Plan.
Pursuant to section 1123(a)(6) of the Bankruptcy Code, the organizational documents of each of the Reorganized
Debtors will prohibit the issuance of non-voting equity securities. After the Effective Date, the Reorganized Debtors
may amend and restate their respective organizational documents, and the Reorganized Debtors may file their
respective certificates or articles of incorporation, bylaws, or such other applicable formation documents, and other
constituent documents as permitted by the laws of the respective states, provinces, or countries of incorporation and
the organization documents of each of the Reorganized Debtors.
K. Exemption from Certain Transfer Taxes and Recording Fees
To the fullest extent permitted by section 1146(a) of the Bankruptcy Code, any transfer from a Debtor to a
Reorganized Debtor or to any Entity pursuant to, in contemplation of, or in connection with the Plan or pursuant to:
(1) the issuance, distribution, transfer, or exchange of any debt, securities, or other interest in the Debtors or the
Reorganized Debtors; (2) the creation, modification, consolidation, or recording of any mortgage, deed of trust or
other security interest, or the securing of additional indebtedness by such or other means; (3) the making, assignment,
or recording of any lease or sublease; or (4) the making, delivery, or recording of any deed or other instrument of
transfer under, in furtherance of, or in connection with, the Plan, including any deeds, bills of sale, assignments, or
other instrument of transfer executed in connection with any transaction arising out of, contemplated by, or in any
way related to the Plan, shall not be subject to any document recording tax, stamp tax, conveyance fee, intangibles, or
similar tax, mortgage tax, real estate transfer tax, mortgage recording tax, Uniform Commercial Code filing or
recording fee, regulatory filing or recording fee, or other similar tax or governmental assessment, and the appropriate
state or local governmental officials or agents shall forego the collection of any such tax or governmental assessment
and to accept for filing and recordation any of the foregoing instruments or other documents without the payment of
any such tax or governmental assessment.
L. Directors and Officers of the Reorganized Debtors
1. The New Board
The New Board will initially consist of nine (9) members, including the then-serving chief executive officer
and eight (8) other members who will be designated in accordance with the terms of the Restructuring Support
Agreement and the New Equity Documents. The identity of the New Board members will be disclosed in the Plan
Supplement or at or prior to the Confirmation Hearing to the extent not known. The existing directors of each of the
Debtors’ subsidiaries shall remain in their current capacities as directors of the applicable Reorganized Debtor, subject
to the Restructuring Support Agreement, until replaced or removed in accordance with the organizational documents
of the applicable Reorganized Debtors.
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2. Senior Management
On the Effective Date, the officers of the Reorganized Debtors shall be substantially the same and their
employment shall be subject to the ordinary rights and powers of the New Board to remove or replace them in
accordance with the Reorganized Debtors’ organizational documents and any applicable employment agreements that
are assumed pursuant to the Plan.
M. Directors and Officers Insurance Policies
Notwithstanding anything in the Plan to the contrary, each of the D&O Liability Insurance Policies in
existence as of the Effective Date (including a six-year “tail policy” in favor of the D&O Indemnified Persons as
defined below) shall be reinstated and, to the extent applicable, the Reorganized Debtors shall be deemed to have
assumed all of the Debtors’ D&O Liability Insurance Policies pursuant to section 365(a) of the Bankruptcy Code
effective as of the Effective Date. Entry of the Confirmation Order will constitute the Bankruptcy Court’s approval
of the Reorganized Debtors’ foregoing assumption of the unexpired D&O Liability Insurance Policies.
Notwithstanding anything to the contrary contained in the Plan, Confirmation of the Plan shall not discharge, impair,
or otherwise modify any indemnity obligations assumed by the foregoing assumption of the D&O Liability Insurance
Policies, and each such indemnity obligation will be deemed and treated as an Executory Contract that has been
assumed by the Debtors under the Plan as to which no Proof of Claim need be filed.
In addition, after the Effective Date, none of the Reorganized Debtors shall terminate or otherwise reduce the
coverage under any D&O Liability Insurance Policies (including a six-year “tail policy” purchased prior to the Petition
Date) in effect on the Petition Date, with respect to conduct occurring prior thereto, and all directors and officers of
the Debtors who served in such capacity on or at any time prior to the Effective Date shall be entitled to the full
benefits of any such policy for the full term of such policy regardless of whether such directors and officers remain in
such positions after the Effective Date.
N. Other Insurance Policies
On the Effective Date, each of the Debtors’ insurance policies in existence as of the Effective Date shall be
Reinstated and continued in accordance with their terms and, to the extent applicable, shall be deemed assumed by
the applicable Reorganized Debtor pursuant to section 365 of the Bankruptcy Code and Article V of this Plan. Nothing
in the Plan shall affect, impair, or prejudice the rights of the insurance carriers, the insureds, or the Reorganized
Debtors under the insurance policies in any manner, and such insurance carriers, the insureds, and Reorganized
Debtors shall retain all rights and defenses under such insurance policies. The insurance policies shall apply to and
be enforceable by and against the insureds and the Reorganized Debtors in the same manner and according to the same
terms and practices applicable to the Debtors, as existed prior to the Effective Date.
O. Preservation of Rights of Action
In accordance with section 1123(b) of the Bankruptcy Code but subject to the releases set forth in Article IX
of this Plan, all Causes of Action that a Debtor may hold against any Entity shall vest in the applicable Reorganized
Debtor on the Effective Date. Thereafter, the Reorganized Debtors shall have the exclusive right, authority, and
discretion to determine, initiate, file, prosecute, enforce, abandon, settle, compromise, release, withdraw, or litigate to
judgment any such Causes of Action, whether arising before or after the Petition Date, and to decline to do any of the
foregoing without the consent or approval of any third party or further notice to or action, order, or approval of the
Bankruptcy Court. Subject to the releases set forth in Article IX of this Plan, no Entity may rely on the absence
of a specific reference in the Plan, the Plan Supplement, or the Disclosure Statement to any specific Cause of
Action as any indication that the Debtors or Reorganized Debtors, as applicable, will not pursue any and all
available Causes of Action. The Debtors or Reorganized Debtors, as applicable, expressly reserve all rights to
prosecute any and all Causes of Action against any Entity, except as otherwise expressly provided in the Plan,
and, therefore, no preclusion doctrine, including the doctrines of res judicata, collateral estoppel, issue preclusion,
claim preclusion, estoppel (judicial, equitable, or otherwise) or laches, shall apply to any Cause of Action upon, after,
or as a consequence of the Confirmation or the occurrence of the Effective Date.
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P. Corporate Action
Subject to the Restructuring Support Agreement, upon the Effective Date, all actions contemplated by the
Plan and the Restructuring Transactions Memorandum shall be deemed authorized, approved, and, to the extent taken
prior to the Effective Date, ratified without any requirement for further action by Holders of Claims or Interests,
directors, managers, or officers of the Debtors, the Reorganized Debtors, or any other Entity, including: (1)
assumption of Executory Contracts and Unexpired Leases; (2) selection of the directors, managers, and officers for
the Reorganized Debtors; (3) the execution of and entry into the Exit Facilities Documents, Alternate Term Exit
Facility Documents (as applicable), the New Common Equity Documents, and the New Warrants Documents; (4) the
issuance and distribution of the New Equity as provided herein; and (5) all other acts or actions contemplated or
reasonably necessary or appropriate to promptly consummate the transactions contemplated by the Plan (whether to
occur before, on, or after the Effective Date). All matters provided for in the Plan involving the company structure of
the Debtors and any company action required by the Debtors in connection therewith shall be deemed to have occurred
on and shall be in effect as of the Effective Date without any requirement of further action by the security holders,
directors, managers, authorized persons, or officers of the Debtors.
On or prior to the Effective Date, the appropriate officers, directors, managers, or authorized persons of the
Debtors (including any president, vice-president, chief executive officer, treasurer, general counsel, or chief financial
officer thereof) shall be authorized and directed to issue, execute, and deliver the agreements, documents, securities,
certificates of incorporation, certificates of formation, bylaws, operating agreements, and instruments contemplated
by the Plan (or necessary or desirable to effect the transactions contemplated by the Plan) in the name of and on behalf
of the Debtors or the Reorganized Debtors, as applicable, including (1) the Exit Facilities Documents, Alternate Term
Exit Facility Documents (as applicable), the New Common Equity Documents, and the New Warrants Documents
and (2) any and all other agreements, documents, securities, and instruments relating to the foregoing. The
authorizations and approvals contemplated by the Plan shall be effective notwithstanding any requirements under non-
bankruptcy law.
Q. Effectuating Documents; Further Transactions
Prior to, on, and after the Effective Date, the Debtors and Reorganized Debtors and the directors, managers,
officers, authorized persons, and members of the boards of directors or managers and directors thereof, are authorized
to and may issue, execute, deliver, file, or record such contracts, securities, instruments, releases, and other agreements
or documents and take such actions as may be necessary or appropriate to effectuate, implement, and further evidence
the terms and provisions of the Plan, the Exit Facilities Documents, Alternate Term Exit Facility Documents (as
applicable), the New Common Equity Documents, the New Warrants Documents, and any securities issued pursuant
to the Plan in the name of and on behalf of the Reorganized Debtors, without the need for any approvals,
authorizations, actions, or consents except for those expressly required pursuant to the Plan or the Restructuring
Support Agreement.
R. Management Incentive Plan
Effective as of the Effective Date, shares will be reserved for continuing employees of the Debtors and
members of the New Board, providing for up to 10% of the New Common Equity issued and outstanding on the
Effective Date (on a fully diluted basis and fully distributed basis). The New Board will determine the amount and
form or forms of incentive interests to be granted upon the Effective Date and the terms and conditions of such awards.
S. Workers’ Compensation Programs
As of the Effective Date, except as set forth in the Plan Supplement, the Debtors and the Reorganized Debtors
shall continue to honor their obligations under (1) all applicable workers’ compensation laws in states in which the
Reorganized Debtors operate and (2) the Debtors’ written contracts, agreements, agreements of indemnity,
self-insured workers’ compensation bonds, policies, programs, and plans, in each case, for workers’ compensation
and workers’ compensation insurance. Any and all Proofs of Claims on account of workers’ compensation shall be
deemed withdrawn automatically and without any further notice to or action, order, or approval of the Bankruptcy
Court; provided that nothing in the Plan shall limit, diminish, or otherwise alter the Debtors’ or Reorganized Debtors’
defenses, Causes of Action, or other rights under applicable non-bankruptcy law with respect to any such contracts,
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agreements, policies, programs, and plans; provided, further, that nothing herein shall be deemed to impose any
obligations on the Debtors in addition to what is provided for under applicable state law.
Article V.
TREATMENT OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES; EMPLOYEE BENEFITS; AND INSURANCE POLICIES
A. Assumption of Executory Contracts and Unexpired Leases
On the Effective Date, except as otherwise provided in the Plan or in any contract, instrument, release,
indenture, or other agreement or document entered into in connection with the Plan, all Executory Contracts and
Unexpired Leases shall be deemed assumed without the need for any further notice to or action, order, or approval of
the Bankruptcy Court as of the Effective Date under section 365 of the Bankruptcy Code; provided that the
Restructuring Support Agreement shall be deemed assumed as of the Confirmation Date; provided, further, that, upon
the occurrence of the Effective Date, the Restructuring Support Agreement will terminate in accordance with its terms.
Entry of the Confirmation Order shall constitute a Bankruptcy Court Final Order approving the assumption
or assumption and assignment, as applicable, of such Executory Contracts or Unexpired Leases as set forth in the Plan,
pursuant to sections 365(a) and 1123 of the Bankruptcy Code. Unless otherwise indicated, the assumption or
assumption and assignment of Executory Contracts and Unexpired Leases pursuant to the Plan are effective as of the
Effective Date. Each Executory Contract or Unexpired Lease assumed pursuant to the Plan or a Bankruptcy Court
Final Order but not assigned to a third party before the Effective Date shall re-vest in and be fully enforceable by the
applicable contracting Reorganized Debtor in accordance with its terms, except as such terms may have been modified
in the Plan or any Final Order of the Bankruptcy Court authorizing and providing for its assumption under applicable
federal law.
To the maximum extent permitted by law, to the extent that any provision in any Executory Contract or
Unexpired Lease assumed or assumed and assigned pursuant to the Plan restricts or prevents, purports to restrict or
prevent, or is breached or deemed breached by the assumption or assumption and assignment of such Executory
Contract or Unexpired Lease (including any “change of control” provision), such provision shall be deemed modified
such that the transactions contemplated by the Plan shall not entitle the non-Debtor party thereto to terminate such
Executory Contract or Unexpired Lease or to exercise any other default-related rights with respect thereto.
B. Cure of Defaults for Assumed Executory Contracts and Unexpired Leases
Any monetary defaults under each Executory Contract and Unexpired Lease to be assumed pursuant to the
Plan shall be satisfied, pursuant to section 365(b)(1) of the Bankruptcy Code, by payment of the default amount in
Cash on the Effective Date or in the ordinary course of business, subject to the limitation described below, or on such
other terms as the parties to such Executory Contracts or Unexpired Leases may otherwise agree. In the event of a
dispute regarding (1) the amount of any payments to cure such a default, (2) the ability of the Reorganized Debtors or
any assignee to provide “adequate assurance of future performance” (within the meaning of section 365 of the
Bankruptcy Code) under the Executory Contract or Unexpired Lease to be assumed, or (3) any other matter pertaining
to assumption, the Bankruptcy Court shall hear such dispute prior to the assumption becoming effective. The cure
payments required by section 365(b)(1) of the Bankruptcy Code shall be made following the entry of a Final Order or
orders resolving the dispute and approving the assumption and shall not prevent or delay implementation of the Plan
or the occurrence of the Effective Date.
Assumption of any Executory Contract or Unexpired Lease pursuant to the Plan or otherwise and payment
of the applicable cure amount shall result in the full release, satisfaction, and waiver of any Claims or defaults, whether
monetary or nonmonetary, including defaults of provisions restricting the change in control or ownership interest
composition or other bankruptcy-related defaults, arising under any assumed Executory Contract or Unexpired Lease
at any time prior to the effective date of assumption. Any proof of claim filed with respect to an Executory
Contract or Unexpired Lease that is assumed shall be deemed disallowed and expunged, without further notice
to or action, order or approval of the Bankruptcy Court.
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C. Contracts and Leases Entered into After the Petition Date
Contracts and leases entered into after the Petition Date by any Debtor, including any Executory Contracts
and Unexpired Leases assumed by such Debtor, will be performed by the Debtor or Reorganized Debtor liable
thereunder in the ordinary course of its business. Accordingly, such contracts and leases (including any assumed
Executory Contracts and Unexpired Leases) will survive and remain unaffected by entry of the Confirmation Order.
D. Indemnification and Reimbursement Obligations
On and as of the Effective Date, the Indemnification Provisions will be assumed and irrevocable and will
survive the effectiveness of the Plan, and the Reorganized Debtors’ governance documents will provide for the
indemnification, defense, reimbursement, exculpation, and/or limitation of liability of and advancement of fees and
expenses to the Debtors’ and the Reorganized Debtors’ current and former directors, officers, direct or indirect
equityholders, employees, and agents (each, a “D&O Indemnified Person”) to the fullest extent permitted by law and
at least to the same extent as the certificate of incorporation, bylaws, or similar organizational documents of each of
the respective Debtors as of the Petition Date, against any claims or Causes of Action whether direct or derivative,
liquidated or unliquidated, fixed, or contingent, disputed or undisputed, matured or unmatured, known or unknown,
foreseen or unforeseen, asserted or unasserted. None of the Reorganized Debtors shall amend and/or restate its
certificate of incorporation, bylaws, or similar organizational document before or after the Effective Date to terminate
or materially adversely affect (1) any of the Reorganized Debtors’ obligations referred to in the immediately preceding
sentence or (2) the rights of such D&O Indemnified Persons referred to in the immediately preceding sentence.
Notwithstanding anything to the contrary herein, the Reorganized Debtors shall not be required to indemnify the D&O
Indemnified Persons for any claims or Causes of Action for which indemnification is barred under applicable law, the
Debtors’ organizational documents, or applicable agreements governing the Debtors’ indemnification obligations.
For the avoidance of doubt, each Debtor shall continue after the Effective Date, to the fullest extent permitted
by applicable law, to (i) indemnify and hold harmless (and release from any liability to the Debtors), the D&O
Indemnified Persons against all D&O Expenses (as defined below), losses, claims, damages, judgments or amounts
paid in settlement (collectively, “D&O Costs”) in respect of any threatened, pending or completed claim, action, suit
or proceeding, whether criminal, civil, administrative or investigative, based on or arising out or relating to the fact
that such D&O Indemnified Person is or was a director or officer of any Debtor arising out of acts or omissions
occurring on or prior to the Effective Date (a “D&O Indemnifiable Claim”) and (ii) advance to such D&O Indemnified
Persons all D&O Expenses incurred in connection with any D&O Indemnifiable Claim (including in circumstances
where the D&O Indemnifying Party has assumed the defense of such claim) promptly after receipt of reasonably
detailed statements therefor; provided, however, that the D&O Indemnified Person to whom D&O Expenses are to be
advanced provides an undertaking to repay such advances if it is ultimately determined that such D&O Indemnified
Person is not entitled to indemnification. Any D&O Indemnifiable Claims will continue until such D&O Indemnifiable
Claim is disposed of or all judgments, orders, decrees or other rulings in connection with such D&O Indemnifiable
Claim are fully satisfied. For the purposes of this paragraph, “D&O Expenses” will include attorneys' fees and all
other costs, charges and expenses paid or incurred in connection with investigating, defending, being a witness in or
participating in (including on appeal), or preparing to defend, to be a witness in or participate in any D&O
Indemnifiable Claim, but will exclude losses, claims, damages, judgments and amounts paid in settlement (which
items are included in the definition of D&O Costs).
On and as of the Effective Date, any of the Debtors’ indemnification obligations with respect to any contract
or agreement that is the subject of or related to any litigation against the Debtors or Reorganized Debtors (including
any indemnification obligation under the Equity Purchase Agreement dated March 28, 2017 by and among AP Exhaust
Holdings, LLC, Harvest APC Holdings LLC and AG Grey Goose Holdings, LLC), as applicable, shall be assumed by
the Reorganized Debtors and otherwise remain unaffected by the Chapter 11 Cases; provided that the Reorganized
Debtors shall not indemnify the Debtors’ directors for any claims or causes of action for which indemnification is
barred under applicable law, the Debtors’ organizational documents, or applicable agreements governing the Debtors’
indemnification obligations.
E. Employee Compensation and Benefits
Subject to the provisions of the Plan and the Restructuring Support Agreement, all Compensation and
Benefits Programs shall be treated as Executory Contracts under the Plan and deemed assumed on the Effective Date
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pursuant to the provisions of sections 365 and 1123 of the Bankruptcy Code; provided that with respect to
management, any provision relating to equity-based awards, including any termination-related provisions with respect
to equity based awards, will be replaced and superseded in its entirety by the Management Incentive Plan. The
Reorganized Debtors shall honor, in the ordinary course of business, Claims of employees employed as of the Effective
Date for accrued vacation time arising prior to the Petition Date and not otherwise paid pursuant to a Bankruptcy
Court order.
Any assumption of Compensation and Benefits Programs pursuant to the terms herein shall not be deemed
to trigger any applicable change of control, immediate vesting, termination, or similar provisions therein. No
counterparty shall have rights under a Compensation and Benefits Program assumed pursuant to the Plan other than
those applicable immediately prior to such assumption.
F. Modifications, Amendments, Supplements, Restatements, or Other Agreements
Unless otherwise provided in the Plan, each Executory Contract or Unexpired Lease that is assumed shall
include all modifications, amendments, supplements, restatements, or other agreements that in any manner affect such
Executory Contract or Unexpired Lease, and Executory Contracts and Unexpired Leases related thereto, if any,
including easements, licenses, permits, rights, privileges, immunities, options, rights of first refusal, and any other
interests, unless any of the foregoing agreements has been previously rejected or repudiated.
Modifications, amendments, supplements, and restatements to prepetition Executory Contracts and
Unexpired Leases that have been executed by the Debtors during the Chapter 11 Cases shall not be deemed to alter
the prepetition nature of the Executory Contract or Unexpired Lease.
G. Reservation of Rights
Except with respect to the Restructuring Support Agreement, nothing contained in the Plan or the Plan
Supplement shall constitute an admission by the Debtors or any other party that any such contract or lease is in fact
an Executory Contract or Unexpired Lease or that any Reorganized Debtor has any liability thereunder. If there is a
dispute regarding whether a contract or lease is or was executory or unexpired at the time of assumption, the Debtors
or the Reorganized Debtors, as applicable, shall have thirty (30) calendar days following entry of a Final Order
resolving such dispute to alter their treatment of such contract or lease, including by rejecting such contract or lease
nunc pro tunc to the Confirmation Date.
H. Nonoccurrence of Effective Date
In the event that the Effective Date does not occur, the Bankruptcy Court shall retain jurisdiction with respect
to any request to extend the deadline for assuming or rejecting Unexpired Leases pursuant to section 365(d)(4) of the
Bankruptcy Code, unless such deadline(s) have expired.
Article VI.
PROVISIONS GOVERNING DISTRIBUTIONS
A. Timing and Calculation of Amounts to Be Distributed
Unless otherwise provided in the Plan, on the Effective Date, the Debtors shall distribute the full amount of
the distributions that the Plan provides for the ABL Claims, Term A Claims, and Term B Claims, and all other Holders
of Allowed Claims or Interests shall receive on the Effective Date (or, if a Claim or Interest is not an Allowed Claim
or Interest on the Effective Date, on the date that such Claim becomes an Allowed Claim or Interest) or as soon as
reasonably practicable thereafter (or, in the case of Allowed General Unsecured Claims, in accordance with the terms
and conditions of the particular transaction giving rise to such Allowed General Unsecured Claims), the full amount
of the distributions that the Plan provides for such Allowed Claims or Interests, in each applicable Class, and in the
manner provided in the Plan. If any payment or act under the Plan is required to be made or performed on a date that
is not a Business Day, then the making of such payment or the performance of such act may be completed on the next
succeeding Business Day but shall be deemed to have been completed as of the required date. If and to the extent that
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there are any Disputed Claims or Interests, distributions on account of any such Disputed Claims or Interests shall be
made pursuant to the provisions set forth in Article VII of this Plan.
B. Delivery of Distributions
1. Delivery of Distributions on Account of ABL DIP Facility Claims
The ABL DIP Agent shall be deemed to be the Holder of any and all ABL DIP Facility Claims for purposes
of distributions to be made hereunder, and any distributions on account of such ABL DIP Facility Claims shall be
made to the ABL DIP Agent. As soon as practicable following compliance with the requirements set forth in Article
VI of this Plan, the ABL DIP Agent shall arrange to deliver or direct the delivery of such distributions to or on behalf
of the Holders of ABL DIP Facility Claims in accordance with the terms of the ABL DIP Facility, subject to any
modifications to such distributions in accordance with the terms of the Plan. Notwithstanding anything in the Plan to
the contrary and without limiting the exculpation and release provisions of the Plan, the ABL DIP Agent shall not
have any liability to any Entity with respect to distributions made or directed to be made by the ABL DIP Agent.
2. Delivery of Distributions on Account of Term DIP Facility Claims
Distributions on account of the Term DIP Facility Claims shall be made by the Debtors directly to the holders
of such Holders of Term DIP Facility Claims. As soon as practicable following compliance with the requirements set
forth in Article IV of this Plan, the Debtors shall deliver such distributions to the Holders of Term DIP Facility Claims.
Notwithstanding anything in the Plan to the contrary and without limiting the exculpation and release provisions of
the Plan, the Term DIP Agent shall not have any liability to any Entity with respect to distributions made or directed
to be made by the Term DIP Agent.
3. Delivery of Distributions on Account of ABL Claims
The ABL Agent shall be deemed to be the Holder of all Allowed ABL Claims for purposes of distributions
to be made hereunder, and all distributions on account of such Allowed Claims shall be made to the ABL Agent. As
soon as practicable following compliance with the requirements set forth in Article VI of this Plan, if applicable, the
ABL Agent shall arrange to deliver or direct the delivery of such distributions to or on behalf of the Holders of Allowed
ABL Claims in accordance with the terms of the ABL Credit Agreement and the Plan. Notwithstanding anything in
the Plan to the contrary and without limiting the exculpation and release provisions of the Plan, the ABL Agent shall
not have any liability to any Entity with respect to distributions made or directed to be made by the ABL Agent.
4. Delivery of Distributions on Account of Term Claims
Distributions on account of all Allowed Term Claims shall be made by the Debtors directly to the holders of
such Allowed Term Claims. As soon as practicable following compliance with the requirements set forth in Article
IV of this Plan, the Debtors shall deliver such distributions to the Holders of Allowed Term Claims.. Notwithstanding
anything in the Plan to the contrary and without limiting the exculpation and release provisions of the Plan, the Term
Agent shall not have any liability to any Entity with respect to distributions made or directed to be made by the Term
Agent.
5. Distributions by Distribution Agents
The Debtors and the Reorganized Debtors, as applicable, shall have the authority to enter into agreements
with one or more Distribution Agents to facilitate the distributions required hereunder. To the extent the Debtors and
the Reorganized Debtors, as applicable, determine to utilize a Distribution Agent to facilitate the distributions under
the Plan to Holders of Allowed Claims, any such Distribution Agent would first be required to: (a) affirm its obligation
to facilitate the prompt distribution of any documents; (b) affirm its obligation to facilitate the prompt distribution of
any recoveries or distributions required under the Plan; (c) waive any right or ability to setoff, deduct from, or assert
any lien or encumbrance against the distributions required under the Plan to be distributed by such Distribution Agent;
and (d) post a bond, obtain a surety, or provide some other form of security for the performance of its duties, and the
costs and expenses of procuring such forms of security shall be borne by the Debtors or the Reorganized Debtors, as
applicable.
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The Debtors or the Reorganized Debtors, as applicable, shall pay to the Distribution Agents all reasonable
and documented fees and expenses of the Distribution Agents without the need for any approvals, authorizations,
actions, or consents. The Distribution Agents shall submit detailed invoices to the Debtors or the Reorganized
Debtors, as applicable, for all fees and expenses for which the Distribution Agent seeks reimbursement, and the
Debtors or the Reorganized Debtors, as applicable, shall pay those amounts that they, in their sole discretion, deem
reasonable, and shall object in writing to those fees and expenses, if any, that the Debtors or the Reorganized Debtors,
as applicable, deem to be unreasonable. In the event that the Debtors or the Reorganized Debtors, as applicable, object
to all or any portion of the amounts requested to be reimbursed in a Distribution Agent’s invoice, the Debtors or the
Reorganized Debtors, as applicable, and such Distribution Agent shall endeavor, in good faith, to reach mutual
agreement on the amount of the appropriate payment of such disputed fees and/or expenses. In the event that the
Debtors or the Reorganized Debtors, as applicable, and a Distribution Agent are unable to resolve any differences
regarding disputed fees or expenses, either party shall be authorized to move to have such dispute heard by the
Bankruptcy Court.
6. Minimum Distributions
Notwithstanding anything herein to the contrary, the Reorganized Debtors and the Distribution Agents shall
not be required to make distributions or payments of less than $100 (whether Cash or otherwise) and shall not be
required to make partial distributions or payments of fractions of dollars. Whenever any payment or distribution of a
fraction of a dollar or fractional share of New Equity under the Plan would otherwise be called for, the actual payment
or distribution will reflect a rounding of such fraction to the nearest whole dollar or share of New Equity (up or down),
with half dollars and half shares of New Equity or less being rounded down. The total number of authorized shares
of New Common Equity or of the New Warrants, as applicable, shall be adjusted as necessary to account for the
foregoing rounding.
7. Undeliverable Distributions
If any distribution to a Holder of an Allowed Claim made in accordance herewith is returned to the
Reorganized Debtors (or their Distribution Agent) as undeliverable, no further distributions shall be made to such
Holder unless and until the Distribution Agent is notified in writing of such Holder’s then-current address or other
necessary information for delivery, at which time such undelivered distribution shall be made to such Holder within
ninety (90) days of receipt of such Holder’s then-current address or other necessary information; provided that any
such undelivered distribution shall be deemed unclaimed property under section 347(b) of the Bankruptcy Code at the
expiration of six (6) months from the later of (a) the Effective Date and (b) the date of the initial attempted distribution.
After such date, all unclaimed property or interests in property shall revert to the Reorganized Debtors automatically
and without need for a further order by the Bankruptcy Court (notwithstanding any applicable non-bankruptcy escheat,
abandoned, or unclaimed property laws to the contrary), and the right, title, and interest of any Holder to such property
or interest in property shall be discharged and forever barred.
C. Manner of Payment
At the option of the Distribution Agent, any Cash payment to be made under the Plan may be made by check
or wire transfer or as otherwise required or provided in applicable agreements.
D. No Postpetition or Default Interest on Claims
Unless otherwise specifically provided for in the Plan or the Confirmation Order and notwithstanding any
documents that govern the Debtors’ prepetition indebtedness to the contrary, (1) postpetition and/or default interest
shall not accrue or be paid on any Claims, and (2) no Holder of a Claim shall be entitled to (a) interest accruing on or
after the Petition Date on any such Claim or (b) interest at the contract default rate, each as applicable.
E. Compliance with Tax Requirements/Allocations
In connection with the Plan, to the extent applicable, the Debtors, Reorganized Debtors, and other applicable
withholding and reporting agents shall comply with all tax withholding and reporting requirements imposed on them
by any Governmental Unit, and all distributions pursuant hereto shall be subject to such withholding and reporting
31
requirements. Notwithstanding any provision in the Plan to the contrary, the Debtors, Reorganized Debtors, and other
applicable withholding and reporting agents and the Distribution Agent shall be authorized to take all actions necessary
or appropriate to comply with such withholding and reporting requirements, including liquidating a portion of the
distribution to be made under the Plan to generate sufficient funds to pay applicable withholding taxes, withholding
distributions pending receipt of information necessary to facilitate such distributions, or establishing any other
mechanisms they believe are reasonable and appropriate. The Debtors, Reorganized Debtors, and other applicable
withholding agents reserve the right to allocate all distributions made under the Plan in compliance with all applicable
wage garnishments, alimony, child support and other spousal awards, liens, and encumbrances. For tax purposes,
distributions in full or partial satisfaction of Allowed Claims shall be allocated first to the principal amount of Allowed
Claims, with any excess allocated to unpaid interest that accrued on such Claims.
F. Surrender of Cancelled Instruments or Securities
On the Effective Date, each Holder of a certificate or instrument evidencing a Claim or an Equity Interest
shall be deemed to have surrendered such certificate or instrument to the Distribution Agent. Such surrendered
certificate or instrument shall be cancelled solely with respect to the Debtors, and such cancellation shall not alter the
obligations or rights of any non-Debtor third parties vis-à-vis one another with respect to such certificate or instrument,
including with respect to any indenture or agreement that governs the rights of the Holder of a Claim or Equity Interest,
which shall continue in effect for purposes of allowing Holders to receive distributions under the Plan, charging liens,
priority of payment, and indemnification rights. Notwithstanding anything to the contrary herein, this paragraph shall
not apply to certificates or instruments evidencing Claims that are Unimpaired under the Plan.
G. Claims Paid or Payable by Third Parties
1. Claims Payable by Insurance
No distributions under the Plan shall be made on account of an Allowed Claim that is payable pursuant to
one of the Debtors’ insurance policies until the Holder of such Allowed Claim has exhausted all remedies with respect
to such insurance policy.
2. Applicability of Insurance Policies
Except as otherwise provided in the Plan, distributions to Holders of Allowed Claims shall be in accordance
with the provisions of any applicable insurance policy. Nothing contained in the Plan shall constitute or be deemed a
waiver of any Cause of Action that the Debtors or any Entity may hold against any other Entity, including insurers
under any policies of insurance, nor shall anything contained herein constitute or be deemed a waiver by such insurers
of any defenses, including coverage defenses, held by such insurers.
Article VII.
PROCEDURES FOR RESOLVING UNLIQUIDATED
AND DISPUTED CLAIMS OR EQUITY INTERESTS
A. Allowance of Claims and Interests
After the Effective Date, each of the Reorganized Debtors shall have and retain any and all rights and defenses
such Debtor had with respect to any Claim or Equity Interest immediately prior to the Effective Date. This Article
VII shall not apply to the DIP Facility Claims and the Secured Claims, which Claims shall be Allowed in full and will
not be subject to any avoidance, reductions, set off, offset, recharacterization, subordination (whether equitable,
contractual, or otherwise), counterclaims, cross-claims, defenses, disallowance, impairment, objection, or any other
challenges under any applicable law or regulation by any person or Entity. All settled Claims approved prior to the
Effective Date pursuant to a Final Order of the Bankruptcy Court pursuant to Bankruptcy Rule 9019 or otherwise shall
be binding on all parties.
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B. Proofs of Claim
Holders of Claims and Interests need not file a Proof of Claim with the Bankruptcy Court and shall be subject
to the Bankruptcy Court process only to the extent provided in the Plan. On and after the Effective Date, except as
otherwise provided in the Plan, all Allowed Claims shall be satisfied in the ordinary course of business of the
Reorganized Debtors. The Debtors and the Reorganized Debtors, as applicable, shall have the exclusive authority to
file, settle, compromise, withdraw, or litigate to judgment any objections to Claims as permitted under the Plan. If
the Debtors or Reorganized Debtors dispute any Claim or Interest, such dispute shall be determined, resolved, or
adjudicated, as the case may be, in the manner as if the Chapter 11 Cases had not been commenced and shall survive
the Effective Date as if the Chapter 11 Cases had not been commenced; provided that the Debtors or Reorganized
Debtors may elect, at their sole option, to object to any Claim (other than Claims expressly Allowed by the Plan) and
to have the validity or amount of any Claim adjudicated by the Bankruptcy Court; provided, further, that Holders of
Claims and Administrative Claims may elect to resolve the validity or amount of any Claim in the Bankruptcy Court.
If a Holder makes such an election, the Bankruptcy Court shall apply the law that would have governed the dispute if
the Chapter 11 Cases had not been filed. All Proofs of Claim filed in these Chapter 11 Cases shall be considered
objected to and Disputed without further action by the Debtors. On the Effective Date, all Proofs of Claim filed
against the Debtors, regardless of when such Proofs of Claim were filed, including Proofs of Claims filed after the
Effective Date, shall be deemed withdrawn.
C. Claims Administration Responsibilities
Except as otherwise specifically provided in the Plan, after the Effective Date, the Reorganized Debtors shall
have the sole authority to (1) file, withdraw, or litigate to judgment, any objections to Claims or Interests and (2) settle
or compromise any Disputed Claim or Interest without any further notice to or action, order, or approval by the
Bankruptcy Court. For the avoidance of doubt, except as otherwise provided in the Plan, from and after the Effective
Date, each Reorganized Debtor shall have and retain any and all rights and defenses such Debtor had immediately
prior to the Effective Date with respect to any Disputed Claim or Interest, including the Causes of Action retained
pursuant to the Plan.
D. Estimation of Claims and Interests
Before or after the Effective Date, the Debtors or the Reorganized Debtors, as applicable, may (but are not
required to) at any time request that the Bankruptcy Court estimate any Disputed Claim or Interest that is contingent
or unliquidated pursuant to section 502(c) of the Bankruptcy Code for any reason, regardless of whether any party
previously has objected to such Claim or Interest or whether the Bankruptcy Court has ruled on any such objection,
and the Bankruptcy Court shall retain jurisdiction to estimate any such Claim or Interest, including during the litigation
of any objection to any Claim or Interest or during the appeal relating to such objection. Notwithstanding any
provision otherwise in the Plan, a Claim that has been expunged but that either is subject to appeal or has not been the
subject of a Final Order shall be deemed to be estimated at zero ($0.00) dollars unless otherwise ordered by the
Bankruptcy Court. In the event that the Bankruptcy Court estimates any contingent or unliquidated Claim or Interest,
that estimated amount shall constitute a maximum limitation on such Claim or Interest for all purposes under the Plan
(including for purposes of distributions), and the relevant Reorganized Debtor may elect to pursue any supplemental
proceedings to object to any ultimate distribution on such Claim or Interest.
E. Adjustment to Claims Without Objection
Any duplicate Claim or Interest or any Claim or Interest that has been paid, satisfied, amended, or superseded
may be adjusted or expunged by the Reorganized Debtors without the Reorganized Debtors having to file an
application, motion, complaint, objection, or any other legal proceeding seeking to object to such Claim or Interest,
and without any further notice to or action, order, or approval of the Bankruptcy Court.
F. Disallowance of Certain Claims
Any Claims held by Entities from which property is recoverable under section 542, 543, 550, or 553 of the
Bankruptcy Code or that is a transferee of a transfer avoidable under section 522(f), 522(h), 544, 545, 547, 548, 549,
or 724(a) of the Bankruptcy Code shall be deemed disallowed pursuant to section 502(d) of the Bankruptcy Code
unless expressly Allowed pursuant to the Plan, and Holders of such Claims may not receive any distributions on
33
account of such Claims and Interests until such time as such Causes of Action against that Entity have been settled or
a Final Order of the Bankruptcy Court with respect thereto has been entered and all sums due, if any, to the Debtors
by that Entity have been turned over or paid to the Reorganized Debtors.
G. No Distributions Pending Allowance
Notwithstanding any other provision hereof, if any portion of a Claim or Interest is a Disputed Claim or
Interest, as applicable, no payment or distribution provided hereunder shall be made on account of such Claim or
Interest unless and until such Disputed Claim or Interest becomes an Allowed Claim or Interest.
H. Distributions After Allowance
To the extent that a Disputed Claim or Interest ultimately becomes an Allowed Claim or Interest, distributions
(if any) shall be made to the Holder of such Allowed Claim or Interest in accordance with the provisions of the Plan.
As soon as reasonably practicable after the date that the order or judgment of the Bankruptcy Court allowing any
Disputed Claim or Interest becomes a Final Order, the Distribution Agent shall provide to the Holder of such Claim
or Interest the distribution (if any) to which such Holder is entitled under the Plan as of the Effective Date, without
any interest to be paid on account of such Claim or Interest.
I. No Interest
Interest shall not accrue or be paid on any Disputed Claim with respect to the period from the Effective Date
to the date a final distribution is made on account of such Disputed Claim if and when such Disputed Claim becomes
an Allowed Claim.
Article VIII.
CONDITIONS PRECEDENT TO THE EFFECTIVE DATE
A. Conditions Precedent to the Effective Date
The following are conditions precedent to the Effective Date that must be satisfied or waived in accordance
with the terms of the Restructuring Support Agreement and the Plan:
1. The Bankruptcy Court shall have approved the Disclosure Statement as containing adequate
information with respect to the Plan within the meaning of section 1125 of the Bankruptcy Code.
2. The Confirmation Order shall have been entered and shall be in full force and effect and such
Confirmation Order shall be a Final Order.
3. The Debtors shall have obtained any authorization, consents, regulatory approvals, rulings, or
documents that are necessary to implement and effectuate the Plan and each of the other transactions contemplated by
the Restructuring Transactions.
4. All actions, documents, certificates, and agreements necessary to implement this Plan shall have
been effected or executed and delivered to the required parties and, to the extent required, filed with the applicable
Governmental Units in accordance with applicable laws.
5. All conditions precedent to the effectiveness of the Exit Facilities Documents and Alternate Term
Exit Facility Documents (as applicable) shall have been satisfied contemporaneously or duly waived.
6. All conditions precedent to the issuance of the New Common Equity, including the New Warrants,
shall have been satisfied or duly waived.
7. All documents and agreements necessary to implement the DOJ Settlement, which shall be in form
and substance reasonably acceptable to the Requisite Consenting Term Loan Lenders, shall have been executed and
tendered for delivery.
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8. The DOJ Settlement shall be approved by the Bankruptcy Court and any required non-Bankruptcy
Court and subsequently finalized by the Debtors and the DOJ.
9. All documents and agreements necessary to implement the Plan shall have been executed and
tendered for delivery. All conditions precedent to the effectiveness of such documents and agreements shall have
been satisfied or waived pursuant to the terms thereof (or will be satisfied and waived substantially concurrently with
the occurrence of the Effective Date).
10. The final version of the Plan Supplement and all of the schedules, documents, and exhibits contained
therein and all other schedules, documents, supplements, and exhibits to the Plan shall be consistent with the
Restructuring Support Agreement and Article I.E of this Plan.
11. All of the other Definitive Documents not expressly set forth in Article VIII of this Plan shall have
been executed in accordance with section 3 of the Restructuring Support Agreement and Article I.E of this Plan.
12. The Restructuring Support Agreement shall not have been terminated in accordance with its terms
and shall be in full force and effect.
13. The Professional Fee Escrow Account shall have been established and funded.
14. All Accrued Professional Compensation Claims and expenses of Retained Professionals required to
be approved by the Bankruptcy Court shall have been paid in full or amounts sufficient to pay such fees and expenses
after the Effective Date shall have been placed in the Professional Fee Escrow Account pending approval by the
Bankruptcy Court.
15. All invoiced reasonable and documented fees and out-of-pocket expenses payable pursuant to the
Restructuring Support Agreement, Article II.A.2.d of this Plan, or an order of the Bankruptcy Court shall have been
paid in full.
16. The Debtors and Reorganized Debtors, as applicable, shall have implemented the restructuring in a
manner consistent in all respects with the Plan and the Restructuring Support Agreement.
B. Effect of Non-Occurrence of Conditions to the Effective Date
If the Effective Date does not occur on or before the termination of the Restructuring Support Agreement,
then (1) the Plan shall be null and void in all respects, (2) any settlement or compromise embodied in the Plan,
assumption of Executory Contracts or Unexpired Leases effected under the Plan, and document or agreement executed
pursuant to the Plan shall be deemed null and void, and (3) nothing contained in the Plan, the Confirmation Order, or
the Disclosure Statement shall (a) constitute a waiver or release of any Claims, Interests, or Causes of Action, (b)
prejudice in any manner the rights of the Debtors or any other Entity, or (c) constitute an admission, acknowledgement,
offer, or undertaking of any sort by the Debtors or any other Entity.
C. Waiver of Conditions
The Debtors or the Reorganized Debtors, as applicable, subject to the Restructuring Support Agreement, may
waive any of the conditions to the Effective Date set forth above at any time, without any notice to parties in interest
and without any further notice to or action, order, or approval of the Bankruptcy Court and without any formal action
other than a proceeding to confirm the Plan.
Article IX.
RELEASE, INJUNCTION, AND RELATED PROVISIONS
A. Discharge of Claims and Termination of Interests; Compromise and Settlement of Claims, Interests, and
Controversies
Pursuant to and to the fullest extent permitted by section 1141(d) of the Bankruptcy Code and except as
otherwise specifically provided in the Plan, the distributions, rights, and treatments that are provided in the Plan shall
35
be in full and final satisfaction, settlement, release, and discharge, effective as of the Effective Date, of all Interests
and Claims of any nature whatsoever, including any interest accrued on Claims from and after the Petition Date,
whether known or unknown, against, liabilities of, Liens on, obligations of, rights against the Debtors, the Reorganized
Debtors or any of their assets or properties, regardless of whether any property shall have been distributed or retained
pursuant to the Plan on account of such Claims or Interests, including demands, liabilities, and Causes of Action that
arose before the Effective Date, any contingent or non-contingent liability on account of representations or warranties
issued on or before the Effective Date, and all debts of the kind specified in sections 502(g), 502(h), or 502(i) of the
Bankruptcy Code, in each case whether or not: (1) a Proof of Claim or Interest is filed or deemed filed pursuant to
section 501 of the Bankruptcy Code; (2) a Claim or Interest is Allowed; or (3) the Holder of such Claim or Interest
has accepted the Plan. Except as otherwise provided herein, any default by the Debtors or their Affiliates with respect
to any Claim or Interest that existed immediately prior to or on account of the filing of the Chapter 11 Cases shall be
deemed cured on the Effective Date. The Confirmation Order shall be a judicial determination of the discharge of all
Claims and Interests subject to the Effective Date occurring, except as otherwise expressly provided in the Plan. For
the avoidance of doubt, nothing in this Article IX.A shall affect the rights of Holders of Claims and Interests to seek
to enforce the Plan, including the distributions to which Holders of Allowed Claims and Interests are entitled under
the Plan.
Pursuant to Bankruptcy Rule 9019 and in consideration for the distributions and other benefits provided
pursuant to the Plan, the provisions of the Plan shall constitute a good faith compromise of all Claims, Interests, and
controversies relating to the contractual, legal, and subordination rights that a Holder of a Claim or Interest may have
with respect to any Allowed Claim or Interest or any distribution to be made on account of such Allowed Claim or
Interest. The entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of the compromise or
settlement of all such Claims, Interests, and controversies as well as a finding by the Bankruptcy Court that such
compromise or settlement is in the best interests of the Debtors, their Estates, and Holders of Claims and Interests and
is fair, equitable, and reasonable. In accordance with the provisions of the Plan, pursuant to Bankruptcy Rule 9019,
without any further notice to or action, order, or approval of the Bankruptcy Court, after the Effective Date, the
Reorganized Debtors may compromise and settle Claims against the Debtors and their Estates and Causes of Action
against other Entities.
B. Releases by the Debtors
NOTWITHSTANDING ANYTHING CONTAINED IN THE PLAN TO THE CONTRARY,
PURSUANT TO SECTION 1123(B) OF THE BANKRUPTCY CODE, FOR GOOD AND VALUABLE
CONSIDERATION, ON AND AFTER THE EFFECTIVE DATE, EACH RELEASED PARTY IS DEEMED
RELEASED AND DISCHARGED BY THE DEBTORS, THE REORGANIZED DEBTORS, AND THEIR
ESTATES FROM ANY AND ALL CLAIMS AND CAUSES OF ACTION, WHETHER KNOWN OR
UNKNOWN, INCLUDING ANY DERIVATIVE CLAIMS, ASSERTED ON BEHALF OF THE DEBTORS,
THAT THE DEBTORS, THE REORGANIZED DEBTORS, OR THEIR ESTATES WOULD HAVE BEEN
LEGALLY ENTITLED TO ASSERT IN THEIR OWN RIGHT (WHETHER INDIVIDUALLY OR
COLLECTIVELY) OR ON BEHALF OF THE HOLDER OF ANY CLAIM AGAINST, OR INTEREST IN,
A DEBTOR OR OTHER ENTITY, BASED ON OR RELATING TO, OR IN ANY MANNER ARISING
FROM, IN WHOLE OR IN PART, THE DEBTORS (INCLUDING THE MANAGEMENT, OWNERSHIP,
OR OPERATION THEREOF, OR OTHERWISE), ANY SECURITIES ISSUED BY THE DEBTORS AND
THE OWNERSHIP THEREOF, THE DEBTORS’ IN- OR OUT-OF-COURT RESTRUCTURING
EFFORTS, ANY AVOIDANCE ACTIONS, INTERCOMPANY TRANSACTIONS, THE CHAPTER 11
CASES, THE FORMULATION, PREPARATION, DISSEMINATION, NEGOTIATION, OR FILING OF
THE RESTRUCTURING SUPPORT AGREEMENT, THE DISCLOSURE STATEMENT, THE DIP
FACILITIES, THE DIP FACILITIES DOCUMENTS, THE EXIT FACILITIES, THE EXIT FACILITIES
DOCUMENTS, THE ALTERNATE TERM EXIT FACILITY AND THE ALTERNATE TERM EXIT
FACILITY DOCUMENTS (AS APPLICABLE), THE PLAN, THE PLAN SUPPLEMENT, OR ANY
RESTRUCTURING TRANSACTION, CONTRACT, INSTRUMENT, RELEASE, OR OTHER
AGREEMENT OR DOCUMENT CREATED OR ENTERED INTO IN CONNECTION WITH THE
RESTRUCTURING SUPPORT AGREEMENT, THE DISCLOSURE STATEMENT, THE DIP FACILITIES,
THE EXIT FACILITIES, THE ALTERNATE TERM EXIT FACILITY (AS APPLICABLE), THE PLAN,
THE PLAN SUPPLEMENT, THE CHAPTER 11 CASES, THE FILING OF THE CHAPTER 11 CASES, THE
PURSUIT OF CONFIRMATION, THE PURSUIT OF THE DIP FACILITIES, THE PURSUIT OF THE
36
EXIT FACILITIES AND THE ALTERNATE TERM EXIT FACILITY (AS APPLICABLE), THE PURSUIT
OF CONSUMMATION, THE ADMINISTRATION AND IMPLEMENTATION OF THE PLAN,
INCLUDING THE ISSUANCE OR DISTRIBUTION OF SECURITIES PURSUANT TO THE PLAN, OR
THE DISTRIBUTION OF PROPERTY UNDER THE PLAN OR ANY OTHER RELATED AGREEMENT,
OR UPON ANY OTHER RELATED ACT OR OMISSION, TRANSACTION, AGREEMENT, EVENT, OR
OTHER OCCURRENCE TAKING PLACE ON OR BEFORE THE EFFECTIVE DATE.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE FOREGOING, THE RELEASES SET
FORTH ABOVE DO NOT RELEASE (A) ANY POST-EFFECTIVE DATE OBLIGATIONS OF ANY
PARTY OR ENTITY UNDER THE PLAN, ANY RESTRUCTURING TRANSACTION, OR ANY
DOCUMENT, INSTRUMENT, OR AGREEMENT (INCLUDING THOSE SET FORTH IN THE PLAN
SUPPLEMENT) EXECUTED TO IMPLEMENT THE PLAN OR (B) ANY INDIVIDUAL FROM ANY
CLAIM OR CAUSES OF ACTION RELATED TO AN ACT OR OMISSION THAT IS DETERMINED IN A
FINAL ORDER BY A COURT OF COMPETENT JURISDICTION TO HAVE CONSTITUTED ACTUAL
INTENTIONAL FRAUD, WILLFUL MISCONDUCT, OR GROSS NEGLIGENCE OF SUCH RELEASED
PARTY.
ENTRY OF THE CONFIRMATION ORDER SHALL CONSTITUTE THE BANKRUPTCY
COURT’S APPROVAL, PURSUANT TO BANKRUPTCY RULE 9019, OF THE DEBTOR RELEASE,
WHICH INCLUDES BY REFERENCE EACH OF THE RELATED PROVISIONS AND DEFINITIONS
CONTAINED IN THE PLAN, AND FURTHER, SHALL CONSTITUTE THE BANKRUPTCY COURT’S
FINDING THAT THE DEBTOR RELEASE IS: (A) IN EXCHANGE FOR THE GOOD AND VALUABLE
CONSIDERATION PROVIDED BY THE RELEASED PARTIES, INCLUDING, WITHOUT LIMITATION,
THE RELEASED PARTIES’ CONTRIBUTIONS TO FACILITATING THE RESTRUCTURING AND
IMPLEMENTING THE PLAN; (B) A GOOD FAITH SETTLEMENT AND COMPROMISE OF THE
CLAIMS RELEASED BY THE DEBTOR RELEASE; (C) IN THE BEST INTERESTS OF THE DEBTORS
AND ALL HOLDERS OF CLAIMS AND INTERESTS; (D) FAIR, EQUITABLE, AND REASONABLE; (E)
GIVEN AND MADE AFTER DUE NOTICE AND OPPORTUNITY FOR HEARING; AND (F) A BAR TO
ANY OF THE DEBTORS, THE REORGANIZED DEBTORS, OR THE DEBTORS’ ESTATES ASSERTING
ANY CLAIM OR CAUSE OF ACTION RELEASED PURSUANT TO THE DEBTOR RELEASE.
C. Releases by the Releasing Parties
NOTWITHSTANDING ANYTHING CONTAINED IN THE PLAN TO THE CONTRARY, AS OF THE
EFFECTIVE DATE, EACH RELEASING PARTY IS DEEMED TO HAVE RELEASED AND
DISCHARGED EACH DEBTOR, REORGANIZED DEBTOR, AND RELEASED PARTY FROM ANY AND
ALL CLAIMS AND CAUSES OF ACTION, WHETHER KNOWN OR UNKNOWN, INCLUDING ANY
DERIVATIVE CLAIMS, ASSERTED ON BEHALF OF THE DEBTORS, THAT SUCH ENTITY WOULD
HAVE BEEN LEGALLY ENTITLED TO ASSERT (WHETHER INDIVIDUALLY OR COLLECTIVELY),
BASED ON OR RELATING TO, OR IN ANY MANNER ARISING FROM, IN WHOLE OR IN PART, THE
DEBTORS (INCLUDING THE MANAGEMENT, OWNERSHIP OR OPERATION THEREOF, OR
OTHERWISE), ANY SECURITIES ISSUED BY THE DEBTORS AND THE OWNERSHIP THEREOF, THE
DEBTORS’ IN- OR OUT-OF-COURT RESTRUCTURING EFFORTS, ANY AVOIDANCE ACTIONS,
INTERCOMPANY TRANSACTIONS, THE CHAPTER 11 CASES, THE FORMULATION,
PREPARATION, DISSEMINATION, NEGOTIATION, OR FILING OF THE RESTRUCTURING
SUPPORT AGREEMENT, THE DISCLOSURE STATEMENT, THE DIP FACILITIES, THE DIP
FACILITIES DOCUMENTS, THE EXIT FACILITIES, THE EXIT FACILITIES DOCUMENTS, THE
ALTERNATE TERM EXIT FACILITY AND THE ALTERNATE TERM EXIT FACILITY DOCUMENTS
(AS APPLICABLE), THE PLAN, THE PLAN SUPPLEMENT, OR ANY RESTRUCTURING
TRANSACTION, CONTRACT, INSTRUMENT, RELEASE, OR OTHER AGREEMENT OR DOCUMENT
CREATED OR ENTERED INTO IN CONNECTION WITH THE RESTRUCTURING SUPPORT
AGREEMENT, THE DISCLOSURE STATEMENT, THE DIP FACILITIES, THE EXIT FACILITIES, THE
ALTERNATE TERM EXIT FACILITY (AS APPLICABLE), THE PLAN, THE PLAN SUPPLEMENT, THE
CHAPTER 11 CASES, THE FILING OF THE CHAPTER 11 CASES, THE PURSUIT OF CONFIRMATION,
THE PURSUIT OF THE DIP FACILITIES, THE PURSUIT OF THE EXIT FACILITIES AND THE
ALTERNATE TERM EXIT FACILITY (AS APPLICABLE), THE PURSUIT OF CONSUMMATION, THE
ADMINISTRATION AND IMPLEMENTATION OF THE PLAN, INCLUDING THE ISSUANCE OR
37
DISTRIBUTION OF SECURITIES PURSUANT TO THE PLAN, OR THE DISTRIBUTION OF PROPERTY
UNDER THE PLAN OR ANY OTHER RELATED AGREEMENT, OR UPON ANY OTHER RELATED
ACT OR OMISSION, TRANSACTION, AGREEMENT, EVENT, OR OTHER OCCURRENCE TAKING
PLACE ON OR BEFORE THE EFFECTIVE DATE. NOTWITHSTANDING ANYTHING TO THE
CONTRARY IN THE FOREGOING, THE RELEASES SET FORTH ABOVE DO NOT RELEASE (A) ANY
POST-EFFECTIVE DATE OBLIGATIONS OF ANY PARTY OR ENTITY UNDER THE PLAN, ANY
RESTRUCTURING TRANSACTION, OR ANY DOCUMENT, INSTRUMENT, OR AGREEMENT
(INCLUDING THOSE SET FORTH IN THE PLAN SUPPLEMENT) EXECUTED TO IMPLEMENT THE
PLAN OR (B) ANY INDIVIDUAL FROM ANY CLAIM OR CAUSES OF ACTION RELATED TO AN ACT
OR OMISSION THAT IS DETERMINED IN A FINAL ORDER BY A COURT OF COMPETENT
JURISDICTION TO HAVE CONSTITUTED ACTUAL INTENTIONAL FRAUD, WILLFUL
MISCONDUCT, OR GROSS NEGLIGENCE OF SUCH RELEASED PARTY.
ENTRY OF THE CONFIRMATION ORDER SHALL CONSTITUTE THE BANKRUPTCY
COURT’S APPROVAL, PURSUANT TO BANKRUPTCY RULE 9019, OF THE THIRD-PARTY RELEASE,
WHICH INCLUDES BY REFERENCE EACH OF THE RELATED PROVISIONS AND DEFINITIONS
CONTAINED HEREIN, AND, FURTHER, SHALL CONSTITUTE THE BANKRUPTCY COURT’S
FINDING THAT THE THIRD-PARTY RELEASE IS: (A) CONSENSUAL; (B) ESSENTIAL TO THE
CONFIRMATION OF THE PLAN; (C) GIVEN IN EXCHANGE FOR THE GOOD AND VALUABLE
CONSIDERATION PROVIDED BY THE RELEASED PARTIES; (D) A GOOD FAITH SETTLEMENT
AND COMPROMISE OF THE CLAIMS RELEASED BY THE THIRD-PARTY RELEASE; (E) IN THE
BEST INTERESTS OF THE DEBTORS AND THEIR ESTATES; (F) FAIR, EQUITABLE, AND
REASONABLE; (G) GIVEN AND MADE AFTER DUE NOTICE AND OPPORTUNITY FOR HEARING;
AND (H) A BAR TO ANY OF THE RELEASING PARTIES ASSERTING ANY CLAIM OR CAUSE OF
ACTION RELEASED PURSUANT TO THE THIRD-PARTY RELEASE.
D. Exculpation
EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THE PLAN, NO EXCULPATED
PARTY SHALL HAVE OR INCUR LIABILITY FOR AND EACH EXCULPATED PARTY IS RELEASED
AND EXCULPATED FROM ANY CAUSE OF ACTION FOR ANY CLAIM RELATED TO ANY ACT OR
OMISSION IN CONNECTION WITH, RELATING TO, OR ARISING OUT OF, THE CHAPTER 11 CASES,
THE FORMULATION, PREPARATION, DISSEMINATION, NEGOTIATION, OR FILING OF THE
RESTRUCTURING SUPPORT AGREEMENT AND RELATED PREPETITION TRANSACTIONS, THE
DIP FACILITIES, THE DIP FACILITIES DOCUMENTS,, THE EXIT FACILITIES, THE EXIT
FACILITIES DOCUMENTS, THE ALTERNATE TERM EXIT FACILITY AND THE ALTERNATE TERM
EXIT FACILITY DOCUMENTS (AS APPLICABLE), THE DISCLOSURE STATEMENT, THE PLAN, THE
PLAN SUPPLEMENT, OR ANY RESTRUCTURING TRANSACTION, CONTRACT, INSTRUMENT,
RELEASE, OR OTHER AGREEMENT OR DOCUMENT CREATED OR ENTERED INTO IN
CONNECTION WITH THE RESTRUCTURING SUPPORT AGREEMENT, THE DIP FACILITIES, THE
EXIT FACILITIES, THE ALTERNATE TERM EXIT FACILITY (AS APPLICABLE), THE DISCLOSURE
STATEMENT, THE PLAN, THE PLAN SUPPLEMENT, THE CHAPTER 11 CASES, THE FILING OF THE
CHAPTER 11 CASES, THE PURSUIT OF CONFIRMATION, THE PURSUIT OF THE DIP FACILITIES,
THE PURSUIT OF THE EXIT FACILITIES AND THE ALTERNATE TERM EXIT FACILITY (AS
APPLICABLE), THE PURSUIT OF CONSUMMATION, THE ADMINISTRATION AND
IMPLEMENTATION OF THE PLAN, INCLUDING THE ISSUANCE OR DISTRIBUTION OF
SECURITIES PURSUANT TO THE PLAN, OR THE DISTRIBUTION OF PROPERTY UNDER THE PLAN
OR ANY OTHER RELATED AGREEMENT, OR UPON ANY OTHER RELATED ACT OR OMISSION,
TRANSACTION, AGREEMENT, EVENT, OR OTHER OCCURRENCE TAKING PLACE ON OR
BEFORE THE EFFECTIVE DATE, EXCEPT FOR CLAIMS RELATED TO ANY ACT OR OMISSION
THAT IS DETERMINED IN A FINAL ORDER BY A COURT OF COMPETENT JURISDICTION TO
HAVE CONSTITUTED ACTUAL INTENTIONAL FRAUD, WILLFUL MISCONDUCT, OR GROSS
NEGLIGENCE OF SUCH PERSON, BUT IN ALL RESPECTS SUCH ENTITIES SHALL BE ENTITLED
TO REASONABLY RELY UPON THE ADVICE OF COUNSEL WITH RESPECT TO THEIR DUTIES AND
RESPONSIBILITIES PURSUANT TO THE PLAN.
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THE EXCULPATED PARTIES HAVE, AND UPON CONFIRMATION OF THE PLAN SHALL BE
DEEMED TO HAVE, PARTICIPATED IN GOOD FAITH AND IN COMPLIANCE WITH THE
APPLICABLE LAWS WITH REGARD TO THE SOLICITATION OF VOTES AND DISTRIBUTION OF
CONSIDERATION PURSUANT TO THE PLAN AND, THEREFORE, ARE NOT, AND ON ACCOUNT OF
SUCH DISTRIBUTIONS SHALL NOT BE, LIABLE AT ANY TIME FOR THE VIOLATION OF ANY
APPLICABLE LAW, RULE, OR REGULATION GOVERNING THE SOLICITATION OF
ACCEPTANCES OR REJECTIONS OF THE PLAN OR SUCH DISTRIBUTIONS MADE PURSUANT TO
THE PLAN.
E. Injunction
EXCEPT AS OTHERWISE PROVIDED IN THE PLAN OR THE CONFIRMATION ORDER, ALL
ENTITIES WHO HAVE HELD, HOLD, OR MAY HOLD CLAIMS, INTERESTS, CAUSES OF ACTION,
OR LIABILITIES THAT: (A) ARE SUBJECT TO COMPROMISE AND SETTLEMENT PURSUANT TO
THE TERMS OF THE PLAN; (B) HAVE BEEN RELEASED PURSUANT TO ARTICLE IX.B OF THIS
PLAN; (C) HAVE BEEN RELEASED PURSUANT TO ARTICLE IX.C OF THIS PLAN, (D) ARE SUBJECT
TO EXCULPATION PURSUANT TO ARTICLE IX.D OF THIS PLAN (BUT ONLY TO THE EXTENT OF
THE EXCULPATION PROVIDED IN ARTICLE IX.D OF THIS PLAN), OR (E) ARE OTHERWISE
DISCHARGED, SATISFIED, STAYED, RELEASED, OR TERMINATED PURSUANT TO THE TERMS OF
THE PLAN, ARE PERMANENTLY ENJOINED AND PRECLUDED, FROM AND AFTER THE
EFFECTIVE DATE, FROM COMMENCING OR CONTINUING IN ANY MANNER, ANY ACTION OR
OTHER PROCEEDING, INCLUDING ON ACCOUNT OF ANY CLAIMS, INTERESTS, CAUSES OF
ACTION, OR LIABILITIES THAT HAVE BEEN COMPROMISED OR SETTLED AGAINST THE
DEBTORS, THE REORGANIZED DEBTORS, OR ANY ENTITY SO RELEASED OR EXCULPATED (OR
THE PROPERTY OR ESTATE OF ANY ENTITY, DIRECTLY OR INDIRECTLY, SO RELEASED OR
EXCULPATED) ON ACCOUNT OF, OR IN CONNECTION WITH OR WITH RESPECT TO, ANY
DISCHARGED, RELEASED, SETTLED, COMPROMISED, OR EXCULPATED CLAIMS, INTERESTS,
CAUSES OF ACTION, OR LIABILITIES.
F. Setoffs and Recoupment
Except as otherwise provided herein, each Reorganized Debtor pursuant to the Bankruptcy Code (including
section 553 of the Bankruptcy Code), applicable non-bankruptcy law, or as may be agreed to by the Holder of an
Allowed Claim may setoff or recoup against any Allowed Claim and the distributions to be made pursuant to the Plan
on account of such Allowed Claim, any Claims, rights, and Causes of Action of any nature that the applicable Debtor
or Reorganized Debtor may hold against the Holder of such Allowed Claim, to the extent such Claims, rights, or
Causes of Action have not been otherwise compromised or settled on or prior to the Effective Date (whether pursuant
to the Plan, a Final Order or otherwise); provided that neither the failure to effect such a setoff or recoupment nor the
allowance of any Claim pursuant to the Plan shall constitute a waiver or release by such Reorganized Debtor of any
such Claims, rights, and Causes of Action.
G. Release of Liens
Except as otherwise provided herein or in any contract, instrument, release, or other agreement or document
created pursuant to the Plan, on the Effective Date and concurrently with the applicable distributions made pursuant
to the Plan, all mortgages, deeds of trust, Liens, pledges, or other security interests against any property of the Estates
shall be fully released and discharged, and all of the right, title, and interest of any Holder of such mortgages, deeds
of trust, Liens, pledges, or other security interests shall revert to the applicable Reorganized Debtor and its successors
and assigns.
To the extent that any Holder of a Secured Claim has had such Claim satisfied or discharged in full pursuant
to the Plan or any agent for such Holder has filed or recorded publicly any Liens and/or security interests to secure
such Holder’s Secured Claim, as soon as practicable on or after the Effective Date, such Holder (or the agent for such
Holder) shall take any and all steps requested by the Debtors, the Reorganized Debtors, or any administrative agent
under the Exit Facilities Documents and Alternate Term Exit Facility Documents (as applicable) that are necessary or
desirable to record or effectuate the cancellation and/or extinguishment of such Liens and/or security interests,
39
including the making of any applicable filings or recordings, and the Reorganized Debtors shall be entitled to make
any such filings or recordings on such Holder’s behalf.
Article X.
RETENTION OF JURISDICTION
Notwithstanding the entry of the Confirmation Order and the occurrence of the Effective Date, the
Bankruptcy Court shall retain exclusive jurisdiction over all matters arising out of, or related to, the Chapter 11 Cases
and the Plan pursuant to sections 105(a) and 1142 of the Bankruptcy Code, including jurisdiction to:
1. Allow, disallow, determine, liquidate, classify, estimate, or establish the priority, secured or
unsecured status, or amount of any Claim or Interest, including the resolution of any request for payment of any
Administrative Claim and the resolution of any and all objections to the secured or unsecured status, priority, amount,
or allowance of Claims or Interests;
2. Decide and resolve all matters related to the granting and denying, in whole or in part, any
applications for allowance of compensation or reimbursement of expenses to Retained Professionals authorized
pursuant to the Bankruptcy Code or the Plan;
3. Resolve any matters related to: (a) the assumption or assumption and assignment of any Executory
Contract or Unexpired Lease to which a Debtor is party or with respect to which a Debtor may be liable and to hear,
determine, and, if necessary, liquidate, any Cure or Cure Claims arising therefrom, including Cure or Cure Claims
pursuant to section 365 of the Bankruptcy Code; (b) any potential contractual obligation under any Executory Contract
or Unexpired Lease that is assumed; and (c) any dispute regarding whether a contract or lease is or was executory or
expired;
4. Ensure that distributions to Holders of Allowed Claims are accomplished pursuant to the provisions
of the Plan;
5. Adjudicate, decide or resolve any motions, adversary proceedings, contested, or litigated matters,
and any other matters, and grant or deny any applications involving a Debtor that may be pending on the Effective
Date;
6. Adjudicate, decide, or resolve any and all matters related to section 1141 of the Bankruptcy Code;
7. Resolve any cases, controversies, suits, or disputes that may arise in connection with General
Unsecured Claims, including establishment of a bar date, related notice, claim objections, allowance, disallowance,
estimation and distribution;
8. Enter and implement such orders as may be necessary or appropriate to execute, implement, or
consummate the provisions of the Plan and all contracts, instruments, releases, indentures, and other agreements or
documents created in connection with the Plan or the Disclosure Statement;
9. Enter and enforce any order for the sale of property pursuant to sections 363, 1123, or 1146(a) of
the Bankruptcy Code;
10. Resolve any cases, controversies, suits, disputes, or Causes of Action that may arise in connection
with the interpretation or enforcement of the Plan or any Entity’s obligations incurred in connection with the Plan;
11. Issue injunctions, enter and implement other orders or take such other actions as may be necessary
or appropriate to restrain interference by any Entity with enforcement of the Plan;
12. Resolve any cases, controversies, suits, disputes, or Causes of Action with respect to the releases,
injunctions, and other provisions contained in the Plan and enter such orders as may be necessary or appropriate to
implement such releases, injunctions, and other provisions;
40
13. Resolve any cases, controversies, suits, disputes, or Causes of Action with respect to the repayment
or return of distributions and the recovery of additional amounts owed by any Holder of a Claim or Interest for amounts
not timely repaid;
14. Enter and implement such orders as are necessary or appropriate if the Confirmation Order is for
any reason modified, stayed, reversed, revoked, or vacated;
15. Determine any other matters that may arise in connection with or relate to the Plan, the Disclosure
Statement, or the Confirmation Order;
16. Enter an order or final decree concluding or closing the Chapter 11 Cases;
17. Adjudicate any and all disputes arising from or relating to distributions under the Plan;
18. Consider any modifications of the Plan, to cure any defect or omission, or to reconcile any
inconsistency in any Bankruptcy Court order, including the Confirmation Order;
19. Determine requests for the payment of Claims and Interests entitled to priority pursuant to section
507 of the Bankruptcy Code;
20. Hear and determine disputes arising in connection with the interpretation, implementation, or
enforcement of the Plan or the Confirmation Order;
21. Hear and determine matters concerning state, local, and federal taxes in accordance with sections
346, 505, and 1146 of the Bankruptcy Code;
22. Hear and determine all disputes involving the existence, nature, or scope of the Debtors’ discharge,
including any dispute relating to any liability arising out of the termination of employment or the termination of any
employee or retiree benefit program, regardless of whether such termination occurred prior to or after the Effective
Date;
23. Enforce all orders previously entered by the Bankruptcy Court; and
24. Hear any other matter not inconsistent with the Bankruptcy Code.
Article XI.
MODIFICATION, REVOCATION, OR WITHDRAWAL OF PLAN
A. Modification of Plan
Subject to the limitations contained in the Plan, the Debtors reserve the right, in accordance with the
Bankruptcy Code, the Bankruptcy Rules, and the Restructuring Support Agreement (1) to amend or modify the Plan
prior to the entry of the Confirmation Order, including amendments or modifications to satisfy section 1129(b) of the
Bankruptcy Code, and (2) after the entry of the Confirmation Order, the Debtors or the Reorganized Debtors, as the
case may be, may, upon order of the Bankruptcy Court, amend or modify the Plan, in accordance with section 1127(b)
of the Bankruptcy Code and the Restructuring Support Agreement, or remedy any defect or omission or reconcile any
inconsistency in the Plan in such manner as may be necessary to carry out the purpose and intent of the Plan.
B. Effect of Confirmation on Modifications
Entry of the Confirmation Order shall mean that all modifications or amendments to the Plan since the
solicitation thereof are approved pursuant to section 1127(a) of the Bankruptcy Code and do not require additional
disclosure or re-solicitation under Bankruptcy Rule 3019.
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C. Revocation of Plan
Subject to the conditions to the Effective Date, the Debtors reserve the right, subject to the terms of the
Restructuring Support Agreement, to revoke or withdraw the Plan prior to the entry of the Confirmation Order and to
file subsequent plans of reorganization. If the Debtors revoke or withdraw the Plan with the prior reasonable consent
of the Required Parties, if entry of the Confirmation Order or the Effective Date does not occur, or if the Restructuring
Support Agreement terminates in accordance with its terms, then (1) the Plan shall be null and void in all respects,
(2) any settlement or compromise embodied in the Plan, assumption of executory contracts or leases effected by the
Plan, and any document or agreement executed pursuant hereto shall be deemed null and void, and (3) nothing
contained in the Plan shall (a) constitute a waiver or release of any claims by or against or any Equity Interests in such
Debtor or any other Entity, (b) prejudice in any manner the rights of the Debtors or any other Entity, or (c) constitute
an admission of any sort by the Debtors or any other Entity.
Article XII.
MISCELLANEOUS PROVISIONS
A. Immediate Binding Effect
Notwithstanding Bankruptcy Rules 3020(e), 6004(g), or 7062 or otherwise, upon the occurrence of the
Effective Date, the terms of the Plan and the documents and instruments contained in the Plan Supplement shall be
immediately effective and enforceable and deemed binding upon the Debtors, the Reorganized Debtors, and any and
all Holders of Claims and Interests (irrespective of whether such Holders of Claims or Interests are deemed to have
accepted the Plan), all Entities that are parties to or are subject to the settlements, compromises, releases, discharges,
and injunctions described in the Plan, each Entity acquiring property under the Plan and any and all non-Debtor parties
to Executory Contracts and Unexpired Leases. The Confirmation Order shall contain a waiver of any stay of
enforcement otherwise applicable, including pursuant to Bankruptcy Rule 3020(e), 6004(g), and 7062.
B. Additional Documents
On or before the Effective Date and in accordance with the Restructuring Support Agreement and Article I.E
of this Plan, the Debtors may file with the Bankruptcy Court such agreements and other documents as may be
necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan. The Debtors or
Reorganized Debtors, as applicable, and all Holders of Claims or Interests receiving distributions pursuant to the Plan
and all other parties in interest shall, from time to time, prepare, execute, and deliver any agreements or documents
and take any other actions as may be necessary or advisable to effectuate the provisions and intent of the Plan or the
Confirmation Order.
C. Reservation of Rights
The Plan shall have no force or effect unless and until the Bankruptcy Court enters the Confirmation Order.
None of the filing of the Plan, any statement or provision contained in the Plan, or the taking of any action by any
Debtor with respect to the Plan, the Disclosure Statement, or the Plan Supplement shall be or shall be deemed to be
an admission or waiver of any rights of any Debtor with respect to the Holders of Claims or Interests prior to the
Effective Date.
D. Successors and Assigns
The rights, benefits, and obligations of any Entity named or referred to in the Plan shall be binding on, and
shall inure to the benefit of any heir, executor, administrator, successor or assign, affiliate, officer, director, agent,
representative, attorney, beneficiaries or guardian, if any, of each Entity.
E. Service of Documents
Any pleading, notice, or other document required by the Plan to be served on or delivered to the Debtors or
Reorganized Debtors, as applicable, shall also be served on or delivered to:
42
Debtors Proposed Co-Counsel to the Debtors
APC Automotive Technologies
Intermediate Holdings LLC
10822 West Toller Drive
Suite 370
Littleton, Colorado 80127
Attn.: Patricia Warfield, Marc Weinsweig, and
Chris Walling
Kirkland & Ellis LLP
601 Lexington Avenue
New York, New York 10022
Attn.: Jonathan S. Henes, P.C., George Klidonas, and
Neda Davanipour
Klehr Harrison Harvey Branzburg LLP
919 North Market Street
Wilmington, Delaware 19801
Attn.: Morton R. Branzburg and Domenic E. Pacitti
United States Trustee Counsel to the Term Loan Lender Group
Office of the United States Trustee
for the District of Delaware
844 King Street, Suite 2207
Wilmington, Delaware 19801
King & Spalding LLP
1180 Peachtree Street, NE
Atlanta, Georgia 30309
Attn.: W. Austin Jowers
With a copy to:
King & Spalding LLP
1185 Avenue of the Americas
New York, New York 10036
Attn.: Peter Montoni and Michael R. Handler
Counsel to the ABL Lenders Counsel to the Consenting Sponsors
Greenberg Traurig, LLP
Terminus 200
3333 Piedmont Road NE
Suite 2500
Atlanta, GA 30305
Attn: David Kurzweil, Esq., John J. Dyer, Esq., and
Victoria Bartlett, Esq.
White & Case LLP
1221 Avenue of the Americas
New York, New York 10020-1095
Attn.: Thomas Lauria, John Reiss, David Turetsky, and
Luke Laumann
Honigman LLP
2290 First National Building
660 Woodward Avenue
Detroit, Michigan 48226-3506
Attn.: Joseph R. Sgroi
Goodwin Procter LLP
New York Times Building
620 8th Avenue
New York, New York 10018
Attn.: Bruce Rader and Michael Goldstein
After the Effective Date, the Debtors or Reorganized Debtors, as applicable, have authority to send a notice
to Entities that, to continue to receive documents pursuant to Bankruptcy Rule 2002, they must file a renewed request
to receive documents pursuant to Bankruptcy Rule 2002. After the Effective Date, the Debtors are authorized to limit
the list of Entities receiving documents pursuant to Bankruptcy Rule 2002 to those Entities who have filed such
renewed requests.
In accordance with Bankruptcy Rules 2002 and 3020(e), within fourteen (14) calendar days of the date of
entry of the Confirmation Order, the Debtors shall serve the Notice of Confirmation by United States mail, first class
43
postage prepaid, by hand, or by overnight courier service to all parties served with the Confirmation Hearing notice;
provided that no notice or service of any kind shall be required to be mailed or made upon any Entity to whom the
Debtors mailed a Confirmation Hearing notice but received such notice returned marked “undeliverable as addressed,”
“moved, left no forwarding address” or “forwarding order expired,” or similar reason unless the Debtors or
Reorganized Debtors, as applicable, have been informed in writing by such Entity or are otherwise aware of that
Entity’s new address. To supplement the notice described in the preceding sentence, within (21) twenty-one calendar
days of the date of the Confirmation Order, the Debtors or Reorganized Debtors, as applicable, shall publish the Notice
of Confirmation once in the The New York Times. Mailing and publication of the Notice of Confirmation in the time
and manner set forth in this paragraph shall be good and sufficient notice under the particular circumstances and in
accordance with the requirements of Bankruptcy Rules 2002 and 3020(e), and no further notice is necessary.
F. Term of Injunctions or Stays
Unless otherwise provided in the Plan or in the Confirmation Order, all injunctions or stays in effect in the
Chapter 11 Cases pursuant to sections 105 or 362 of the Bankruptcy Code or any order of the Bankruptcy Court, and
extant on the Confirmation Date (excluding any injunctions or stays contained in the Plan or the Confirmation
Order) shall remain in full force and effect until the Effective Date. All injunctions or stays contained in the Plan or
the Confirmation Order shall remain in full force and effect in accordance with their terms.
G. Entire Agreement
On the Effective Date, the Plan and the Plan Supplement supersede all previous and contemporaneous
negotiations, promises, covenants, agreements, understandings, and representations on such subjects, all of which
have become merged and integrated into the Plan.
H. Plan Supplement Exhibits
All exhibits and documents included in the Plan Supplement are incorporated into and are a part of the Plan
as if set forth in full in the Plan. Copies of such exhibits and documents shall be made available upon written request
to the Debtors’ proposed counsel at the address above or by downloading such exhibits and documents from
https://cases.stretto.com/APC or the Bankruptcy Court’s website at www.nysb.uscourts.gov. Unless otherwise
ordered by the Bankruptcy Court, to the extent any exhibit or document in the Plan Supplement is inconsistent with
the terms of any part of the Plan that does not constitute the Plan Supplement, such part of the Plan that does not
constitute the Plan Supplement shall control. The documents considered in the Plan Supplement are an integral part
of the Plan and shall be deemed approved by the Bankruptcy Court pursuant to the Confirmation Order.
I. Governing Law
Unless a rule of law or procedure is supplied by federal law (including the Bankruptcy Code and Bankruptcy
Rules) or unless otherwise specifically stated, the laws of the State of Delaware, without giving effect to the principles
of conflict of laws, shall govern the rights, obligations, construction, and implementation of the Plan, any agreements,
documents, instruments, or contracts executed or entered into in connection with the Plan (except as otherwise set
forth in those agreements, in which case the governing law of such agreement shall control), and corporate governance
matters; provided that corporate governance matters relating to Debtors or Reorganized Debtors, as applicable, not
incorporated in Delaware shall be governed by the laws of the state of incorporation of the applicable Debtor or
Reorganized Debtor, as applicable.
J. Nonseverability of Plan Provisions upon Confirmation
If, prior to Confirmation, any term or provision of the Plan is held by the Bankruptcy Court to be invalid,
void, or unenforceable, the Bankruptcy Court shall have the power to alter and interpret such term or provision to
make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or
provision held to be invalid, void, or unenforceable, and such term or provision shall then be applicable as altered or
interpreted; provided that any such alteration or interpretation shall be reasonably acceptable to the Required Parties
and otherwise consistent with Article I.E of this Plan. Notwithstanding any such holding, alteration, or interpretation,
the remainder of the terms and provisions of the Plan will remain in full force and effect and will in no way be affected,
impaired, or invalidated by such holding, alteration, or interpretation. The Confirmation Order shall constitute a
44
judicial determination and shall provide that each term and provision of the Plan, as it may have been altered or
interpreted in accordance with the foregoing, is the following: (a) valid and enforceable pursuant to its terms; (b)
integral to the Plan and may not be deleted or modified without the consent of the Debtors or Reorganized Debtors,
as applicable; and (c) nonseverable and mutually dependent.
K. Closing of Chapter 11 Cases
The Reorganized Debtors shall promptly file, after the full administration of the Chapter 11 Cases, with the
Bankruptcy Court all documents required by Bankruptcy Rule 3022 and any applicable order of the Bankruptcy Court
to close the Chapter 11 Cases.
L. Section 1125(e) Good Faith Compliance
The Debtors, the Reorganized Debtors, the Agents, the Secured Lenders, the DIP Lenders, the Consenting
Sponsors, and each of their respective Representatives shall be deemed to have acted in “good faith” under section
1125(e) of the Bankruptcy Code.
[Signature Page to Plan]
Respectfully submitted, as of the date first set forth above,
APC Automotive Technologies Intermediate Holdings, LLC
(on behalf of itself and all other Debtors)
By: /s/ Marc Weinsweig
Name: Marc Weinsweig
Title: Interim Chief Financial Officer
EXHIBIT B
Restructuring Support Agreement
EXECUTION VERSION
THIS RESTRUCTURING SUPPORT AGREEMENT IS NOT AN OFFER WITH RESPECT TO
ANY SECURITIES OR A SOLICITATION OF ACCEPTANCES OF A CHAPTER 11 PLAN
WITHIN THE MEANING OF SECTION 1125 OF THE BANKRUPTCY CODE. ANY SUCH
OFFER OR SOLICITATION WILL COMPLY WITH ALL APPLICABLE SECURITIES LAWS
AND/OR PROVISIONS OF THE BANKRUPTCY CODE. NOTHING CONTAINED IN THIS
RESTRUCTURING SUPPORT AGREEMENT SHALL BE AN ADMISSION OF FACT OR
LIABILITY OR, UNTIL THE OCCURRENCE OF THE RSA EFFECTIVE DATE ON THE
TERMS DESCRIBED HEREIN, DEEMED BINDING ON ANY OF THE PARTIES HERETO.
RESTRUCTURING SUPPORT AGREEMENT
This RESTRUCTURING SUPPORT AGREEMENT (as amended, supplemented, or
otherwise modified from time to time in accordance with the terms hereof, and including any
exhibits, schedules, or annexes attached hereto, this “Restructuring Support Agreement”), dated
as of May 31, 2020, is entered into by and among the following parties:
(a) APC Automotive Technologies Intermediate Holdings, LLC (“APC”), and each of
its affiliates and direct and indirect subsidiaries of APC listed on Annex I attached
hereto (as defined herein) (together with APC, collectively, the “Company
Parties”);
(b) APC Automotive Technologies Holdings, LLC (“APC Holdings”);
(c) Audax Private Equity Fund IV AIV, L.P., AG PE Fund IV Exhaust-Aristo, LLC,
Audax Co-Invest IV, L.P., AG TCI Exhaust-Aristo, LLC, AFF Co-Invest, L.P., and
AG Grey Goose Holdings, LLC (collectively, “Audax”), Harvest Partners VII,
L.P., Harvest Partners VII (Parallel), L.P., Harvest Strategic Associates VII, L.P.,
Harvest APC Holdings, LLC, and Harvest APC Blocker Purchaser, L.P.
(collectively, “Harvest”), VAP Holdings, Inc., (“VAP”), and Crescent Mezzanine
Partners VII, L.P., Crescent Mezzanine Partners VII (LTL), L.P., CBDC Universal
Equity, Inc., CM7B APC Equity, LLC, and CM7C APC Equity, LLC (collectively,
“Crescent” and, together with Audax, Harvest, and VAP, collectively,
the “Consenting Sponsors”); and
(d) the undersigned entities that are Term Loan Lenders (as defined herein) under the
Term Credit Agreement (other than the Consenting Sponsors) (as defined herein)
(the “Consenting Term Loan Lenders”).
Each of the Company Parties, APC Holdings, the Consenting Sponsors, the Consenting
Term Loan Lenders, and any subsequent person or entity that becomes a party hereto in accordance
with the terms hereof, are referred to as the “Parties” and individually as a “Party.”
Recitals
WHEREAS, to preserve the going concern value of the Company Parties and maximize
distributions to the Company Parties’ stakeholders, the Parties have, in good faith and at arm’s
length, negotiated and agreed to certain restructuring transactions with respect to the Company
Parties’ capital structure that will be implemented consistent with the terms and conditions set
2
forth herein and in the term sheet attached hereto as Exhibit A (together with any schedules,
annexes, and exhibits attached thereto, and as may be modified in accordance with Section 12
hereof, the “Term Sheet” and the transactions described in this Restructuring Support Agreement
and the Term Sheet, collectively, the “Restructuring”);1
WHEREAS, the Company Parties intend to implement the Restructuring in accordance
with the terms set forth in this Restructuring Support Agreement by commencing voluntary cases
(the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101-
1532 (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware
(the “Bankruptcy Court”) to pursue and implement the Restructuring pursuant to a “prepackaged”
chapter 11 plan that is subject to the terms and conditions set forth in this Restructuring Support
Agreement and otherwise in form and substance acceptable to the Parties as set forth herein (as
may be amended, supplemented, or otherwise modified from time to time in accordance with the
terms hereof and including any exhibits and schedules thereto, the “Plan”) and the supplement
thereto (the “Plan Supplement”);
WHEREAS, as of the date hereof, the Consenting Sponsors hold, in the aggregate,
approximately 90 percent of the issued, outstanding, and vested shares of APC Holdings on a fully
diluted basis and approximately 7 percent of the aggregate principal amount of outstanding Term
Debt (as defined herein) under the Term Credit Agreement;
WHEREAS, as of the date hereof, the Consenting Term Loan Lenders hold, in the
aggregate, approximately 74 percent of the aggregate principal amount of outstanding Term Debt
under the Term Credit Agreement;
WHEREAS, the Company Parties will obtain debtor-in-possession financing consisting
of (i) a “roll-up” of the ABL Credit Agreement on terms mutually acceptable to the Company
Parties and the Requisite Consenting Term Loan Lenders (the “ABL DIP Facility”) and (ii) a new
money term debtor-in-possession credit facility in aggregate principal amount of $50 million, the
terms of which are attached hereto as Exhibit I (the “Term DIP Facility” and, together with the
ABL DIP Facility, the “DIP Facilities”);
WHEREAS, the Parties agree that this Restructuring Support Agreement, the Term Sheet,
and the Restructuring are the product of arm’s-length and good-faith negotiations among all of the
Parties; and
WHEREAS, the Parties have agreed to take certain actions in support of the Restructuring
on the terms and conditions set forth in this Restructuring Support Agreement and the Term Sheet.
NOW, THEREFORE, in consideration of the promises and the mutual covenants and
agreements set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as
follows:
1 Capitalized terms used but not defined in this Restructuring Support Agreement have the meanings set forth in
the Term Sheet.
3
Agreement
Section 1. Definitions and Interpretation.
As used in this Restructuring Support Agreement, the following terms have the following
meanings:
(a) “ABL Agent” means Wells Fargo Bank, N.A. in its capacity as administrative agent
and collateral agent under the ABL Credit Agreement.
(b) “ABL Credit Agreement” means that certain ABL Credit Agreement, dated May
10, 2017 (as amended, restated, modified, supplemented, or replaced from time to
time in accordance with its terms), by and among APC and certain of its affiliates
and subsidiaries, as borrower and guarantors, the ABL Agent, and the ABL
Lenders.
(c) “ABL DIP Credit Agreement” means the credit agreement governing the ABL DIP
Facility.
(d) “ABL DIP Facility” has the meaning assigned to such term in the recitals.
(e) “ABL Exit Facility” means that certain ABL exit facility in accordance with the
terms and conditions set forth in the ABL Exit Facility Documents.
(f) “ABL Exit Facility Commitment Letter” means that certain commitment letter for
the ABL Exit Facility financing by and among the Debtors and certain of the
Consenting ABL Lenders.
(g) “ABL Exit Facility Documents” has the meaning assigned to such term in Section
3(a)(ii).
(h) “ABL Lenders” means the lenders party to the ABL Credit Agreement with respect
to the ABL Loans.
(i) “ABL Loans” means the “Loans” and “Letters of Credit,” as defined in the ABL
Credit Agreement.
(j) “Alternate Term Exit Facility” means an alternate term loan exit facility, the
proceeds of which would be used to pay the Term DIP Facility in full in cash, on
terms and conditions acceptable to the Requisite Consenting Term Loan Lenders
and reasonably acceptable to the ABL Lenders, in accordance with this
Restructuring Support Agreement and the Plan.
(k) “Alternate Term Exit Facility Documents” has the meaning assigned to such term
in Section 3(a)(ii).
(l) “Alternative Transaction” has the meaning assigned to such term in Section
4(a)(v).
4
(m) “APC” has the meaning assigned to such term in the preamble.
(n) “APC Holdings” has the meaning assigned to such term in the preamble.
(o) “Audax” has the meaning assigned to such term in the preamble.
(p) “Bankruptcy Code” has the meaning assigned to such term in the recitals.
(q) “Bankruptcy Court” has the meaning assigned to such term in the recitals.
(r) “Board of Directors” means with respect to any entity, its board of directors, board
of managers, managing member, general partner, or other governing body
constituted pursuant to its governing documents.
(s) “Cash Collateral Documents” has the meaning assigned to such term in Section
3(a)(vi).
(t) “Chapter 11 Cases” has the meaning assigned to such term in the recitals.
(u) “Claim” has the meaning ascribed to it in section 101(5) of the Bankruptcy Code.
(v) “Commitment Letters” means, collectively, the ABL Exit Facility Commitment
Letter, the Term DIP Commitment Letter, and Term DIP Exit Facility Commitment
Letter.
(w) “Company Parties” has the meaning assigned to such term in the preamble.
(x) “Confirmation Order” has the meaning assigned to such term in Section 3(a)(xi).
(y) “Consenting Sponsors” has the meaning assigned to such term in the preamble.
(z) “Consenting Term Loan Lenders” has the meaning assigned to such term in the
preamble.
(aa) “Crescent” has the meaning assigned to such term in the preamble.
(bb) “Definitive Documents” has the meaning assigned to such term in Section 3(a).
(cc) “DIP Documents” has the meaning assigned to such term in Section 3(a)(vi).
(dd) “DIP Facilities” has the meaning assigned to such term in the recitals.
(ee) “Disclosure Statement” means the disclosure statement in support of the Plan (as
defined herein) and any exhibits and schedules thereto, as may be amended or
supplemented from time to time in accordance with the terms of this Restructuring
Support Agreement.
(ff) “Disclosure Statement Motion” has the meaning assigned to such term in Section
3(a)(x).
5
(gg) “Disclosure Statement Order” has the meaning assigned to such term in Section
3(a)(x).
(hh) “DOJ Settlement” mean that certain Department of Justice civil investigation and
related whistleblower litigation regarding the alleged underpayment of certain
import tariffs under the following: (i) Civil Investigative Demand No. 20-051
(3/13/20); and (ii) Department of Homeland Security, Summons (11/27/17).
(ii) “DOJ Settlement Agreement” mean that certain agreement, which will effectuate
the DOJ Settlement, which shall be materially consistent with the DOJ Settlement
Term Sheet, attached hereto as Exhibit F, and finalized by no later than July 15,
2020.
(jj) “Exit Facilities” means, collectively, the ABL Exit Facility and the Term Exit
Facility.
(kk) “First Day Pleadings” has the meaning assigned to such term in Section 3(a)(xii).
(ll) “FTI” means FTI Consulting, Inc., as financial advisor to the Term Loan Lender
Group.
(mm) “Honigman LLP” means Honigman LLP, as counsel to VAP.
(nn) “Joinder Agreement” has the meaning assigned to such term in Section 4(b).
(oo) “King & Spalding” means King & Spalding LLP, as counsel to the Term Loan
Lender Group.
(pp) “Kirkland” means, collectively, Kirkland & Ellis LLP and Kirkland & Ellis
International LLP, as counsel to the Company Parties.
(qq) “Milestones” means the Restructuring Milestones set forth in Section 6(c).
(rr) “New Common Equity Documents” has the meaning assigned to such term in
Section Section 3(a)(iv).
(ss) “New Warrants Documents” has the meaning assigned to such term in Section
3(a)(v).
(tt) “Parties” has the meaning assigned to such term in the preamble.
(uu) “Party” has the meaning assigned to such term in the preamble.
(vv) “Permitted Transfer” has the meaning assigned to such term in Section 4(b).
(ww) “Permitted Transferee” has the meaning assigned to such term in Section 4(b).
(xx) “Petition Date” means the date upon which the Chapter 11 Cases are commenced.
6
(yy) “Plan” has the meaning assigned to such term in the recitals.
(zz) “Plan Supplement” has the meaning assigned to such term in the recitals.
(aaa) “Releases” means the releases, discharge, and exculpation of all Claims and Causes
of Action held by all Parties against all other Parties and all of their respective
insiders, officers, directors and shareholders, as contained in Exhibit D of this
Restructuring Support Agreement.
(bbb) “Requisite Consenting Sponsors” means each of Audax, Crescent, Harvest, and
VAP.
(ccc) “Requisite Consenting Term Loan Lenders” means the Consenting Term Loan
Lenders who hold, in the aggregate, greater than fifty (50) percent in principal
amount outstanding of all Term Claims held by the Consenting Term Loan Lenders.
(ddd) “Required Parties” means, collectively, the Company Parties, the Requisite
Consenting Sponsors, and the Requisite Consenting Term Loan Lenders.
(eee) “Restructuring” has the meaning assigned to such term in the recitals.
(fff) “Restructuring Effective Date” means the date upon which the Restructuring is
consummated.
(ggg) “Restructuring Support Agreement” has the meaning assigned to such term in the
preamble.
(hhh) “RSA Effective Date” means the date on which all of the conditions set forth in
Section 2 have been satisfied or waived by the appropriate Party or Parties in
accordance with this Restructuring Support Agreement.
(iii) “Solicitation Materials” has the meaning assigned to such term in Section 3(a)(ix).
(jjj) “Sponsor Claims” means any and all outstanding Claims that APC Holdings, the
Consenting Sponsors, and/or any controlled affiliates of the Consenting Sponsors,
solely in their capacities as such, may have against the Debtors; provided that the
Sponsor Claims shall not include (a) any Term Claims held by any Consenting
Sponsor, (b) rights of any of the Consenting Sponsors based on, arising from, or
related to the Plan, (c) Claims based on, arising from, or related to any
Indemnification Provisions or D&O Liability Insurance Policies (as such terms are
defined in the Plan), or (d) any Claims entered into on an arm’s length basis in the
ordinary course of business by any portfolio company of the Consenting Sponsors.
(kkk) “Support Period” means, with respect to any Party, the period commencing on the
RSA Effective Date applicable to such Party and ending on the date on which this
Restructuring Support Agreement is terminated in accordance with Section 7.
7
(lll) “Term A Claims” means all Claims held by Term A Lenders (as defined herein)
derived from, based upon, or secured by the Term Credit Agreement, including
Claims for all principal amounts outstanding, interest, fees, expenses, costs, and
other charges arising thereunder or related thereto.
(mmm)“Term A Debt” means the Term A-1 Loans, Term A-2 Loans, and Term A-3 Loans,
as such terms are defined in the Term Credit Agreement, outstanding under the
Term Credit Agreement.
(nnn) “Term A Lenders” means the lenders party to the Term Credit Agreement holding
Term A Debt (as defined herein).
(ooo) “Term Agent” means Wilmington Trust, N.A., in its capacity as administrative
agent and collateral agent under the Term Credit Agreement.
(ppp) “Term B Claims” means all Claims held by Term B Lenders (as defined herein)
derived from, based upon, or secured by the Term Credit Agreement, including
Claims for all principal amounts outstanding, interest, fees, expenses, costs, and
other charges arising thereunder or related thereto.
(qqq) “Term B Debt” means the Term B Loans, as such term is defined in the Term Credit
Agreement, outstanding under the Term Credit Agreement.
(rrr) “Term B Lenders” means the lenders party to the Term Credit Agreement holding
Term B Debt (as defined herein).
(sss) “Term Claims” means all Claims held by Term A Lenders and Term B Lenders (as
defined herein) derived from, based upon, or secured by the Term Credit
Agreement, including Claims for all principal amounts outstanding, interest, fees,
expenses, costs, and other charges arising thereunder or related thereto.
(ttt) “Term Credit Agreement” means that certain Term Credit Agreement, dated May
10, 2017 (as amended, restated, modified, supplemented, or replaced from time to
time in accordance with its terms), by and among APC and certain of its affiliates
and subsidiaries, as borrowers and guarantors, the Term Agent, and the Term Loan
Lenders.
(uuu) “Term Debt” means, collectively, the Term A Debt and Term B Debt outstanding
under the Term Credit Agreement.
(vvv) “Term DIP Commitment Letter” means that certain commitment letter for the
Term DIP Facility financing by and among the Debtors and certain of the
Consenting Term Loan Lenders attached hereto as Exhibit H.
(www) “Term DIP Credit Agreement” means the credit agreement governing the Term
DIP Facility.
(xxx) “Term DIP Facility” has the meaning assigned to such term in the recitals.
8
(yyy) “Term DIP Obligations” means all “Obligations” as described in the Term DIP
Credit Agreement.
(zzz) “Term Exit Facility” means that certain term loan exit facility in accordance with
the terms and conditions set forth in Exhibit K to this Restructuring Support
Agreement.
(aaaa) “Term Exit Facility Commitment Letter” means that certain commitment letter for
the Term Exit Facility financing by and among the Debtors and certain of the
Consenting Term Loan Lenders attached hereto as Exhibit J.
(bbbb) “Term Exit Facility Documents” has the meaning assigned to such term in Section
3(a)(i).
(cccc) “Term Loan Lenders” means the Term A Lenders and the Term B Lenders.
(dddd) “Term Loan Lender Group” means the ad hoc group of Consenting Term Loan
Lenders represented by King & Spalding, as legal counsel, and FTI, as financial
advisor.
(eeee) “Term Obligations” means all “Obligations” as described in the Term Credit
Agreement.
(ffff) “Term Sheet” has the meaning assigned to such term in the recitals.
(gggg) “Terminating Consenting Term Loan Lenders” has the meaning assigned to such
term in Section 7(b).
(hhhh) “Terminating Consenting Sponsor” has the meaning assigned to such term in
Section 7(c).
(iiii) “Termination Date” means the date on which termination of this Restructuring
Support Agreement as to a Party or Parties, as applicable, is effective in accordance
with Sections 7(a), 7(b), 7(c), 7(d), and 7(e) of this Restructuring Support
Agreement.
(jjjj) “Transfer” has the meaning assigned to such term in Section 4(b).
(kkkk) “Transfer Agreement” has the meaning assigned to such term in Section 4(b).
(llll) “VAP” has the meaning assigned to such term in the preamble.
(mmmm) “White & Case” means White & Case LLP, as counsel to Audax and
Harvest.
This Agreement is the product of negotiations among the Parties, and the enforcement or
interpretation hereof is to be interpreted in a neutral manner, and any presumption with regard to
interpretation for or against any Party by reason of that Party having drafted or caused to be drafted
9
this Restructuring Support Agreement or any portion hereof shall not be effective in regard to the
interpretation hereof. For purposes of this Restructuring Support Agreement:
(a) in the appropriate context, each term, whether stated in the singular or the plural,
shall include both the singular and the plural;
(b) capitalized terms defined only in the plural or singular form shall nonetheless have
their defined meanings when used in the opposite form;
(c) unless otherwise specified, any reference herein to a contract, lease, instrument,
release, indenture, or other agreement or document being in a particular form or on
particular terms and conditions means that such document shall be substantially in
such form or substantially on such terms and conditions;
(d) unless otherwise specified, any reference herein to an existing document, schedule,
or exhibit shall mean such document, schedule, or exhibit as it may have been or
may be amended, restated, supplemented, or otherwise modified from time to time;
provided that any capitalized terms herein which are defined with reference to
another agreement, are defined with reference to such other agreement as of the
date of this Restructuring Support Agreement, without giving effect to any
termination of such other agreement or amendments to such capitalized terms in
any such other agreement following the date hereof;
(e) unless otherwise specified, all references herein to “Sections” are references to
Sections of this Restructuring Support Agreement;
(f) the words “herein,” “hereof,” and “hereto” refer to this Restructuring Support
Agreement in its entirety rather than to any particular portion of this Restructuring
Support Agreement;
(g) captions and headings to Sections, paragraphs, and subsections of this
Restructuring Support Agreement are inserted for convenience only and shall not
affect the interpretation hereof or, for any purpose, be deemed a part of this
Restructuring Support Agreement;
(h) references to “shareholders,” “directors,” and/or “officers” shall also include
“members” and/or “managers,” as applicable, as such terms are defined under the
applicable limited liability company laws; and
(i) the use of “include” or “including” is without limitation, whether stated or not.
Section 2. Effectiveness of this Restructuring Support Agreement
(a) This Agreement shall become effective and binding upon each of the Parties
according to its terms as of 12:00 a.m., prevailing Eastern Standard Time, on the
RSA Effective Date, which is the date on which all of the following conditions have
been satisfied or waived in accordance with the Restructuring Support Agreement;
provided that signature pages executed by Consenting Term Loan Lenders shall be
10
delivered to (a) the Company Parties in a redacted form that removes such
Consenting Term Loan Lenders’ holdings of the Term Claims and any schedules
to such Consenting Term Loan Lenders’ holdings (if applicable) and (b) Kirkland
in an unredacted form (to be held by such counsel on a professionals’ eyes only
basis):
(i) the Company Parties shall have executed and delivered counterpart
signature pages of this Restructuring Support Agreement to counsel to each
of the other Parties’ in accordance with Section 20 of this Restructuring
Support Agreement;
(ii) the Consenting Term Loan Lenders holding, in aggregate, at least two-thirds
(66.67%) in principal amount outstanding of all Term Claims and
constituting a majority in number of all Term Loan Lenders shall have
executed and delivered counterpart signatures of this Restructuring Support
Agreement to counsel to each of the other Parties’ in accordance with
Section 20 of this Restructuring Support Agreement;
(iii) the Consenting Sponsors shall have executed and delivered counterpart
signature pages of this Restructuring Support Agreement to counsel to each
of the other Parties’ in accordance with Section 20 of this Restructuring
Support Agreement;
(iv) the Term DIP Commitment Letter and the Term DIP Exit Facility
Commitment Letter shall be duly executed and effective in accordance with
their terms;
(v) the Company Parties shall have paid the fees and expenses of the Term Loan
Lender Group’s professionals in accordance with Section 25 of this
Restructuring Support Agreement; and
(vi) Kirkland shall have given notice to counsel of the Consenting Sponsors and
the Consenting Term Loan Lenders in the manner set forth in Section 20 of
this Restructuring Support Agreement (by email or otherwise) that the other
conditions to the RSA Effective Date set forth in this Section 2 have
occurred.
Section 3. Definitive Documents.
(a) The definitive documents with respect to the Restructuring (collectively, the
“Definitive Documents”) shall include all documents (including any related orders,
agreements, instruments, schedules, or exhibits) that are contemplated by this
Restructuring Support Agreement and that are otherwise necessary to implement,
or otherwise relate to the Restructuring, including, without limitation, to the extent
applicable:
11
(i) the agreement with respect to the Term Exit Facility and any agreements,
commitment letters, documents, or instruments related thereto (the “Term
Exit Facility Documents”);
(ii) the agreement with respect to the Alternate Term Exit Facility, as
applicable, and any agreements, commitment letters, documents, or
instruments related thereto (the “Alternate Term Exit Facility
Documents”);
(iii) the agreement with respect to the ABL Exit Facility and any agreements,
commitment letters, documents, or instruments related thereto (the “ABL
Exit Facility Documents”);
(iv) any shareholder agreement, limited liability company agreement, operating
agreement, organizational or similar governing documents, evidence of
equity interests (including share or unit certificates or other mutually agreed
evidence of equity interests to be issued in accordance with the Plan), or
other governance documents for the reorganized Company Parties
(collectively, the “New Common Equity Documents”);
(v) the definitive documentation with respect to the New Warrants to be issued
in accordance with the Plan, which shall be materially consistent with the
Warrants Term Sheet, attached hereto as Exhibit G (the “New Warrants
Documents”);
(vi) any motion seeking approval of (A) the use of cash collateral and all
agreements, interim and final orders, and/or amendments in connection
therewith (collectively, the “Cash Collateral Documents”) and (B) the DIP
Facilities and, with respect to (A) and (B) above, all agreements, documents,
interim and final orders, and/or amendments in connection therewith
(collectively, the “DIP Facilities Documents”);
(vii) the Plan (which shall include the Releases);
(viii) the Plan Supplement;
(ix) the Disclosure Statement and other solicitation materials in respect of the
Plan (such materials, collectively, the “Solicitation Materials”);
(x) the motion(s) and related pleadings seeking approval of the Disclosure
Statement and Solicitation Materials and scheduling a combined hearing on
the Plan and Disclosure Statement (the “Disclosure Statement Motion”)
and the order approving the Disclosure Statement and Solicitation Materials
(the “Disclosure Statement Order”);
(xi) the motion(s) and related pleadings seeking confirmation of the Plan and
the order confirming the Plan, which order may be contained in the same
order as the Disclosure Statement Order (the “Confirmation Order”); and
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(xii) all motions and proposed court orders that the Company Parties file on or
after the Petition Date and seek to have heard on an expedited basis at the
“first day hearing” (the “First Day Pleadings”), including any motion
authorizing the Company Parties to pay prepetition Claims of certain critical
vendors and service providers, foreign service providers, lien claimants, and
section 503(b)(9) claimants.
(b) The Definitive Documents remain subject to negotiation and completion. Each of
the Definitive Documents to the extent applicable shall, upon completion, contain
terms, conditions, representations, warranties, and covenants consistent in all
material respects with the terms of this Restructuring Support Agreement,
including, without limitation, the Term Sheet, as it may be modified, amended, or
supplemented pursuant to Section 12, and otherwise be in form and substance
reasonably acceptable to the Company Parties and the Requisite Consenting Term
Loan Lenders (and, with respect to the terms and provisions affecting the rights,
protections, duties, or obligations of the Consenting Sponsors, reasonably
acceptable to the Requisite Consenting Sponsors); provided that the Releases
contained in the Plan shall be as contained in Exhibit D to this Restructuring
Support Agreement, except as otherwise agreed by the Requisite Consenting
Sponsors in their reasonable discretion.
Section 4. Agreements of the Consenting Term Loan Lenders.
(a) Restructuring Support. During the Support Period, subject to the terms and
conditions of this Restructuring Support Agreement, each Consenting Term Loan
Lender agrees, severally and not jointly, with respect to all Term Claims held by
such Consenting Term Loan Lender, that it shall:
(i) use its commercially reasonable efforts to support the Restructuring in
accordance with the Milestones and to act in good faith and take all
reasonable actions necessary to implement and consummate the
Restructuring in accordance with the terms, conditions, and applicable
deadlines set forth in this Restructuring Support Agreement, the Term
Sheet, and Plan, as applicable;
(ii) negotiate in good faith and timely approve, execute deliver and perform, as
applicable, its obligations under each of the applicable Definitive
Documents consistent with the terms of this Restructuring Support
Agreement;
(iii) upon receipt of Solicitation Materials that comply with applicable law and
are consistent with the terms and conditions of this Restructuring Support
Agreement, (A) timely vote each of its Term Claims to accept the Plan by
delivering its duly executed and completed ballot(s) accepting the Plan to
the Company Parties’ solicitation agent, (B) not select on its ballot(s) the
“opt-out” with respect to the Releases, and (C) not withdraw, amend, or
revoke (or cause to be withdrawn, amended, or revoked) its vote with
13
respect to such Plan; provided that the acceptance or votes of the Consenting
Term Loan Lenders shall be immediately and automatically without further
action of any Consenting Term Loan Lender revoked and deemed null and
void ab initio upon termination of this Restructuring Support Agreement
pursuant to Section 7 prior to the Restructuring Effective Date in accordance
with the terms hereof;
(iv) not take any action, direct the Term Agent to take any action, or solicit,
encourage, or support any other person to (A) take any action inconsistent
with such Consenting Term Loan Lender’s obligations under this
Restructuring Support Agreement, (B) take any action inconsistent with the
Releases (as though the Releases were in full force and effect), or
(C) exercise any right or remedy for the enforcement, collection, or
recovery of any Claim (including for any known Default or Event of Default
under the Term Credit Agreement) against the Company Parties, APC
Holdings, or any direct or indirect subsidiaries of the Company Parties
except in a manner consistent with this Restructuring Support Agreement,
including, without limitation and for the avoidance of any doubt, seeking to
initiate involuntary bankruptcy proceedings, the appointment of a
provisional liquidator, or seeking to initiate any other sort of insolvency
proceeding in a court of competent jurisdiction, or otherwise exercising any
right or remedy under the Term Credit Agreement or any related security
agreement or other applicable loan documents (including the right to direct
the Term Agent to accelerate any obligations under the Term Credit
Agreement with respect to the May 12, 2020 interest payment), or
otherwise;
(v) (A) support and take all commercially reasonable actions necessary or
reasonably requested by the Company Parties to facilitate the solicitation,
confirmation, approval, and consummation of the Restructuring, as
applicable, to the extent consistent with the terms and conditions in this
Restructuring Support Agreement; (B) not, nor encourage any other person
to, take any action, directly or indirectly, that would, or would reasonably
be expected to, breach this Restructuring Support Agreement or object to,
prevent, interfere with, delay, impede, or appeal the solicitation, acceptance,
confirmation, approval, consummation, and/or implementation of the
Restructuring, including the solicitation of votes on the Plan, in each case,
to the extent applicable and to the extent consistent with the terms and
conditions of this Restructuring Support Agreement; (C) except as
expressly provided in this Restructuring Support Agreement, not directly or
indirectly propose, file, support, vote for, consent to, encourage, or take any
other action in furtherance of the negotiation or formulation of any
reorganization (including, for the avoidance of doubt, a transaction
premised on an asset sale or a chapter 11 plan other than one that
implements the Restructuring, or otherwise), proposal, offer, dissolution,
winding up, liquidation, reorganization, merger, consolidation, business
combination, joint venture, partnership, sale of assets, or restructuring in
14
any jurisdiction anywhere in the world for any entity of the Company
Parties other than the Restructuring (any such transaction, an “Alternative
Transaction”); and (D) not challenge or support any other party that
challenges the validity, enforceability, or priority of the Term DIP Credit
Agreement, Term Credit Agreement, the Term DIP Obligations, the Term
Obligations, or the Releases;
(vi) negotiate in good faith and timely approve, execute, deliver, and perform,
as applicable, its obligations under a forbearance agreement with the
Company Parties with respect to the interest payment due on May 12, 2020;
and
(vii) support the Releases and not take any action that would be inconsistent with
the Releases if the Releases were in full force and effect.
The Parties understand that the Consenting Term Loan Lenders are engaged in a
wide range of financial services and businesses. In furtherance of the foregoing,
the Parties acknowledge and agree that, to the extent a Consenting Term Loan
Lender expressly indicates on its signature page hereto that it is executing this
Restructuring Support Agreement on behalf of specific trading desk(s) and/or
business group(s) of the Consenting Term Loan Lender, the obligations set forth in
this Restructuring Support Agreement shall only apply to such trading desk(s)
and/or business group(s) and shall not apply to any other trading desk or business
group of the Consenting Term Loan Lender so long as they are not acting at the
direction or for the benefit of such Consenting Term Loan Lender or such
Consenting Term Lender’s investment in the Company Parties; provided that the
foregoing shall not diminish or otherwise affect the obligations and liability therefor
of any legal entity that (i) executes this Restructuring Support Agreement or (ii) on
whose behalf this Agreement is executed by a Consenting Term Loan Lender.
(b) Transfers. During the Support Period, subject to the terms and conditions hereof,
each Consenting Term Loan Lender agrees, solely with respect to itself, that it shall
not directly or indirectly sell, use, pledge, assign, transfer, permit the participation
in, or otherwise dispose of (each, a “Transfer”) any ownership (including any
beneficial ownership)2 in its Term Claims, or any option thereon or any right or
interest therein (including by granting any proxies or depositing any interests in
such Term Claims into a voting trust or by entering into a voting agreement with
respect to such Term Claims), unless the intended transferee (A) is a Consenting
Term Loan Lender or a Consenting Sponsor and provides notice of such Transfer
(including the amount and type of Term Claim to be Transferred) to Kirkland and
King & Spalding by delivery of an executed transfer agreement in the form attached
hereto as Exhibit B (a “Transfer Agreement”) at or before the time of such
Transfer or (B) executes and delivers to Kirkland and King & Spalding an executed
2 As used herein, the term “beneficial ownership” means the direct or indirect economic ownership of, and/or the
power, whether by contract or otherwise, to direct the exercise of the voting rights and the disposition of, the
Term Claims or the right to acquire such Term Claims.
15
joinder agreement in the form attached hereto as Exhibit C (a “Joinder
Agreement”) at or before the time of such Transfer (it being understood that any
Transfer shall be void ab initio and shall not be effective as against the Company
Parties or with respect to this Restructuring Support Agreement or the transactions
contemplated herein until notification of such Transfer and a copy of the executed
Joinder Agreement has been received by Kirkland and King & Spalding, in each
case, on the terms set forth herein) (such transfer, a “Permitted Transfer” and such
party to such Permitted Transfer, a “Permitted Transferee”).
(i) This Agreement shall in no way be construed to preclude the Consenting
Term Loan Lenders from acquiring additional Term Claims; provided that
(A) any Consenting Term Loan Lender that acquires additional Term
Claims during the Support Period shall promptly notify Kirkland and King
& Spalding of such acquisition, including the amount acquired, (B) such
acquired Term Claims shall automatically and immediately upon
acquisition by a Consenting Term Loan Lender be deemed to be subject to
the terms of this Restructuring Support Agreement (regardless of when or
whether notice of such acquisition is given to Kirkland and King &
Spalding), and (C) to the extent the Consenting Term Loan Lender is a
“Affiliated Lender” (as such term is defined in the Term Credit Agreement),
comply with Section 9.04 thereof in all respects.
(ii) This Section 4(b) shall not impose any obligation on the Company Parties
to issue any “cleansing letter” or otherwise publicly disclose information
for the purpose of enabling a Consenting Term Loan Lender to Transfer any
Term Claims. Notwithstanding anything to the contrary herein, to the
extent the Company Parties and another Party have entered into a separate
agreement with respect to the issuance of a “cleansing letter” or other public
disclosure of information, the terms of such confidentiality agreement shall
continue to apply and remain in full force and effect according to its terms.
(iii) Any Transfer made in violation of this Section 4(b) shall be void ab initio.
Upon the completion of any Transfer of Term Claims in accordance with
this Section 4(b), the Permitted Transferee shall be deemed a Consenting
Term Loan Lender hereunder with respect to such transferred Term Claims
and the transferor shall be deemed to relinquish its rights and Claims (and
be released from its obligations under this Restructuring Support
Agreement) with respect to such transferred Term Claims; provided that if
such transferor retains any rights related to such Term Claims, such
transferor shall remain subject to the provisions of this Restructuring
Support Agreement with respect to such rights.
(iv) Each Consenting Term Loan Lender agrees to provide, on two (2) business
days’ notice, its current holdings of Term Claims to Kirkland on a
professionals’ eyes only basis.
16
Section 5. Agreements of the Consenting Sponsors.
(a) Restructuring Support. During the Support Period, subject to the terms and
conditions of this Restructuring Support Agreement, each Consenting Sponsor
agrees, severally and not jointly, that it shall:
(i) use its commercially reasonable efforts to support the Restructuring, in
accordance with the Milestones, and to act in good faith and take all
reasonable actions necessary to implement and consummate the
Restructuring in accordance with the terms, conditions, and applicable
deadlines set forth in this Restructuring Support Agreement, the Term
Sheet, and Plan, as applicable;
(ii) negotiate in good faith and timely approve, execute deliver and perform, as
applicable, its obligations under each of the applicable Definitive
Documents consistent with the terms of this Restructuring Support
Agreement;
(iii) (A) support and take all commercially reasonable actions necessary or
reasonably requested by the Company Parties to facilitate the solicitation,
confirmation, approval, and consummation of the Restructuring, as
applicable, to the extent consistent with the terms and conditions in this
Restructuring Support Agreement; (B) not, nor encourage any other person
to, take any action, directly or indirectly, that would, or would reasonably
be expected to, breach this Restructuring Support Agreement or object to,
prevent, interfere with, delay, impede, or appeal the solicitation, acceptance,
confirmation, approval, consummation, and/or implementation of the
Restructuring, including the solicitation of votes on the Plan, in each case,
to the extent applicable and to the extent consistent with the terms and
conditions of this Restructuring Support Agreement; (C) except as
expressly provided in this Restructuring Support Agreement, not directly or
indirectly propose, file, support, vote for, consent to, encourage, or take any
other action in furtherance of the negotiation or formulation of any
Alternative Transaction; and (D) not challenge or support any other party
that challenges the validity, enforceability, or priority of the Term DIP
Credit Agreement, Term Credit Agreement, the Term DIP Obligations, or
the Term Obligations;
(iv) not pledge, encumber, assign, sell, or otherwise transfer, including by the
declaration of a worthless stock deduction for any tax year ending on or
prior to the Restructuring Effective Date, offer, or contract to pledge,
encumber, assign, sell, or otherwise transfer, in whole or in part, any portion
of its right, title, or interests in any of its shares, stock, or other interests in
APC Holdings, but only to the extent such pledge, encumbrance,
assignment, sale, or other transfer will impair any of the Company Parties
entities’ tax attributes;
17
(v) not pursue any or all Sponsor Claims against the Company Parties; and
(vi) support the Releases.
Nothing in this Restructuring Support Agreement shall (A) prohibit the Consenting
Sponsors from (x) appearing as a party-in-interest in any matter arising in the
Chapter 11 Cases, (y) taking or directing any action to be taken relating to
maintenance, protection, or preservation of any collateral or defending its claims
and interests, and (z) enforcing any right, remedy, condition, consent, or approval
requirement under this Restructuring Support Agreement or any Definitive
Documents entered into in connection with the Restructuring; provided that, in each
case, any such action is not inconsistent with the Consenting Sponsors’ obligations
hereunder, or (B) require the Consenting Sponsors to file any pleadings, or appear
as a party-in-interest, in the Chapter 11 Cases.
(b) Transfers. During the Support Period, subject to the terms and conditions hereof,
each Consenting Sponsor agrees, solely with respect to itself, that it shall not
Transfer, offer, or contract to Transfer in whole or in part, any portion of its right,
title, or interests in any of its shares, stock, or other interests in, or Claims in its
capacity as a Consenting Sponsor against the Company Parties unless the intended
transferee (A) is a Consenting Term Loan Lender or Consenting Sponsor and
provides notice of such Transfer to Kirkland, King & Spalding, and White & Case
by delivery of an executed Transfer Agreement before or at the time of such
Transfer or (B) executes and delivers a Joinder Agreement to Kirkland, King &
Spalding, and White & Case before or at the time of such Transfer, each in
accordance with Section 4(b) (it being understood that any Transfer in violation of
this paragraph shall be void ab initio and shall not be effective as against the
Company Parties or with respect to this Restructuring Support Agreement or the
transactions contemplated herein).
Section 6. Agreements of the Company Parties and APC Holdings.
(a) Restructuring Support. During the Support Period, subject to the terms and
conditions of this Restructuring Support Agreement, including without limitation
Section 10, each of the Company Parties and APC Holdings agrees that it shall:
(i) use its commercially reasonable efforts to support the Restructuring, in
accordance with the Milestones, and to act in good faith and take all
reasonable actions necessary to implement and consummate the
Restructuring in accordance with the terms, conditions, and applicable
deadlines set forth in this Restructuring Support Agreement, the Term
Sheet, and Plan, as applicable;
(ii) negotiate in good faith and timely approve, execute deliver and perform, as
applicable, its obligations under each of the applicable Definitive
Documents and use its commercially reasonable efforts to agree to the form
18
and substance of such Definitive Documents consistent with the terms of
this Restructuring Support Agreement;
(iii) subject to Section 10 of this Restructuring Support Agreement, (A) support
and take all commercially reasonable actions necessary or reasonably
requested by the other Required Parties to facilitate the solicitation,
confirmation, approval, and consummation of the Restructuring, as
applicable, to the extent consistent with the terms and conditions in this
Restructuring Support Agreement; (B) not, nor encourage any other person
to, take any action, directly or indirectly, that would, or would reasonably
be expected to, breach this Restructuring Support Agreement or object to,
prevent, interfere with, delay, impede, or appeal the solicitation, acceptance,
confirmation, approval, consummation, and/or implementation of the
Restructuring, including the solicitation of votes on the Plan, in each case,
to the extent applicable and to the extent consistent with the terms and
conditions of this Restructuring Support Agreement; (C) except as
expressly provided in this Restructuring Support Agreement, not directly or
indirectly propose, file, support, vote for, consent to, encourage, or take any
other action in furtherance of the negotiation or formulation of any
Alternative Transaction; and (D) not challenge or support any other party
that challenges the validity, enforceability, or priority of the Term DIP
Credit Agreement, Term Credit Agreement, the Term DIP Obligations, or
the Term Obligations;
(iv) with respect to APC Holdings, not pledge, encumber, assign, sell, or
otherwise transfer, including by the declaration of a worthless stock
deduction for any tax year ending on or prior to the Restructuring Effective
Date, offer, or contract to pledge, encumber, assign, sell, or otherwise
transfer, in whole or in part, any portion of APC Holdings’ right, title, or
interests in any of its shares, stock, or other interests in the Company Parties
entities to the extent such pledge, encumbrance, assignment, sale, or other
transfer will impair any of the Company Parties entities’ tax attributes;
(v) support and seek approval of the Releases;
(vi) provide draft copies of all Definitive Documents and all “first day” motions,
applications, or other material documents the Company Parties intend to file
with the Bankruptcy Court on the Petition Date in connection with the
Restructuring to King & Spalding and White & Case at least three (3) days
before the date the Company Parties intend to file or execute such
document, provided that the form and substance of such proposed filing
with the Bankruptcy Court shall be reasonably acceptable to King &
Spalding; and provided, further, that, without limiting any approval rights
set forth in this Restructuring Support Agreement, the Company Parties
shall consult in good faith with White & Case regarding the form and
substance of such proposed filing. The Company Parties shall provide draft
copies of all other material pleadings the Company Parties intend to file
19
with the Bankruptcy Court to King & Spalding and White & Case within a
reasonable time prior to such filing, and the form and substance of any such
proposed pleading shall be reasonably acceptable to King & Spalding and
the Company Parties shall consult in good faith with White & Case
regarding the form and substance of such proposed filing;
(vii) provide prompt written notice (email to counsel being sufficient) to the
Consenting Term Loan Lenders and the Consenting Sponsors and/or their
respective professionals of (A) the occurrence, or failure to occur, of any
event of which the Company Parties know (or, upon reasonable inquiry,
should have known), which occurrence or failure would be likely to cause
(1) any covenant of the Company Parties contained in this Restructuring
Support Agreement not to be satisfied in any material respect or (2) any
condition precedent contained in the Plan or this Restructuring Support
Agreement not to timely occur or become impossible to satisfy, (B) receipt
of any notice from any third-party alleging that the consent of such party is
or may be required in connection with the transactions contemplated by the
Restructuring, (C) receipt of any notice from any governmental unit with
jurisdiction in connection with this Restructuring Support Agreement or the
transactions contemplated by the Restructuring, (D) receipt of any notice of
any proceeding commenced, or, to the actual knowledge of the Company
Parties, threatened against the Company Parties, relating to or involving or
otherwise affecting in any material respect the transactions contemplated by
the Restructuring, and (E) any failure of the Company Parties to comply, in
any material respect, with or satisfy any covenant, condition, or agreement
to be complied with or satisfied by it hereunder;
(viii) use their commercially reasonable efforts to (A) carry on the business of the
Company Parties in the ordinary course and in a manner consistent with
past practices and preserve intact such businesses and their assets (unless
the Requisite Consenting Term Loan Lenders have expressly consented
thereto in writing, email to counsel being sufficient) in accordance with
their business judgment, (B) keep available the services of their current
officers and material employees (in each case, other than voluntary
resignations, terminations for cause, or terminations consistent with
applicable fiduciary duties), and (C) preserve their material relationships
with customers, sales representatives, suppliers, distributors, and others
having material business dealings with the Company Parties, in each of
clauses (A) through (C), subject to changes required to be made or resulting
from the impact of the COVID-19 pandemic on the operations, business,
assets, liabilities (actual or contingent), or condition (financial or otherwise)
of the Debtors;
(ix) provide to the Consenting Term Loan Lenders and the Consenting Sponsors
and/or their respective professionals: (A) upon reasonable advance notice
to Kirkland, reasonable access (without any material disruption to the
conduct of the Company Parties’ business) during normal business hours to
20
the Company Parties’ books, records, and facilities; (B) upon reasonable
advance notice to Kirkland, reasonable access to the management of and
advisors to the Company Parties for the purposes of evaluating the
Company Parties’ finances and operations and participating in the planning
process with respect to the Restructuring; (C) reasonable access to any non-
confidential information provided to any existing or prospective financing
sources (including lenders under any exit financing); (D) timely updates
regarding the Restructuring, including any material developments or any
material conversations with parties in interest; (E) timely notification of the
occurrence of the RSA Effective Date; and (F) any other reasonable
information related to the Restructuring reasonably requested by the
Consenting Term Loan Lenders in writing (electronic mail shall suffice)
from the Company Parties’ professionals;
(x) maintain their good standing under the laws of the states in which they are
incorporated or organized;
(xi) to the extent permitted under applicable law and confidentiality obligations,
promptly notify the other Parties in writing following the receipt, in writing,
of notice of any material governmental, regulatory, or third party
complaints, litigations, investigations, or hearings (or communications
indicating that the same may be contemplated or threatened);
(xii) provide prompt notice of any written or oral proposal or other documents or
written communications with respect to an Alternative Transaction received
by the Company Parties or their representatives, together with copies of any
and all documents relating thereto, to the Consenting Term Loan Lenders
and the Consenting Sponsors and/or their representatives, unless prohibited
by confidentiality;
(xiii) use the information regarding any Term Claims solely in connection with
this Restructuring Support Agreement, keep such information strictly
confidential, and not disclose the information to any other Person except as
specifically permitted by this Restructuring Support Agreement or required
by applicable law or court order;
(xiv) support and take all actions as are reasonably necessary and appropriate to
obtain any and all required regulatory and/or third-party approvals to
consummate the Restructuring;
(xv) seek a Confirmation Order that becomes effective and enforceable
immediately upon its entry and seek to have the period in which an appeal
thereto must be filed commence immediately upon its entry;
(xvi) to the extent applicable, object, in a reasonable manner, to any motion filed
with the Bankruptcy Court by any person (A) seeking the entry of an order
terminating the Company Parties’ exclusive right to file and/or solicit
21
acceptances of a plan of reorganization or (B) seeking the entry of an order
terminating, annulling, or modifying the automatic stay (as set forth in
section 362 of the Bankruptcy Code) with regard to any material asset that,
to the extent such relief was granted, would have a material adverse effect
on the consummation of the Restructuring transactions; and
(xvii) to the extent applicable, not file any pleading seeking entry of an order, and
object, in a reasonable manner, to any motion filed with the Bankruptcy
Court by any person seeking the entry of an order, (A) directing the
appointment of an examiner or a trustee, (B) converting the Chapter 11
Cases to cases under chapter 7 of the Bankruptcy Code, (C) dismissing the
Chapter 11 Cases, or (D) for relief that (1) is inconsistent with this
Restructuring Support Agreement in any material respect or (2) would
reasonably be expected to frustrate the purposes of this Restructuring
Support Agreement, including by preventing the consummation of the
Restructuring.
(b) Automatic Stay. Each of the Company Parties acknowledges and agrees and shall
not dispute that after the commencement of the Chapter 11 Cases, if applicable, the
giving of notice of termination by any Party pursuant to this Restructuring Support
Agreement shall not be a violation of the automatic stay of section 362 of the
Bankruptcy Code (and the Company Parties hereby waive, to the fullest extent
permitted by law, the applicability of the automatic stay to the giving of such
notice).
(c) Restructuring Milestones: Subject to the terms and conditions of this Restructuring
Support Agreement, for the duration of Support Period:
(i) The Company Parties shall have commenced solicitation on the Plan by
11:59 pm (ET) on May 31, 2020 (commencing solicitation by email being
sufficient, provided that solicitation materials are sent by mail on June 1,
2020).
(ii) Promptly following the RSA Effective Date and, in any event, no later than
11:59 pm (ET) on June 3, 2020, the Company Parties shall file the
Chapter 11 Cases (for the avoidance of doubt, commencement of the
Chapter 11 Cases remains subject to approval of the board of directors or
other governing bodies of the Company Parties).
(iii) The Company Parties’ filing with the Bankruptcy Court, on or within
twenty-four (24) hours of the Petition Date, the Plan, which shall be in form
and substance reasonably acceptable to the Requisite Consenting Term
Loan Lenders and the Requisite Consenting Sponsors, consistent with the
terms, covenants, and conditions of this Restructuring Support Agreement,
and, solely with respect to terms and provisions affecting the rights,
protections, duties, or obligations of the Term DIP Agent (as defined in the
Term DIP Credit Agreement) or the Term Agent, the Term DIP Agent or
22
the Term Agent, as applicable, and for which the Company Parties shall
have solicited and obtained the requisite consent to the Plan by the Requisite
Consenting Term Loan Lenders or requested and obtained authority from
the Bankruptcy Court to complete solicitation within twenty (20) days from
the Petition Date.
(iv) The Company Parties’ filing with the Bankruptcy Court, on or within
twenty-four (24) hours of the Petition Date, of a disclosure statement
relating to the Plan, and all related schedules, supplements, exhibits and
orders (as applicable), in form and substance satisfactory to the Requisite
Consenting Sponsors and the Term DIP Agent at the direction of the
Requisite Term DIP Lenders.
(v) The Bankruptcy Court’s entry of an interim order approving (i) the ABL
DIP Facility and (ii) the Term DIP Facility (including the Term DIP
Commitments (as defined in the Term DIP Credit Agreement), all
documents and lender fees related thereto, and the payment of the fees and
expenses of the Term Loan Lender Group’s and Term Agent’s advisors), in
form and substance acceptable to the Requisite Consenting Term Loan
Lenders in their sole discretion on or before three (3) Business Days
following the Petition Date.
(vi) By no later than the date the Plan Supplement (as defined in the Plan) is
required to be filed in the Chapter 11 Cases, the Debtors shall have received
an executed commitment letter by one or more of the lenders under the Term
DIP Facility (or such other party after approval by the Required Lenders (as
defined in the Term DIP Credit Agreement)) providing a commitment of an
additional $6.5 million to be funded as part of the final draw under the Term
DIP Facility following the entry of the order approving the Term DIP
Facility on a final basis.
(vii) The Bankruptcy Court shall hold the combined hearing on the Plan and
Disclosure Statement on or before thirty-seven (37) calendar days following
the Petition Date.
(viii) The Bankruptcy Court’s entry of a final order approving (i) the ABL DIP
Facility and (ii) the Term DIP Facility, in form and substance reasonably
acceptable to the Requisite Consenting Term Loan Lenders in their sole
discretion on or before thirty-seven (37) calendar days following the
Petition Date.
(ix) The Bankruptcy Court’s entry of an order, in form and substance
satisfactory to the Requisite Consenting Term Loan Lenders and the
Requisite Consenting Sponsors, in their sole discretion, approving the
Disclosure Statement Order, on or before forty (40) calendar days following
the Petition Date.
23
(x) The Bankruptcy Court’s entry of the Confirmation Order, in form and
substance satisfactory to the Requisite Consenting Term Loan Lenders and
the Requisite Consenting Sponsors, in their sole discretion, and, solely with
respect to terms and provisions affecting the rights, protections, duties or
obligations of the Term DIP Agent or the Term Agent, the Term DIP Agent
or the Term Agent, as applicable, on or before forty (40) calendar days
following the Petition Date.
(xi) The Restructuring Effective Date having occurred not later than fifty-four
(54) calendar days following the Petition Date.
Section 7. Termination of Agreement.
(a) Automatic Termination. This Agreement shall terminate automatically, without
any further action required by any Party, upon the occurrence of any of the
following events:
(i) the occurrence of the Restructuring Effective Date;
(ii) entry of an order denying confirmation of the Plan, unless the Requisite
Consenting Term Loan Lenders shall deliver written notice within two (2)
business days of the entry of such order to the Company Parties of their
desire to amend the Plan to address the grounds on which confirmation was
denied;
(iii) an order confirming the Plan is reversed or vacated, unless the Requisite
Consenting Term Loan Lenders shall deliver written notice within two (2)
business days of the entry of such order reversing or vacating confirmation
to the Company Parties of their desire to amend the Plan to address the
grounds on which confirmation was reversed or vacated; or
(iv) any court of competent jurisdiction has entered a final, non-appealable
judgment or order declaring this Restructuring Support Agreement to be
unenforceable.
(b) Consenting Term Loan Lender Termination Events. The obligations of the
Consenting Term Loan Lenders may be terminated by the Requisite Consenting
Term Loan Lenders (such Consenting Term Loan Lenders seeking to terminate,
the “Terminating Consenting Term Loan Lenders”), in each case, by the delivery
to each of the other Parties of a written notice in accordance with Section 20 upon
the occurrence and continuation of any of the following events, subject to any grace
period or cure period, as applicable thereto:
(i) the breach by any Party, other than the Terminating Consenting Term Loan
Lenders, of (A) any affirmative or negative covenant contained in this
Restructuring Support Agreement or (B) any other obligations of such
breaching Party set forth in this Restructuring Support Agreement, in each
of clauses (A) and (B), in any material respect and which breach is
24
continuing for a period of five (5) business days following such breaching
Party’s receipt of a written notice of breach pursuant to Section 20; provided
that such termination right shall be ineffective if the breaching Party is a
Consenting Term Loan Lender other than the Terminating Consenting Term
Loan Lenders and at such time Consenting Term Loan Lenders holding in
the aggregate at least 66.67 percent in aggregate principal amount
outstanding Term Claims and representing a majority of all Term Loan
Lenders have not breached this Restructuring Support Agreement in any
material respect;
(ii) the breach in any material respect by the Company Parties or the Requisite
Consenting Sponsors of any of their respective representations or warranties
in this Restructuring Support Agreement, which breach remains uncured for
a period of five (5) business days following the Company Parties’ or the
Requisite Consenting Sponsors’, as applicable, receipt of a written notice
pursuant to Section 20;
(iii) the Company Parties fail to meet any of the Milestones as set forth herein,
unless otherwise expressly consented to in writing by the Requisite
Consenting Term Loan Lenders;
(iv) the Definitive Documents are not in form and substance reasonably
satisfactory to the Requisite Consenting Term Loan Lenders; provided that
the Requisite Consenting Term Loan Lenders must provide three (3)
business days’ written notice to the Company Parties in accordance with
Section 20 hereof of any such proposed termination and the Company
Parties shall have such time to amend or modify such Definitive Documents
such that the applicable Definitive Documents shall be in form and
substance reasonably satisfactory to the Requisite Consenting Term Loan
Lenders;
(v) the Company Parties or any Consenting Sponsor files, amends, modifies or
supports any motion, pleading, or related document with a court of
competent jurisdiction in a manner that is materially inconsistent with this
Restructuring Support Agreement, and such motion, pleading, or related
document has not been withdrawn after three (3) business days following
such Party’s receipt of a written notice in accordance with Section 20 that
such motion, pleading, or related document is materially inconsistent with
this Restructuring Support Agreement;
(vi) the issuance by any governmental authority, including any regulatory
authority or court of competent jurisdiction, of any ruling, judgment, or
order enjoining the consummation of or rendering illegal the Restructuring
or any material portion thereof, and such ruling, judgment, or order has not
been reversed or vacated within thirty (30) calendar days after such
issuance;
25
(vii) the Bankruptcy Court (or other court of competent jurisdiction) enters an
order (A) directing the appointment of a liquidator, judicial manager,
trustee, receiver, or examiner with expanded powers or a trustee in any of
the Chapter 11 Cases, (B) converting the Chapter 11 Cases to cases under
chapter 7 of the Bankruptcy Code, (C) dismissing any of the Chapter 11
Cases, (D) invaliding, disallowing, subordinating, or limiting the
enforceability, priority, or validity of any of the Term Claims, or (E) the
effect of which would render the Plan incapable of consummation on the
terms set forth in this Restructuring Support Agreement or the Term Sheet;
(viii) the Company Parties or a Consenting Sponsor files or supports (or, in the
case of the Company Parties, fails to timely object to) another person in
filing any plan of reorganization, liquidation, or sale of all or substantially
all of the Company Parties’ assets other than the Restructuring set forth
herein;
(ix) the Company Parties or a Consenting Sponsor files, or supports (or, in the
case of the Company Parties, fails to timely object to) another person in
filing, any motion or pleading seeking to avoid, disallow, subordinate, or
recharacterize any Term Claims held by the Consenting Term Loan Lenders
or that contests the amount, validity, or priority of any of the Term Claims
held by the Consenting Term Loan Lenders;
(x) the Company Parties withdraw the Plan or publicly announce their intention
to withdraw the Plan or to pursue an Alternative Transaction;
(xi) the failure of the Company Parties to use commercially reasonable efforts
to oppose any enforcement action against any material portion of its assets
in any jurisdiction or the entry of a judgment in any enforcement action
against any material portion of the Company Parties’ assets;
(xii) the commencement of an involuntary bankruptcy case against any
Company entity under the Bankruptcy Code if such involuntary case is not
dismissed, stayed, or vacated within sixty (60) calendar days after the filing
thereof, or if a court order grants the relief sought in such involuntary case;
(xiii) the Company Parties fail to enter into the DOJ Settlement Agreement on or
before July 15, 2020;
(xiv) the occurrence of any Event of Default under (and as defined in the DIP
Facilities) either of the DIP Facilities; or
(xv) the termination of the commitments or acceleration of the obligations under
the DIP Facilities pursuant to their terms.
(c) Consenting Sponsor Termination Events. The obligations of a Consenting Sponsor
under this Restructuring Support Agreement may be terminated by such Consenting
Sponsor (such Consenting Sponsor seeking to terminate, the “Terminating
26
Consenting Sponsor”) by the delivery to each of the other Parties of a written
notice in accordance with Section 20, stating in reasonable detail the reasons for
such termination, upon the occurrence and continuation of any of the following
events, subject to any grace period or cure period, as applicable thereto:
(i) the breach by any Company Party (unless such breach is caused by or
resulted from any action or direction by the Terminating Consenting
Sponsor or any of its employees, agents, or representatives in their
respective capacities as such, and not in their capacities as employees,
agents, or representatives of the Company Parties or its subsidiaries) or a
Consenting Term Loan Lender (other than a breach by a Consenting Term
Loan Lender that is the same person or entity as the Terminating Consenting
Sponsor or an affiliate thereof) of (A) any affirmative or negative covenant
contained in this Restructuring Support Agreement or (B) any other
obligations of such breaching Party set forth in this Restructuring Support
Agreement, in each of clauses (A) and (B), in any material respect that is
adverse to the Consenting Sponsors’ interests in connection with the
Restructuring or the Plan and which breach is continuing for a period of five
(5) business days following such breaching Party’s receipt of a written
notice of breach pursuant to Section 20 (which written notice shall set forth
in detail the alleged breach); provided that such termination right shall be
ineffective if the Terminating Consenting Sponsors are seeking termination
as a result of a breach by any Consenting Term Loan Lender and at such
time Consenting Term Loan Lenders holding in the aggregate at least 66.67
percent in aggregate principal amount outstanding of Term Claims and
representing a majority of all Term Loan Lenders have not breached this
Restructuring Support Agreement in any material respect;
(ii) the breach in any material respect by the Company Parties or a Consenting
Term Loan Lender (other than a breach by a Consenting Term Loan Lender
that is the same person or entity as the Terminating Consenting Sponsor or
an affiliate thereof) of any of their respective representations or warranties
in this Restructuring Support Agreement, which breach is adverse to the
Consenting Sponsor’s interests in connection with the Restructuring or the
Plan and remains uncured for a period of five (5) business days following
the Company Parties’ or Consenting Term Loan Lender’s, as applicable,
receipt of a written notice pursuant to Section 20 (which written notice shall
set forth in detail the alleged failure of the representation or warranty);
provided that such termination right shall be ineffective if the Terminating
Consenting Sponsors are seeking termination as a result of a breach by any
Consenting Term Loan Lender at such time Consenting Term Loan Lenders
holding in the aggregate at least 66.67 percent in aggregate principal amount
outstanding of Term Claims and representing a majority of all Term Loan
Lenders have not breached their representations and warranties in this
Restructuring Support Agreement in any material respect;
27
(iii) the Definitive Documents are not in form and substance reasonably
satisfactory to the Requisite Consenting Sponsors and are adverse to their
interests and rights under this Restructuring Support Agreement; provided
that the Requisite Consenting Sponsors must provide three (3) business
days’ written notice to the Company Parties in accordance with Section 20
hereof of any such proposed termination and the Company Parties shall
have such time to amend or modify such Definitive Documents such that
the applicable Definitive Documents shall be in form and substance
reasonably satisfactory to the Requisite Consenting Sponsors;
(iv) the Company Parties (unless the Company Parties are acting at the direction
or instruction of the Terminating Consenting Sponsor or any of their
respective employees, agents, or representatives in their respective
capacities as such, and not in their capacities as employees, agents, or
representatives of the Company Parties or its subsidiaries), or any
Consenting Term Loan Lender (other than a Consenting Term Loan Lender
that is the same person or entity as the Terminating Consenting Sponsor or
an affiliate thereof) files, amends, modifies, or supports any motion,
pleading, or related document with a court of competent jurisdiction in a
manner that is materially inconsistent with this Restructuring Support
Agreement and adverse to the Consenting Sponsor’s interests in connection
with the Restructuring or the Plan, and such motion, pleading, or related
document has not been withdrawn after five (5) business days following
such Party’s receipt of a written notice in accordance with Section 20 that
such motion, pleading, or related document is materially inconsistent with
this Restructuring Support Agreement;
(v) the issuance by any governmental authority, including any regulatory
authority or court of competent jurisdiction, of any ruling, judgment, or
order enjoining the consummation of or rendering illegal the Restructuring
or any material portion thereof, and such ruling, judgment, or order has not
been reversed or vacated within thirty (30) calendar days after such
issuance;
(vi) the Company Parties withdraw the Plan or publicly announce their intention
to withdraw the Plan or pursue an Alternative Transaction;
(vii) the Company Parties (unless the Company Parties is acting at the direction
or instruction of the Terminating Consenting Sponsor or any of their
respective employees, agents, or representatives in their respective
capacities as such, and not in their capacities as employees, agents, or
representatives of the Company Parties or its subsidiaries) or a Consenting
Term Loan Lender (other than a Consenting Term Loan Lender that is the
same person or entity as the Terminating Consenting Sponsor or an affiliate
thereof) files or supports (or fails to timely object to) another person in filing
(A) any plan of reorganization, liquidation, or sale of all or substantially all
of the Company Parties’ assets other than the Restructuring set forth herein
28
or (B) a motion or pleading asserting (or seeking standing to assert) any
purported Claims or causes of action against the Terminating Consenting
Sponsor; or
(viii) the Company Parties (unless the Company Parties is acting at the direction
or instruction of the Terminating Consenting Sponsor or any of their
respective employees, agents, or representatives in their respective
capacities as such, and not in their capacities as employees, agents, or
representatives of the Company Parties or its subsidiaries) or a Consenting
Term Loan Lender (other than a Consenting Term Loan Lender that is the
same person or entity as the Terminating Consenting Sponsor or an affiliate
thereof) files or supports (or fails to timely object to) another person in filing
a motion or pleading seeking to avoid, disallow, subordinate, or
recharacterize any equity interests in the Company Parties or Claims held
by the Consenting Sponsors or that contests the amount, validity, or priority
of any equity interests in the Company Parties or Claims held by the
Sponsors.
(d) Company Parties Termination Events. The obligations of the Company Parties
under this Restructuring Support Agreement may be terminated by the Company
Parties by the delivery to each of the other Parties of a written notice in accordance
with Section 20, stating in reasonable detail the reasons for such termination, upon
the occurrence and continuation of any of the following events, subject to any grace
period or cure period, as applicable thereto:
(i) the breach by any Party other than the Company Parties of (A) any
affirmative or negative covenant contained in this Restructuring Support
Agreement or (B) any other obligations of such breaching Party set forth in
this Restructuring Support Agreement, in each of clauses (A) and (B), in
any material and adverse respect and which breach is continuing for a period
of three (3) business days following such breaching Party’s receipt of a
written notice of breach pursuant to Section 20 (which written notice shall
set forth in detail the alleged breach); provided that such termination right
shall be ineffective if the Company Parties is seeking termination as a result
of a breach by any Consenting Term Loan Lender and at such time other
Consenting Term Loan Lenders holding in the aggregate at least 66.67
percent in aggregate principal amount outstanding of Term Claims and
representing a majority of all Term Loan Lenders have not breached this
Restructuring Support Agreement in any material respect;
(ii) the issuance by any governmental authority, including any regulatory
authority or court of competent jurisdiction, of any ruling, judgment, or
order enjoining the consummation of or rendering illegal the Restructuring
or any material portion thereof, and such ruling, judgment, or order has not
been reversed or vacated within thirty (30) calendar days after such
issuance; or
29
(iii) the Board of Directors of any Company Party determines in good faith and
after consulting with counsel that continued performance under this
Restructuring Support Agreement (including taking any action or refraining
from taking any action) would be inconsistent with the exercise of its
fiduciary duties under applicable law (as reasonably determined in good
faith after consultation with external legal counsel) and otherwise consistent
with Section 10.
(e) Mutual Termination. This Agreement may be terminated by mutual agreement of
the Required Parties upon the receipt of written notice delivered in accordance with
Section 20.
(f) Effect of Termination.
(i) Except as set forth in Section 15, upon the occurrence of a Termination
Date, this Restructuring Support Agreement, including the Releases
contained herein, shall be of no further force and effect as to such Party and
each Party subject to such termination shall be released from its
commitments, undertakings, and agreements under or related to this
Restructuring Support Agreement and shall have the rights and remedies
that it would have had, had it not entered into this Restructuring Support
Agreement, and shall be entitled to take all actions, whether with respect to
the Restructuring or otherwise, that it would have been entitled to take had
it not entered into this Restructuring Support Agreement, including with
respect to any and all Claims or causes of action. Upon the occurrence of a
Termination Date prior to the Confirmation Order being entered by a
Bankruptcy Court, any and all consents or ballots tendered by the Parties
subject to such termination before a Termination Date shall be deemed, for
all purposes, to be null and void from the first instance and shall not be
considered or otherwise used in any manner by the Parties in connection
with the Restructuring and this Restructuring Support Agreement or
otherwise; provided, however, any Consenting Term Loan Lender
withdrawing or changing its vote pursuant to this Section 7(f) shall
promptly provide written notice of such withdrawal or change to each other
Party to this Restructuring Support Agreement and, if such withdrawal or
change occurs on or after the Petition Date, file notice of such withdrawal
or change with the Bankruptcy Court. Nothing in this Restructuring
Support Agreement shall be construed as prohibiting the Company Parties
or any of the Consenting Term Loan Lenders or Consenting Sponsors from
contesting whether any such termination is in accordance with its terms or
to seek enforcement of any rights under this Restructuring Support
Agreement that arose or existed before a Termination Date. Except as
expressly provided in this Restructuring Support Agreement, nothing herein
is intended to, or does, in any manner waive, limit, impair, or restrict any
right of any Party or the ability of any Party to protect and reserve its rights
(including rights under this Restructuring Support Agreement), remedies,
and interests, including its Claims against any other Party. No purported
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termination of this Restructuring Support Agreement shall be effective
under this Section 7(f) or otherwise if the Party seeking to terminate this
Restructuring Support Agreement is in material breach of this Restructuring
Support Agreement, except a termination pursuant to Section 7(d)(iii).
Nothing in this Section 7(f) shall restrict the Company Parties’ right to
terminate this Restructuring Support Agreement in accordance with Section
7(d)(iii).
Section 8. Definitive Documents; Good Faith Cooperation; Further Assurances.
Subject to the terms and conditions described herein, during the Support Period, each Party,
severally and not jointly, hereby covenants and agrees to reasonably cooperate with each other in
good faith in connection with the negotiation, drafting, execution (to the extent such Party is a
party thereto), and delivery of the Definitive Documents. Furthermore, subject to the terms and
conditions hereof, each of the Parties shall take such action as may be reasonably necessary or
reasonably requested by the other Parties to carry out the purposes and intent of this Restructuring
Support Agreement, including making and filing any required regulatory filings.
Section 9. Representations and Warranties.
(a) Mutual Representations and Warranties. Each Party, severally and not jointly,
represents and warrants to the other Parties that the following statements are true,
correct, and complete as of the date hereof (or as of the date such Party becomes a
party hereto):
(i) such Party is validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, and has, as applicable, all
requisite corporate, partnership, limited liability company, or similar
authority to enter into this Restructuring Support Agreement and carry out
the transactions contemplated hereby and perform its obligations
contemplated hereunder; and the execution and delivery of this
Restructuring Support Agreement and the performance of such Party’s
obligations hereunder have been duly authorized by, as applicable, all
necessary corporate, limited liability company, partnership, or other similar
action on its part;
(ii) the execution, delivery, and performance by such Party of this Restructuring
Support Agreement does not and will not (A) violate any provision of law,
rule, or regulation applicable to it, its charter, or bylaws (or other similar
governing documents), or (B) conflict with, result in a breach of, or
constitute a default under any material contractual obligation to which it is
a party; provided that with respect to the Company Parties, it is understood
that commencing the Chapter 11 Cases may result in a breach of or
constitute a default under such obligations;
(iii) the execution, delivery, and performance by such Party of this Restructuring
Support Agreement, except as expressly provided in this Restructuring
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Support Agreement (including the Term Sheet), does and will not require
the consent or approval by any other person or entity, except for any consent
or approval obtained prior to, or contemporaneously with, the RSA
Effective Date; and
(iv) this Restructuring Support Agreement is the legally valid and binding
obligation of such Party, enforceable against it in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, or other similar laws relating to or limiting
creditors’ rights generally or by equitable principles relating to
enforceability or a ruling of a court of competent jurisdiction.
(b) Consenting Term Loan Lenders Representations and Warranties. Each Consenting
Term Loan Lender, severally and not jointly, represents and warrants to the
Company Parties that, as of the date hereof (or as of the date such Consenting Term
Loan Lender becomes a party hereto), such Consenting Term Loan Lender:
(i) is the beneficial owner of the aggregate principal amount of Term Claims
set forth below its name on the signature page hereof (or below its name on
the signature page of a Joinder Agreement for any Consenting Term Loan
Lender that becomes a party hereto after the date hereof), which shall
specify the aggregate principal amount of Term Claims held by such
Consenting Term Loan Lender, as applicable;
(ii) does not directly or indirectly own any Term Claims other than as identified
below its name on its signature page hereof; and/or
(iii) has, with respect to the beneficial owners of such Term Claims (as may be
set forth on a schedule to such Consenting Term Loan Lender’s signature
page hereto), (A) sole investment or voting discretion with respect to such
Term Claims, (B) full power and authority to vote on and consent to matters
concerning such Term Claims, or to exchange, assign, and transfer such
Term Claims, and (C) full power and authority to bind or act on the behalf
of, such beneficial owners for purposes of this Restructuring Support
Agreement.
(c) Consenting Sponsor Representations and Warranties.
(i) The Consenting Sponsors, severally and not jointly, represents and warrants
to the Consenting Term Loan Lenders that neither it nor any of its affiliates
has entered into any agreements with any party regarding a sale or
restructuring of the Company Parties that would result in a greater recovery
on the Term Claims than is contemplated under this Restructuring Support
Agreement; and
(ii) The Consenting Sponsors represent and warrant that the Consenting
Sponsors hold, in the aggregate, 72 percent of the issued, outstanding, and
vested shares of APC Holdings on a fully diluted basis.
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Section 10. Fiduciary Duty.
Notwithstanding any provision in this Restructuring Support Agreement to the contrary,
nothing in this Restructuring Support Agreement shall require the Company Parties, the
Consenting Sponsors, nor the Company Parties’ or the Consenting Sponsors’ directors, managers,
and officers, including any director, manager, or officer of the Company Parties that is an
employee, representative, or agent of any Consenting Sponsor, to take or refrain from taking any
action in its capacity as a director, manager, or officer of the Company Parties or the Consenting
Sponsors (including, without limitation, terminating this Restructuring Support Agreement under
Section 7), to the extent such person (or persons) determines in good faith, based on the advice of
external counsel (including counsel to the Company Parties), that taking or refraining from taking
such action, as applicable, would be inconsistent with applicable law or its fiduciary obligations
under applicable law owed to the Company Parties. The Company Parties shall provide written
notice in accordance with Section 20 to the Consenting Term Loan Lenders and the Consenting
Sponsors promptly following any determination by the Company Parties, the Consenting
Sponsors, or the Company Parties’ or Consenting Sponsors’ directors, managers, or officers to
take or refrain from taking any action that would otherwise be prohibited or required, as applicable,
by this Restructuring Support Agreement, which notice shall set forth in reasonable detail the basis
for such determination. All Consenting Term Loan Lenders reserve all rights they may have,
including the right (if any) to challenge the exercise by the Company Parties of their ability to
terminate this Agreement under Section 7(d)(iii) hereof and pursuant to this Section 10.
Section 11. Disclosure; Publicity.
The Company Parties shall submit drafts to counsel to the Consenting Term Loan Lenders
and the Consenting Sponsors of any press releases, public documents, and any and all filings with
the Bankruptcy Court, or otherwise that constitute disclosure of the existence or terms of this
Restructuring Support Agreement or any amendment to the terms of this Restructuring Support
Agreement at least three days prior to making any such disclosure, and shall afford them a
reasonable opportunity under the circumstances to comment on such documents and disclosures
and shall consider any such comments in good faith, final versions of which shall be reasonably
satisfactory to the Requisite Consenting Term Loan Lenders. This Agreement, as well as its terms,
its existence, and the existence of the negotiation of its terms are expressly subject to any existing
confidentiality agreements executed by and among any of the Parties as of the date hereof;
provided, however, that, after the Petition Date, the Parties may disclose the existence of, or the
terms of, this Restructuring Support Agreement or any other material term of the Restructuring
without the express written consent of the other Parties; provided, further, however, that no Party
or its advisors shall disclose to any person or entity (including, for the avoidance of doubt, any
other Party) other than advisors to the Company Parties the principal amount or percentage of any
Term Claims held by any Party or the specific legal entity name of any Consenting Term Loan
Lender, in each case, without such Party’s prior written consent, except as required by law or
otherwise permitted under the terms of any other agreement between the Company Parties, on the
one hand, and any Consenting Term Loan Lender, on the other hand; provided that (a) if such
disclosure is required by law, subpoena, or other legal process or regulation, the disclosing Party
shall afford the relevant Party a reasonable opportunity to review and comment in advance of such
disclosure and shall take all reasonable measures to limit such disclosure (the expense of which, if
any, shall be borne by the relevant disclosing Party) and (b) the foregoing shall not prohibit the
33
disclosure of the aggregate percentage or aggregate principal amount of Term Claims held by all
the Consenting Term Loan Lenders collectively. Any public filing of this Restructuring Support
Agreement, with the Bankruptcy Court or otherwise, that includes executed signature pages to this
Restructuring Support Agreement shall include such signature pages only in redacted form with
respect to the amount of Term Claims held by each Consenting Term Loan Lender and, in the case
of managed accounts, the specific name of the account managed (provided that the holdings
disclosed in such signature pages may be filed in unredacted form with the Bankruptcy Court under
seal).
Section 12. Amendments and Waivers.
During the Support Period this Restructuring Support Agreement, including any exhibits
or schedules hereto may not be waived, modified, amended, or supplemented except in a writing
signed by the Required Parties (provided that the Requisite Consenting Sponsors shall not be
deemed to be a Required Party for purposes of this Section 12 unless such waiver, modification,
amendment or supplement is adverse to their interests and rights under this Restructuring Support
Agreement); provided that: (i) any waiver, modification, amendment, or supplement to this
Section 12 shall require the prior written consent of each Party; (ii) any waiver, modification,
amendment, or supplement to the definition of Requisite Consenting Term Loan Lenders shall
require the prior written consent of the Company Parties and each Consenting Term Loan Lender;
and (iii) any waiver, modification, amendment, or supplement that disproportionately and
adversely affects the economic recoveries or treatment of any Consenting Term Loan Lender or
Consenting Sponsor may not be made without the prior written consent of such Consenting Term
Loan Lender or Consenting Sponsor.
Section 13. Governing Law; Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be construed and enforced in accordance with, and the rights
of the parties shall be governed by, the law of the State of New York, without giving
effect to any conflicts of law principles which would permit or require the
application of the law of any other jurisdiction.
(b) Each of the Parties irrevocably agrees for itself that any legal action, suit, or
proceeding arising out of or relating to this Restructuring Support Agreement
brought by any party or its successors or assigns shall be brought and determined
in any federal or state court in the Borough of Manhattan, the City of New York,
and each of the Parties hereby irrevocably submits to the exclusive jurisdiction of
the aforesaid courts for itself, generally and unconditionally, with regard to any
such proceeding arising out of or relating to this Restructuring Support Agreement
or the Restructuring. Each of the Parties agrees not to commence any proceeding
relating hereto or thereto except in the courts described above in New York, other
than proceedings in any court of competent jurisdiction to enforce any judgment,
decree, or award rendered by any such court in New York as described herein.
Subject to the foregoing, each of the Parties hereby irrevocably and unconditionally
waives, and agrees not to assert, by way of motion or as a defense, counterclaim,
or otherwise, in any proceeding arising out of or relating to this Restructuring
Support Agreement or the Restructuring, (i) that any Claim is not personally subject
34
to the jurisdiction of the courts in New York as described herein for any reason and
(ii) that (A) the proceeding in any such court is brought in an inconvenient forum,
(B) the venue of such proceeding is improper, or (C) this Restructuring Support
Agreement, or the subject matter hereof, may not be enforced in or by such courts.
Notwithstanding the foregoing consent to New York jurisdiction, if the Chapter 11
Cases are commenced, each Party agrees that the Bankruptcy Court shall have
exclusive jurisdiction of all matters arising out of or in connection with this
Restructuring Support Agreement. By executing and delivering this Restructuring
Support Agreement, and upon commencement of the Chapter 11 Cases, each of the
Parties irrevocably and unconditionally submits to the personal jurisdiction of the
Bankruptcy Court solely for purposes of any action, suit, proceeding, or other
contested matter arising out of or relating to this Restructuring Support Agreement,
or for recognition or enforcement of any judgment rendered or order entered in any
such action, suit, proceeding, or other contested matter.
(c) EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT (WHETHER BASED ON
CONTRACT, TORT, OR ANY OTHER THEORY). EACH PARTY
(I) CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS Section
13. ANY DISPUTES RESOLVED IN COURT SHALL BE RESOLVED IN A
BENCH TRIAL WITHOUT A JURY.
Section 14. Specific Performance/Remedies.
It is understood and agreed by the Parties that money damages would not be a sufficient
remedy for any breach of this Restructuring Support Agreement by any Party, that such breach
would represent an irreparable harm, and that each non-breaching Party shall be entitled to, in
addition to any other legal or equitable rights or remedies under applicable law, specific
performance of the terms hereof and injunctive or other equitable relief, including attorneys’ fees
and costs (without the posting of bond) as a remedy of any such breach, without the necessity of
proving the inadequacy of money damages as a remedy, including an order of a court of competent
jurisdiction requiring any Party to comply promptly with any of its obligations hereunder;
provided, however, that no Party shall be entitled to pursue specific performance as a remedy
against any other Party in connection with any action or omission taken pursuant to Section 10 of
this Restructuring Support Agreement.
35
Section 15. Survival.
Notwithstanding the termination of this Restructuring Support Agreement pursuant to
Section 7 (other than a termination pursuant to Section 7(a)(i)), the agreements and obligations of
the Parties set forth in the following Sections: Section 1, Section 7(f), Section 10, Section 12,
Section 13, Section 14, Section 15, Section 16, Section 17, Section 18, Section 19, Section 20,
Section 21, and Section 22 (and any defined terms used in any such Sections) shall survive such
termination and shall continue in full force and effect for the benefit of the Consenting Term Loan
Lenders and the Consenting Sponsors in accordance with the terms hereof; provided that any
liability of a Party for failure to comply with the terms of this Restructuring Support Agreement
shall survive such termination (other than a termination pursuant to Section 7(a)(i)).
Section 16. Successors and Assigns; Severability; Several Obligations.
This Agreement is intended to bind and inure to the benefit of each of the Parties and their
respective predecessors, successors, permitted assigns, heirs, executors, administrators, and
representatives; provided that nothing contained in this Section 16 shall be deemed to permit
Transfers of interests in the Term Claims other than in accordance with the express terms of this
Restructuring Support Agreement. Notwithstanding anything to the contrary herein, the
agreements, representations, and obligations of the Parties are, in all respects, several and neither
joint nor joint and several. For the avoidance of doubt, the obligations arising out of this
Restructuring Support Agreement are several and neither joint nor joint and several with respect
to each Consenting Term Loan Lender, in accordance with its proportionate interest hereunder,
and the Parties agree not to proceed against any Consenting Term Loan Lender for the obligations
of another. For the avoidance of doubt, the obligations arising out of this Restructuring Support
Agreement are several and neither joint, nor joint and several, with respect to each Consenting
Sponsor.
Section 17. No Third-Party Beneficiaries.
Unless expressly stated herein, this Restructuring Support Agreement shall be solely for
the benefit of the Parties and no other person or entity shall be a third-party beneficiary hereof.
Section 18. Prior Negotiations; Entire Agreement.
This Agreement, including the annexes, exhibits, and schedules hereto (including the Term
Sheet) constitutes the entire, integrated agreement of the Parties, and supersedes all other prior
negotiations, with respect to the subject matter hereof and thereof, except that the Parties
acknowledge that any confidentiality agreements (if any) heretofore executed between the
Company Parties and each Consenting Term Loan Lender shall continue in full force and effect in
accordance with its terms.
Section 19. Counterparts.
This Agreement may be executed in several counterparts, each of which shall be deemed
to be an original, and all of which together shall be deemed to be one and the same agreement.
Execution copies of this Restructuring Support Agreement may be delivered by facsimile,
36
electronic mail, or otherwise, which shall be deemed to be an original for the purposes of this
paragraph.
Section 20. Notices.
All notices hereunder shall be deemed given if in writing and delivered, if
contemporaneously sent by electronic mail, courier, or by registered or certified mail (return
receipt requested) to the following addresses:
(a) If to the Company Parties, to:
APC Automotive Technologies Intermediate Holdings, LLC
10822 West Toller Drive
Suite 370
Littleton, Colorado 80127
Attention: Patricia Warfield
Marc Weinsweig
Chris Walling
With a copy to:
Kirkland & Ellis LLP
601 Lexington Avenue
New York, New York 10022
Attention: Jonathan S. Henes, P.C.
George Klidonas
Neda Davanipour
(b) If to a Consenting Term Loan Lender or a transferee thereof, to the addresses set
forth below such Consenting Term Loan Lender’s signature (or as directed by any
transferee thereof), as the case may be, with a copy to:
King & Spalding LLP
1180 Peachtree Street, NE
Atlanta, Georgia 30309
Attention: W. Austin Jowers
With a copy to:
King & Spalding LLP
37
1185 Avenue of the Americas
New York, New York 10036
Attention: Peter Montoni
Michael R. Handler
(c) If to a Consenting Sponsor or a transferee thereof, to the addresses set forth below
such Consenting Sponsor’s signature (or as directed by any transferee thereof), as
the case may be, with a copy to:
White & Case LLP
1221 Avenue of the Americas
New York, New York 10020-1095
Attention: Thomas Lauria
John Reiss
David Turetsky
Luke Laumann
And:
Honigman LLP
2290 First National Building
660 Woodward Avenue
Detroit, Michigan 48226-3506
Attention: Joseph R. Sgroi
And:
Goodwin Procter LLP
New York Times Building
620 8th Avenue
New York, New York 10018
Attention: Bruce Rader
Michael Goldstein
Any notice given by electronic mail, facsimile, delivery, mail, or courier shall be effective
when received.
38
Section 21. Reservation of Rights; No Admission.
(a) Nothing contained herein shall (i) limit (A) the ability of any Party to consult with
other Parties or (B) the rights of any Party under any applicable bankruptcy,
insolvency, foreclosure, or similar proceeding, including the right to appear as a
party in interest in any matter to be adjudicated in order to be heard concerning any
matter arising in or related to the Restructuring before a court of competent
jurisdiction, in each case, so long as such consultation or appearance is not
inconsistent with such Party’s obligations hereunder, or, to the extent such
Restructuring is consistent with this Restructuring Support Agreement, under the
terms of the Restructuring; (ii) limit the ability of any Consenting Term Loan
Lender to sell or enter into any transactions in connection with the Term Claims, or
any other Claims against or interests in the Company Parties, subject to the terms
of Section 4(b); (iii) limit the rights of any Consenting Term Loan Lender under
the Term Credit Agreement or any agreements executed in connection therewith,
except to the extent the exercise of any such rights is inconsistent with the terms of
this Restructuring Support Agreement as applicable to each such Consenting Term
Loan Lender; or (iv) constitute a waiver or amendment of any provision of the Term
Credit Agreement or any agreements executed in connection therewith.
(b) Except as expressly provided in this Restructuring Support Agreement, nothing
herein is intended to, or does, in any manner waive, limit, impair, or restrict the
ability of each of the Parties to protect and preserve its rights, remedies, and
interests, including its Claims against any of the other Parties (or their respective
affiliates or subsidiaries) or its full participation in any bankruptcy case filed by the
Company Parties or any of its affiliates and subsidiaries. This Agreement and the
transactions contemplated thereby are part of a proposed settlement of matters that
could otherwise be the subject of litigation among the Parties. Pursuant to Rule
408 of the Federal Rule of Evidence, any applicable state rules of evidence, and
any other applicable law, foreign or domestic, this Restructuring Support
Agreement and all negotiations relating thereto shall not be admissible into
evidence in any proceeding other than a proceeding to enforce its terms. This
Agreement shall in no event be construed as or be deemed to be evidence of an
admission or concession on the part of any Party of any Claim or fault or liability
or damages whatsoever. Each of the Parties denies any and all wrongdoing or
liability of any kind and does not concede any infirmity in the Claims or defenses
that it has asserted or could assert.
Section 22. Relationship Among Consenting Term Loan Lenders.
(a) It is understood and agreed that no Consenting Term Loan Lender has any duty of
trust or confidence in any kind or form with any other Consenting Term Loan
Lender as a result of this Restructuring Support Agreement. In this regard, it is
understood and agreed that any Consenting Term Loan Lender may trade in the
Term Claims or other debt of the Company Parties without the consent of the
Company Parties or any other Consenting Term Loan Lender, subject to the Term
Credit Agreement, the terms of this Restructuring Support Agreement, and any
39
confidentiality agreement entered into with the Company Parties; provided that no
Consenting Term Loan Lender shall have any responsibility for any such trading to
any other person or entity by virtue of this Restructuring Support Agreement. No
prior history, pattern, or practice of sharing confidences among or between the
Consenting Term Loan Lenders shall in any way affect or negate this Restructuring
Support Agreement. The Parties acknowledge that this agreement does not
constitute an agreement, arrangement, or understanding with respect to acting
together for the purpose of acquiring, holding, voting, or disposing of any equity
securities of the Company Parties and the Parties do not constitute a “group” within
the meaning of Rule 13d-5 under the Securities Exchange Act of 1934, as amended.
No action taken by any Party pursuant to this Restructuring Support Agreement
shall be deemed to constitute or to create a presumption by any of the Parties that
the Parties are in any way acting in concert or as such a “group.”
(b) Notwithstanding anything to the contrary herein, nothing in this Restructuring
Support Agreement shall require any Consenting Term Loan Lender or
representative of a Consenting Term Loan Lender that becomes a member of a
statutory committee that may be established in any proceeding before a court of
competent jurisdiction to take any action, or to refrain from taking any action, in
such person’s capacity as a statutory committee member; provided that nothing in
this Restructuring Support Agreement shall be construed as requiring any
Consenting Term Loan Lender to serve on any statutory committee that may be
established in any proceeding before a court of competent jurisdiction.
Section 23. No Solicitation; Representation by Counsel; Adequate Information.
(a) This Agreement is not and shall not be deemed to be a solicitation for votes in favor
of the Plan. The acceptances and consents of any party with respect to the Plan will
not have been solicited until after such party has been provided with such
disclosures and/or materials in compliance with the applicable requirements of
applicable law with respect to such solicitation.
(b) Each Party acknowledges that it has been represented by counsel in connection with
this Restructuring Support Agreement and the transactions contemplated hereby.
Accordingly, any rule of law or any legal decision that would provide any Party
with a defense to the enforcement of the terms of this Restructuring Support
Agreement against such Party based upon lack of legal counsel shall have no
application and is expressly waived.
Section 24. Additional Parties.
Without in any way limiting the requirements of Section 2(a) or Section 4(b) of this
Restructuring Support Agreement, additional Lenders may elect to become Parties upon execution
and delivery of a counterpart hereof in accordance with Section 2(a). Such additional Parties shall
become a Consenting Term Loan Lender under this Restructuring Support Agreement in
accordance with the terms of this Restructuring Support Agreement.
40
Section 25. Professional Fees & Expenses.
The Company Parties shall pay or reimburse all reasonable and documented fees and out-
of-pocket expenses of: (a) the advisors to the Term Loan Lender Group, (i) King & Spalding and
(ii) FTI, consistent with the existing fee payment arrangements between the Company Parties and
such advisors under any engagement letters or other agreements, as applicable; and (b) White &
Case, in an amount not to exceed $550,000; provided that all outstanding invoices of such advisors
shall be paid in full on the Restructuring Effective Date.
IN WITNESS WHEREOF, the Parties hereto have caused this Restructuring Support
Agreement to be executed and delivered by their respective duly authorized officers, solely in their
respective capacity as officers of the undersigned and not in any other capacity, as of the date first
set forth above.
[Signature Pages Follow]
[Company Parties Signature Page to Restructuring Support Agreement]
APC AUTOMOTIVE TECHNOLOGIES INTERMEDIATE HOLDINGS, LLC APC AUTOMOTIVE TECHNOLOGIES, LLC
By: By: Name: Patricia Warfield Name: Patricia Warfield Title: Chief Executive Officer Title: Chief Executive Officer
CWD ACQUISITION, LLC CWD HOLDING CORP.
By: By: Name: Patricia Warfield Name: Patricia Warfield Title: Chief Executive Officer Title: Chief Executive Officer
CWD INTERMEDIATE HOLDING CORP. CWD, LLC
By: By: Name: Patricia Warfield Name: Patricia Warfield Title: Chief Executive Officer Title: Chief Executive Officer
QUALIS ENTERPRISES, INC. QUALIS AUTOMOTIVE, L.L.C.
By: By: Name: Patricia Warfield Name: Patricia Warfield Title: Chief Executive Officer Title: Chief Executive Officer
AP EMISSIONS TECHNOLOGIES, LLC AP EXHAUST PRODUCTS DISC, INC.
By: By: Name: Patricia Warfield Name: Patricia Warfield Title: Chief Executive Officer Title: Chief Executive Officer
EASTERN MANUFACTURING, LLC AIRTEK, LLC
By:
By:
Name: Patricia Warfield Name: Patricia Warfield Title: Chief Executive Officer Title: Chief Executive Officer
[Company Parties Signature Page to Restructuring Support Agreement]
ARISTO, LLC
By:
Name: Patricia Warfield Title: Chief Executive Officer
[APC Holdings Signature Page to Restructuring Support Agreement]
APC AUTOMOTIVE TECHNOLOGIES HOLDINGS, LLC
By: Name: Patricia Warfield Title: Chief Executive Officer
[Consenting Sponsor Signature Page to Restructuring Support Agreement]
AG PE FUND IV EXHAUST-ARISTO, LLC AUDAX PRIVATE EQUITY FUND IV AIV, L.P. AUDAX CO-INVEST IV, L.P. AG TCI EXHAUST-ARISTO, LLC AFF CO-INVEST, L.P.
By:
Name: Daniel H. Weintraub
Title: Authorized Signatory
Ownership Interest In APC Holdings:
Notice Information
Address:
Attn:
Fax:
Email:
c/o Audax Management Company, LLC
101 Huntington Avenue, 25th Floor
Boston, MA 02199
Entity: Class A1 Preferred Units; Class A1 Common Units AG PE Fund IV Exhaust-Aristo, LLC: 16,471.03; 166.37 Audax Private Equity Fund IV AIV, L.P.: 35,137.28; 354.92 Audax Co-Invest IV, L.P.: 7,384.59; 74.59AG TCI Exhaust-Aristo, LLC: 699.77; 7.07AFF Co-Invest, L.P.: 287.11; 2.90
Daniel H. [email protected]
[Consenting Sponsor Signature Page to Restructuring Support Agreement]
HARVEST PARTNERS VII, L.P.
HARVEST PARTNERS VII (PARALLEL), L.P.
HARVEST STRATEGIC ASSOCIATES VII, L.P.HARVEST APC HOLDINGS, LLC
HARVEST APC BLOCKER PURCHASER, L.P.
By:
Name: Michael B. DeFlorio
Title: Authorized Person; Authorized Signatory
Ownership Interest In APC Holdings:
Notice Information
Address:
Attn:
Fax:
Email:
Entity: Class A1 Preferred Units; Class A1 Common Units
Harvest Partners VII, L.P.: 139,237.34; 1,406.44
Harvest Strategic Associates VII, L.P.: 1,918.01; 19.37
c/o Harvest Partners, LP
280 Park Avenue, 26th Floor
New York, NY 10017
Nick Romano
[Consenting Term Loan Lender Signature Pages Omitted]
Annex I
Affiliates and Subsidiaries
APC Automotive Technologies, LLC
CWD Acquisition, LLC
CWD Holding Corp.
CWD Intermediate Holding Corp.
CWD, LLC
Qualis Enterprises, Inc.
Qualis Automotive, L.L.C.
AP Emissions Technologies, LLC
AP Exhaust Products DISC, Inc.
Eastern Manufacturing, LLC
AirTek, LLC
Aristo, LLC
Exhibit A
Term Sheet
APC AUTOMOTIVE TECHNOLOGIES, LLC
Restructuring Term Sheet
This Restructuring Term Sheet (this “Term Sheet”) sets forth the principal terms of a proposed restructuring of the existing
funded debt obligations of, and existing equity interests in, APC Automotive Technologies Intermediate Holdings, LLC
(“APC”) and certain of its subsidiaries (each subsidiary and APC, a “Company Party” and, collectively, the “Company
Parties”), through a prepackaged joint plan of reorganization on the terms set forth herein (the “Chapter 11 Plan”), which
would be filed by the Company Parties in connection with cases (the “Chapter 11 Cases”) commenced under title 11 of the
United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware or such
other venue selected by the Company Parties with the consent of the Requisite Consenting Term Loan Lenders (as defined
below) (the “Restructuring”). The Company Parties shall be referred to herein collectively as “Reorganized APC”
following the occurrence of the effective date of the Chapter 11 Plan (the “Plan Effective Date”).
THIS TERM SHEET DOES NOT CONSTITUTE (NOR SHALL IT BE CONSTRUED AS) AN OFFER WITH
RESPECT TO ANY COMMITMENT TO PROVIDE FINANCING.
THIS TERM SHEET DOES NOT ADDRESS ALL MATERIAL TERMS THAT WOULD BE REQUIRED IN
CONNECTION WITH ANY POTENTIAL RESTRUCTURING AND ANY AGREEMENT IS SUBJECT TO THE
EXECUTION OF DEFINITIVE DOCUMENTATION IN FORM AND SUBSTANCE CONSISTENT WITH THIS
TERM SHEET.
THIS TERM SHEET HAS BEEN PRODUCED FOR DISCUSSION AND SETTLEMENT PURPOSES ONLY AND
IS SUBJECT TO RULE 408 OF THE FEDERAL RULES OF EVIDENCE AND OTHER SIMILAR APPLICABLE
STATE AND FEDERAL STATUTES, RULES, AND LAWS. THIS TERM SHEET AND THE INFORMATION
CONTAINED HEREIN ARE STRICTLY CONFIDENTIAL AND SHALL NOT BE SHARED WITH ANY
OTHER PARTY WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY PARTIES AND THE
TERM LOAN LENDERS (AS DEFINED HEREIN) REPRESENTED BY KING & SPALDING LLP, AS LEGAL
ADVISOR, AND FTI CONSULTING, INC., AS FINANCIAL ADVISOR (COLLECTIVELY, THE “TERM LOAN
LENDER GROUP”).
Transaction Overview
Pursuant to the Restructuring, the Company Parties will restructure their funded debt obligations and equity interests
(x) through the issuance of New Common Equity (as defined below) and New Warrants (as defined below) in exchange
for extinguishing certain outstanding funded debt and (y) through the cancellation of all existing equity interests in
exchange for releases.
The Company Parties, the applicable affiliates of Harvest, the applicable affiliates of Audax, VAP, the applicable affiliates
of Crescent, and the applicable Term Loan Lenders (as defined below) will have entered into a restructuring support
agreement obligating such parties to pursue the Restructuring subject to the terms and conditions contained therein (the
“RSA”). Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the RSA or Plan,
as applicable.
Treatment of Claims and Interests
ABL Credit Agreement (“ABL”)
The ABL will roll into, or be refinanced by, the ABL DIP Facility (as defined below)
and upon the Plan Effective Date, the ABL Exit Facility (as defined below), the
structure and terms each of which shall be mutually acceptable to the ABL Lenders
(solely if rolled into the ABL DIP Facility and the ABL Exit Facility, as applicable),
the Company Parties and the Requisite Consenting Term Loan Lenders.
2
Term A ($206.2mm1)
(the “Term A Debt” and the
holders thereof, the “Term A
Lenders”)
Term B ($142.2mm)
(the “Term B Debt” and the
holders thereof, the “Term B
Lenders”)
(the Term A Lenders and the Term
B Lenders together, the “Term
Loan Lenders”; the Term A Debt
and the Term B Debt together, the
“Term Debt”)
Except as otherwise may be agreed, each holder of Term A Debt shall receive its
pro rata share of 100% of New Common Equity (subject to dilution on account of
any New Common Equity issued pursuant to the MIP (as defined below), the New
Warrants, and in connection with the commitments under the Term DIP Facility,
including the DIP Fee (as defined in the Plan)). In addition, each Term A Lender
that is a Consenting Term A Lender may elect to participate in its pro rata share of
the commitments under the Term DIP Facility (as defined below).
Each holder of Term B Debt that is a Consenting Term B Lender shall receive such
holder’s pro rata share of new warrants (the “New Warrants”) for 5% of the New
Common Equity struck at an exercise price equal to 105% of the sum of (i) the
aggregate obligations under the DIP Facilities, (ii) the aggregate obligations under
the ABL, and (iii) the outstanding Term A Debt immediately prior to the Plan
Effective Date provided, however, that each Holder of an Allowed Term B Claim
that is a Consenting Term Loan Lender or that otherwise votes in favor of the Plan
shall receive its Pro Rata Share of the New Warrants.
In the event the treatment of the Allowed Term A Claims and Allowed Term B
Claims described in the two immediately preceding paragraphs is not permitted by
the Bankruptcy Court, the Holders of Allowed Term Claims shall be treated as
follows under the Plan:
Except to the extent that a Holder of an Allowed Term Claim agrees to less
favorable treatment, in exchange for full and final satisfaction, settlement,
release, and discharge of each Term Claim, on the Effective Date, each
Holder of an Allowed Term Claim shall receive, in full and final satisfaction
of its Term A Claims, its Pro Rata Share of 100% of the New Common
Equity, subject to dilution by the New Warrants, the DIP Fee, and the
Management Incentive Plan. The Application of Proceeds provision set
forth in Section 7.04 of the Term Credit Agreement shall remain in full
force and effect and govern any distributions made pursuant to the Plan,
including the distribution of New Common Equity in accordance hereto.
For plan voting purposes, the foregoing Term Debt will be treated as a single voting
class.
General Unsecured Creditors General Unsecured Claims will be paid in full in the ordinary course of business;
provided, the the Debtors shall, on or before July 15, 2020, enter into that certain
settlement agreement with the Department of Justice in the amount of $8 million in
connection with civil investigation and related whistleblower litigation regarding
the alleged underpayment of certain import tariffs under the following: (i) Civil
Investigative Demand No. 20-051 (3/13/20); and (ii) Department of Homeland
Security, Summons (11/27/17).
Existing Preferred Interests Holders of APC’s preferred equity interests shall not be entitled to any distribution
on account thereof, and such interest shall be deemed automatically cancelled,
released, and extinguished without further action by the Company Parties, and the
obligations of the Company Parties thereunder shall be discharged.
1 Plus any amounts required to reflect PIK’d interest accrued prior to the Plan Effective Date.
3
Existing Common Interests Holders of APC’s common equity interests shall not be entitled to any distribution
on account thereof, and each such interest shall be deemed automatically cancelled,
released, and extinguished without further action by the Company Parties, and the
obligations of the Company Parties thereunder shall be discharged.
New Equity Interests
Terms of New Common Equity On the Plan Effective Date, Reorganized APC will issue new common equity as set
forth in this term sheet (the “New Common Equity”; together with the New
Warrants, the “New Equity Interests”).
If APC Holdings is reorganized as a limited liability company or other pass thru
entity, the stock will be issued as units with the economic treatment described above
accomplished through a customary distribution waterfall.
Terms of New Warrants On the Plan Effective Date, Reorganized APC will issue the New Warrants. The
terms of the New Warrants shall be mutually acceptable to the Company Parties and
the Requisite Consenting Term Loan Lenders.
Corporate Governance and Employee Matters
Board of Directors The board of directors of Reorganized APC (the “Reorganized Board”) shall consist
of 9 members, one of whom shall be the Chief Executive Officer of Reorganized
APC. Existing corporate governance documents shall be amended and restated or
terminated, as necessary, to, among other things, set forth the rights and obligations
of the parties (consistent with this Term Sheet) and to conform with applicable law
(including the provisions of the Bankruptcy Code). The terms of and all
documentation relating to such documents shall be in form and substance acceptable
to the Company Parties and the Requisite Consenting Term Loan Lenders.
Management Incentive Plan The Company Parties will, upon and after the Restructuring Effective Date
implement a new management incentive plan (the “MIP”), including any awards
and terms thereunder, reserving 10% of the New Common Equity on a fully diluted
basis, which will be in the form of profits interests, restricted equity and/or other
forms of incentive based equity.
Allocations of, and eligibility criteria for, the MIP shall be determined by a sub-
committee of the Reorganized Board following the Restructuring Effective Date.
Implementation
Consummation of Restructuring The Restructuring shall be consummated at a closing of the transactions
contemplated herein on the Plan Effective Date pursuant to the Chapter 11 Plan
(a “Prepackaged Proceeding”).
Structure and Tax Considerations Transaction to be structured in a tax-efficient manner mutually acceptable to
Company Parties and the Requisite Consenting Term Loan Lenders.
4
Miscellaneous Provisions
Forbearance and Amendment The Company Parties do not intend to make their upcoming interest and amortization
payments. In connection with entering into the RSA, the Company Parties and a
majority of the Term Loan Lenders will enter into a forbearance agreement pursuant
to which, among other things, the applicable Term Loan Lenders will agree not to
exercise any rights or remedies arising from the Company Parties’ failure to make
an interest payment in May 12, 2020 or to make an amortization payment in June
2020, in each case, in accordance with that certain Term Credit Agreement, dated as
of May 10, 2017 (as amended the “Term Credit Facility”).
Releases and Exculpation
In connection with the Prepackaged Proceeding, (a) the Debtors shall waive and
release all claims and causes of action against all stakeholders and the Debtors’
insiders, officers, directors, and shareholders (preferred and common), (b) all holders
of claims or interests who are unimpaired or who do not affirmatively opt out of the
releases provided in the Plan shall waive and release all claims and causes of action
against each other and the Debtors and all of their respective insiders, officers,
directors, and shareholders (preferred and common), and (c), all claims against the
Debtors’ insiders, officers, directors, and shareholders (preferred and common) shall
be waived, released and enjoined to the fullest extent permitted by law.
The Debtors shall assume and maintain the indemnification provisions in effect on
the Petition Date (including any indemnification obligation under the Equity
Purchase Agreement dated March 28, 2017 by and among AP Exhaust Holdings,
LLC, Harvest APC Holdings LLC and AG Grey Goose Holdings, LLC and the six-
year “tail policy” purchased prior to the Petition Date), to the fullest extent permitted
by applicable law.
In addition, after the Plan Effective Date, none of the reorganized Debtors shall
terminate or otherwise reduce the coverage under any D&O liability insurance
policies (including the six-year “tail policy”) in effect on the Petition Date, with
respect to conduct occurring prior thereto, and all directors and officers of the
Debtors who served in such capacity on or at any time prior to the Plan Effective
Date shall be entitled to the full benefits of any such policy for the full term of such
policy regardless of whether such directors and officers remain in such positions
after the Plan Effective Date.
Relationship Among Parties Except where otherwise specified, the agreements, representations, warranties, and
obligations of the Parties will be, in all respects, several and not joint. No Party shall,
as a result of its entering into and performing its obligations under this Agreement,
be deemed to be part of a “group” (as that term is used in section 13(d) of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder) with any of the other Parties.
5
DIP Facilities The Company Parties will obtain debtor-in-possession financing consisting of (i) a
“roll-up” of the ABL, on terms mutually acceptable to the Company Parties, the
ABL Lenders, and the Requisite Consenting Term Loan Lenders (the “ABL DIP
Facility”) and (ii) a new money term debtor-in-possession credit facility in aggregate
principal amount of $50 million (the “Term DIP Facility”; together with the ABL
DIP Facility, the “DIP Facilities”).
Unless a holder agrees to less favorable treatment, each holder of a claim under the
DIP Facilities shall receive:
1. solely with respect to the ABL DIP Lenders, its pro rata share of the ABL Exit
Facility; and
2. solely with respect to the Term DIP Lenders, its pro rata share of the Term Exit
Facility, unless the required Term DIP Lenders have consented to the Reorganized
Debtors entering into an alternate term exit facility (the “Alternate Term Exit
Facility”) in connection with the occurrence of the Plan Effective Date, in which
case, the DIP Term Loans shall be repaid in full in cash on the Plan Effective Date
from the proceeds of the Alternate Term Exit Facility.
Term Exit Facility On the Plan Effective Date, unless the Term DIP Lenders otherwise consent to an
Alternate Term Exit Facility, a new senior secured term loan facility (the “Term Exit
Facility”; the lenders thereunder, the “Term Exit Facility Lenders”) shall be entered
into, secured by a newly granted first lien on the property of the Company Parties
comprising the “Collateral” as defined in the Term Credit Facility; provided that the
lien on the Collateral constituting ABL Priority Collateral (as defined in the
Prepetition ABL/Term Intercreditor) shall be junior to the lien on such ABL Priority
Collateral securing the ABL Exit Facility (if applicable).
The Term Exit Facility shall consist of a term loan in an aggregate principal amount
equal to the aggregate outstanding amount of loans under the Term DIP Facility as
of the Plan Effective Date, up to $50 million (the “Term Exit Loans”) plus any
amounts paid-in-kind in accordance with the Term DIP Facility. Interest on the
Term Exit Loans shall accrue and be paid in cash at a rate of 10% per annum. The
Term Exit Loans shall mature on the 5th anniversary of the Effective Date.
Other terms of and all documentation relating to the Term Exit Facility, including,
without limitation, the credit agreement and security/collateral documents, shall be
in form and substance acceptable to the Company Parties and the Term Exit Facility
Lenders, reasonably acceptable to the Consenting Term Loan Lenders.
ABL Exit Facility On the Plan Effective Date, the Company Parties shall enter into a new revolving
loan facility (the “ABL Exit Facility”; together with the Term Exit Facility, the
“Exit Facilities”) which shall be in an aggregate principal amount and otherwise in
form and substance acceptable to the Company Parties and the Requisite Consenting
Term Loan Lenders.
6
Documentation This Term Sheet does not include a description of all of the terms, conditions, and
other provisions that will be contained in the definitive documentation governing
the Restructuring. The material documents implementing the Restructuring,
including the documentation with regards to the DIP Facilities, Chapter 11 Plan, the
disclosure statement related thereto, and orders entered in the Prepackaged
Proceeding, as applicable, the New Equity Interests, the Exit Facilities, and the
Alternate Term Exit Facility (as applicable), shall be materially consistent with this
Term Sheet (collectively, the “Definitive Documents”). The Definitive Documents
shall be acceptable (or reasonably acceptable to the extent otherwise specified
herein) to the Company Parties, the Sponsor Consenting Parties, and the Requisite
Consenting Term Loan Lenders in all respects.
Term Loan Lender Group and
Consenting Sponsors Professional
Fees and Expenses
Reasonable and documented fees and expenses of (a) the Term Loan Lender
Group’s professionals, including, but not limited to, K&S, as legal counsel, and FTI,
as financial advisor, and (b) White & Case in an amount not to exceed $550,000
shall be paid in full upon the signing of the RSA (as a condition precedent to its
effectiveness) and on the Plan Effective Date.
Conditions to Effectiveness of
RSA
The execution and delivery of the RSA by (i) Term Loan Lenders (each consenting
Term Loan Lender, a “Consenting Term Loan Lender” and together, the “Consenting
Term Loan Lenders”) holding 66 2/3% of the Term Debt and representing a majority
in number of the holders of the Term Debt shall be a condition to the effectives of
the RSA, unless waived by the Company Parties and the Term Loan Lender Group.
The Consenting Term Loan Lenders holding in excess of 50% of the Term Debt
held by Consenting Term Loan Lenders shall be referred to herein as the “Requisite
Consenting Term Loan Lenders.”
Conditions to Effectiveness of
Restructuring
The occurrence of the Plan Effective Date shall be subject to the satisfaction of the
conditions precedent as set forth in the RSA and the Definitive Documents. Such
conditions precedent shall be usual and customary for facilities and restructurings
of this type, including, without limitation, that with respect to any Prepackaged
Proceeding, the Bankruptcy Court shall have entered an order approving the DIP
Facilities on a final basis and confirming the plan of reorganization and each such
order shall not have been stayed or modified or subject to an appeal.
Exhibit B
Form of Transfer Agreement
Transfer Agreement to Restructuring Support Agreement
Reference is made to the Restructuring Support Agreement (as amended, supplemented, or
otherwise modified from time to time in accordance with the terms thereof, the “Agreement”)
dated as of May 31, 2020, by and among APC Automotive Technologies Intermediate Holdings,
LLC and each of its affiliates and subsidiaries that executes the Restructuring Support
Agreement (collectively, the “Company Parties”), certain beneficial holders (or investment
managers, advisors or subadvisors for any of the beneficial holders) of Term Claims (together
with their successors and permitted assigns under the Restructuring Support
Agreement, each, a “Consenting Term Loan Lender” and, collectively, the “Consenting
Term Loan Lenders”), and the other parties thereto.1
The undersigned (the “Transferee”) is [a Consenting Term Loan Lender / a Consenting
Sponsor] under the Restructuring Support Agreement and has acquired the further Term Claims
set forth below, which are in addition to any Term Claims set forth on its signature page to the
Restructuring Support Agreement or on any Joinder Agreement or Transfer Agreement executed
before the day hereof.
This agreement shall be governed by the governing law set forth in the Restructuring
Support Agreement.
Date: ________________, 2020
[TRANSFEREE]
By:
Name:
Title:
Additional Amount of Term A-1 Claims: $
Additional Amount of Term A-2 Claims: $
Additional Amount of Term A-3 Claims: $
Additional Amount of Term B Claims: $
Aggregate Principal Amount $
1 Defined terms used but not otherwise defined herein shall have the meanings ascribed to them in the Restructuring
Support Agreement.
Exhibit C
Form of Joinder Agreement
Joinder Agreement to Restructuring Support Agreement
The undersigned hereby acknowledges that it has reviewed and understands the
Restructuring Support Agreement (as amended, supplemented, or otherwise modified from time
to time in accordance with the terms thereof, the “Agreement”) dated as of May 31, 2020, by
and among APC Automotive Technologies Intermediate Holdings, LLC and each of its affiliates
and subsidiaries that executes the Restructuring Support Agreement (collectively, the
“Company Parties”), certain beneficial holders (or investment managers, advisors or subadvisors
for any of the beneficial holders) of Term Claims (together with their successors and permitted
assigns under the Restructuring Support Agreement, each, a “Consenting Term Loan Lender”
and, collectively, the “Consenting Term Loan Lenders”), and the other parties thereto, and
agrees to be bound as a Consenting Term Loan Lender by the terms and conditions thereof
binding on the Consenting Term Loan Lender with respect to all Term Claims held by the
undersigned.1
The undersigned hereby makes the representations and warranties of the Consenting
Term Loan Lenders set forth in Section 9(a) and Section 9(b) of the Restructuring Support
Agreement to each other Party, effective as of the date hereof.
This joinder agreement shall be governed by the governing law set forth in the
Restructuring Support Agreement.
Date: ________________, 2020
[TRANSFEREE]
By:
Name:
Title:
Principal Amount of Term A-1 Claims: $
Principal Amount of Term A-2 Claims: $
Principal Amount of Term A-3 Claims: $
Principal Amount of Term B Claims: $
Aggregate Principal Amount $
1 Defined terms used but not otherwise defined herein shall have the meanings ascribed to them in the Restructuring
Support Agreement.
Exhibit D
Release Provisions
Defined Terms1
“Avoidance Actions” means any and all avoidance, recovery, subordination, or other claims,
actions, or remedies that may be brought by or on behalf of the Debtors or their Estates or other
authorized parties in interest under the Bankruptcy Code or applicable non-bankruptcy law,
including actions or remedies under sections 502, 510, 542, 544, 545, 547 through 553, and 724(a)
of the Bankruptcy Code or under similar or related state or federal statutes and common law,
including fraudulent transfer laws.
“Causes of Action” means any claims, interests, damages, remedies, causes of action, demands,
rights, actions, suits, obligations, liabilities, accounts, defenses, offsets, powers, privileges,
licenses, liens, indemnities, guaranties, and franchises of any kind or character whatsoever,
whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, contingent or
non-contingent, liquidated or unliquidated, secured or unsecured, assertable, directly or
derivatively, matured or unmatured, suspected or unsuspected, in contract, tort, law, equity, or
otherwise. Causes of Action also include: (a) all rights of setoff, counterclaim, or recoupment and
claims under contracts or for breaches of duties imposed by law; (b) the right to object to or
otherwise contest Claims or Interests; (c) claims pursuant to sections 362, 510, 542, 543, 544
through 550, or 553 of the Bankruptcy Code; and (d) such claims and defenses as fraud, mistake,
duress, and usury, and any other defenses set forth in section 558 of the Bankruptcy Code.
“Exculpated Party” means each of the following, solely in its capacity as such: (i)(a) the Debtors;
(b) the Reorganized Debtors; (c) APC Holdings; (d) with respect to each of the foregoing parties
in clauses (i)(a) and (i)(c), each of such Entity’s current and former Affiliates; and (e) with respect
to each of the foregoing parties in clauses (i)(a) through (i)(d), each of such party’s current and
former directors, managers, officers, principals, members, managed accounts or funds, fund
advisors, employees, equity holders (regardless of whether such interests are held directly or
indirectly), predecessors, successors, assigns, subsidiaries, agents, advisory board members,
financial advisors, partners, attorneys, accountants, investment bankers, consultants,
representatives, and other professionals; and (ii)(a) the DIP Agents; (b) the DIP Lenders;
(c) the ABL Agent; (d) the ABL Lenders; (e) the Consenting Term Loan Lenders; (f) the Term
Agent; (g) the Consenting Sponsors; (h) with respect to each of the foregoing parties in clauses
(ii)(a) through (ii)(g), each of such Entity’s current and former Affiliates; and (i) with respect to
each of the foregoing parties in clauses (ii)(a) through (ii)(h), each of such party’s current and
former directors, managers, officers, principals, members, employees, equity holders (regardless
of whether such interests are held directly or indirectly), predecessors, successors, assigns,
subsidiaries, agents, advisory board members, financial advisors, investment advisors, partners,
attorneys, accountants, investment bankers, consultants, representatives, and other professionals;
provided that for purposes of this definition, in no event shall “Affiliate” include any entity that is
1 Capitalized terms used but not defined in this Exhibit D to the Restructuring Support Agreement shall have the
meanings ascribed to them in the Plan, which shall be in form and substance consistent with the Restructuring
Support Agreement and the Term Sheet. References herein to either DIP Agent, any of the DIP Lenders, and the
DIP Facilities shall be included in the Releases only if the Company Parties determine each such DIP Facility is
necessary to the Chapter 11 Cases and each such DIP Facility is approved by the Bankruptcy Court.
not directly or indirectly, controlled by, or under common control with, the party of which such
entity is an affiliate.
“Released Party” means each of the following, solely in its capacity as such: (i)(a) the Debtors;
(b) the Reorganized Debtors; (c) APC Holdings; (d) with respect to each of the foregoing parties
in clauses (i)(a) and (i)(c), each of such Entity’s current and former Affiliates and direct and
indirect equity holders; and (e) with respect to each of the foregoing parties in clauses (i)(a) through
(i)(d), each of such party’s current and former directors, managers, officers, principals, members,
managed accounts or funds, fund advisors, employees, equity holders (regardless of whether such
interests are held directly or indirectly), predecessors, successors, assigns, subsidiaries, agents,
advisory board members, financial advisors, partners, attorneys, accountants, investment bankers,
consultants, representatives, and other professionals; and (ii)(a) the DIP Agents; (b) the DIP
Lenders; (c) the ABL Agent; (d) the ABL Lenders; (e) the Consenting Term Loan Lenders; (f) the
Term Agent; (g) the Consenting Sponsors and their Affiliates; (h) with respect to each of the
foregoing parties in clauses (ii)(a) through (ii)(g), each of such Entity’s current and former
Affiliates; and (i) with respect to each of the foregoing parties in clauses (ii)(a) through (ii)(h),
each of such party’s current and former directors, managers, officers, principals, members,
employees, equity holders (regardless of whether such interests are held directly or indirectly),
predecessors, successors, assigns, subsidiaries, agents, advisory board members, financial
advisors, investment advisors, partners, attorneys, accountants, investment bankers, consultants,
representatives, and other professionals; provided that for purposes of this definition, in no event
shall “Affiliate” include any entity that is not directly or indirectly, controlled by, or under common
control with, the party of which such entity is an affiliate; provided, further, that any holder of a
Claim or Interest that opts out of, or objects to, the releases contained in the Plan shall not be a
“Released Party.”
“Releasing Party” means each of the following, solely in its capacity as such: (a) the DIP Agents;
(b) the DIP Lenders; (c) the ABL Agent; (d) the ABL Lenders; (e) the Consenting Term Loan
Lenders; (f) the Term Agent; (g) the Consenting Sponsors; (h) with respect to the foregoing clauses
(a) through (g), each such Entity and its current and former Affiliates; and (i) with respect to the
foregoing clauses (a) through (h), each such party’s current and former directors, managers,
officers, principals, members, employees, equity holders (regardless of whether such interests are
held directly or indirectly), predecessors, successors, assigns, subsidiaries, agents, advisory board
members, financial advisors, investment advisors, partners, attorneys, accountants, investment
bankers, consultants, representatives, and other professionals; (j) without limiting the foregoing,
(1) each holder of a Claim or Interest that voted to accept the Plan, (2) each holder of a Claim or
Interest that is Unimpaired under the Plan, where the applicable Claims or Interests have been fully
paid or otherwise satisfied in accordance with the Plan, (3) holders of Claims whose vote to accept
or reject this Plan was solicited but who did not vote either to accept or to reject this Plan, and
(4) holders of Claims who voted to reject the Plan and who did not opt out of granting the releases
provided by the Plan; provided that for purposes of this definition, in no event shall “Affiliate”
include any entity that is not directly or indirectly controlled by, or under common control with,
the party of which such entity is an affiliate; provided, further, that any holder of a Claim or Interest
that validly opts out of, or objects to, the releases contained in the Plan shall not be a “Releasing
Party.”
Releases by the Debtors
Notwithstanding anything contained in the Plan to the contrary, pursuant to section 1123(b) of the
Bankruptcy Code, for good and valuable consideration, on and after the Effective Date, each
Released Party is deemed released and discharged by the Debtors, the Reorganized Debtors, and
their Estates from any and all Claims and Causes of Action, whether known or unknown, including
any derivative claims, asserted on behalf of the Debtors, that the Debtors, the Reorganized Debtors,
or their Estates would have been legally entitled to assert in their own right (whether individually
or collectively) or on behalf of the holder of any Claim against, or Interest in, a Debtor or other
Entity, based on or relating to, or in any manner arising from, in whole or in part, the Debtors
(including the management, ownership, or operation thereof, or otherwise), any securities issued
by the Debtors and the ownership thereof, the Debtors’ in- or out-of-court restructuring efforts,
any Avoidance Actions, intercompany transactions, the Chapter 11 Cases, the formulation,
preparation, dissemination, negotiation, or filing of the Restructuring Support Agreement, the
Disclosure Statement, the DIP Facilities, the DIP Facilities Documents, the Exit Facilities, the Exit
Facilities Documents, the Alternate Term Exit Facility and the Alternate Term Exit Facility
Documents (as applicable), the Plan, the Plan Supplement, or any Restructuring transaction,
contract, instrument, release, or other agreement or document created or entered into in connection
with the Restructuring Support Agreement, the Disclosure Statement, the DIP Facilities, the Exit
Facilities, the Alternate Term Exit Facility (as applicable), the Plan, the Plan Supplement, the
Chapter 11 Cases, the filing of the Chapter 11 Cases, the pursuit of Confirmation, the pursuit of
the DIP Facilities, the pursuit of the Exit Facilities and the Alternate Term Exit Facility (as
applicable), the pursuit of Consummation, the administration and implementation of the Plan,
including the issuance or distribution of securities pursuant to the Plan, or the distribution of
property under the Plan or any other related agreement, or upon any other related act or omission,
transaction, agreement, event, or other occurrence taking place on or before the Effective Date.
Notwithstanding anything to the contrary in the foregoing, the releases set forth above do not
release (a) any post-Effective Date obligations of any party or Entity under the Plan, any
Restructuring transaction, or any document, instrument, or agreement (including those set forth in
the Plan Supplement) executed to implement the Plan or (b) any individual from any Claim or
Cause of Action related to an act or omission that is determined in a Final Order by a court of
competent jurisdiction to have constituted actual intentional fraud, willful misconduct, or gross
negligence of such Released Party.
Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval, pursuant to
Bankruptcy Rule 9019, of the Debtor Release, which includes by reference each of the related
provisions and definitions contained in the Plan, and further, shall constitute the Bankruptcy
Court’s finding that the Debtor Release is: (a) in exchange for the good and valuable consideration
provided by the Released Parties, including, without limitation, the Released Parties’ contributions
to facilitating the Restructuring and implementing the Plan; (b) a good faith settlement and
compromise of the Claims released by the Debtor Release; (c) in the best interests of the Debtors
and all holders of Claims and Interests; (d) fair, equitable, and reasonable; (e) given and made after
due notice and opportunity for hearing; and (f) a bar to any of the Debtors, the Reorganized
Debtors, or the Debtors’ Estates asserting any Claim or Cause of Action released pursuant to the
Debtor Release.
Third-Party Releases by Releasing Parties
Notwithstanding anything contained in the Plan to the contrary, as of the Effective Date, each
Releasing Party is deemed to have released and discharged each Debtor, Reorganized Debtor, and
Released Party from any and all Claims and Causes of Action, whether known or unknown,
including any derivative claims, asserted on behalf of the Debtors, that such Entity would have
been legally entitled to assert (whether individually or collectively), based on or relating to, or in
any manner arising from, in whole or in part, the Debtors (including the management, ownership
or operation thereof, or otherwise), any securities issued by the Debtors and the ownership thereof,
the Debtors’ in- or out-of-court restructuring efforts, any Avoidance Actions, intercompany
transactions, the Chapter 11 Cases, the formulation, preparation, dissemination, negotiation, or
filing of the Restructuring Support Agreement, the Disclosure Statement, the DIP Facilities, the
Plan, the Plan Supplement, or any Restructuring transaction, contract, instrument, release, or other
agreement or document created or entered into in connection with the Restructuring Support
Agreement, the Disclosure Statement, the DIP Facilities, the Plan, the Plan Supplement, the
Chapter 11 Cases, the filing of the Chapter 11 Cases, the pursuit of Confirmation, the pursuit of
Consummation, the administration and implementation of the Plan, including the issuance or
distribution of securities pursuant to the Plan, or the distribution of property under the Plan or any
other related agreement, or upon any other related act or omission, transaction, agreement, event,
or other occurrence taking place on or before the Effective Date. Notwithstanding anything to the
contrary in the foregoing, the releases set forth above do not release (a) any post-Effective Date
obligations of any party or Entity under the Plan, any Restructuring transaction, or any document,
instrument, or agreement (including those set forth in the Plan Supplement) executed to implement
the Plan or (b) any individual from any Claim or Cause of Action related to an act or omission that
is determined in a Final Order by a court competent jurisdiction to have constituted actual
intentional fraud, willful misconduct, or gross negligence of such Released Party.
Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval, pursuant to
Bankruptcy Rule 9019, of the Third-Party Release, which includes by reference each of the related
provisions and definitions contained herein, and, further, shall constitute the Bankruptcy Court’s
finding that the Third-Party Release is: (a) consensual; (b) essential to the confirmation of the
Plan; (c) given in exchange for the good and valuable consideration provided by the Released
Parties; (d) a good faith settlement and compromise of the Claims released by the Third-Party
Release; (e) in the best interests of the Debtors and their Estates; (f) fair, equitable, and reasonable;
(g) given and made after due notice and opportunity for hearing; and (h) a bar to any of the
Releasing Parties asserting any Claim or Cause of Action released pursuant to the Third-Party
Release.
Exculpation
Except as otherwise specifically provided in the Plan, no Exculpated Party shall have or incur
liability for and each Exculpated Party is released and exculpated from any Cause of Action for
any Claim related to any act or omission in connection with, relating to, or arising out of, the
Chapter 11 Cases, the formulation, preparation, dissemination, negotiation, or filing of the
Restructuring Support Agreement and related prepetition transactions, the DIP Facilities, the Exit
Facilities, the Alternate Term Exit Facility (as applicable), the Disclosure Statement, the Plan, the
Plan Supplement, or any Restructuring transaction, contract, instrument, release, or other
agreement or document created or entered into in connection with the Restructuring Support
Agreement, the DIP Facilities, the Disclosure Statement, the Plan, the Plan Supplement, the
Chapter 11 Cases, the filing of the Chapter 11 Cases, the pursuit of Confirmation, the pursuit of
the DIP Facilities, the pursuit of the Exit Facilities and the Alternate Term Exit Facility (as
applicable), the pursuit of Consummation, the administration and implementation of the Plan,
including the issuance or distribution of securities pursuant to the Plan, or the distribution of
property under the Plan or any other related agreement, or upon any other related act or omission,
transaction, agreement, event, or other occurrence taking place on or before the Effective Date,
except for Claims related to any act or omission that is determined in a Final Order by a court
competent jurisdiction to have constituted actual intentional fraud, willful misconduct, or gross
negligence of such person, but in all respects such Entities shall be entitled to reasonably rely upon
the advice of counsel with respect to their duties and responsibilities pursuant to the Plan.
The Exculpated Parties and other parties set forth above have, and upon confirmation of the Plan
shall be deemed to have, participated in good faith and in compliance with the applicable laws
with regard to the solicitation of votes and distribution of consideration pursuant to the Plan and,
therefore, are not, and on account of such distributions shall not be, liable at any time for the
violation of any applicable law, rule, or regulation governing the solicitation of acceptances or
rejections of the Plan or such distributions made pursuant to the Plan.
* * * * *
Exhibit E
Corporate Governance Term Sheet
Final Form
NEWCO, INC.
Equity Term Sheet
May 31, 2020
THIS TERM SHEET PRESENTS CERTAIN OF THE MATERIAL TERMS IN RESPECT OF
THE GOVERNANCE OF THE DELAWARE CORPORATION ESTABLISHED TO BE THE
ULTIMATE HOLDING COMPANY FOR APC AUTOMOTIVE TECHNOLOGIES
INTERMEDIATE HOLDINGS, LLC’S (F/K/A AP EXHAUST INTERMEDIATE HOLDINGS,
LLC) BUSINESS (“ULTIMATE PARENT”, TOGETHER WITH ITS DIRECT AND INDIRECT
SUBSIDIARIES FOLLOWING THE PLAN EFFECTIVE DATE (AS DEFINED BELOW),
COLLECTIVELY, THE “COMPANY”) IN CONNECTION WITH ITS EMERGENCE FROM
CHAPTER 11 BANKRUPTCY (THE “BANKRUPTCY”) PURSUANT TO THAT CERTAIN
PREPACKAGED PLAN OF REORGANIZATION (AS AMENDED, SUPPLEMENTED OR
OTHERWISE MODIFIED FROM TIME TO TIME , THE “CHAPTER 11 PLAN”), AS
DESCRIBED IN THAT CERTAIN RESTRUCTURING SUPPORT AGREEMENT DATED AS
OF MAY 31, 2020 (THE “RSA”) TO WHICH THIS TERM SHEET IS ATTACHED.
THE PROPOSED TERMS SET FORTH IN THIS TERM SHEET DO NOT ADDRESS ALL OF
THE MATERIAL TERMS IN CONNECTION WITH, BUT ARE INTENDED TO FACILITATE
THE PREPARATION OF, THE DEFINITIVE CONSTITUTIVE DOCUMENTATION OF
ULTIMATE PARENT, WHICH SHALL EACH BE IN FORM AND SUBSTANCE CONSISTENT
WITH THIS TERM SHEET. FURTHER, THE DEFINITIVE CONSTITUTIVE DOCUMENTS
OF ULTIMATE PARENT CONTEMPLATED BY THIS TERM SHEET ARE SUBJECT TO THE
COMPLETION OF DUE DILIGENCE AND WILL BE SUBJECT TO AGREED-UPON
CONDITIONS TO BE SET FORTH THEREIN. NO BINDING OBLIGATIONS WILL BE
CREATED BY THIS TERM SHEET UNLESS AND UNTIL SIGNATURE PAGES TO THE RSA
ARE EXECUTED AND DELIVERED BY ALL APPLICABLE PARTIES THERETO.
THIS TERM SHEET IS HIGHLY CONFIDENTIAL AND SHALL NOT BE DISCLOSED BY
ANY RECIPIENT HEREOF TO ANY THIRD PARTY.
CAPITALIZED TERMS USED BUT NOT OTHERWISE DEFINED HEREIN SHALL HAVE
THE MEANINGS ASCRIBED TO SUCH TERMS IN THE RSA AND THE ATTACHMENTS
THERETO (AS APPLICABLE). TO THE EXTENT THAT ANY PROVISION OF THIS TERM
SHEET IS INCONSISTENT WITH THE RSA, THE TERMS OF THIS TERM SHEET WITH
RESPECT TO SUCH PROVISION SHALL CONTROL.
The constitutive documents (e.g., Certificate of Incorporation, Bylaws and Stockholders Agreement) of
Ultimate Parent (the “Organizational Documents”) would include the provisions set forth below.
Board of Directors Following the date of the consummation of the transactions contemplated
by the Chapter 11 Plan (such date, the “Plan Effective Date”), the day-to-
day operations of the Company (including the authority to appoint the
officers of the Company after the Plan Effective Date) shall be overseen
by the board of directors of Ultimate Parent (the “Board”), which shall
initially be comprised of nine directors as follows:
(i) three directors appointed by Apollo Capital Management, L.P.
(together with its applicable Affiliates and/or managed funds,
2
“Apollo”), for so long as Apollo holds not less than 25% of the
issued and outstanding New Common Stock; if Apollo holds
between 15% and 25% of the issued and outstanding New
Common Stock, then Apollo will have the right to appoint two
directors; if Apollo holds between 5% and 15% of the issued
and outstanding New Common Stock, then Apollo will have the
right to appoint one director;
(ii) two directors appointed by Special Situations Investing Group,
Inc. (together with its applicable Affiliates and/or managed
funds, “SSIG”), for so long as SSIG holds not less than 15% of
the issued and outstanding New Common Stock; if SSIG holds
between 5% and 15% of the issued and outstanding New
Common Stock, then SSIG will have the right to appoint one
director;
(iii) one director appointed by First Eagle Alternative Credit, LLC
(together with its applicable Affiliates and/or managed funds,
“First Eagle”, and together with Apollo and SSIG, the
“Designating Stockholders”), for so long as First Eagle holds
not less than 5% of the issued and outstanding New Common
Stock;
(iv) one independent director, who shall initially serve as the
Chairperson of the Board, appointed by the Stockholders (as
defined below) holding at least 75% of the issued and
outstanding New Common Stock;
(v) one director appointed by the Stockholders holding at least 75%
of the issued and outstanding New Common Stock; and
(vi) the then serving Chief Executive Officer of Ultimate Parent (the
“CEO”).
Each director that is appointed by any of the Designating Stockholders
(each a “Designated Director”) may be removed from the Board, with or
without cause, only upon the written request to the Company by the
Designating Stockholder that appointed such Designated Director and, in
such cases, the applicable Designating Stockholder may fill the vacancy
on the Board created by such removal; provided, however, that if a
Designating Stockholder no longer holds the requisite amount of the
outstanding New Common Stock required for such Designating
Stockholder to appoint one or more Designated Directors (its “Requisite
Ownership”) (and such Designating Stockholder’s right to appoint a
Designated Director has not been assigned to another Designating
Stockholder in connection with a transfer of the New Common Stock),
such Designated Director appointed by such Designating Stockholder will
be automatically removed from the Board with no further action by the
Designating Stockholder.
Each Designating Stockholder’s right to appoint a Designated Director
3
will not be assignable in connection with a transfer of the New Common
Stock held by such Designating Stockholder, except in connection with an
assignment of all of a Designating Stockholder’s New Common Stock to
any other Designating Stockholder.
In the event that a Designating Stockholder no longer holds its Requisite
Ownership (and such Designating Stockholder’s right to appoint a
Designated Director has not been assigned to another Designating
Stockholder in connection with the transfer of the New Common Stock),
such Designating Stockholder’s right to appoint a Designated Director
shall automatically terminate, and thereafter the Stockholders holding a
majority of the issued and outstanding New Common Stock will
collectively appoint an independent director to fill any vacancy on the
Board created by the termination of such Designating Stockholder’s right
to appoint a Designated Director.
Each director shall be entitled to cast one vote on any matter before the
Board.
The Chairperson of the Board shall be the independent director appointed
by the Stockholders holding a majority of the issued and outstanding New
Common Stock. The Chairperson of the Board shall have the rights and
duties customary for non-executive chairperson positions.
Designated Directors that are not independent directors will not receive
compensation from the Company for service on the Board; provided, that
the Company may pay the reasonable out of pocket costs incurred by such
Designated Directors to attend Board or Sub-Board meetings and
committee meetings.
Action to be taken by the Board shall require approval by a majority vote
of the directors at a meeting at which a quorum is present. A quorum for
meetings of the Board will require the attendance (telephonically or in
person) of a majority of the directors. Any action required or permitted to
be taken at any meeting of the Board may be taken without a meeting if all
members of the Board consent thereto.
Board Information Rights Each holder of New Common Stock (each, together with its Affiliates
and/or managed funds, a “Stockholder”) that holds at least 7.5% of the
issued and outstanding New Common Stock shall be entitled to receive all
information and materials provided to the Board, the board of directors or
managers of any subsidiary of Ultimate Parent after the Plan Effective
Date (a “Sub-Board”), and any committee of the Board or any Sub-Board,
subject to exceptions for the preservation of attorney-client privilege and
conflicts of interest, for so long as such Stockholder retains at least 7.5%
of the outstanding New Common Stock.
Board Observer Rights Each of the following Stockholders shall be entitled to designate one
person (a “Board Observer”) to observe the actions and meetings of, and
receive all information and materials provided to, the Board, any Sub-
Board, or any committee of the Board or any Sub-Board, subject to
4
exceptions for the preservation of attorney-client privilege and conflicts of
interest:
(i) each Designating Stockholder that has designated an
independent director for all of the seats for which such
Designating Stockholder is permitted to designate directors, until
such time as (a) such Stockholder ceases to be a Designating
Stockholder, or (b) all of the seats for which such Designating
Stockholder is permitted to designate a director are no longer
filled by independent directors; and
(ii) each Stockholder that holds at least 7.5% of the issued and
outstanding New Common Stock, until such time as such
Stockholder no longer holds at least 7.5% of the issued and
outstanding New Common Stock.
Board Observers shall not have any voting rights.
Stockholder Voting Each Stockholder shall be entitled to one vote per share of New Common
Stock.
A quorum for all Stockholder meetings shall require the attendance
(telephonically, in person or by proxy) of Stockholders holding a majority
of the issued and outstanding New Common Stock. Action to be taken by
Stockholders at a meeting shall require approval by a majority or such
other percentage of the New Common Stock entitled to vote, as provided
herein. Any Stockholder or group of Stockholders holding at least 25% of
the issued and outstanding New Common Stock shall be entitled to call a
special meeting of the Stockholders.
Stockholders holding not less than the minimum number of votes that
would be necessary to take an action at a Stockholder meeting at which all
Stockholders were present may take such action by written consent
without a meeting.
Consent Rights /
Protections
The following actions shall require the affirmative vote of Stockholders
holding at least 66 2/3% of the issued and outstanding New Common
Stock:
(i) any winding up, liquidation or dissolution of the business and
operations of the Company;
(ii) engagement of the Company in any unrelated line of business;
(iii) a sale or other disposition of all or substantially all of the
assets of the Company in one or a series of related
transactions;
(iv) any transaction that results in a change in control of Ultimate
Parent or any entity that holds a majority of the assets of the
Company and its subsidiaries taken as a whole other than a
5
sale pursuant to Drag-Along Rights described below;
(v) any issuance of any equity securities (or securities exercisable
for, convertible into or exchangeable for equity securities),
other than Excluded Securities (as defined below);
(vi) (a) the incurrence of any indebtedness, loan or other
obligation, (b) the granting of any mortgage against, or any
security interest in, the assets of the Company, or (c) the
guaranty by the Company of any indebtedness, loan or other
obligation;
(vii) any dividends or distributions or redemptions of any equity
securities, other than pro rata;
(viii) consummation of an initial public offering or any action that
results in the Company becoming a public reporting company
under the Securities Exchange Act of 1934 and the related
rules and regulations thereunder;
(ix) any amendment, modification or waiver of any provision of
the Organizational Documents (subject to customary
exceptions) or any change to Ultimate Parent’s jurisdiction of
incorporation or corporate form;
(x) initiation of a bankruptcy proceeding (or consent to any
involuntary bankruptcy proceeding) involving Ultimate Parent;
and
(xi) any change in the size or classification of the Board.
Affiliate Transactions The Company will not be permitted to make any payment to, or sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or make or amend any
transaction or series of related transactions, contract, agreement, loan,
advance or guarantee with, or for the benefit of, any equityholder of the
Company or any of its Affiliates (any such transaction or series of related
transactions, an “Affiliate Transaction”) unless:
(i) such Affiliate Transaction is on terms that, taken as a whole,
are not materially less favorable to the Company than those
that could reasonably have been obtained in a comparable
arm’s-length transaction by the Company with an unaffiliated
party; and
(ii) (a) with respect to an Affiliate Transaction involving aggregate
consideration less than $5,000,000, such Affiliate Transaction
is approved, in good faith, by the disinterested directors of the
Board; or (b) with respect to an Affiliate Transaction involving
aggregate consideration reasonably expected to equal or
exceed $5,000,000, either (1) such Affiliate Transaction
6
receives the prior approval of a majority of the disinterested
Stockholders, or (2) the Company obtains a written opinion of
a nationally recognized investment banking, accounting or
appraisal firm stating that the Affiliate Transaction is fair to
the Company from a financial point of view.
In no event shall the foregoing or any party’s status as an equity holder in
the Company affect, limit or otherwise impair the rights of such equity
holder or any of its Affiliates in such party’s capacity as a lender to the
Company or its subsidiaries pursuant to any agreement under which the
Company or any of its subsidiaries has borrowed money.
Management Equity
Incentive Plan
A management equity incentive plan for continuing employees of the
Company and members of the Board (the “MEIP”) will be established,
providing for up to 10% of the New Common Stock issued and
outstanding on the Plan Effective Date (on a fully diluted basis). Such
MEIP will be on such terms and conditions (including pricing, vesting and
exercise terms), and the incentive interests to be granted thereunder will be
in such form or forms (including profits interests, restricted stock and/or
other forms of incentive-based equity), determined by the Board.
Tag-Along Rights If one or more Stockholders (collectively, the “Transferring Stockholders”
and each a “Transferring Stockholder”) propose to sell or otherwise
transfer in one or a series of related transactions shares of New Common
Stock representing more than 15% of the issued and outstanding New
Common Stock held by it or them to any purchaser (other than to any
Affiliate of a Transferring Stockholder), then the Transferring
Stockholder(s) shall give written notice to the Company and each of the
other Stockholders (“Tagging Stockholders” and together with the
Transferring Stockholders, “Tag Sale Participants”) shall have the right
(but not the obligation) to include in such sale or transfer its pro rata
portion of the New Common Stock to be sold or transferred to the
proposed purchaser on the same terms and conditions as the Transferring
Stockholder, including, without limitation, in exchange for a pro rata share
of all consideration received by the Transferring Stockholders in exchange
for such New Common Stock.
Tagging Stockholders shall not be required to:
(i) make any representations or warranties other than customary
several (and not joint) representations with respect to
organization, authorization, enforceability, capitalization,
ownership of the equity securities being sold or transferred by
it, and the non-contravention of its organizational documents or
material agreements (“Seller Representations”);
(ii) make any representations, warranties or agreements in any
documentation relating to such sale or transfer that are less
favorable than the representations, warranties or agreements
agreed to by the Transferring Stockholder; or
7
(iii) in the case of institutional Tag Sale Participants, agree to any
restrictive covenants that are not customarily required for
institutional Tag Sale Participants.
Indemnification and any reasonable costs and expenses will be borne by
all Tag Sale Participants on a pro rata basis (several and not joint) in
accordance with each Tag Sale Participant’s proportion of the total
consideration and limited to the such Tag Sale Participant’s pro rata
portion of escrow, except for indemnification in connection with the Seller
Representations which will be provided solely by the relevant Tag Sale
Participant.
Drag-Along Rights If one or more Stockholders (collectively, the “Selling Stockholders” and
each a “Selling Stockholder”) collectively holding at least 66 2/3% of all
of the issued and outstanding New Common Stock propose to sell or
otherwise transfer, to any purchaser that proposes to purchase all (but not
less than all) of the issued and outstanding New Common Stock (other
than New Common Stock held by the Company’s employees if, and only
if, such purchaser is not proposing to purchase such New Common Stock)
or all or substantially all of the assets of the Company, the Selling
Stockholders may require the other Stockholders (other than Stockholders
that are employees of the Company if, and only if, such purchaser is not
proposing to purchase New Common Stock held by employees of the
Company) (“Dragged Stockholders” and together with the Selling
Stockholders, the “Drag Sale Participants”) to include all of their New
Common Stock in, if applicable, and otherwise cooperate and raise no
objection to, such sale or transfer, on the same terms and conditions
applicable to the Selling Stockholders.
Dragged Stockholders shall not be required to:
(i) make any representations or warranties other than Seller
Representations with respect to itself (severally, not jointly);
(ii) make any representations, warranties or agreements in any
documentation relating to such sale or transfer that are less
favorable than the representations, warranties or agreements
agreed to by the Selling Stockholders or otherwise customarily
made in a compelled sale; or
(iii) agree to any non-compete, non-solicit or other restrictive
covenants (other than customary confidentiality restrictions).
Indemnification and any reasonable costs and expenses will be borne by
all Drag Sale Participants on a pro rata basis (several and not joint) in
accordance with each Drag Sale Participant’s proportion of the total
consideration and limited to the such Drag Sale Participant’s pro rata
portion of escrow, except for indemnification in connection with the Seller
Representations which will be provided solely by the relevant Drag Sale
Participant.
8
Pre-emptive Rights
Until an initial public offering (if any) by the Company occurs, if the
Company (including any subsidiary) proposes to sell any debt or equity
securities (or securities exercisable for, convertible into or exchangeable
for equity securities), except for Excluded Securities, each Stockholder (or
its Affiliate transferee) who is an accredited investor shall have a right of
first refusal to purchase its pro rata portion of such interests at the same
price and on the same economic terms as such interests are to be sold to
the proposed purchaser.
“Excluded Securities” shall mean securities issued (i) pursuant to or upon
the exercise of the Warrants or incentive interests granted under the MEIP,
(ii) in consideration for an acquisition transaction or other strategic
investment, (iii) pursuant to conversion or exchange rights included in
equity interests previously issued, and (iv) in connection with a pro rata
dividend, distribution or redemption or similar transaction.
Registration Rights Demand Registration. At any time after an initial public offering, the
Company shall register all Registrable Securities under the Securities Act
of 1933, as amended (the “Securities Act”) requested in writing to be
registered by any Stockholder holding at least 10% of the Registrable
Securities (a “Qualified Stockholder”). The Qualified Stockholders will
each be entitled to an aggregate of two (2) demand registrations. Exercise
of demand rights will otherwise be subject to usual and customary
limitations (e.g., blackout periods).
“Registrable Securities” means all New Common Stock held by
Stockholders, including any equity securities issued (a) in respect of New
Common Stock (by way of conversion, exchange, split, dividend,
distribution, redemption or otherwise) or (b) by a corporation or other
entity formed for the purpose of effecting a public offering; provided, that
such securities shall cease to be Registrable Securities after they have been
sold to the public pursuant to a registration statement.
Piggyback Registration. Each Stockholder shall have the right to include
its Registrable Securities each time the Company proposes for any reason
to register any of its equity securities under the Securities Act. The rights
to piggyback registration may be exercised an unlimited number of
occasions. The rights to piggyback registration will be subject to usual
and customary exceptions and limitations (including, without limitation, as
to employee plan S-8 filings and acquisition transactions and, as to
limitations, selection of underwriters). Any cutbacks or limitations on
inclusion of Registrable Securities shall apply pro rata to all Stockholders
(including to Qualified Stockholders requesting demand registrations).
S-3 Registration. Following an initial public offering, any Qualified
Stockholder may request that the Company file a registration statement
under the Securities Act on Form S-3 (or similar or successor form)
covering Registrable Securities held by such Qualified Stockholder if the
Company is a registrant qualified to use Form S-3 to register the
Registrable Securities. Demands to register the Registrable Securities on
Form S-3 will not be deemed to be demand requests (as described above)
9
and any Qualified Stockholder shall have the right to request an unlimited
number of registrations on Form S-3.
Information Rights The Company (for as long as it is not a public filer) will provide or cause
to be provided the following information to (a) each Stockholder who
receives shares of New Common Stock on the Plan Effective Date (for so
long as such Stockholder continues to hold such shares of New Common
Stock), and (b) each Stockholder holding at least 7.5% of the issued and
outstanding New Common Stock:
(i) As soon as available but in any event within 120 days after the
end of each fiscal year, audited consolidated financial
statements (including an income statement, balance sheet and
statement of cash flows), setting forth in each case in
comparative form the corresponding figures for the
corresponding periods of the previous fiscal year, all in
reasonable detail, together with a copy of the audit report of
the Company’s independent public accountants (the “Audited
Statements”);
(ii) as soon as available but in any event within 45 days after the
end of each fiscal quarter of the Company, unaudited
consolidated financial statements (including an income
statement, balance sheet and statement of cash flows), all in
reasonable detail (the “Quarterly Statements”);
(iii) concurrently with the Company’s delivery of the Quarterly
Statements, a then-current capitalization table of Ultimate
Parent (“Capitalization Table”); and
(iv) promptly following approval thereof, a copy of the annual
budget and Board adopted updates to such budget.
The Company (for as long as it is not a public filer) will provide or cause
to be provided the Audited Statements, the Quarterly Statements and the
current Capitalization Table to any Stockholder holding less than 7.5% of
the issued and outstanding New Common Stock upon written request by
such Stockholder therefor.
Amendments None of the Organizational Documents may be amended without written
consent or approval of the Board and Stockholders holding at least 66
2/3% of the issued and outstanding New Common Stock (subject to
customary exceptions).
Any amendment, modification or waiver of any provision of the
Organizational Documents that treats a Stockholder or group of
Stockholders in a disproportionate and adverse manner as compared to
other Stockholders shall require the approval of such disproportionately
treated Stockholder; provided, however, that amendments that adversely
affect any Stockholder’s rights with respect to Board Observer Rights,
Tag-Along Rights, Drag-Along Rights, Pre-emptive Rights, Information
10
Rights, Amendments or Transferability shall be effective only if consented
to by such Stockholder.
Transferability Subject to compliance with applicable securities laws, New Common
Stock shall not be subject to restrictions on transfer, other than certain
customary carveouts, including restrictions with respect to transfers to
Competitors of the Company. The Board, acting in good faith, will have
discretion to identify a list of Competitors of the Company. Such list of
Competitors will not be binding upon the Board, shall not be deemed to be
exhaustive and will remain subject to review, modification and/or
amendment by the Board in its sole discretion; provided, that, in
connection with any transfer, a Stockholder shall be entitled to rely on
such list of Competitors (as may be updated by the Board in its discretion
from time to time) to determine whether a transferee is a “Competitor.”
Exhibit F
DOJ Settlement Agreement
SETTLEMENT TERM SHEET
The following summary (the “Term Sheet”) sets forth certain principal terms of a settlement (the “DOJ
Settlement”) between the Debtors (as defined herein) and the United States (as defined herein) concerning
the DOJ Litigation (as defined herein).
Without limiting the generality of the foregoing, this Term Sheet and the undertakings contemplated herein
are subject in all respects to the negotiation, execution, and delivery of definitive documentation acceptable
to the Debtors, the Term Loan Lender Group, and the United States (collectively, the “Parties”). This Term
Sheet is proffered in the nature of a settlement proposal in furtherance of settlement discussions.
Accordingly, this Term Sheet and the information contained herein are entitled to protection from any use
or disclosure to any party or person pursuant to Rule 408 of the Federal Rules of Evidence and any other
applicable rule, statute, or doctrine of similar import protecting the use or disclosure of confidential
settlement discussions. This Term Sheet does not include a description of all of the terms, conditions and
other provisions that are to be contained in the definitive documentation necessary for the settlement
contemplated by this Term Sheet. This Term Sheet reflects terms subject to ongoing negotiation with the
United States, is therefore subject to ongoing review and approval by, and is not binding upon, the Parties
(as defined herein), is subject to material change, and is being distributed for discussion purposes only.
Term Description
Defined Terms
Debtors APC Automotive Technologies Intermediate Holdings, LLC and
each of its affiliates and direct and indirect subsidiaries listed on
Annex 1
United States United States of America, as represented by the U.S. Department of
Justice
Term Loan Lender Group The ad hoc group of Consenting Term Loan Lenders (as defined in
the Plan) represented by King & Spalding LLP and FTI Consulting
Inc.
DOJ Litigation U.S. Customs and Border Protection civil investigation and related
FCA Investigation and Claims whistleblower litigation regarding
the Debtors’ alleged underpayment of certain import tariffs from
and through the effective date of the chapter 11 plan (the “Effective
Date”), including as relating to the following: (i) Civil
Investigative Demand No. 20-051 (3/13/20); and (ii) Department of
Homeland Security, Summons (11/27/17)
FCA Investigation and Claims DOJ investigation and related whistleblower litigation under the
False Claims Act (collectively, “FCA Investigation And Claims”)
pertaining to the Company’s tariff classification for imported brake
pads for the time period from 2007 to the present.
The DOJ Settlement
Documentation The DOJ Settlement will be effectuated through a settlement
agreement (the “Settlement Agreement”), which shall be materially
consistent with this Term Sheet and otherwise acceptable to the
Parties, and shall be finalized (including approval of the Settlement
Agreement by the Court having jurisdiction over the FCA
Investigation and Claims), no later than July 15, 2020.
The Debtors shall seek approval of the DOJ Settlement pursuant to
the Plan and the Settlement Agreement shall be subject to entry by
the Bankruptcy Court of an order approving the same (the
“Confirmation Order”).
Settlement Consideration The Settlement Agreement shall provide the United States with an
$8 million non-dischargeable recovery for any and all liabilities
arising as a result of the DOJ Litigation, to be paid in the following
manner:
i. Cash in the amount of $4 million on the Effective Date;
ii. Cash in the amount of no greater than $300,000 for
attorneys’ fees in connection with the FCA Investigation
and Claims directly to relator’s counsel;
iii. Cash in the amount of $2 million plus accrued interest at
the 5-year Treasury note rate to be paid on or before
January 31, 2021;
iv. Cash in the amount of $2 million plus accrued interest at
the 5-year Treasury note rate to be paid on or before
December 31, 2021.
The Settlement Consideration shall be in full and final satisfaction,
settlement, and release from Claims or liabilities arising from, or
related to, the DOJ Litigation, as explained more specifically below
under “Releases.” The DOJ shall move to dismiss the DOJ
Litigation without prejudice on or before the Effective Date;
provided that the DOJ shall move to dismiss the DOJ Litigation
with prejudice promptly after the Effective Date.
To the extent the reorganized Debtors effectuate a sale of all, or
substantially all, of their assets or equity before December 31,
2021, and Settlement Consideration is outstanding, DOJ shall be
paid the outstanding balance of the Settlement Consideration on the
closing date of such sale.
In the Settlement Agreement, should the reorganized Debtors not
pay the Settlement Consideration in full on or before December 31,
2021, the reorganized Debtors acknowledge that the DOJ has a
claim for $16.5 million plus civil penalties (representing $5.5
million single damages times three); provided, that the $16.5
million shall not be a secured claim; provided, further that such
amount shall be reduced on a dollar for dollar basis by any amounts
paid pursuant to the Settlement Agreement.
Security / Collateral For any outstanding amounts owed to the DOJ on or after the
Effective Date, the DOJ shall have a lien on the reorganized Debtors’
collateral, and such lien shall be junior to the ABL Exit Facility and
Term Exit Facility, as to payment, priority, and enforcement rights.
Reorganized Debtors represent that there will be, on the Effective
Date, more than $4 million in equity value, after all liens senior to
the DOJ claims.
No personal guarantees shall be provided.
Releases The DOJ Settlement and Settlement Agreement shall provide for,
upon full payment of the Settlement Consideration, release,
exculpation, and injunction provisions acceptable to the Debtors and
the Term Loan Lender Group from civil or administrative liability
relating to the DOJ Litigation or any related issue; provided that, for
the avoidance of doubt, it is agreed that such provisions of the DOJ
Settlement shall release and discharge any and all claims or liabilities
arising from, or related to, the DOJ Litigation with respect to the
Debtors, controlled or controlling affiliates, shareholders, and non-
debtor affiliates, and current officers, directors, and employees
arising before the Petition Date; provided that the following shall not
be released:
i. former individual officers or employees;
ii. criminal liability associated with the DOJ Litigation or any
related issue;
iii. personal claims asserted by the whistleblower in which
DOJ has no interest; and
iv. other narrowly defined exceptions.
Conditions Precedent It shall be a condition to the effective date of the Plan that the
Confirmation Order shall have been entered and shall have become
a final order.
Fiduciary Duties Notwithstanding anything to the contrary herein, nothing in this
Term Sheet shall require any of the Debtors, or any of their directors
or officers, including with respect to each subsidiary, to take or
refrain from taking any action such person or entity reasonably
believes is required to comply with its or their fiduciary duties under
applicable law.
Annex I
Affiliates and Subsidiaries
APC Automotive Technologies, LLC
CWD Acquisition, LLC
CWD Holding Corp.
CWD Intermediate Holding Corp.
CWD, LLC
Qualis Enterprises, Inc.
Qualis Automotive, L.L.C.
AP Emissions Technologies, LLC
AP Exhaust Products DISC, Inc.
Eastern Manufacturing, LLC
AirTek, LLC
Aristo, LLC
Exhibit G
Warrants Term Sheet
Final Form
NEWCO, INC.
Warrants Term Sheet
May 31, 2020
THIS TERM SHEET PRESENTS CERTAIN OF THE MATERIAL TERMS OF THE
WARRANTS (THE “WARRANTS”) TO BE ISSUED BY THE DELAWARE CORPORATION
ESTABLISHED TO BE THE ULTIMATE HOLDING COMPANY FOR APC AUTOMOTIVE
TECHNOLOGIES INTERMEDIATE HOLDINGS, LLC’S (F/K/A AP EXHAUST
INTERMEDIATE HOLDINGS, LLC) BUSINESS (“ULTIMATE PARENT”; TOGETHER WITH
ITS DIRECT AND INDIRECT SUBSIDIARIES FOLLOWING THE PLAN EFFECTIVE DATE
(AS DEFINED BELOW), COLLECTIVELY, THE “COMPANY”) IN CONNECTION WITH ITS
EMERGENCE FROM CHAPTER 11 BANKRUPTCY (THE “BANKRUPTCY”) PURSUANT TO
THAT CERTAIN PREPACKAGED PLAN OF REORGANIZATION (AS AMENDED,
SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME , THE “CHAPTER 11
PLAN”), AS DESCRIBED IN THAT CERTAIN RESTRUCTURING SUPPORT AGREEMENT
DATED AS OF MAY 31, 2020 (THE “RSA”) TO WHICH THIS TERM SHEET IS ATTACHED.
THE PROPOSED TERMS SET FORTH IN THIS TERM SHEET DO NOT ADDRESS ALL OF
THE MATERIAL TERMS IN CONNECTION WITH, BUT ARE INTENDED TO FACILITATE
THE PREPARATION OF, THE DEFINITIVE WARRANT AGREEMENT (THE “WARRANT
AGREEMENT”), WHICH SHALL BE IN FORM AND SUBSTANCE CONSISTENT WITH THIS
TERM SHEET. FURTHER, THE WARRANT AGREEMENT CONTEMPLATED BY THIS
TERM SHEET IS SUBJECT TO THE COMPLETION OF DUE DILIGENCE AND WILL BE
SUBJECT TO AGREED-UPON CONDITIONS TO BE SET FORTH THEREIN. NO BINDING
OBLIGATIONS WILL BE CREATED BY THIS TERM SHEET UNLESS AND UNTIL
SIGNATURE PAGES TO THE RSA ARE EXECUTED AND DELIVERED BY ALL
APPLICABLE PARTIES THERETO.
THIS TERM SHEET IS HIGHLY CONFIDENTIAL AND SHALL NOT BE DISCLOSED BY
ANY RECIPIENT HEREOF TO ANY THIRD PARTY.
CAPITALIZED TERMS USED BUT NOT OTHERWISE DEFINED HEREIN SHALL HAVE
THE MEANINGS ASCRIBED TO SUCH TERMS IN THE RSA AND THE ATTACHMENTS
THERETO (AS APPLICABLE). TO THE EXTENT THAT ANY PROVISION OF THIS TERM
SHEET IS INCONSISTENT WITH THE RSA, THE TERMS OF THIS TERM SHEET WITH
RESPECT TO SUCH PROVISION SHALL CONTROL.
The definitive Warrant Agreement would include the provisions set forth below:
Issuance of Warrants On the Plan Effective Date, Warrants issued by Ultimate Parent will be
transferred to the holders of Term B Debt in accordance with the terms of
the Chapter 11 Plan that will entitle such holders (each, a “Warrant
Holder” and collectively, the “Warrant Holders”) to purchase at the
Exercise Price (as defined below) an aggregate amount of shares of New
Common Stock equal to 5% of the issued and outstanding shares of New
Common Stock as of the Plan Effective Date (the “Aggregate Share
Amount”), subject to dilution by the MIP and the equity commitment fee
for the Term DIP Facility.
2
The Warrants will have an exercise price per share of New Common
Stock (the “Exercise Price”) equal to (A) 105% of the sum of (i) the
aggregate obligations under the Term Exit Facility, (ii) the aggregate
obligations under the ABL Exit Facility, and (iii) the outstanding Term A
Debt immediately prior to the Plan Effective Date (the amount in this
sub-clause A, the “Aggregate Strike Price”), divided by (B) the Aggregate
Share Amount.
Exercise Period The Warrants will be exercisable at any time after the Plan Effective Date
until the fifth anniversary of the Plan Effective Date (the “Term”).
Exercise The Warrants will only be exercisable during the Term as follows:
(a) upon a change of control event consummated through a sale or a
merger at or exceeding the Aggregate Strike Price on a net
(cashless exercise) basis; or
(b) for cash only at the option of the Warrant Holder at the Exercise
Price, but only if such cash election is made before a change of
control event consummated through a sale or a merger.
Warrant Holders will not be entitled to any fractional shares of New
Common Stock upon the exercise of the Warrants.
Adjustments / Protections No adjustments will be made to the Exercise Price, except in the event
Ultimate Parent declares a dividend, makes a distribution, or splits,
subdivides, combines or reclassifies the outstanding New Common
Stock. Any such adjustment will be made in accordance with customary
terms to be set forth in the Warrant Agreement.
The Warrant Agreement will provide that the Warrants shall not have any
Black-Scholes or similar “cash out” protections in the event of a change
of control transaction for less than the Aggregate Strike Price.
Corporate Governance Warrant Holders will not be entitled to any corporate governance rights
on account of their Warrants.
Transfer Rights Subject to compliance with applicable securities laws, Warrants shall not
be subject to restrictions on transfer, other than certain customary
carveouts, including restrictions with respect to transfers to Competitors
of the Company. The Board, acting in good faith, will have discretion to
identify a list of Competitors of the Company. Such list of Competitors
will not be binding upon the Board, shall not be deemed to be exhaustive
and will remain subject to review, modification and/or amendment by the
Board in its sole discretion; provided, that, in connection with any
transfer, a Warrant Holder shall be entitled to rely on such list of
Competitors (as may be updated by the Board in its discretion from time
to time) to determine whether a transferee is a “Competitor.”
Exhibit H
Term DIP Commitment Letter
CONFIDENTIAL
May 31, 2020
APC Automotive Technologies Intermediate Holdings, LLC
10822 West Toller Drive, Suite 370
Littleton, CO 80127
Attn: Marc Weinsweig
Email: [email protected]
APC Automotive Technologies, LLC
$50,000,000 Term DIP Facility
DIP Commitment Letter
Mr. Weinsweig:
Each of the undersigned (collectively, the “DIP Commitment Parties” and each individually, a
“DIP Commitment Party”) hereby, severally but not jointly, commits to provide (directly and/or
through one or more of its affiliates, accounts managed or sub-managed by it or its affiliates and
direct or indirect subsidiaries, each such affiliate, account subsidiary or any other lender under the
Term DIP Facility, as hereinafter defined, a “Term DIP Lenders”) its pro rata share set forth on
Schedule I hereto (the “Term DIP Commitments”) of a $43,500,000 superpriority senior secured
debtor-in-possession term loan credit facility (as such amount may be increased (not to exceed an
aggregate commitment amount of $50,000,000) as set forth in the DIP Term Sheet referenced
below, the “Term DIP Facility”) to APC Automotive Technologies, LLC, CWD Acquisition,
LLC and CWD Holding Corp. (collectively, the “Borrowers”), and Wilmington Trust, National
Association hereby agrees to act as administrative agent for the Term DIP Facility (in such
capacity, together with its successors and assigns, the “Term DIP Agent”), in connection with the
Borrowers’ and certain of their subsidiaries’ filing of petitions for relief (collectively, the
“Bankruptcy Cases”) under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101, et
seq (the “Bankruptcy Code”).
The DIP Commitment Parties’ commitments to fund the Term DIP Facility (and their Term DIP
Commitments) are subject to the satisfaction or waiver by the DIP Commitment Parties of the
following conditions precedent (and solely such conditions precedent) (i) the execution of Term
DIP Facility definitive documentation on the terms and conditions set forth in the Summary of
Proposed Terms and Conditions attached as Exhibit A (the “DIP Term Sheet” and, together with
this letter, the “DIP Commitment Letter”), and to the extent not otherwise set forth therein or
herein, otherwise in accordance with the Documentation Principles (collectively, the “Term DIP
Loan Documents ”) and (ii) the satisfaction of (or express written waiver of each of the DIP
Commitment Parties of) all conditions precedent set forth in the Term DIP Loan Documents.
Capitalized terms used herein without definition have the meanings assigned to such terms in the
DIP Term Sheet.
Evaluation Material.
You hereby represent, warrant and covenant that (a) all written information (other than the
projections, budgets, financial estimates, forecasts and other forward-looking information with
respect to you and your affiliates (collectively, the “Projections”) and general economic or
specific industry information) (the “Information”) that has been or will be made available to the
Execution Version
DIP Commitment Parties and/or the Term DIP Lenders by you or any of your affiliates or
representatives, when taken as a whole, is or will be, when furnished, correct in all material
respects and does not or will not, when furnished, contain any untrue statement of fact or omit to
state a fact necessary in order to make the statements contained therein not materially misleading
in light of the circumstances under which such statements are made (after giving effect to all
supplements from time to time) and (b) the Projections that have been or will be made available
to the DIP Commitment Parties and/or Term DIP Lenders by you or any of your affiliates or
representatives have been or will be prepared in good faith based upon assumptions believed to
be reasonable at the time made (it being understood and agreed that financial projections are not a
guarantee of financial performance and actual results may differ from financial projections and
such differences may be material). You agree that if at any time prior to the closing of the Term
DIP Facility you become aware that any of the representations in the preceding sentence would
be, to your knowledge, incorrect in any material respect if the Information and Projections were
being furnished, and such representations were being made, at such time, then you will use
commercially reasonable efforts to supplement the Information and the Projections from time to
time until the closing of the Term DIP Facility so that the representations, warranties and
covenants in the foregoing sentences will be correct in all material respects under those
circumstances, it being understood that any such supplement shall cure any breach of such
representation. You understand that in making its commitment hereunder, each DIP Commitment
Party may use and rely on the Information and Projections without independent verification
thereof.
You hereby authorize and agree, on behalf of yourself and your affiliates, that the Information,
the Projections and all other information (including third party reports) provided by or on behalf
of you and your affiliates and representatives to the DIP Commitment Parties regarding you and
your affiliates, in connection with the Term DIP Facility and the transactions contemplated
hereby, may be disseminated by or on behalf of the DIP Commitment Parties, and made
available, to prospective Term DIP Lenders and their advisors, who have each agreed to be bound
by customary confidentiality undertakings (including “click-through” agreements) (whether
transmitted electronically by means of a website, e-mail or otherwise, or made available orally or
in writing, including at prospective Term DIP Lenders or other meetings). You hereby further
authorize the DIP Commitment Parties to download copies of your logos and agree to use
commercially reasonable efforts to obtain authorization to permit the DIP Commitment Parties to
download copies of your logos, from your websites and post copies thereof on an IntraLinks® or
similar workspace and use such logos on any materials prepared in connection with the Term DIP
Facility.
Expenses.
Regardless of whether the Term DIP Facility closes, you hereby agree to pay or reimburse (in
each case, whether incurred before or after the date hereof) the DIP Commitment Parties and the
Term DIP Agent, as applicable, for all (i) reasonable and documented (in summary form) out-of-
pocket fees, costs, disbursements and expenses of (a) the Term DIP Agent (including (and
limited, in the case of counsel, to) all reasonable and documented out-of-pocket fees, costs,
disbursements and expenses of the Term DIP Agent’s outside counsel, Arnold & Porter Kaye
Scholer LLP and, to the extent necessary, one firm of local counsel engaged by the Term DIP
Agent in connection with the preparation of the Term DIP Loan Documents and the Chapter 11
Cases, and any successor counsel to each) and (b) the DIP Commitment Parties (including (and
limited, in the case of counsel, financial advisors and other outside professionals, to) all
reasonable and documented out-of-pocket fees, costs, disbursements and expenses of the DIP
Commitment Parties’ outside counsel, King & Spalding LLP, and, to the extent necessary, one
firm of local counsel engaged by the DIP Commitment Parties in connection with the preparation
of the Term DIP Loan Documents and the Chapter 11 Cases, and FTI Consulting), in the case of
each of the foregoing clauses (a) and (b), in connection with the negotiations, preparation,
execution and delivery of the Term DIP Loan Documents and the funding of all Term DIP Loans
under the Term DIP Facility, including, without limitation, all due diligence, transportation,
computer, duplication, messenger, audit, insurance, appraisal, valuation and consultant costs and
expenses, and all search, filing and recording fees, incurred or sustained by the Term DIP Agent
and the DIP Commitment Parties, and their counsel and professional advisors in connection with
the Term DIP Facility, the Term DIP Loan Documents or the transactions contemplated thereby,
the administration of the Term DIP Facility and any amendment or waiver of any provision of the
Term DIP Loan Documents, and (ii) without duplication, reasonable and documented (in
summary form) out-of-pocket fees, costs, disbursements and expenses of the Term DIP Agent
and the DIP Commitment Parties (including (and limited, in the case of counsel, to) (x) all
reasonable and documented out-of-pocket fees, costs, disbursements and expenses of one firm of
outside counsel for the Term DIP Agent and, to the extent necessary, one firm of local counsel
engaged by the Term DIP Agent in each relevant jurisdiction, and any successor counsel to such
primary counsel and local counsel) and (y) all reasonable and documented out-of-pocket fees,
costs, disbursements and expenses of one firm of outside counsel for the DIP Commitment
Parties and, to the extent necessary, one firm of local counsel engaged by the DIP Commitment
Parties in connection therewith) in connection with the enforcement of any rights and remedies
under or arising out of this Commitment Letter and/or the Term DIP Facility.
Confidentiality.
You agree that you will not disclose, directly or indirectly, this DIP Commitment Letter and the
contents hereof or the DIP Lender Fee Letter dated as of the date hereof (the “DIP Fee Letter”)
among the DIP Commitment Parties and the Borrowers and the contents thereof or the DIP
Commitment Parties’ involvement with the Term DIP Facility to any third party (including,
without limitation, any financial institution or intermediary) without each DIP Commitment
Party’s prior written consent, other than to (a) those individuals who are your directors, officers,
employees, attorneys, agents or advisors in connection with the Term DIP Facility who agree to
observe the confidentiality requirements set forth herein; provided that this DIP Commitment
Letter may be disclosed to the providers of the ABL DIP described in the DIP Term Sheet and
their officers, employees, attorneys, agents and advisors, in each case on a confidential basis (it
being understood any such disclosure pursuant to this clause shall be limited to a general
description of the fees to be paid and does not authorize the distribution of the DIP Fee Letter to
such persons), (b) the Bankruptcy Court for approval of this DIP Commitment Letter and the
Term DIP Facility and to the extent required in motion, (c) any official committee appointed in
the Bankruptcy Cases (in respect of the DIP Fee Letter, on a professional eyes only basis) and
their respective legal and financial advisers, (d) as may be compelled in a judicial or
administrative proceeding or as otherwise required by law (in which case you agree to inform the
DIP Commitment Parties promptly thereof), (e) to the extent necessary in connection with the
exercise of any remedies or enforcement of any rights hereunder, (f) the existence and contents of
the DIP Commitment Letter to the extent any such information becomes publically available
other than by reason of disclosure by you, your affiliates or your representatives in violation of
this DIP Commitment Letter and (h) other recipients as required by the Bankruptcy Court, or as
part of the Borrowers and each of their subsidiaries’ disclosure statement soliciting votes in
support of a plan of reorganization, whether before or after the commencement of the Bankruptcy
Cases (it being understood any such disclosure pursuant to this clause (f) shall be limited to a
general description of the fees to be paid in the Borrowers’ solicitation materials and does not
authorize the distribution, filing with the Bankruptcy Court, or other action that results in the DIP
Fee Letter being made available to such other recipients). Except in connection with the
disclosure statement soliciting votes in support of a plan of reorganization, you agree to inform all
such persons who receive information concerning this DIP Commitment Letter or the DIP Fee
Letter that such information is confidential and may not be used for any other purpose. The DIP
Commitment Parties reserve the right to review and approve, in advance, all materials, press
releases, advertisements and disclosures that contain their name or any name of any affiliate or
the name of any account managed or sub-managed by, or any related fund of, the DIP
Commitment Parties or describe their respective financing commitments (such approval not to be
unreasonably withheld, delayed or conditioned).
The Borrowers hereby agree that if the DIP Fee Letter is required to be filed with any bankruptcy
court or disclosed to any U.S. Trustee for purposes of obtaining approval to pay any fees provided
for therein or otherwise, then it shall promptly notify the DIP Commitment Parties and, if
requested by the DIP Commitment Parties, take all commercially reasonable actions necessary to
file the DIP Fee Letter in redacted form to the maximum extent permitted by such bankruptcy
court and such law. Notwithstanding the “Survival” section herein, the obligations of the
foregoing sentence shall survive any termination or completion of the arrangement provided by
this DIP Commitment Letter.
Each DIP Commitment Party and the Term DIP Agent agrees it shall use all nonpublic
information received by it in connection with the Term DIP Facility solely for the purposes of
providing the commitments subject of this DIP Commitment Letter and shall treat confidentially
all such information; provided, however, that nothing herein shall prevent any DIP Commitment
Party or the Term DIP Agent from disclosing any such information (a) to any other party hereto
or to any lender under the Term DIP Facility or participants or prospective lenders under the
Term DIP Facility, (b) as may be compelled in a judicial or administrative proceeding or as
otherwise required by law or regulations (in which case we agree to inform you promptly
thereof), (c) upon the request or demand of any regulatory authority, (d) to the legal counsel,
independent auditors, professionals and other experts or agents of such party (collectively,
“Representatives”) who are informed of the confidential nature of such information and are or
have been advised of their obligation to keep information of this type confidential, (e) to any of
its respective affiliates, directors, trustees, officers, employees and agents (provided that any such
affiliate is advised of its obligation to retain such information as confidential, and each DIP
Commitment Party and Term DIP Agent shall be responsible for its affiliates’ compliance with
this paragraph) solely in connection with the Term DIP Facility, (f) to the extent such information
is independently developed by the DIP Commitment Parties, (g) to the extent any such
information becomes publicly available other than by reason of disclosure by any DIP
Commitment Party, the Term DIP Agent, any of their affiliates or Representatives in breach of
this DIP Commitment Letter, (h) to the extent that such information is received by such DIP
Commitment Party or the Term DIP Agent from a third party that is not, to such DIP
Commitment Party’s or the Term DIP Agent’s knowledge, subject to confidentiality obligations
to you, (i) in connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to any Term DIP Loan Document or the enforcement of rights thereunder,
and (j) to the extent consented by you.
Indemnity.
Regardless of whether the Term DIP Facility is closed, you agree to (a) indemnify, defend and
hold each of the DIP Commitment Parties, the Term DIP Agent, each Term DIP Lender, and their
respective affiliates and funds managed or advised by the DIP Commitment Parties and Term DIP
Lenders or their affiliates, and the principals, directors, officers, employees, representatives,
agents, attorneys and third party advisors of each of them (each, an “Indemnified Person”),
harmless from and against all losses, disputes, claims, investigations, litigation, proceedings,
expenses (including, but not limited to, attorneys’ fees), damages, and liabilities of any kind to
which any Indemnified Person may become subject arising out of or in connection with any
claim, litigation, investigation or proceeding (any of the foregoing, a “Proceeding”) relating to or
in connection with this DIP Commitment Letter, the DIP Fee Letter, the Term DIP Facility, the
use or the proposed use of the proceeds thereof, or any other transaction contemplated by this DIP
Commitment Letter (each, a “Claim”, and collectively, the “Claims”), regardless of whether such
Indemnified Person is a party thereto (and regardless of whether such matter is initiated by a third
party, you, or any of your or its respective affiliates), and (b) reimburse each Indemnified Person
within five (5) business days upon demand (together with reasonably detailed backup
documentation in summary form supporting such demand) for all reasonable and documented
legal and other out-of-pocket expenses incurred in connection with investigating, preparing to
defend or defending, or providing evidence in or preparing to serve or serving as a witness with
respect to, any Proceeding (each, an “Expense”) by one counsel to the Indemnified Persons taken
as a whole and, if necessary, one firm of local counsel in each appropriate jurisdiction to the
Indemnified Persons taken as a whole, and, in the case of an actual or potential conflict of
interest, one additional counsel to the affected Indemnified Persons taken as a whole; provided
that no Indemnified Person shall be entitled to indemnity hereunder in respect of any Claim or
Expense to the extent that the same (i) is found by a final, non-appealable judgment of a court of
competent jurisdiction to have resulted from the gross negligence, willful misconduct or bad faith
of such Indemnified Person or any of its affiliates and their principals, directors, officers,
employees, representatives, agents, attorneys or third party advisors, (ii) is found by a final, non-
appealable judgment of a court of competent jurisdiction to have resulted from a material breach
of the obligations of such Indemnified Person or any of its affiliates and their principals,
directors, officers, employees, representatives, agents, attorneys or third party advisors under this
DIP Commitment Letter or (iii) arises from any dispute among Indemnified Persons that does not
involve or relate to an act or omission by you and that is brought by an Indemnified Person
against another Indemnified Person (other than any claims against any DIP Commitment Party or
the Term DIP Agent in its capacity or in fulfilling its role as an agent under the Term DIP
Facility). Notwithstanding any other provision of this DIP Commitment Letter, and without
limitation of your indemnification and reimbursement obligations set forth herein, no party hereto
shall be liable for any special, indirect, consequential or punitive damages in connection with the
DIP Term Loan Facilities, this DIP Commitment Letter, the DIP Term Sheet, the DIP Fee Letter
or any other transaction contemplated hereby or thereby; provided that this foregoing sentence
shall not limit your indemnity obligations to the extent set forth above in respect of any actual
Claims and Expenses incurred or paid by an Indemnified Person to a third party unaffiliated with
the DIP Commitment Parties that are otherwise required to be indemnified in accordance with the
terms hereof.
Furthermore, you hereby acknowledge and agree that the use of electronic transmission is not
necessarily secure and that there are risks associated with such use, including risks of
interception, disclosure and abuse. You agree to assume and accept such risks and hereby
authorize the use of transmission of electronic transmissions, and that none of the DIP
Commitment Parties nor any of their respective affiliates will have any liability for any damages
arising from the use of such electronic transmission systems, except to the extent such damages
have been found by a final, non-appealable judgment of a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of such DIP Commitment Party or any
of its affiliates and their principals, directors, officers, employees, representatives, agents,
attorneys or third party advisors.
Notwithstanding the above, (a) you shall not be liable for any settlement of any Proceedings
effected without your consent (which consent shall not be unreasonably conditioned, withheld or
delayed), but if settled with your written consent or if there is a judgment for the plaintiff against
any Indemnified Person in any such Proceedings, you agree to indemnify and hold harmless each
Indemnified Person from and against any and all Claims and Expenses by reason of such
settlement or judgment in accordance with this section and (b) each Indemnified Person shall be
obligated to refund or return any and all amounts paid by you under the preceding paragraph to
such Indemnified Person for any losses, claims, damages liabilities or expenses to the extent such
Indemnified Person is not entitled to payment of such amounts in accordance with the terms
hereof. You shall not, without the prior written consent of an Indemnified Person (which consent
shall not be unreasonably conditioned, withheld or delayed), effect any settlement or consent to
the entry of any judgment of any pending or threatened Proceedings in respect of which
indemnity could have been sought hereunder by such Indemnified Person unless such settlement
(i) includes an unconditional release of such Indemnified Person from all liability or claims that
are the subject matter of such Proceedings, (ii) does not include any statement as to or any
admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person and
(iii) contains customary confidentiality and nondisparagement provisions.
In the event that an Indemnified Person is requested or required to appear as a witness in any
action brought by or on behalf of or against you or any of your subsidiaries or affiliates in which
such Indemnified Person is not named as a defendant, or a demand to produce documents or
otherwise respond to discovery requests is made on an Indemnified Person, you agree to
reimburse such Indemnified Person for all reasonable expenses incurred by it in connection with
such Indemnified Person’s response to a discovery request and appearing and/or preparing to
appear as such a witness, including, without limitation, the reasonable fees and expenses of its
legal counsel.
Sharing Information; Absence of Fiduciary Relationship.
You acknowledge that the DIP Commitment Parties, the Term DIP Agent and their respective
affiliates may be providing debt financing, equity capital or other services to other companies
with which you may have conflicting interests. Neither the DIP Commitment Parties nor any of
their affiliates will use confidential information obtained from you by virtue of the transactions
contemplated by this DIP Commitment Letter or its other relationships with you in connection
with the performance by it of services for other persons, and neither the DIP Commitment Parties
nor any of their affiliates will furnish any such information to other persons except as permitted
under the “Confidentiality” section herein. You further acknowledge and agree that (a) no
fiduciary, advisory or agency relationship between you and any of the DIP Commitment Parties
or the Term DIP Agent has been or will be created in respect of any of the transactions
contemplated by this DIP Commitment Letter, irrespective of whether the DIP Commitment
Parties, the Term DIP Agent and/or their respective affiliates have advised or are advising you on
other matters and (b) you will not assert any claim against any of the DIP Commitment Parties or
the Term DIP Agent for breach or alleged breach of fiduciary duty in respect of any of the
transactions contemplated by this DIP Commitment Letter and agree that none of the DIP
Commitment Parties or the Term DIP Agent shall have any direct or indirect liability to you in
respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on behalf
of or in right of you, including your stockholders, employees or creditors.
Assignments and Amendments.
This DIP Commitment Letter shall not be assignable by you without the prior written consent of
each of the DIP Commitment Parties (and any purported assignment without such consent shall
be null and void), and is solely for the benefit of the parties hereto and is not intended to confer
any benefits upon, or create any rights in favor of, any person other than the parties hereto and the
Indemnified Persons. The DIP Commitment Parties may assign their respective commitments
hereunder, in whole or in part, (i) to any of their affiliates, any funds or accounts managed,
advised, sub-managed or sub-advised by them or their affiliates or, (ii) subject to the prior written
consent of the Borrowers (such consent not to be unreasonably withheld or delayed) to any
prospective Term DIP Lenders; provided that (unless such assignee enters into a separate letter
agreement with you affirming its commitments on the same terms as set forth herein with respect
to such assigned portion of the commitments (such agreement not to be unreasonably
conditioned, withheld or delayed by you)), any such assignment shall not relieve, release or
novate them of the obligations (including the obligation to fund the DIP Term Loans if all
conditions thereto have been satisfied) hereunder and each DIP Commitment Party shall retain
exclusive control over all rights and obligations with respect to its commitments hereunder,
including all rights with respect to consents, modifications, supplements, waivers and
amendments, until after the closing and funding of the Term DIP Facility has occurred; provided,
further, that any such assignment, or any assignment of such DIP Commitment Parties’
obligations under this DIP Commitment Letter, shall require the assignee to execute a joinder to,
and thereby become a party to, this DIP Commitment Letter and such assignment shall not be
effective until the execution and delivery thereof. This DIP Commitment Letter may not be
amended or waived except in a written instrument signed by you and the DIP Commitment
Parties.
Counterparts and Governing Law.
This DIP Commitment Letter may be executed in counterparts, each of which shall be deemed an
original and all of which counterparts shall constitute one and the same document. Delivery of an
executed signature page of this DIP Commitment Letter by facsimile or electronic (including
“PDF”) transmission shall be effective as delivery of a manually executed counterpart hereof.
The laws of the State of New York shall govern all matters arising out of, in connection with or
relating to this DIP Commitment Letter, including, without limitation, its validity, interpretation,
construction, performance and enforcement and any claims sounding in contract law or tort law
arising out of the subject matter hereof.
Venue and Submission to Jurisdiction.
The parties hereto consent and agree that the federal bankruptcy court located in the District of
Delaware, shall have exclusive jurisdiction to hear and determine any claims or disputes between
or among any of the parties hereto pertaining to this DIP Commitment Letter and the DIP Fee
Letter, any other transaction relating hereto or thereto, and any investigation, litigation, or
proceeding in connection with, related to or arising out of any such matters or, if that court does
not have subject matter jurisdiction, then the U.S. District Court for the Southern District of New
York shall have such exclusive jurisdiction or, if that court does not have subject matter
jurisdiction, then any state court located in New York County, State of New York shall have such
exclusive jurisdiction; provided, that the parties hereto acknowledge that any appeal from those
courts may have to be heard by a court located outside of such jurisdiction. The parties hereto
expressly submit and consent in advance to such jurisdiction in any action or suit commenced in
any such court, and hereby waive any objection, which each of the parties may have based upon
lack of personal jurisdiction, improper venue or inconvenient forum.
Waiver of Jury Trial.
THE PARTIES HERETO, TO THE EXTENT PERMITTED BY LAW, WAIVE ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF, IN
CONNECTION WITH OR RELATING TO, THIS DIP COMMITMENT LETTER AND THE
DIP FEE LETTER, AND ANY OTHER TRANSACTION RELATED HERETO OR
THERETO. THIS WAIVER APPLIES TO ANY ACTION, SUIT OR PROCEEDING
WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE.
Survival.
The provisions of this letter set forth under this heading and the headings “Expenses”,
“Confidentiality”, “Indemnity”, “Sharing Information; Absence of Fiduciary Relationship”,
“Assignments and Amendments”, “Counterparts and Governing Law”, “Venue and Submission
to Jurisdiction” and “Waiver of Jury Trial” shall survive the termination or expiration of this DIP
Commitment Letter and shall remain in full force and effect regardless of whether the Term DIP
Facility is closed or the credit documentation with respect to the Term DIP Facility shall be
executed and delivered; provided that if the Term DIP Facility is closed and the credit
documentation with respect to the Term DIP Facility shall be executed and delivered, the
provisions under the heading “Expenses”, “Confidentiality”, “Indemnity”, and “Sharing
Information; Absence of Fiduciary Relationship” shall be superseded and deemed replaced by the
terms of the credit documentation with respect to the Term DIP Facility governing such matters.
Integration.
This DIP Commitment Letter and the DIP Fee Letter supersede any and all discussions,
negotiations, understandings or agreements, written or oral, express or implied, between or
among the parties hereto and their affiliates as to the subject matter hereof.
Patriot Act.
The DIP Commitment Parties hereby notify you that pursuant to the requirements of the USA
PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “PATRIOT
Act”), each Term DIP Lender may be required to obtain, verify and record information that
identifies the Borrowers and each Guarantor, which information includes the name, address, tax
identification number and other information regarding the Borrowers and each Guarantor that will
allow such Term DIP Lenders to identify each Borrower and each Guarantor in accordance with
the PATRIOT Act. This notice is given in accordance with the requirements of the PATRIOT
Act and is effective as to each Term DIP Lender.
Please indicate your acceptance of the terms hereof by signing in the appropriate space below.
Unless extended in writing by the DIP Commitment Parties, the commitments and agreements of
the DIP Commitment Parties contained herein (subject to the provisions under the heading
“Survival”) shall automatically expire on the first to occur of (a) 5:00 p.m. New York time on the
later of (x) June 5, 2020 and (y) if the Bankruptcy Cases have commenced prior to such date, the
date that is 3 calendar days after the first day hearing in the Bankruptcy Cases, and (b) execution
and delivery of the credit documentation with respect to the Term DIP Facility and funding of the
Term DIP Facility.
[SIGNATURE PAGE FOLLOWS]
[Consenting Term Loan Lender Signature Pages Omitted]
[Signature Page to DIP Commitment Letter]
Accepted and agreed to as ofthe date first written above:
APC AUTOMOTIVE TECHNOLOGIES, LLC
By:Name: Marc Weinsweig Title: Chief Financial Officer
APC AUTOMOTIVE TECHNOLOGIES INTERMEDIATE HOLDINGS, LLC
By:Name: Marc Weinsweig Title: Chief Financial Officer
CWD ACQUISITION, LLC
By:Name: Marc Weinsweig Title: Chief Financial Officer
CWD HOLDING CORP.
By:Name: Marc Weinsweig Title: Chief Financial Officer
Schedule I
Term DIP Lenders Pro Rata
DIP Term Loan Commitment
Percent
Apollo $26,027,420.98 59.8%
Special Situations Investing Group
$12,653,128.60 29.1%
THL Credit $4,819,450.42 11.1%
Total $43,500,000.00 100.0%
Exhibit I
Term DIP Facility Term Sheet
______________________________________________________________________________
APC AUTOMOTIVE TECHNOLOGIES, LLC,
CWD ACQUISITION, LLC,
CWD HOLDING CORP.
SUPERPRIORITY SECURED
DEBTOR-IN-POSSESSION CREDIT FACILITY TERM SHEET
____________________________________________________________________________________
Summary of Proposed Terms and Conditions
This Summary of Proposed Terms and Conditions (this “Term DIP Term Sheet”) outlines certain terms of
the Term DIP Facility (as defined herein) proposed to be provided by the Term DIP Lenders (as defined
herein) subject to the conditions herein and as set forth more fully below.
Borrowers: APC Automotive Technologies, LLC (f/k/a AP Exhaust Acquisition, LLC),
a Delaware limited liability company, CWD Acquisition, LLC, a Delaware
limited liability company, and CWD Holding Corp., a Delaware corporation
are collectively borrowers under the Prepetition First Lien Credit
Agreement1, each in its capacity as debtor and debtor-in-possession in a
case (together with the cases of their affiliated debtors and debtors-in-
possession, the “Chapter 11 Cases”) to be filed under Chapter 11 of Title 11
of the United States Code (the “Bankruptcy Code”) in the United States
Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) or
such other court as the Loan Parties and the Requisite Term DIP Lenders
1 Reference is hereby made to that certain First Lien Credit Agreement, dated as of May 10, 2017 (as amended,
restated, supplemented or otherwise modified from time to time, the “Prepetition First Lien Credit Agreement”;
together with any Loan Document (as defined in the Prepetition First Lien Credit Agreement), collectively, the
“Prepetition First Lien Loan Documents”), by and among APC Automotive Technologies Intermediate Holdings,
LLC (f/k/a AP Exhaust Intermediate Holdings, LLC), a Delaware limited liability company (“Holdco”), APC
Automotive Technologies, LLC (f/k/a AP Exhaust Acquisition, LLC), a Delaware limited liability company (“AP
Acquisition”), CWD Acquisition, LLC, a Delaware limited liability company (“CWD Buyer”), CWD Holding
Corp., a Delaware corporation, as a Borrower (“CWD Corp.” and, together with AP Acquisition and CWD Buyer, in
their capacities as Borrowers, collectively the “Borrowers” and each individually a “Borrower”), the other persons
from time to time party to, or designated under, the Prepetition First Lien Credit Agreement as “Loan Parties”
(together with the Borrowers, the “Loan Parties”), the several lenders from time to time party thereto (the
“Prepetition First Lien Lenders”; each Prepetition First Lien Lender holding Term A Loans; a “Prepetition Term A
Loan Lender”; each Prepetition First Lien Lender holding Term B Loans; a “Prepetition Term B Loan Lender”) and
Wilmington Trust, National Association, in its capacity as successor Administrative Agent (in such capacity, the
“Prepetition First Lien Agent,” and collectively with the Prepetition First Lien Lenders, the “Prepetition Secured
Parties”). Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to
such terms in the Prepetition First Lien Credit Agreement, the RSA Term Sheet to which this term sheet is attached
as Exhibit H thereto, or the Restructuring Support Agreement, to which the RSA Term Sheet is attached as Exhibit
A thereto, as applicable
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may mutually agree. This Term DIP Term Sheet assumes that the
Borrowers and each of the other Guarantors (as defined herein) will file
voluntary proceedings simultaneously under the Bankruptcy Code in the
Bankruptcy Court and will request joint administration of the Chapter 11
Cases.
Guarantors: Each of the Loan Parties identified as guarantors under the Prepetition First
Lien Credit Agreement (collectively, the “Guarantors”), each in its capacity
as a debtor and debtor-in-possession in the Chapter 11 Cases, on a joint and
several basis (together with the Borrowers, each individually a “Debtor”,
and collectively, the “Debtors”).
Term DIP Agent: Wilmington Trust, National Association (in such capacity, together with its
successors and assigns, the “Term DIP Agent”).
Term DIP Lenders: Certain of the Prepetition Term A Loan Lenders (as defined herein) will,
either directly or through one or more affiliated funds or financing vehicles
(or funds or accounts advised or sub-advised by such person) (such
participating funds, collectively, the “Term DIP Lenders”), finance the
Term DIP Facility.
All Prepetition Term A Loan Lenders (either directly or through one or
more affiliated funds of financing vehicles) shall have an opportunity to
fund their pro rata share of the Term DIP Commitments (as defined herein)
on a pro rata basis based on the outstanding principal amount of Term A
Loans, excluding any accrued interest and fees, under the Prepetition First
Lien Credit Agreement held by such Prepetition Term A Loan Lenders as of
the RSA Effective Date; provided that such Prepetition Term Loan A
Lender (or its Affiliates, as applicable) shall have become a party to (i) the
RSA on or before the RSA Effective Date and (ii) the DIP Commitment
Letter (as defined in the RSA) within one (1) day of the RSA Effective
Date.
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Type and Amount of the
Term DIP Facility:
A secured superpriority priming debtor-in-possession non-amortizing
facility comprised of a new money credit facility in an aggregate principal
amount equal to $50 million (the “Term DIP Facility”) consisting of (a)
$43.5 million of fully committed financing thereunder (such commitments,
the “Term DIP Commitments”; the loans under the Term DIP Facility, the
“Term DIP Loans”; each Term DIP Lender’s claim under the Term DIP
Facility, a “Term DIP Claim”; and collectively, the “Term DIP Claims”;
and proceeds received by the Borrowers from the Term DIP Loans, the
“Term DIP Proceeds”) and (b) an incremental $6.5 million of financing
under the Term DIP Facility (such incremental commitments under the
Term DIP Facility, the “Incremental Term DIP Commitments”).
Incremental Term DIP Commitments may be provided by one or more
Term DIP Lenders or such other third parties approved by the Requisite
Term DIP Lenders. The commitment to fund the Incremental Term DIP
Commitments must be executed (any such commitment, an “Incremental
Commitment Letter”) by no later than the date that the Plan Supplement (as
defined in the Chapter 11 Plan) is required to be filed in the Chapter 11
Cases (such date, the “Commitment Deadline”). The lenders providing the
Incremental Term DIP Commitments shall purchase from the existing Term
DIP Lenders an amount of Term DIP Commitments and, to the extent a
Term DIP Commitment has already been funded, Term DIP Loans in order
to provide that all Term DIP Commitments and Incremental Term DIP
Commitments are made on a pro rata basis as if all such commitments were
fully committed as of the Closing Date (as defined below).
Unless otherwise noted, all terms and conditions with respect to the
Incremental Term DIP Commitments and the loans borrowed with respect
thereto shall be the same as the Term DIP Commitments unless expressly
noted herein.
The principal amount of the Term DIP Facility shall increase by the amount
of fees paid-in-kind and capitalized and applied to the aggregate principal
amount of the Term DIP Facility as set forth herein.
Following the date (the “Closing Date”) of the satisfaction or waiver by
Requisite Term DIP Lenders (as defined herein) of the relevant “Conditions
Precedent to the Closing of the Term DIP Facility,” which shall include
entry by the Bankruptcy Court of the Interim DIP Order authorizing and
approving the Term DIP Facility, the Term DIP Loans may be incurred as
follows: (x) up to $30 million under the Term DIP Facility to be drawn in
one drawing following entry of the Interim DIP Order (provided that the
initial draw shall occur not later than two business days following entry of
the Interim DIP Order) and (y) a draw equal to (i) the remaining undrawn
Term DIP Commitments upon entry of an order approving the Term DIP
Facility on a final basis (the “Final DIP Order”; together with the Interim
DIP Order, the “DIP Orders”) plus (ii) the Incremental Term DIP
Commitments, in each case, subject to the terms and conditions described
herein and the Term DIP Loan Documents (as defined below) and in
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accordance with the Budget and the DIP Orders.
Once repaid, the Term DIP Loans incurred under the Term DIP Facility
cannot be reborrowed.
The Term DIP Loans will be made available for purposes not inconsistent
with the Budget (as defined below) and the DIP Orders and as further set
forth below under the header “Use of Proceeds”.
In connection with confirmation of the chapter 11 prepackaged plan
consistent with the RSA and RSA Term Sheet (the “Chapter 11 Plan”) each
Term DIP Lender agrees to exchange, in full and final satisfaction,
settlement, release and discharge of such Term DIP Lender’s Term DIP
Claim, its pro rata share of Exit Loans on the Plan Effective Date of the
Chapter 11 Plan.
Credit Bidding: The DIP Orders and the Term DIP Loan Documents shall provide that, in
connection with any sale of any of the Debtors’ assets under section 363 of
the Bankruptcy Code or under a plan of reorganization (i) the Prepetition
First Lien Agent shall have the right to credit bid the full amount of all
Obligations due and outstanding under the Prepetition First Lien Credit
Agreement (the “Prepetition First Lien Obligations”), at the direction of the
“Required Lenders” (as such term is defined in the Prepetition First Lien
Credit Agreement), and (ii) the Term DIP Agent shall have the right (acting
at the direction of the Requisite Term DIP Lenders) to credit bid all amounts
outstanding under the Term DIP Facility at the direction of the Requisite
Term DIP Lenders, in each case, in accordance with section 363(k) of the
Bankruptcy Code.
Maturity: All Term DIP Obligations (as defined herein) will be due and payable in full
in cash (except, in the case of clause (v) below, as otherwise expressly
provided herein) on the earliest of (i) one hundred and twenty (120) days
after the commencement of the Chapter 11 Cases (the “Petition Date”), (ii)
the consummation of any sale of all or substantially all of the assets of the
Debtors pursuant to section 363 of the Bankruptcy Code, (iii) the
acceleration of the Term DIP Loans and the termination of the Term DIP
Commitments upon the occurrence of an event referred to below under
“Termination,” (iv) the date that is forty-five (45) calendar days after the
Petition Date, if the Final DIP Order has not been entered on or before that
date, and (v) the Plan Effective Date (any such date, the “Term DIP
Termination Date”). Principal of, and accrued interest on, the Term DIP
Loans and all other amounts owing to the Term DIP Agent and/or the Term
DIP Lenders under the Term DIP Facility, including fees, shall be payable
on the Term DIP Termination Date.
Budget: The “Budget” shall consist of a 13-week operating budget setting forth all
forecasted receipts and disbursements on a weekly basis for such 13-week
period beginning the week prior to the Petition Date, broken down by week,
including the anticipated weekly uses of the proceeds of the Term DIP
Facility for such period, which shall include, among other things, available
5
cash, cash flow, trade payables and ordinary course expenses and total
expenses, fees and expenses relating to the Term DIP Facility, fees and
expenses related to the Chapter 11 Cases, and working capital and other
general corporate needs, which forecast shall be in form and substance
satisfactory to the Term DIP Agent at the direction of the Requisite Term
DIP Lenders (such budget shall be supplemented in the manner required
pursuant to the Financial Reporting Requirements (as defined herein)), it
being understood that a Budget in form substantially consistent with
budgets delivered by the Borrowers prior to the Petition Date shall be
satisfactory to the Term DIP Agent.
Use of Proceeds: The Term DIP Loans shall be used to provide working capital, for general
corporate purposes and to fund the Chapter 11 Cases, subject to the Budget
(including Permitted Variances (as defined herein)) and the terms and
conditions of the Term DIP Credit Agreement and the DIP Orders,
including, without limitation, to (i) provide working capital and for other
general corporate purposes of the Debtors, (ii) fund the costs of the
administration of the Chapter 11 Cases (including professional fees and
expenses) and the consummation of the Debtors’ Chapter 11 Plan; and (iii)
fund interest, fees, and other payments contemplated in respect of the Term
DIP Facility.
Without in any way limiting the foregoing, no Term DIP Collateral (as
defined herein), Term DIP Proceeds, or any portion of the Carve Out (as
defined herein) may be used directly or indirectly by any of the Debtors, the
official committee of unsecured creditors appointed in the Chapter 11 Cases
(the “Committee”), if any, or any trustee or other estate representative
appointed in the Chapter 11 Cases (or any successor case) or any other
person or entity (or to pay any professional fees, disbursements, costs or
expenses incurred in connection therewith): (a) to seek authorization to
obtain liens or security interests that are senior to or pari passu with the
Term DIP Liens or the Liens in existence on the Petition Date securing the
Prepetition First Lien Obligations (the “Prepetition Term Liens”); or (b) to
investigate (including by way of examinations or discovery proceedings),
prepare, assert, join, commence, support or prosecute any action for any
claim, counter-claim, action, proceeding, application, motion, objection,
defense, or other contested matter seeking any order, judgment,
determination or similar relief against, or adverse to the interests of, in any
capacity, any of the Term DIP Agent, the Term DIP Lenders, the Prepetition
First Lien Agent, or the Prepetition First Lien Lenders, and each of their
respective officers, directors, controlling persons, employees, agents,
attorneys, affiliates, assigns, or successors of each of the foregoing (all in
their capacities as such) (collectively, the “Released Parties”), with respect
to any transaction, occurrence, omission, action or other matter (including
formal discovery proceedings in anticipation thereof), including, without
limitation, (i) any claims or causes of action arising under chapter 5 of the
Bankruptcy Code; (ii) any so-called “lender liability” claims and causes of
action; (iii) any action with respect to the validity, enforceability, priority
and extent of, or asserting any defense, counterclaim, or offset to, the Term
6
DIP Obligations, the Term DIP Claims (as defined below), the Term DIP
Liens, the Term DIP Loan Documents, the Prepetition Term Liens, the
Prepetition First Lien Loan Documents, or the Prepetition First Lien
Obligations; (iv) any action seeking to invalidate, modify, set aside, avoid
or subordinate, in whole or in part, the Term DIP Obligations, or the
Prepetition First Lien Obligations; (v) any action seeking to modify any of
the rights, remedies, priorities, privileges, protections and benefits granted
to either (A) the Term DIP Agent or the Term DIP Lenders hereunder or
under any of the Term DIP Loan Documents, or (B) the Prepetition First
Lien Agent or the Prepetition First Lien Lenders under any of the
Prepetition First Lien Loan Documents (in each case, including, without
limitation, claims, proceedings or actions that might prevent, hinder or delay
any of the Term DIP Agent’s or the Term DIP Lenders’ assertions,
enforcements, realizations or remedies on or against the Term DIP
Collateral in accordance with the applicable Term DIP Loan Documents
and the DIP Orders); or (vi) objecting to, contesting, or interfering with, in
any way, the Term DIP Agent’s and the Term DIP Lenders’ enforcement or
realization upon any of the Term DIP Collateral once an Event of Default
(as defined herein) has occurred; provided, however, that no more than
$50,000 in the aggregate of the Term DIP Collateral, Term DIP Proceeds, or
the Carve Out, may be used by the Committee, if any, to investigate claims
and/or liens of the Prepetition First Lien Agent and Prepetition First Lien
Lenders under the Prepetition First Lien Credit Agreement.
Documentation: The Term DIP Facility will be evidenced by a credit agreement (the “Term
DIP Credit Agreement”) to be based on the Prepetition First Lien Credit
Agreement (with such modifications as are necessary to reflect the terms set
forth in this Term DIP Term Sheet and the DIP Orders, the Known Events
(as defined herein), and the nature of the Term DIP Facility as a debtor-in-
possession facility and to reflect administrative agency and operational
matters reasonably acceptable to the Term DIP Agent (acting at the
direction of the Requisite Term DIP Lenders) and the Debtors and other
modifications as may be reasonably agreed between Term DIP Agent
(acting at the direction of the Requisite Term DIP Lenders) and the Debtors,
collectively, the “Documentation Principles”) and other legal
documentation (provided that no security documents, other than control
agreements noted herein, or legal opinions shall be required) (collectively,
together with the Term DIP Credit Agreement, the “Term DIP Loan
Documents”), which Term DIP Loan Documents shall be in form and
substance consistent with the Documentation Principles, this Term DIP
Term Sheet and to the extent not otherwise set forth herein or therein,
reasonably satisfactory to the Term DIP Agent (acting at the direction of the
Requisite Term DIP Lenders), the Term DIP Lenders, and the Debtors. For
the avoidance of doubt, the Term DIP Credit Agreement shall have
customary restrictions on voting and other rights with respect to Term DIP
Lenders that are affiliates of the Debtors no less restrictive than such
provisions in the Prepetition First Lien Credit Agreement and otherwise
mutually acceptable to the Debtors and the Requisite Term DIP Lenders.
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Controlled Account: On the Petition Date, the Debtors shall have established a segregated
account for the Term DIP Proceeds and the DIP Orders shall establish
“control” (as defined in the Uniform Commercial Code as in effect from
time to time in the State of New York and as otherwise set forth in the DIP
Orders) in favor of the Term DIP Agent for the benefit of the Term DIP
Lenders with respect to such segregated account (the “Controlled
Account”). At the written request of the Required Term DIP Lenders, the
Debtors shall enter into a deposit account control agreement following the
Closing Date with respect to the Controlled Account in favor of the Term
DIP Agent for the benefit of the Term DIP Lenders, in form and substance
reasonably satisfactory to the Term DIP Agent. The Term DIP Credit
Agreement and the DIP Orders shall require the Debtors to maintain the
Term DIP Proceeds in the Controlled Account except as permitted to be
used in accordance with the Budget and shall prohibit the Debtors from
withdrawing funds from the Controlled Account after the occurrence and
during the continuance of a Specified Default under the Term DIP Credit
Agreement.
Interest: The Term DIP Loans will bear interest at a rate per annum equal to 10.00%,
which amount shall be paid in cash in arrears on a monthly basis.
Interest shall be calculated on the basis of the actual number of days elapsed
in a 360 day year.
Default Interest: Upon the occurrence of and during the continuance of an Event of Default
under the Term DIP Loan Documents, overdue amounts under the Term
DIP Loans will bear interest at an additional 2.00% per annum.
Fees: An administrative agency fee set forth in a separate fee letter payable in
cash to the Term DIP Agent on the Closing Date.
Voluntary Prepayments: Voluntary prepayments of the Term DIP Loans shall be permitted at any
time, without premium or penalty.
Mandatory Prepayments: The Term DIP Credit Agreement will contain customary mandatory
prepayment events for financings of this type consistent with the
Documentation Principles and on terms and conditions no worse to the
Borrower than the Prepetition First Lien Credit Agreement (“Mandatory
Prepayments”), subject to customary exceptions to be agreed. Mandatory
Prepayments will result in a permanent reduction of the Term DIP Facility.
8
Amortization: None.
Priority and Security under
Term DIP Facility:
All obligations of the Borrowers and the Guarantors to the Term DIP Agent
and the Term DIP Lenders under the Term DIP Facility, including, without
limitation, all principal and accrued interest, premiums (if any), costs, fees
and expenses or any other amounts due, or any exposure of each Term DIP
Lender and its affiliates in respect of cash management incurred on behalf
of any Borrower or any Guarantor under the Term DIP Facility
(collectively, the “Term DIP Obligations”), shall be secured by the
following liens and security interests (the “Term DIP Liens”):
(a) subject to the Carve Out and subject only to permitted existing
Liens and liens arising as a matter of law, in each case to the extent that
such existing liens have been incurred and are valid, perfected, enforceable
and non-avoidable liens as of the Petition Date or are valid non-avoidable
liens that are perfected subsequent to the Petition Date as permitted by
section 546(b) of the Bankruptcy Code, pursuant to section 364(d)(1) of the
Bankruptcy Code, (i) a first priority perfected senior priming lien on, and
security interest in the First Priority Term Collateral (as defined in that
certain ABL Intercreditor Agreement dated as of May 10, 2017, (as
amended, restated, amended and restated, supplemented or otherwise
modified from time to time prior to the date hereof, the “Prepetition
ABL/Term Intercreditor”) among Holdco, Borrowers, Wells Fargo Bank,
National Association, as administrative agent under the Prepetition ABL
Facility, and the Prepetition First Lien Agent and (ii) a third priority
perfected lien on, and security interest in the ABL Priority Collateral (as
defined in the Prepetition ABL/Term Intercreditor), which shall be (A)
senior to the Prepetition Term Liens and (B) junior to the liens securing the
obligations under the ABL DIP (the “ABL DIP Liens”) and the liens
securing the obligations under the Prepetition ABL Facility (the “Prepetition
ABL Liens). The Prepetition Term Liens shall be primed by, and made
subject and subordinate to, the perfected first priority senior priming liens
and security interests and third priority senior priming lien and interests, as
applicable, to be granted to the Term DIP Agent for the benefit of the Term
DIP Lenders, which senior priming liens and security interests in favor of
the Term DIP Agent for the benefit of the Term DIP Lenders shall also be
senior to the Prepetition First Lien Lender Adequate Protection Liens (as
defined herein);
(b) subject to the Carve Out, pursuant to section 364(c)(2) of the
Bankruptcy Code, a first priority perfected lien on, and security interest in,
all present and after acquired property of the Debtors, wherever located, not
subject to a lien or security interest on the Petition Date (the
“Unencumbered Property”);
(c) subject to the Carve Out, pursuant to section 364(c)(3) of the
Bankruptcy Code, a junior perfected lien on, and security interest in, all
present and after-acquired property of the Debtors, wherever located, that is
9
subject to a perfected lien or security interest on the Petition Date or subject
to a lien or security interest in existence on the Petition Date that is
perfected subsequent thereto as permitted by section 546(b) of the
Bankruptcy Code; and
(d) subject to the Carve Out, a first priority perfected lien on, and
security interest in, all funds on deposit in the Controlled Account.
The property referred to in the preceding clauses (a), (b), (c), and (d) is
collectively referred to as the “Term DIP Collateral” and shall include,
without limitation, all assets (whether tangible, intangible, personal or
mixed) of the Borrowers and the Guarantors, whether now owned or
hereafter acquired and wherever located, before or after the Petition Date,
including, without limitation, all accounts, proceeds of leases, inventory,
equipment, equity interests or capital stock in subsidiaries, investment
property, instruments, chattel paper, contracts, patents, copyrights,
trademarks and other general intangibles, the proceeds of all claims or
causes of action, and all products, offspring, profits and proceeds thereof.
Notwithstanding the foregoing, the Term DIP Collateral shall not include
(and the Term DIP Liens shall not extend to) (i) any assets held by the
Debtors in trust; provided, that the Prepetition First Lien Lender Adequate
Protection Liens shall extend to (a) any rights, claims or causes of action
that the Debtors may have with respect to such assets, and (b) any proceeds
of such assets that become property of the Debtors; and (ii) avoidance
actions under chapter 5 of the Bankruptcy Code (“Avoidance Actions”) or
any proceeds thereof; provided that, upon entry of the Final DIP Order, the
Term DIP Collateral shall include Avoidance Actions and proceeds thereof.
The Term DIP Liens shall be effective and perfected as of the entry of the
Interim DIP Order and without necessity of the execution, filing or
recording of security agreements, pledge agreements, control agreements,
financing statements or other agreements. However, the Term DIP Agent
may, in its reasonable discretion, require the execution, filing or recording
of any or all of the documents described in the preceding sentence.
No security documents, other than control agreements noted herein, or legal
opinions shall be required.
10
Superpriority Term DIP
Claims:
All Term DIP Claims shall be entitled to the benefits of section 364(c)(1) of
the Bankruptcy Code, having superpriority over any and all administrative
expenses of the kind that are specified in sections 105, 326, 328, 330, 331,
365, 503(a) 503(b), 506(c) (subject to the entry of the Final DIP Order),
507(a), 507(b), 546(c), 726, 1114 or any other provisions of the Bankruptcy
Code, subject only to the Carve Out.
The Term DIP Claims will, at all times during the period that the Term DIP
Loans remain outstanding, remain, in right of payment (and not security), (i)
pari passu to the ABL DIP claims and (ii) senior in priority to all other
claims or administrative expenses, including (a) any claims allowed
pursuant to the Obligations under the Prepetition First Lien Loan
Documents, (b) the obligations under the Prepetition ABL Facility, and (c)
the Prepetition First Lien Lender Superpriority Claims (as defined herein),
subject only to the Carve Out.
The DIP Orders shall include language providing that the Term DIP Claims
shall be satisfied from the proceeds, product, offspring, profits or value of
Unencumbered Property to the fullest extent possible prior to use of the
prepetition Term Priority Collateral to satisfy such obligations.
Carve Out: (a) “Carve Out” As used in this [Final/Interim] Order, the “Carve Out”
means the sum of (i) all fees required to be paid to the Clerk of the Court
and to the Office of the United States Trustee under section 1930(a) of title
28 of the United States Code plus interest at the statutory rate (without
regard to the notice set forth in (iii) below); (ii) all reasonable fees and
expenses up to $25,000 incurred by a trustee under section 726(b) of the
Bankruptcy Code (without regard to the notice set forth in (iii) below);
(iii) to the extent allowed at any time, whether by interim order, procedural
order, or otherwise, all unpaid fees and expenses (the “Allowed Professional
Fees”) incurred by persons or firms retained by the Debtors pursuant to
section 327, 328, or 363 of the Bankruptcy Code (the “Debtor
Professionals”) and the Creditors’ Committee pursuant to section 328 or
1103 of the Bankruptcy Code (the “Committee Professionals” and, together
with the Debtor Professionals, the “Professional Persons”) at any time
before or on the first business day following delivery by the Term DIP
Agent at the direction of the Requisite Term DIP Lenders of a Carve Out
Trigger Notice (as defined below), whether allowed by the Court prior to or
after delivery of a Carve Out Trigger Notice; and (iv) Allowed Professional
Fees of Professional Persons in an aggregate amount not to exceed
$750,000 incurred after the first business day following delivery by the
Term DIP Agent at the direction of the Requisite Term DIP Lenders of the
Carve Out Trigger Notice, to the extent allowed at any time, whether by
interim order, procedural order, or otherwise (the amounts set forth in this
clause (iv) being the “Post-Carve Out Trigger Notice Cap”). For purposes
of the foregoing, “Carve Out Trigger Notice” shall mean a written notice
delivered by email (or other electronic means) by the Term DIP Agent at the
direction of the Requisite Term DIP Lenders to the Debtors, their lead
restructuring counsel, the U.S. Trustee, and counsel to the Creditors’
11
Committee, which notice may be delivered following the occurrence and
during the continuation of an Event of Default and acceleration of the DIP
Obligations under the DIP Facility, stating that the Post-Carve Out Trigger
Notice Cap has been invoked.
(b) Carve Out Reserves. On the day on which a Carve Out Trigger Notice
is given by the Term DIP Agent at the direction of the Requisite Term DIP
Lenders to the Debtors with a copy to counsel to the Creditors’ Committee
(the “Termination Declaration Date”), the Carve Out Trigger Notice shall
constitute a demand to the Debtors to utilize all cash on hand as of such date
and any available cash thereafter held by any Debtor to fund a reserve in an
amount equal to the then unpaid amounts of the Allowed Professional Fees.
The Debtors shall deposit and hold such amounts in a segregated account at
the DIP Agent in trust to pay such then unpaid Allowed Professional Fees
(the “Pre-Carve Out Trigger Notice Reserve”) prior to any and all other
claims. On the Termination Declaration Date, after funding the Pre-Carve
Out Trigger Notice Reserve, the Debtors shall utilize all remaining cash on
hand as of such date and any available cash thereafter held by any Debtor to
fund a reserve in an amount equal to the Post-Carve Out Trigger Notice Cap
(the “Post Carve Out Trigger Notice Reserve” and, together with the Pre-
Carve Out Trigger Notice Reserve, the “Carve Out Reserves”) prior to any
and all other claims. All funds in the Pre-Carve Out Trigger Notice Reserve
shall be used first to pay the obligations set forth in clauses (i) through (iii)
of the definition of Carve Out set forth above (the “Pre-Carve Out
Amounts”), but not, for the avoidance of doubt, the Post-Carve Out Trigger
Notice Cap, until paid in full, and then, to the extent the Pre Carve Out
Trigger Notice Reserve has not been reduced to zero, to pay the Term DIP
Agent for the benefit of the Term DIP Lenders, unless the Term DIP
Obligations have been indefeasibly paid in full, in cash, and all
Commitments have been terminated, in which case any such excess shall be
paid to the Prepetition Secured Creditors in accordance with their rights and
priorities as of the Petition Date. All funds in the Post-Carve Out Trigger
Notice Reserve shall be used first to pay the obligations set forth in clause
(iv) of the definition of Carve Out set forth above (the “Post-Carve Out
Amounts”), and then, to the extent the Post Carve Out Trigger Notice
Reserve has not been reduced to zero, to pay the Term DIP Agent for the
benefit of the Term DIP Lenders, unless the Term DIP Obligations have
been indefeasibly paid in full, in cash, and all Commitments have been
terminated, in which case any such excess shall be paid to the Prepetition
Secured Creditors in accordance with their rights and priorities as of the
Petition Date. Notwithstanding anything to the contrary in the Term DIP
Loan Documents, or this [Final/Interim] Order, if either of the Carve Out
Reserves is not funded in full in the amounts set forth in this paragraph [●],
then, any excess funds in one of the Carve Out Reserves following the
payment of the Pre-Carve Out Amounts and Post-Carve Out Amounts,
respectively, shall be used to fund the other Carve Out Reserve, up to the
applicable amount set forth in this paragraph [●], prior to making any
payments to the Term DIP Agent or the Prepetition Secured Creditors, as
applicable. Notwithstanding anything to the contrary in the Term DIP Loan
12
Documents or this [Final/Interim] Order, following delivery of a Carve Out
Trigger Notice, the Term DIP Agent and the Prepetition Secured Agent
shall not sweep or foreclose on cash (including cash received as a result of
the sale or other disposition of any assets) of the Debtors until the Carve
Out Reserves have been fully funded, but shall have a security interest in
any residual interest in the Carve Out Reserves, with any excess paid to the
Term DIP Agent for application in accordance with the Term DIP Loan
Documents. Further, notwithstanding anything to the contrary in this
[Final/Interim] Order, (i) disbursements by the Debtors from the Carve Out
Reserves shall not constitute DIP Loans (as defined in the Term DIP Credit
Agreement) or increase or reduce the Term DIP Obligations, (ii) the failure
of the Carve Out Reserves to satisfy in full the Allowed Professional Fees
shall not affect the priority of the Carve Out, and (iii) in no way shall the
Initial Budget, Budget, Carve Out, Post-Carve Out Trigger Notice Cap,
Carve Out Reserves, or any of the foregoing be construed as a cap or
limitation on the amount of the Allowed Professional Fees due and payable
by the Debtors. For the avoidance of doubt and notwithstanding anything to
the contrary in this [Final/Interim] Order, the DIP Facility or in any
[Prepetition Secured Facilities],2 the Carve Out shall be senior to all liens
and claims securing the Term DIP Facility, the Adequate Protection Liens,
and the 507(b) Claim, and any and all other forms of adequate protection,
liens, or claims securing the Term DIP Obligations or the Prepetition First
Lien Obligations.
(c) Payment of Allowed Professional Fees Prior to the Termination
Declaration Date. Any payment or reimbursement made prior to the
occurrence of the Termination Declaration Date in respect of any Allowed
Professional Fees shall not reduce the Carve Out.
(d) No Direct Obligation To Pay Allowed Professional Fees. None of the
Term DIP Agent, Term DIP Lenders, or the Prepetition Secured Parties
shall be responsible for the payment or reimbursement of any fees or
disbursements of any Professional Person incurred in connection with the
Chapter 11 Cases or any successor cases under any chapter of the
Bankruptcy Code. Nothing in this [Interim/Final] Order or otherwise shall
be construed to obligate the Term DIP Agent, the Term DIP Lenders, or the
Prepetition Secured Creditors, in any way, to pay compensation to, or to
reimburse expenses of, any Professional Person or to guarantee that the
Debtors have sufficient funds to pay such compensation or reimbursement.
(e) Payment of Carve Out On or After the Termination Declaration Date.
Any payment or reimbursement made on or after the occurrence of the
Termination Declaration Date in respect of any Allowed Professional Fees
shall permanently reduce the Carve Out on a dollar-for-dollar basis. Any
funding of the Carve Out shall be added to, and made a part of, the DIP
Obligations secured by the DIP Collateral and shall be otherwise entitled to
2 To be defined in the DIP Order.
13
the protections granted under this [Final/Interim] Order, the DIP
Documents, the Bankruptcy Code, and applicable law.
Investigation Rights: The Committee (to the extent one is appointed), and any other party in
interest with standing, shall have a maximum of the earlier of (A) if a
Confirmation Order is entered, the date on which objections to confirmation
of the Chapter 11 Plan were due, and (B) no later than (1) for a Committee
(to the extent one is appointed), sixty (60) calendar days from the date of the
Committee’s appointment, or (2) seventy-five (75) calendar days from the
entry of the Interim DIP Order for any other party in interest with requisite
standing (the “Investigation Period”) to investigate and commence an
adversary proceeding or contested matter, as required by the applicable
Federal Rules of Bankruptcy Procedure, and challenge (each, a
“Challenge”) the findings, the Debtors’ stipulations, or any other
stipulations contained in the DIP Orders, including, without limitation, any
challenge to the validity, priority or enforceability of the liens securing the
obligations under the Prepetition First Lien Loan Documents, or to assert
any claim or cause of action against the Prepetition First Lien Agent or the
Prepetition First Lien Lenders arising under or in connection with the
Prepetition First Lien Loan Documents or the Prepetition First Lien
Obligations, as the case may be, whether in the nature of a setoff,
counterclaim or defense of Prepetition First Lien Obligations, or otherwise.
The Investigation Period may only be extended with the prior written
consent of the Term DIP Agent (acting at the direction of the Requisite
Term DIP Lenders), or pursuant to an order of the Bankruptcy Court.
Except to the extent asserted in an adversary proceeding or contested matter
filed during the Investigation Period, upon the expiration of such applicable
Investigation Period (to the extent not otherwise waived or barred), (i) any
and all Challenges or potential challenges shall be deemed to be forever
waived and barred; (ii) all of the agreements, waivers, releases, affirmations,
acknowledgements and stipulations contained in the Interim DIP Order shall
be irrevocably and forever binding on the Debtors, the Committee and all
parties-in-interest and any and all successors-in-interest as to any of the
foregoing, including any Chapter 7 Trustee, without further action by any
party or the Bankruptcy Court; (iii) the Prepetition First Lien Obligations
shall be deemed to be finally allowed and the Prepetition Term Liens shall
be deemed to constitute valid, binding and enforceable encumbrances, and
not subject to avoidance pursuant to the Bankruptcy Code or applicable
non-bankruptcy law; and (iv) the Debtors shall be deemed to have released,
waived and discharged the Released Parties from any and all claims and
causes of action arising out of, based upon or related to, in whole or in part,
the Prepetition First Lien Obligations. Notwithstanding anything to the
contrary herein: (x) if any Challenge is timely commenced, the stipulations
contained in the DIP Orders shall nonetheless remain binding on all other
parties-in-interest and preclusive except to the extent that such stipulations
are expressly and successfully challenged in such Challenge; and (y) the
Released Parties reserve all of their rights to contest on any grounds any
Challenge. For the avoidance of doubt, the DIP Orders shall include
language that the investigation rights afforded to the Committee will not
14
constitute the Debtors’ and Term DIP Lenders recognition, consent, or
agreement not to object to, the Committee’s standing to assert any claim or
cause of action.
Conditions Precedent to the
Closing of the Term DIP
Facility:
The Term DIP Credit Agreement will contain solely the following
conditions precedent to closing, each of which shall be subject to waiver
with the consent of the Debtors and the Term DIP Agent at the direction of
the Requisite Term DIP Lenders:
All documentation relating to the Term DIP Facility shall be in form
and substance reasonably satisfactory to the Term DIP Agent (at the
direction of the Requisite Term DIP Lenders), the Term DIP Lenders
and the Debtors, and shall have been duly executed and delivered by the
Debtors.
All documentation relating to the ABL DIP Facility shall be in form and
substance reasonably satisfactory to the Term DIP Agent (at the
direction of the Requisite Term DIP Lenders), including an ABL
commitment letter with respect to the exit ABL loans.
All reasonable and documented (in summary form) out-of-pocket fees,
costs, disbursements and expenses, accrued and unpaid as of the
Closing Date, of (i) the Term DIP Agent (limited, in the case of
counsel, to all reasonable and documented out-of-pocket fees, costs,
disbursements and expenses of the Term DIP Agent’s outside counsel,
Arnold & Porter Kaye Scholer LLP (“A&P”) and any successor
counsel, and, to the extent necessary, one firm of local counsel engaged
by the Term DIP Agent in connection with the Debtors’ Chapter 11
Cases), (ii) the Term Loan Lender Group (as defined in the RSA)
(limited, in the case of counsel, financial advisors and other outside
professional advisors to all reasonable and documented fees, costs,
disbursements and expenses of the First Lien Steering Committee’s
outside counsel, King & Spalding LLP (“K&S”), and, to the extent
necessary, one firm of local counsel engaged by the First Lien Steering
Committee in connection with the Debtors’ Chapter 11 Cases, and (iii)
FTI Consulting (“FTI”), as financial advisor to the First Lien Steering
Committee, in each case to the extent invoices for any such accrued and
unpaid amounts are provided to the Debtors no later than three (3)
Business Days prior to the Closing Date.
The Term DIP Agent and the Term DIP Lenders shall have received a
Budget in form and substance satisfactory to the Term DIP Agent at the
direction of the Requisite Term DIP Lenders and of the type previously
delivered to the Term DIP Lenders.
Other than the Orders, there shall not exist any law, regulation, ruling,
judgment, order, injunction or other restraint that prohibits, restricts or
imposes a materially adverse condition on the Term DIP Facility or the
exercise by the Term DIP Agent at the direction of the Requisite Term
DIP Lenders of its rights as a secured party with respect to the DIP
15
Collateral.
All other first day motions, including those related to the Term DIP
Facility, filed by the Debtors (if any) and related orders entered by the
Bankruptcy Court in the Chapter 11 Cases shall be in form and
substance reasonably satisfactory to the Requisite Term DIP Lenders.
Other than, in each case, as a result of the commencement and
continuation of the Chapter 11 Cases, the events leading up to the
Chapter 11 Cases, the effect of the bankruptcy, the conditions in the
industry in which the Borrowers operate in as existing on the Closing
Date (including the impacts of the COVID-19 pandemic on the
operations, business, assets, liabilities (actual or contingent) or
condition (financial or otherwise) of the Debtors taken as a whole)
and/or the consummation of transactions contemplated by the Debtors’
“first day” pleadings reviewed by the Term DIP Agent and the
Requisite Term DIP Lenders, or as disclosed to the Term DIP Agent
prior to the Petition Date (collectively, the “Known Events”), since the
Petition Date there shall have occurred no event, circumstance or
condition that materially adversely affects: (i) the business, operations,
properties or financial condition of the Debtors and their subsidiaries,
collectively; (ii) the legality, validity or enforceability of any Term DIP
Loan Documents or the DIP Orders; (iii) the ability of the Borrowers or
the Guarantors, taken as a whole, to perform their payment obligations
under the Term DIP Loan Documents; (iv) the perfection or priority of
the Term DIP Liens granted pursuant to the DIP Orders; or (v) the
rights and remedies of the Term DIP Agent or the Term DIP Lenders
under the Term DIP Loan Documents taken as a whole (any of the
foregoing being a “Material Adverse Change”).
Other than the Chapter 11 Cases or other Known Events, as stayed upon
the commencement of the Chapter 11 Cases, or as disclosed to the Term
DIP Agent prior to the Petition Date, there shall exist no action, suit,
investigation, litigation or proceeding pending or threatened in writing
in any court or before any arbitrator or governmental authority that (i)
would reasonably be expected to result in a Material Adverse Change or
(ii) restrains, prevents or purports to affect materially adversely the
legality, validity or enforceability of the Term DIP Facility or the
consummation of the transactions contemplated thereby.
Other than as a result of or in connection with the Chapter 11 Cases, all
governmental and third party consents and approvals reasonably
necessary to be obtained by the Borrower in connection with the Term
DIP Facility, if any, shall have been obtained (without the imposition of
any conditions that are not reasonably acceptable to the Term DIP
Agent at the direction of the Requisite Term DIP Lenders in their
reasonable discretion) and shall remain in effect.
Subject to the entry of the Interim DIP Order, the Term DIP Agent, for
the benefit of the Term DIP Lenders, shall have a valid and perfected
16
lien on and security interest in the Term DIP Collateral of the Debtors
on the basis and with the priority set forth herein.
The Bankruptcy Court shall have entered the Interim DIP Order within
three (3) Business Days following the Petition Date, in form and
substance consistent with the terms and conditions set forth herein and
otherwise satisfactory to the Term DIP Agent at the direction of the
Requisite Term DIP Lenders, which DIP Order shall include, without
limitation, copies of the Term DIP Facility, and the initial Budget as
exhibits thereto, entered on notice to such parties as may be satisfactory
to the Term DIP Agent acting at the direction of the Requisite Term
DIP Lenders and otherwise as required by applicable Bankruptcy Law,
(i) authorizing and approving the Term DIP Facility and the transactions
contemplated thereby, including, without limitation, the granting of the
superpriority status, security interests and priming liens, and the
payment of all fees, referred to herein; (ii) authorizing the lifting or
modification of the automatic stay to permit the Borrowers and the
Guarantors to perform their obligations, and the Term DIP Lenders to
exercise their rights and remedies, with respect to the Term DIP
Facility; (iii) authorizing the use of cash collateral and providing for
adequate protection in favor of the Prepetition First Lien Lenders, as
and to the extent provided herein; and (iv) reflecting such other terms
and conditions that are mutually satisfactory to the Term DIP Agent (at
the direction of the Requisite Term DIP Lenders) and the Debtors, in
their respective discretion in each case; which Interim DIP Order shall
be in full force and effect, shall not have been reversed, vacated or
stayed and shall not have been amended, supplemented or otherwise
modified without the prior written consent of the Term DIP Agent
acting at the direction of the Requisite Term DIP Lenders, which
consent shall not be unreasonably withheld, delayed or conditioned.
The Term DIP Agent shall have received, at least three (3) Business
Days, prior to the Closing Date, all documentation and other
information required by the Term DIP Agent and regulatory authorities
under applicable “know your customer” and anti-money laundering
rules and regulations, including, without limitation, the PATRIOT Act.
For all such documentation and information, the Term DIP Agent shall
make a request reasonably prior to the deadline to deliver such
documentation or information.
The Debtors shall have entered into the RSA with the requisite
Prepetition First Lien Lenders in accordance with its terms and the RSA
shall otherwise become effective as to such parties, and the RSA shall
continue to be in full force and effect according to its terms as Debtors
and Consenting Term Lenders.
17
No DOJ Adverse Action shall have occurred.3
Conditions Precedent to
Borrowing Term DIP
Loans:
The Term DIP Credit Agreement will contain only the following conditions
precedent to borrowings:
No Default or Event of Default shall have occurred, and shall be
continuing, under the Term DIP Loan Documents immediately prior to
the funding of the Term DIP Loans or would result from such
borrowing of the Term DIP Loans.
The representations and warranties of each Borrower and each
Guarantor set forth in the Term DIP Credit Agreement shall be true and
correct in all material respects (without duplication of any materiality
qualifier) on and as of the Closing Date or on and as of any draw date
thereafter, as applicable, in each case immediately after giving effect to
the funding of any Term DIP Loans and to the application of the
proceeds therefrom as though made on and as of such date (except to
the extent such representations and warranties expressly relate to an
earlier date, in which case such representations and warranties shall be
true and correct in all material respects (without duplication of any
materiality qualifier) as of such earlier date).
The making of the Term DIP Loans shall not violate any requirement of
law and shall not be enjoined temporarily, preliminarily or permanently.
The making of the Term DIP Loans shall be authorized pursuant to the
Interim DIP Order or the Final DIP Order, as applicable.
The entry of the Interim DIP Order or the Final DIP Orders (as
applicable).
Other than the Orders, there shall not exist any law, regulation, ruling,
judgment, order, injunction or other restraint that prohibits or restricts
the DIP Facility or the exercise by the DIP Agent at the direction of the
3 “DOJ Action” means the pending judicial action, currently sealed, that has been filed by a relator on behalf of the
United States against the Borrowers, asserting alleged violations of the False Claims Act, as disclosed by the
Department of Justice to the Lenders prior to the Petition Date.
“DOJ Action Settlement Term Sheet” means that term sheet, annexed as an exhibit to the RSA, setting forth the
terms of the settlement of the DOJ Action, in form and substance acceptable to the Required Lenders.
“DOJ Adverse Action” means any action (including, without limitation, any changes, amendments, or other
modifications to the DOJ Action Settlement Term Sheet made by the Department of Justice) by the Department of
Justice that materially deviates and is adverse to the Debtors or the Consenting Term Lenders (it being understood
that any increase to the settlement amount or to the settlement payment structure shall constitute a material and
adverse deviation) from the DOJ Action Settlement Term Sheet.
18
DIP Lenders of its rights as a secured party with respect to the DIP
Collateral.
The RSA shall remain in force and effect according to its terms as to the
Debtors and the Consenting Term Lenders.
Other than the Known Events, since the Petition Date there shall not
have occurred a Material Adverse Change.
Other than the Chapter 11 Cases and any Known Events, as stayed upon
the commencement of the Chapter 11 Cases, or as disclosed to the Term
DIP Agent prior to the Petition Date, there shall exist no action, suit,
investigation, litigation or proceeding pending or threatened in writing
in any court or before any arbitrator or governmental authority that (i)
would reasonably be expected to result in a Material Adverse Change or
(ii) restrains, prevents or purports to affect materially and adversely the
legality, validity or enforceability of the Term DIP Facility or the
consummation of the transactions contemplated thereby.
No DOJ Adverse Action shall have occurred.
With respect to the Final DIP Loan, (x) the Bankruptcy Court shall have
entered the Confirmation Order, and the Confirmation Order shall be in
full force and effect, shall not have been reversed, vacated or stayed and
shall not have been amended, supplemented or otherwise modified
without the prior written consent of the Administrative Agent acting at
the direction of the Required Term DIP Lenders, which consent shall
not be unreasonably withheld, delayed or conditioned; and (y) the
settlement of the DOJ Action on a final basis, approved by the court
having jurisdiction over the DOJ Action, on terms acceptable to the
Required Term DIP Lenders and consistent with the DOJ Action
Settlement Term Sheet, shall have occurred.
Solely with respect to the funding of the remaining Term DIP
Commitments following the entry of the Final DIP Order, an
Incremental Commitment Letter shall have been executed by the
Commitment Deadline.
Representations and
Warranties:
The Term DIP Credit Agreement will contain and limited to the following
representations and warranties (which will be applicable to each Debtor and
its subsidiaries) consistent with the Documentation Principles and to be
made as of (x) the date the Borrowers and the Guarantors execute the Term
DIP Loan Documents, (y) the Closing Date, and (z) any draw date
thereafter: representations and warranties regarding valid existence,
requisite power, due authorization, no conflict with the Interim DIP Order
or the Final DIP Order (as applicable) or applicable law, governmental
consent, enforceability of Term DIP Loan Documents, accuracy of financial
statements, and all other non-forward looking information provided,
19
compliance with law, since the Petition Date absence of Material Adverse
Change (other than arising from Known Events), no default under the Term
DIP Loan Documents, taxes, subsidiaries, ERISA, pension and benefit
plans, ownership of properties and necessary rights to intellectual property,
insurance, inapplicability of Investment Company Act, compliance with
OFAC, money laundering, PATRIOT Act and other anti-terrorism laws and
anti-corruption laws, continued effectiveness of the applicable DIP Order
and each other order of the Bankruptcy Court with respect to the Term DIP
Facility.
Affirmative and Negative
Covenants:
The Term DIP Credit Agreement will contain affirmative and negative
covenants (and for the avoidance of doubt, no financial covenants) to be
consistent with the Documentation Principles, with such customary
exceptions (including without limitation, ordinary course of business
exceptions, materiality qualifiers and thresholds to be mutually agreed),
limited to the following:
Deliver to the Term DIP Agent and the Term DIP Lenders and their
counsel for review and comment, as soon as commercially reasonable,
and in any event not less than two (2) Business Days prior to filing (or
as soon thereafter as is reasonably practicable under the circumstances),
upon request, all pleadings, motions and other documents material to
the Term DIP Agent or Term DIP Lenders (provided that any of the
foregoing relating to the Term DIP Facility shall be deemed material) to
be filed on behalf of the Debtors with the Bankruptcy Court.
Deliver to the Term DIP Agent and the Term DIP Lenders, as soon as
commercially reasonable upon receipt of same, copies of any term
sheets, proposals, presentations or other material documents, from any
party, related to (i) the restructuring of the Debtors, or (ii) the sale of
material assets (outside of the ordinary course) of one or more of the
Debtors.
Comply in all material respects with applicable laws and orders binding
on the Debtors (including without limitation, the Bankruptcy Code,
ERISA, environmental laws, OFAC, money laundering laws,
PATRIOT Act and other anti-terrorism laws and anti-corruption laws),
pay taxes, maintain all necessary licenses and permits and trade names,
trademarks, patents, preserve corporate existence, maintain appropriate
and adequate insurance coverage and permit inspection of properties,
books and records upon reasonable notice and at any reasonable time
(and subject to confidentiality).
Conduct all transactions with affiliates of the Debtors on terms that,
when taken as a whole, are no less favorable to the Debtors than those
obtainable in arm’s length transactions, including, without limitation,
restrictions on management fees paid to affiliates.
Maintain a cash management system as required by the Prepetition ABL
Facility and the DIP Orders.
20
Not make or commit to make payments to critical vendors in respect of
prepetition amounts in excess of the amounts included in the Budget
(subject to Permitted Variances) (other than those critical vendors that
are approved in writing by the Requisite Term DIP Lenders).
Deliver the Budget, updated every two weeks, and adherence to the
Budget, subject to the Permitted Variances (as defined below).
Actual aggregate disbursements shall not exceed the aggregate amount
of disbursements in the Budget for the applicable period by more than
the Permitted Variance, and actual aggregate cash receipts (excluding
Term DIP Proceeds that may be deemed a receipt) during the applicable
period shall not be less than the aggregate amount of such cash receipts
in the Budget for such period by more than the Permitted Variances, in
each case, determined on a cumulative basis.
For purposes hereof, the term “Permitted Variances” will mean, for the
applicable “Testing Periods” set forth in the table below, after giving
effect to any Permitted Carryforward (as defined below): (i) all
favorable variances and (ii) an unfavorable variance of no more than the
Applicable Percentage (set forth in the table below) for each of actual
receipts, disbursements and net cash flow as compared to the budgeted
receipts, disbursements and net cash flow, respectively, set forth in the
Budget with respect to the applicable Testing Period; provided, that any
disbursements in such Testing Period made from proceeds of favorable
variances with respect to receipts in such Testing Period shall not be
counted as disbursements for purposes of calculating unfavorable
variances; and provided further that (x) receipts shall not be tested prior
to the first three full weeks following the Petition Date, (y) the
calculation of net cash flow for any Testing Period shall be with respect
to operating net cash flow and net cash flow shall not be tested prior to
the first three full weeks following the Petition Date and shall exclude
restructuring-related costs, and (y) the calculation of disbursements
shall not include disbursements on account of the Debtors’ payment of
professional fees in accordance with the Budget. The Permitted
Variance with respect to each Testing Period shall be determined and
reported to the Term DIP Agent and the Term DIP Lenders not later
than Friday immediately following each such Testing Period weekly in
accordance with clause (v) of “Financial Reporting Requirements”.
Additional variances, if any, from the Budget, and any proposed
changes to the Budget, shall be subject to the approval of the Term DIP
Agent at the direction of the Requisite Term DIP Lenders. “Permitted
Carryforward” is the amount of any projected disbursements, receipts or
net cash flow set forth in the Budget for a Testing Period not expended
in such Testing Period, which amounts shall carry forward into the next
succeeding Testing Period and applied to increase the applicable
amount thereof.
Testing Period (from
Petition Date)
Percentage (for
disbursements)
Percentage
(for
Percentage
(for cash
21
receipts) flow)
Week 1 N/A N/A N/A
Through Week 2
(cumulative)
20% N/A N/A
Through Week 3
(cumulative)
15% 32.5% 35%
Through Week 4
(cumulative)
Through Week 5
(cumulative)
15%
15%
32.5%
25%
35%
30%
Through Week 6
(cumulative)
15% 20% 30%
Through Week 7
(cumulative)
15% 15% 30%
Thereafter 15% 15% 25%
Consistent with the Documentation Principles and subject to the
Budget, not incur or assume any additional debt or contingent
obligations in respect of debt, give any guaranties in respect of debt,
create any liens, charges or encumbrances or incur additional material
lease obligations, in each case, other than (x) in the ordinary course of
business consistent with past practice or (y) otherwise, beyond agreed
upon limits; not merge or consolidate with any other person, change the
nature of business or corporate structure or create or acquire new
subsidiaries, in each case, beyond agreed upon limits; not amend its
charter or by laws; not sell, lease or otherwise dispose of assets
(including, without limitation, in connection with a sale leaseback
transaction) outside the ordinary course of business and beyond agreed
upon limits; not give a negative pledge on any assets in favor of any
person other than the Term DIP Agent for the benefit of the Term DIP
Lenders; and not permit to exist any consensual encumbrance on the
ability of any subsidiary to pay dividends or other distributions to the
Borrowers; in each case, subject to customary exceptions or baskets as
may be agreed.
Other than the Term DIP Obligations and any obligations under the
ABL DIP, not prepay, redeem, purchase, defease, exchange or
repurchase any debt or amend or modify (in a manner adverse to the
Debtors or the Term DIP Lenders) any of the terms of any such debt or
other similar agreements entered into by any Debtor or its subsidiaries.
Not make any loans, advances, capital contributions or acquisitions,
form any joint ventures or partnerships or make any other investments
in subsidiaries (other than among the Debtors) or any other person,
subject to certain exceptions to be agreed.
Not make or commit to make any payments in respect of warrants,
options, repurchase of stock, dividends or any other distributions (other
than among the Debtors, from Debtors to non-Debtor affiliates in the
22
ordinary course, among non-Debtors, and from non-Debtors to
Debtors).
Not make, commit to make, or permit to be made any bonus payments
to executive officers of the Debtors and their subsidiaries in excess of
the amounts set forth in the Budgets.
Not permit any change in ownership or control of any Debtor or any
subsidiary or any change in accounting treatment or reporting practices,
except as required by GAAP or as permitted or contemplated by the
Chapter 11 Plan or the Term DIP Credit Agreement.
Without the prior written consent of the Requisite Term DIP Lenders,
not make or permit to be made any change (in any manner adverse to
the Term DIP Lenders or the Prepetition First Lien Lenders) to the DIP
Orders or any other order of the Bankruptcy Court with respect to the
Term DIP Facility.
Not permit the Debtors to seek authorization for, and not permit the
existence of, any claims other than that of the Term DIP Lenders
entitled to a superpriority under section 364(c)(1) of the Bankruptcy
Code that is senior or pari passu with the Term DIP Lenders’ section
364(c)(1) claim, except for the Carve Out and the ABL DIP claims.
The Debtors, at the written request of the Required Term DIP Lenders,
shall enter into lockbox agreements with respect to the Controlled
Account which are consistent with the lockbox arrangements under the
Debtors’ existing cash management system as soon as reasonably
practical after the Closing Date.
The Debtors shall comply with the Milestones (as defined below).
Financial Reporting
Requirements:
The Borrowers shall provide to the Term DIP Agent for distribution to the
Term DIP Lenders (hereinafter the “Financial Reporting Requirements”):
(i) monthly operating reports of the Debtors and their subsidiaries, within
thirty (30) calendar days of month end (other than fiscal quarter end),
certified by an officer; (ii) quarterly consolidated financial statements of the
Debtors and their subsidiaries within sixty (60) calendar days of fiscal
quarter end, certified by an officer; (iii) following delivery of the Budget,
on every second Friday during the Chapter 11 Cases, an updated Budget, in
each case, in form and substance satisfactory to the Term DIP Agent at the
direction of the Requisite Term DIP Lenders for the subsequent 13-week
period consistent with the form of the initial Budget and such updated
Budget shall become the “Budget” for the purposes of the Term DIP
Facility upon the Term DIP Agent’s acknowledgement at the direction of
the Requisite Term DIP Lenders that the proposed updated Budget is
substantially in the form of the initial Budget and in substance satisfactory
to the Term DIP Agent (provided, that, until a new Budget has been
approved by the Term DIP Agent at the direction of the Requisite Term DIP
Lenders, the most recently approved Budget shall govern; provided further,
23
that, any such updated Budget shall be deemed approved by the DIP Term
Agent unless the DIP Term Agent objects to such supplemental Budget
within five (5) business days of receipt); and (v) beginning on the first
Friday following the Petition Date, and on every Friday thereafter, a
variance report (the “Variance Report”) setting forth actual cash receipts,
disbursements and cash flow of the Debtors for the applicable Testing
Period and setting forth all the variances, an aggregate basis, from the
amount set forth for such period as compared to the applicable Budget
(determined by reference to the most recent updated Budget) delivered by
the Debtors, in each case, on a weekly and cumulative basis (and each such
Variance Report shall include explanations for all material variances and
shall be certified by the Chief Financial Officer of the Debtors).
As soon as practicable after the Borrowers obtain knowledge thereof, the
Borrowers will promptly provide notice to the Term DIP Agent, for
distribution to the Term DIP Lenders, of any Material Adverse Change.
All deliveries required pursuant to this section shall be subject to the
confidentiality provision to be negotiated in the Term DIP Credit
Agreement.
On each Monday (or, in the event that such day is not a Business Day then
on the Business Day immediately following) during the Chapter 11 Cases
(until the Plan Effective Date), the Borrowers’ senior management and
professionals shall host a telephonic meeting for the Term DIP Lenders and
their professionals at which the Borrowers’ senior management and
professionals shall provide an update to the Term DIP Lenders (and make
themselves available for questions) with respect to the financial and
operating performance of the Loan Parties and their estates, including, but
not limited to, the Variance Report.
Other Reporting
Requirements:
The Term DIP Credit Agreement will contain additional reporting
requirements otherwise consistent with the Prepetition First Lien Credit
Agreement (collectively with the financial reporting information described
above, the “Information”).
Chapter 11 Cases
Milestones:
The Term DIP Credit Agreement will include certain milestones (the
“Milestones”) related to the Chapter 11 Cases, including the following:
The Debtors shall have commenced solicitation on the Chapter 11
Plan by 11:59 pm (ET) on May 31, 2020 (commencing solicitation
by email being sufficient; provided that solicitation materials are
sent by mail on June 1, 2020).
Promptly following the RSA Effective Date and, in any event, no
later than 11:59 pm (ET) on June 3, 2020, the Company Parties
shall file the Chapter 11 Cases (for the avoidance of doubt,
commencement of the Chapter 11 Cases remains subject to
approval of the board of directors or other governing bodies of the
24
Company Parties).
The Debtors’ filing with the Bankruptcy Court, on or within twenty-
four (24) hours of the Petition Date, the Chapter 11 Plan, which
shall be in form and substance reasonably acceptable to the
Requisite Term DIP Lenders and, solely with respect to terms and
provisions affecting the rights, protections, duties or obligations of
the Term DIP Agent or the Prepetition First Lien Agent, the Term
DIP Agent or the Prepetition First Lien Agent, as applicable, and
for which the Debtors shall have solicited and obtained the requisite
consent to the Chapter 11 Plan by the Requisite Consenting Term A
Lenders or requested and obtained authority from the Bankruptcy
Court to complete solicitation within twenty (20) days from the
Petition Date.
The Debtors’ filing with the Bankruptcy Court, on or within twenty-
four (24) hours of the Petition Date, of a disclosure statement
relating to the Chapter 11 Plan, and all related schedules,
supplements, exhibits and orders (as applicable), in form and
substance reasonably satisfactory to the Term DIP Agent at the
direction of the Requisite Term DIP Lenders (the “Disclosure
Statement”).
The Bankruptcy Court’s entry of an interim order (the “Interim DIP
Order”) approving (i) the ABL DIP and (ii) the Term DIP Facility
(including the Term DIP Commitments, all documents and lender
fees related thereto, and the payment of the fees and expenses of the
First Lien Steering Committee’s and Prepetition First Lien Agent’s
advisors (as set forth herein under the header “Adequate
Protection”)), in form and substance acceptable to the Requisite
Term DIP Lenders on or before three (3) Business Days following
the Petition Date.
The Debtors shall have received an Incremental Commitment Letter
by the Commitment Deadline.
The Bankruptcy Court shall hold the combined hearing on the
Chapter 11 Plan and Disclosure Statement on or before thirty-seven
(37) calendar days following the Petition Date.
The Bankruptcy Court’s entry of the Final DIP Order, in form and
substance reasonably acceptable to the Requisite Term DIP Lenders
on or before thirty-seven (37) calendar days following the Petition
Date.
The Bankruptcy Court’s entry of an order, in form and substance
reasonably satisfactory to the Term DIP Agent at the direction of
the Requisite Term DIP Lenders, approving the Disclosure
Statement (the “Disclosure Statement Order”), on or before forty
(40) calendar days following the Petition Date.
The Bankruptcy Court’s entry of an order, in form and substance
25
reasonably satisfactory to the Term DIP Agent at the direction of
the Requisite Term DIP Lenders and, solely with respect to terms
and provisions affecting the rights, protections, duties or obligations
of the Term DIP Agent or the Prepetition First Lien Agent, the
Term DIP Agent or the Prepetition First Lien Agent, as applicable,
confirming the Chapter 11 Plan (the “Confirmation Order”) on or
before forty (40) calendar days following the Petition Date.
The effective date (the “Plan Effective Date”) of the Chapter 11
Plan having occurred not later than fifty-four (54) calendar days
following the Petition Date.
Events of Default: The Term DIP Credit Agreement will contain and limited to the following
events of default, which will be applicable to the Debtors (each an “Event of
Default”), each with a cure period of three (3) business days (unless
otherwise set forth below and to the extent such Event of Default is capable
of being cured), in each case subject to waiver with the consent of the
Debtors and the Term DIP Agent at the direction of the Requisite Term DIP
Lenders:
failure to make payments when due within three (3) Business Days after
such payment due date;
noncompliance with covenants (subject to customary cure periods as
may be agreed with respect to certain covenants);
breaches of representations and warranties in any material respect;
existence of certain materially adverse employee benefit or
environmental liabilities, except for such liabilities as are in existence as
of the Closing Date and are set forth on a schedule to the Term DIP
Credit Agreement, and customary ERISA and similar foreign plan
events, in each case, to the extent resulting in a Material Adverse
Change;
the occurrence of a “Event of Default” under the credit agreement
governing the ABL DIP;
change in ownership or control, except as contemplated by the Chapter
11 Plan;
termination of the RSA Company Parties or the Requisite Consenting
Term A Lenders (other than as a result of a breach of the RSA by any
Consenting Lender that would constitute a Company Termination Event
(as defined in the RSA));
filing of a plan of reorganization under Chapter 11 of the Bankruptcy
Code by the Debtors (other than the Chapter 11 Plan) that has not been
consented to by the Requisite Term DIP Lenders;
the filing by any of the Debtors of a pleading seeking to vacate or
modify any of the DIP Orders over the objection of the Term DIP Agent
at the direction of the Requisite Term DIP Lenders;
26
entry of an order without the prior written consent of the Requisite
Term DIP Lenders amending, supplementing or otherwise modifying
the DIP Orders (other than, in respect of the Interim DIP Order, the
entry of the Final DIP Order);
reversal, vacatur or stay of the effectiveness of the DIP Orders except to
the extent stayed or reversed within five (5) Business Days (and, other
than, in respect of the Interim DIP Order, the entry of the Final DIP
Order);
a failure by the Loan Parties to comply with any material provision of
the DIP Orders (except where such failure would not materially and
adversely affect the Term DIP Lenders or the Term DIP Agent);
dismissal of the Chapter 11 Case of a Debtor with material assets or
conversion of the Chapter 11 Case of a Debtor with material assets to a
case under Chapter 7 of the Bankruptcy Code;
appointment of a Chapter 11 trustee or examiner with enlarged powers
relating to the operation of the business of any Borrower or any
Guarantor;
any sale of all or substantially all assets of the Debtors pursuant to
section 363 of the Bankruptcy Code, unless (i) the proceeds of such sale
are applied to repay the Term DIP Obligations in full in cash or (ii) such
sale is supported by the Term DIP Agent at the direction of the
Requisite Term DIP Lenders;
failure to meet a Milestone, unless extended or waived pursuant to the
written consent of the Term DIP Agent at the direction of the Requisite
Term DIP Lenders;
granting of relief from the automatic stay in the Chapter 11 Cases to
permit foreclosure or enforcement on assets of any Borrower or any
Guarantor, in each case, with a fair market value in excess of
$1,000,000;
the Debtors’ filing of (or supporting another party in the filing of) a
motion seeking entry of, or the entry of an order by the Bankruptcy
Court, granting any superpriority claim or lien (except as contemplated
herein) which is senior to or pari passu with the Term DIP Lenders’
claims under the Term DIP Facility;
the Debtors’ filing of a motion seeking entry of an order approving any
key employee incentive plan, employee retention plan, or comparable
plan, except as provided in the Chapter 11 Plan, without the prior
written consent of the Requisite Term DIP Lenders;
the Debtors shall seek, or shall support any other person’s motion
seeking (in any such case, verbally in any court of competent
jurisdiction or by way of any motion or pleading filed with the
Bankruptcy Court, or any other writing to another party in interest by
the Debtors), to challenge the validity or enforceability of any of the
27
obligations of the parties under the Prepetition First Lien Loan
Documents;
the Debtors shall assert in any pleading filed in any court that the
guarantee contained in the Term DIP Loan Documents is not valid and
binding, for any reason, to be in full force and effect, other than
pursuant to the terms hereof or thereof, or as a result of acts or
omissions of the lenders thereto;
payment of or granting adequate protection with respect to prepetition
debt, other than as expressly provided herein or in the DIP Orders or
consented to by the Term DIP Agent at the direction of the Requisite
Term DIP Lenders;
expiration or termination of the period provided by section 1121 of the
Bankruptcy Code for the exclusive right to file a plan, with respect to a
Debtor with material assets;
cessation of the Term DIP Liens or the Term DIP Claims to be valid,
perfected and enforceable in all respects;
Permitted Variances under the Budget are exceeded for any period of
time without consent of or waiver by the Term DIP Agent at the
direction of the Requisite Term DIP Lenders;
any uninsured judgments are entered with respect to any post-petition
non-ordinary course claims against any of the Debtors or any of their
respective affiliates in a combined aggregate amount in excess of
$1,000,000 unless stayed;
other than in the ordinary course and consistent with past practice, any
Debtor asserting any right of subrogation or contribution against any
other Debtor until all borrowings under the Term DIP Facility are paid
in full and the commitments are terminated;
the occurrence of a DOJ Adverse Action; and
the failure to settle the DOJ Action on a final basis, with approval by
the court having jurisdiction over the DOJ Action, on terms acceptable
to the Required Term DIP Lenders and consistent with the DOJ Action
Settlement Term Sheet, by July 15, 2020.
Termination: Upon the occurrence and during the continuance of an Event of Default, the
Term DIP Agent, at the direction of the Requisite Term DIP Lenders shall,
by written notice to the Borrowers, their counsel, the U.S. Trustee and
counsel for any statutory committee, terminate the Term DIP Facility,
declare the obligations in respect thereof to be immediately due and payable
and, subject to the immediately following paragraph, exercise all rights and
remedies under the Term DIP Loan Documents and the DIP Orders.
Remedies: The Term DIP Agent and the Term DIP Lenders shall have customary
remedies, including, without limitation, the following:
28
The automatic stay provisions of section 362 of the Bankruptcy Code shall
be modified to the extent necessary to permit the Term DIP Agent and the
Term DIP Lenders to enforce all of their rights under the Term DIP Loan
Documents and (i) upon the occurrence and during the continuance of any
Event of Default under the Term DIP Loan Documents, to (A) cease making
any Term DIP Loans under the Term DIP Facility to the Debtors and (B)
declare all Term DIP Obligations to be immediately due and payable; and
(ii) unless the Court orders otherwise during such period, upon the
occurrence of an Event of Default and the giving by the Term DIP Agent at
the direction of the Requisite Term DIP Lenders of five (5) business days
prior written notice (the “Termination Notice”; and such notice period, the
“Remedies Notice Period,” provided that such period may be extended by
written agreement by the Debtors and the Term DIP Agent (acting at the
direction of the Requisite Term DIP Lenders), in their respective
discretion), delivered to counsel to the Debtor, with copies to the United
States Trustee and counsel to the Committee (if any), in each case subject in
all respects to the Carve Out and the proviso below, including without
limitation the Debtors’ rights to fund the Carve Out Reserves, to (A)
immediately terminate the Debtors’ use of any cash collateral, (B) freeze
monies or balances in the Debtors’ accounts (and, with respect to the Term
DIP Credit Agreement and the Term DIP Facility, sweep all funds
contained in the Controlled Account); (C) set-off any and all amounts in
accounts maintained by the Debtors with the Term DIP Agent or the Term
DIP Lenders against the Term DIP Obligations, or otherwise enforce any
and all rights against the Term DIP Collateral in the possession of any of the
applicable Term DIP Lenders, including, without limitation, disposition of
the Term DIP Collateral solely for application towards the Term DIP
Obligations; and (D) take any other actions or exercise any other rights or
remedies permitted under the DIP Orders, the Term DIP Loan Documents
or applicable law to effect the repayment of the Term DIP Obligations;
provided, however, that during the Remedies Notice Period, the Debtors
shall be permitted to continue to use proceeds of the Term DIP Facility and
cash collateral to (1) fund the Carve Out Reserves and, (2) to pay (x)
accrued wages and any other critical employee-related expenses and (y)
subject to the consent of the Term DIP Agent (at the direction of the
Requisite Term DIP Lenders) any other critical business-related expenses,
necessary to operate the Debtors’ business or preserve the Term DIP
Collateral as determined by the Debtors in their reasonable discretion and in
good faith; provided, further, that the only basis on which the Debtors, the
Committee or any other party-in-interest shall have the right to contest a
Termination Notice shall be with respect to the validity of the Event of
Default giving rise to such Termination Notice (i.e., whether or not such
Event of Default has occurred or not, or whether or not it has been cured
within the cure periods expressly set forth in the applicable Term DIP Loan
Documents).
Upon and after the delivery of the Termination Notice, the Debtors and the
Term DIP Agent at the direction of the Requisite Term DIP Lenders consent
29
to a hearing on an expedited basis to consider whether the automatic stay
may be lifted so that the Term DIP Agent and the Term DIP Lenders may
exercise all of their respective rights and remedies in respect of the Term
DIP Collateral in accordance with the DIP Orders and the Term DIP Loan
Documents, or to consider any other appropriate relief (including the
Debtors’ use of cash collateral on a nonconsensual basis).
Adequate Protection: As adequate protection for the use of the collateral securing the Prepetition
First Lien Obligations (the “Prepetition First Lien Collateral”), the
Prepetition First Lien Agent, on behalf of and for the benefit of the
Prepetition First Lien Lenders, and the Prepetition First Lien Lenders, shall
receive, in each case subject to the Carve Out:
(i) current payment of all reasonable and documented (in summary
form) out-of-pocket fees, costs and expenses of the Prepetition First
Lien Agent (limited, in the case of counsel, to all reasonable and
documented out-of-pocket fees, costs, disbursements and expenses
of its outside counsel, A&P, and one local counsel shared with the
Term DIP Agent and any successor counsel);
(ii) current payment of all reasonable and documented (in summary
form) out-of-pocket fees, costs and expenses of the First Lien
Steering Committee (limited, in the case of counsel, financial
advisors and other outside professionals, to all reasonable and
documented out-of-pocket fees, costs, disbursements and expenses
of its outside counsel, K&S, and, to the extent necessary, one firm
of local counsel engaged by the First Lien Steering Committee in
connection with the Debtors’ Chapter 11 Cases, and FTI);
(iii) replacement liens to the extent of any postpetition diminution in
value of the Prepetition First Lien Lenders’ interest in the
Prepetition First Lien Collateral resulting from the use, sale or lease
by the Debtors of such Prepetition First Lien Collateral and/or the
imposition of the automatic stay, including replacement liens on all
Unencumbered Property of the Debtors, which liens will be junior
to Term DIP Liens (the “Prepetition First Lien Lender Adequate
Protection Liens”) and senior to the Prepetition Term Liens;
(iv) superpriority administrative expense claims to the extent of any
postpetition diminution in value of the Prepetition First Lien
Lenders’ interest in the Collateral resulting from the use, sale or
lease by the Debtors of such Prepetition First Lien Collateral and/or
the imposition of the automatic stay (the “Prepetition First Lien
Lender Superpriority Claims”), which claims will be junior to the
Term DIP Obligations and be payable from and have recourse to all
assets and property of the Debtors; and
(v) reasonable access to the Debtors’ books and records and such
financial reports as are provided to the Term DIP Agent pursuant to
provisions (i) through (iii) above of the Financial Reporting
30
Requirements section.
(the foregoing clauses (i)-(v), the “Adequate Protection Package”).
The DIP Orders shall provide that the Debtors’ agreement to the Milestones
and the Budgets shall constitute a component of the Adequate Protection
Package.
The Interim DIP Order shall include language providing for the payment of
all outstanding fees and expenses referenced in the foregoing clauses (i) and
(ii) through and including the Petition Date upon entry of the Interim DIP
Order.
Notwithstanding the foregoing, the Prepetition First Lien Lender Adequate
Protection Liens shall not extend to assets held by the Debtors in trust;
provided, however, that the Prepetition First Lien Lender Adequate
Protection Liens shall extend to (a) any rights, claims or causes of action
that the Debtors may have with respect to such assets, and (b) any proceeds
of such assets that become property of the Debtors.
For the avoidance of doubt, any and all payments made on account of the
Prepetition First Lien Obligations to the Prepetition First Lien Lenders in
connection with the Adequate Protection Package shall be distributed in
accordance with the waterfall set forth in the Prepetition First Lien Credit
Agreement.
Marshalling and Waiver of
506(c) and 552(b) Claims:
The Final DIP Order shall provide that in no event shall the Term DIP
Agent, the Term DIP Lenders, the Prepetition First Lien Agent, or the
Prepetition First Lien Lenders be subject to the equitable doctrine of
“marshalling” or any similar doctrine with respect to the Term DIP
Collateral, or the Prepetition First Lien Collateral, as applicable, and all
proceeds shall be received and applied pursuant to the Final DIP Order and
the Term DIP Loan Documents notwithstanding any other agreement or
provision to the contrary.
Upon entry of the Final DIP Order, the Debtors (on behalf of themselves
and their estates) shall waive, and shall not assert in the Chapter 11 Cases or
any successor cases, (i) any surcharge claim under sections 105(a) and/or
506(c) of the Bankruptcy Code or otherwise for any costs and expenses
incurred in connection with the preservation, protection or enhancement of,
or realization by the Term DIP Agent, the Term DIP Lenders, or the
Prepetition Secured Parties, upon the Term DIP Collateral, or the
Prepetition First Lien Collateral, and (ii) the Term DIP Agent, the Term DIP
Lenders, and the Prepetition Secured Parties shall each be entitled to all of
the rights and benefits of section 552(b) of the Bankruptcy Code, and the
“equities of the case” exception under section 552(b) of the Bankruptcy
Code shall not apply to the Term DIP Agent, the Term DIP Lenders, and the
Prepetition Secured Parties with respect to proceeds, product, offspring or
profits of any of the Prepetition First Lien Collateral, or Term DIP
Collateral.
31
Indemnification: Subject to entry of the Interim DIP Order, the Debtors shall jointly and
severally indemnify and hold harmless the Term DIP Agent, each Term DIP
Lender and each of their affiliates and each of the respective officers,
directors, employees, controlling persons, agents, advisors, attorneys and
representatives of each (each, an “Indemnified Party”) from and against any
and all claims, damages, actual losses, liabilities and expenses (including
(and limited, in the case of counsel, to) reasonable and documented out-of-
pocket fees and disbursements of one counsel, one local counsel in each
relevant jurisdiction, and any successor counsel to primary or local counsel,
for the Term DIP Agent and one counsel for the other Indemnified Parties),
joint or several, that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or
relating to any investigation, litigation or proceeding or the preparation of
any defense, arising out of or in connection with or relating to the Term DIP
Facility, the Term DIP Loan Documents or the transactions contemplated
thereby, or any use made or proposed to be made with the Term DIP
Proceeds, whether or not such investigation, litigation or proceeding is
brought by any Debtor or any of its subsidiaries, any shareholders or
creditors of the foregoing, an Indemnified Party or any other person, or an
Indemnified Party is otherwise a party thereto, except, to the extent such
claim, damage, loss, liability or expense (i) is found in a final
non-appealable judgment by a court of competent jurisdiction to have
resulted solely from the gross negligence, or willful misconduct of such
Indemnified Party or any of such Indemnified Party’s affiliates or their
respective principals, directors, officers or employees, (ii) resulted solely
from a dispute among Indemnified Persons other than any claims against
any Indemnified Person in its capacity or in fulfilling its role as Term DIP
Agent or (iii) resulted from a material breach of the Term DIP Loan
Documents by such Indemnified Person or any of such Indemnified Party’s
affiliates or their respective principals, directors, officers or employees, as
determined in a final non-appealable judgment of a court of competent
jurisdiction. No Indemnified Party shall have any liability (whether direct
or indirect, in contract, tort or otherwise) to any Debtor or any of its
subsidiaries or any shareholders or creditors of the foregoing for or in
connection with the transactions contemplated hereby, except, with respect
to any Indemnified Party, to the extent such liability is found in a final
non-appealable judgment by a court of competent jurisdiction to have
resulted (i) solely from the gross negligence, willful misconduct or actual
fraud of such Indemnified Party or any of such Indemnified Party’s
affiliates or their respective principals, directors, officers or employees or
(ii) solely from a material breach of the Term DIP Loan Documents by such
Indemnified Person or any of such Indemnified Party’s affiliates or their
respective principals, directors, officers or employees. In no event,
however, shall any Indemnified Party or Debtor be liable on any theory of
liability for any special, indirect, consequential or punitive damages.
Expenses: Each Borrower and each Guarantor shall jointly and severally pay all (i)
reasonable and documented (in summary form) out-of-pocket fees, costs,
32
disbursements and expenses of (a) the Term DIP Agent (including (and
limited, in the case of counsel, to) all reasonable and documented out-of-
pocket fees, costs, disbursements and expenses of the Term DIP Agent’s
outside counsel, A&P and, to the extent necessary, one firm of local counsel
engaged by the Term DIP Agent in connection with the Debtors’ Chapter 11
Cases, and any successor counsel to each) and (b) the First Lien Steering
Committee (including (and limited, in the case of counsel, financial advisors
and other outside professionals, to) all reasonable and documented out-of-
pocket fees, costs, disbursements and expenses of the First Lien Steering
Committee’s outside counsel, K&S, and, to the extent necessary, one firm
of local counsel engaged by the First Lien Steering Committee’s in
connection with the Debtors’ Chapter 11 Cases, and FTI), in the case of
each of the foregoing clauses (a) and (b), in connection with the
negotiations, preparation, execution and delivery of the Term DIP Loan
Documents and the funding of all Term DIP Loans under the Term DIP
Facility, including, without limitation, all due diligence, transportation,
computer, duplication, messenger, audit, insurance, appraisal, valuation and
consultant costs and expenses, and all search, filing and recording fees,
incurred or sustained by the Term DIP Agent and the First Lien Steering
Committee, and their counsel and professional advisors in connection with
the Term DIP Facility, the Term DIP Loan Documents or the transactions
contemplated thereby, the administration of the Term DIP Facility and any
amendment or waiver of any provision of the Term DIP Loan Documents,
and (ii) without duplication, reasonable and documented (in summary form)
out-of-pocket fees, costs, disbursements and expenses of the Term DIP
Agent and the First Lien Steering Committee (including (and limited, in the
case of counsel, to) (x) all reasonable and documented out-of-pocket fees,
costs, disbursements and expenses of one firm of outside counsel for the
Term DIP Agent and, to the extent necessary, one firm of local counsel
engaged by the Term DIP Agent in each relevant jurisdiction, and any
successor counsel to such primary counsel and local counsel) and (y) all
reasonable and documented out-of-pocket fees, costs, disbursements and
expenses of one firm of outside counsel for the First Lien Steering
Committee and, to the extent necessary, one firm of local counsel engaged
by the First Lien Steering Committee in connection therewith) in connection
with (A) the enforcement of any rights and remedies under the Term DIP
Loan Documents, (B) the Chapter 11 Cases, including attendance at all
hearings in respect of the Chapter 11 Cases, and (C) defending and
prosecuting any actions or proceedings arising out of or relating to the
Prepetition First Lien Obligations, the Term DIP Obligations, the Liens
securing the Prepetition First Lien Obligations and the Term DIP
Obligations, or any transaction related to or arising in connection with the
Prepetition First Lien Loan Documents, the Term DIP Credit Agreement or
the other Term DIP Loan Documents (in the case of the Prepetition First
Lien Obligations and the Liens securing the Prepetition First Lien
Obligations, to the extent provided in the Prepetition First Lien Loan
Documents).
Assignments and Assignments shall not be subject to the consent of the Borrowers. Any
33
Participations: assignment by a Term DIP Lender shall be subject to the terms and
conditions of the RSA as long as the RSA is in effect.
Requisite Term DIP
Lenders:
The “Requisite Term DIP Lenders” shall mean the Term DIP Lenders
holding more than 50.0% of the Term DIP Commitments except as to
matters requiring unanimity under the Term DIP Credit Agreement (e.g., the
reduction of interest rates, the extension of interest payment dates, the
reduction of fees, the extension of the maturity of the Borrowers’
obligations, any change in the superpriority status of the Borrowers’ and
Guarantors’ obligations under the Term DIP Facility and the release of all
or substantially all of the Term DIP Collateral).
Term DIP Agent Rights: Solely with respect to terms and provisions affecting the rights, protections,
duties or obligations of the Term DIP Agent, notwithstanding any other
content herein or in any other document, all documentation pertaining to the
Term DIP Facility, the Interim DIP Order, the Final DIP Order, the Chapter
11 Plan, the Confirmation Order and any other document, pleading, or order
affecting the rights, duties or obligations of the Term DIP Agent, or any
amendments or modifications to the foregoing, shall be in form and
substance acceptable to the Term DIP Agent in its sole and absolute
discretion.
Miscellaneous: The Term DIP Credit Agreement will include standard yield protection
provisions (including, without limitation, provisions relating to compliance
with risk-based capital guidelines, increased costs, payments free and clear
of withholding taxes and customary EU bail-in provisions).
With respect to all references to written notice or written consent herein,
such written notice or written consent may, in each case, be delivered by e-
mail (or other electronic means).
Governing Law: Except as governed by the Bankruptcy Code, the laws of the State of New
York.
Jurisdiction The Bankruptcy Court, or, if the Bankruptcy Court lacks, declines or
abstains from exercising jurisdiction, the U.S. District Court for the
Southern District of New York.
Counsel to the First Lien
Steering Committee:
King & Spalding LLP
Financial Advisor to the
First Lien Steering
Committee:
FTI Consulting
Counsel to the Term DIP
Agent:
Arnold & Porter Kaye Scholer LLP
Counsel to the Debtors: Kirkland & Ellis LLP
34
Financial Advisor to the
Debtors:
Jefferies Finance LLC
Exhibit J
Term Exit Facility Commitment Letter
CONFIDENTIAL
May 31, 2020
APC Automotive Technologies Intermediate Holdings, LLC
10822 West Toller Drive, Suite 370
Littleton, CO 80127
Attn: Marc Weinsweig
Email: [email protected]
APC Automotive Technologies, LLC
$50,000,000 Exit Term Loan Facility
Exit Commitment Letter
Mr. Weinsweig:
Reference is made to:
that certain First Lien Credit Agreement, dated as of May 10, 2017 (as amended, restated,
supplemented or otherwise modified from time to time, the “Prepetition Term Credit
Agreement”), by and among APC Automotive Technologies Intermediate Holdings, LLC
(F/K/A AP Exhaust Intermediate Holdings, LLC, “Holdco”), APC Automotive
Technologies, LLC (f/k/a AP Exhaust Acquisition, LLC, “AP Acquisition”), CWD
Acquisition, LLC (“CWD Buyer”), CWD Holding Corp. (“CWD Corp.” and, together
with AP Acquisition and CWD Buyer, in their capacities as Borrowers, collectively the
“Borrowers” and each individually a “Borrower”), the other persons from time to time
party to, or designated under, the Prepetition Term Credit Agreement as “Loan Parties”
(together with the Borrowers, the “Loan Parties”), the several lenders from time to time
party thereto (the “Prepetition Term Lenders”) and Wilmington Trust, National
Association, in its capacity as successor agent to Jefferies Finance LLC (in such capacity,
the “Prepetition First Lien Agent”);
that certain Restructuring Support Agreement dated as of the date hereof (as amended,
restated, supplemented or otherwise modified from time to time, the “RSA”), by and
among Holdco and certain of its direct and indirect subsidiaries (collectively, the
“Company”), APC Automotive Technologies Holdings, LLC, Audax Private Equity
Fund IV AIV, L.P., AG PE Fund IV Exhaust-Aristo, LLC, Audax Co-Invest IV, L.P., AG
TCI Exhaust-Aristo, LLC, and AFF Co-Invest, L.P., and AG Grey Goose Holdings, LLC,
Harvest Partners VII, L.P., Harvest Partners VII (Parallel), L.P., and Harvest Strategic
Associates VII, L.P., Harvest APC Holdings, LLC, Harvest APC Blocker Purchaser,
L.P., VAP Holdings, Inc., and Crescent Mezzanine Partners VII, L.P., Crescent
Mezzanine Partners VII (LTL), L.P., CBDC Universal Equity, Inc., CM7B APC Equity,
LLC, and CM7C APC Equity, LLC and certain of the Prepetition Term Lenders (such
lenders, the “Consenting Lenders”);
the Summary of Proposed Terms and Conditions attached hereto as Exhibit A (the “Exit
Term Loan Term Sheet” and, together with this letter, the “Exit Commitment Letter”).
Execution Version
Capitalized terms used herein without definition have the meanings assigned to such terms in the
Exit Term Loan Term Sheet.
Exit Commitments.
Each of the undersigned (collectively, the “Exit Commitment Parties” and each individually, an
“Exit Commitment Party”) hereby, severally but not jointly, commits (the “Exit Commitment”) to
roll-up its portion (and the portion held by its affiliates, accounts managed or sub-managed by it
or its affiliates and direct or indirect subsidiaries) of the $43,500,000 Term DIP Facility (as
defined in the RSA) plus any commitment increases actually funded up to $50,000,000 in
aggregate principal amount and amounts paid in kind pursuant to the Term DIP Facility, as senior
secured term loans (the “Exit Term Loans”) to the Borrowers. Each Exit Commitment Party’s
Exit Commitment shall be determined as set forth in the preceding sentence on the date that is
one (1) business day after the entry of the order authorizing and approving the Term DIP Facility
on a final basis (it being understood that the aggregate amount of the Exit Term Loan Facility
shall not be reduced except as a result of a reduction of the outstanding obligations under the
Term DIP Facility in accordance therewith); provided, however, that each Exit Commitment
Party’s Exit Commitment in respect of the Exit Term Loan Facility shall be reduced
proportionately (based upon its pro rata share of Exit Commitments) by any commitment to
provide the Exit Term Loan Facility that is assigned to and assumed in writing by one or more
lenders on or prior to the Closing Date, subject to the provisions under “Assignments and
Amendments” below.
The roll-up of the outstanding obligations of the Borrowers under their post-petition superpriority
senior secured debtor-in-possession term loan credit agreement as Exit Term Loans, are the “Exit
Term Loan Facility”. Wilmington Trust, National Association hereby agrees to act as
administrative agent for the Exit Term Loan Facility (in such capacity, together with its
successors and assigns, the “Exit Term Agent”).
Conditions Precedent.
The Exit Commitment Parties’ commitments to fund the Exit Term Loan Facility (and their Exit
Commitments) are subject to satisfaction or waiver by the Exit Commitment Parties of the
following conditions precedent (and solely such conditions precedent):
(i) the execution of definitive documentation (the “Exit Term Loan Documents”)
evidencing the Exit Term Loan Facility on substantially the terms set forth in the
Exit Term Loan Term Sheet and to the extent not otherwise set forth therein or
herein, otherwise in accordance with the Documentation Principles;
(ii) the Milestones, as such term is defined in the definitive documentation
evidencing the Term DIP Facility, shall have been satisfied or waived in
accordance with the terms thereof;
(iii) by no later than the date that the Plan Supplement (as defined in the Bankruptcy
Plan) is required to be filed in the Chapter 11 Cases, the Debtors shall have
received an executed commitment letter by one or more of the lenders under the
Term DIP Facility (or such other party after approval by the Required Lenders
(as defined in the DIP Term Loan Credit Agreement)) providing a commitment
of an additional $6.5 million to be funded as part of the final draw under the
Term DIP Facility following the entry of the order approving the Term DIP
Facility on a final basis;
(iv) the Bankruptcy Court shall have entered, no later than 45 calendar days after the
scheduled first day hearing in the Chapter 11 Cases, an order approving the terms
set forth in this Exit Commitment Letter and authorizing the payment of all fees
set forth in the Fee Letter;
(v) no later than the date the Bankruptcy Court enters an order approving and
authorizing the Term DIP Facility on an interim basis, Borrowers shall have
entered into a commitment letter reasonably acceptable to the Exit Commitment
Parties with respect to the funding of an exit asset-backed credit facility;
(vi) payment of all fees then due and owing pursuant to this Exit Commitment Letter,
the Fee Letter, and any other fees agreed to in writing by the Debtors and the Exit
Commitment Parties in connection with the Exit Term Loan Facility; and
(vii) the satisfaction of (or express written waiver by each of the Exit Commitment
Parties of) each of the conditions set forth under the section heading “Conditions
Precedent to the Closing of the Exit Term Loan Facility” set forth in the Exit
Term Loan Term Sheet.
Evaluation Material.
You hereby represent, warrant and covenant that (a) all written information (other than the
projections, budgets, financial estimates, forecasts and other forward-looking information with
respect to you and your affiliates (collectively, the “Projections”) and general economic or
specific industry information) (the “Information”) that has been or will be made available to the
Exit Commitment Parties by you or any of your affiliates or representatives, when taken as a
whole, is or will be, when furnished, correct in all material respects and does not or will not,
when furnished, contain any untrue statement of fact or omit to state a fact necessary in order to
make the statements contained therein not materially misleading in light of the circumstances
under which such statements are made (after giving effect to all supplements from time to time)
and (b) the Projections that have been or will be made available to the Exit Commitment Parties
by you or any of your affiliates or representatives have been or will be prepared in good faith
based upon assumptions believed to be reasonable at the time made (it being understood and
agreed that financial projections are not a guarantee of financial performance and actual results
may differ from financial projections and such differences may be material). You agree that if at
any time prior to the closing of the Exit Term Loan Facility you become aware that any of the
representations in the preceding sentence would be, to your knowledge, incorrect in any material
respect if the Information and Projections were being furnished, and such representations were
being made, at such time, then you will use commercially reasonable efforts to supplement the
Information and the Projections from time to time until the closing of the Exit Term Loan Facility
so that the representations, warranties and covenants in the foregoing sentences will be correct in
all material respects under those circumstances, it being understood that any such supplement
shall cure any breach of such representation. You understand that in making its commitment
hereunder, each Exit Commitment Party may use and rely on the Information and Projections
without independent verification thereof.
You hereby authorize and agree, on behalf of yourself and your affiliates, that the Information,
the Projections and all other information (including third party reports) provided by or on behalf
of you and your affiliates and representatives to the Exit Commitment Parties regarding you and
your affiliates, in connection with the Exit Term Loan Facility and the transactions contemplated
hereby, may be disseminated by or on behalf of the Exit Commitment Parties, and made
available, to prospective lenders to the Exit Term Loan Facility and their advisors, who have each
agreed to be bound by customary confidentiality undertakings (including “click-through”
agreements) (whether transmitted electronically by means of a website, e-mail or otherwise, or
made available orally or in writing, including at prospective lenders to the Exit Term Loan
Facility or other meetings). You hereby further authorize the Exit Commitment Parties to
download copies of your logos and agree to use commercially reasonable efforts to obtain
authorization to permit the Exit Commitment Parties to download copies of your logos, from your
websites and post copies thereof on an IntraLinks® or similar workspace and use such logos on
any materials prepared in connection with the Exit Term Loan Facility.
Expenses.
Regardless of whether the Exit Term Loan Facility closes, you hereby agree to pay or reimburse
(in each case, whether incurred before or after the date hereof) the Exit Commitment Parties and
the Exit Term Agent, as applicable, for all (i) reasonable and documented (in summary form) out-
of-pocket fees, costs, disbursements and expenses of (a) the Exit Term Agent (including (and
limited, in the case of counsel, to) all reasonable and documented out-of-pocket fees, costs,
disbursements and expenses of the Exit Term Agent’s outside counsel, Arnold & Porter Kaye
Scholer LLP and, to the extent necessary, one firm of local counsel engaged by the Exit Term
Agent in connection with the preparation of the Exit Term Loan Documents, and any successor
counsel to each) and (b) the Exit Commitment Parties (including (and limited, in the case of
counsel, financial advisors and other outside professionals, to) all reasonable and documented
out-of-pocket fees, costs, disbursements and expenses of Exit Commitment Parties’ outside
counsel, King & Spalding LLP, and, to the extent necessary, one firm of local counsel engaged by
the Exit Commitment Parties in connection with the preparation of the Exit Term Loan
Documents, and FTI Consulting), in the case of each of the foregoing clauses (a) and (b), in
connection with the negotiations, preparation, execution and delivery of the Exit Term Loan
Documents and the funding of all Exit Term Loans under the Exit Term Loan Facility, including,
without limitation, all due diligence, transportation, computer, duplication, messenger, audit,
insurance, appraisal, valuation and consultant costs and expenses, and all search, filing and
recording fees, incurred or sustained by the Exit Term Agent and the Exit Commitment Parties,
and their counsel and professional advisors in connection with the Exit Term Loan Facility, the
Exit Term Loan Documents or the transactions contemplated thereby, the administration of the
Exit Term Loan Facility and any amendment or waiver of any provision of the Exit Term Loan
Documents, and (ii) without duplication, reasonable and documented (in summary form) out-of-
pocket fees, costs, disbursements and expenses of the Exit Term Agent and the Exit Commitment
Parties (including (and limited, in the case of counsel, to) (x) all reasonable and documented out-
of-pocket fees, costs, disbursements and expenses of one firm of outside counsel for the Exit
Agent and, to the extent necessary, one firm of local counsel engaged by the Exit Term Agent in
each relevant jurisdiction, and any successor counsel to such primary counsel and local counsel)
and (y) all reasonable and documented out-of-pocket fees, costs, disbursements and expenses of
one firm of outside counsel for the Exit Commitment Parties and, to the extent necessary, one
firm of local counsel engaged by the Exit Commitment Parties in connection therewith) in
connection with the enforcement of any rights and remedies under or arising out of this Exit
Commitment Letter and/or the Exit Commitment Facility.
Confidentiality.
You agree that you will not disclose, directly or indirectly, this Exit Commitment Letter and the
contents hereof or the Lender Fee Letter dated as of the date hereof (the “Fee Letter”) among the
Exit Commitment Parties and the Borrowers and the contents thereof or the Exit Commitment
Parties’ involvement with the Exit Term Loan Facility to any third party (including, without
limitation, any financial institution or intermediary) without each Exit Commitment Party’s prior
written consent, other than to (a) those individuals who are your directors, officers, employees,
attorneys, agents or advisors in connection with the Exit Term Loan Facility who agree to observe
the confidentiality requirements set forth herein; provided that this Exit Commitment Letter may
be disclosed to the providers of your debtor-in-possession asset-backed revolving credit facility in
the Chapter 11 Cases and to the providers of any asset-backed revolving credit facility to be
provided to the Borrowers upon emerging from bankruptcy and their officers, employees,
attorneys, agents and advisors, in each case on a confidential basis (it being understood any such
disclosure pursuant to this clause shall be limited to a general description of the fees to be paid
and does not authorize the distribution of the Fee Letter to such persons), (b) the Bankruptcy
Court for approval of this Exit Commitment Letter and to the extent required in motions, (c) any
official committee appointed in the Chapter 11 Cases (in respect of the Fee Letter, on a
professional eyes only basis) and their respective legal and financial advisers, (d) as may be
compelled in a judicial or administrative proceeding or as otherwise required by law (in which
case you agree to inform the Exit Commitment Parties promptly thereof), (e) to the extent
necessary in connection with the exercise of any remedies or enforcement of any rights
hereunder, (f) the existence and contents of the Exit Commitment Letter to any ratings agency in
connection with obtaining ratings, (g) the existence and contents of the Exit Commitment Letter
to the extent any such information becomes publicly available other than by reason of disclosure
by you, your affiliates or your representatives in violation of this Commitment Letter and (h)
other recipients as required by the Bankruptcy Court, or as part of the Borrowers and each of their
subsidiaries’ disclosure statement soliciting votes in support of a plan of reorganization, whether
before or after the commencement of the Chapter 11 Cases (it being understood any such
disclosure pursuant to this clause (f) shall be limited to a general description of the fees to be paid
in the Borrower’s solicitation materials and does not authorize the distribution, filing with the
Bankruptcy Court, or other action that results in the Fee Letter being made available to such other
recipients). Except in connection with the disclosure statement soliciting votes in support of a
plan of reorganization, you agree to inform all such persons who receive information concerning
this Exit Commitment Letter or the Fee Letter that such information is confidential and may not
be used for any other purpose. The Exit Commitment Parties reserve the right to review and
approve, in advance, all materials, press releases, advertisements and disclosures that contain
their name or any name of any affiliate or the name of any account managed or sub-managed by,
or any related fund of, the Exit Commitment Parties or describe their respective financing
commitments (such approval not to be unreasonably withheld, delayed or conditioned).
The Borrowers hereby agree that if the Fee Letter is required to be filed with any bankruptcy
court or disclosed to any U.S. Trustee for purposes of obtaining approval to pay any fees provided
for therein or otherwise, then it shall promptly notify the Exit Commitment Parties and, if
requested by the Exit Commitment Parties, take all commercially reasonable actions necessary to
file the Fee Letter in redacted form to the maximum extent permitted by such bankruptcy court
and such law. Notwithstanding the “Survival” section herein, the obligations of the foregoing
sentence shall survive any termination or completion of the arrangement provided by this Exit
Commitment Letter.
Each Exit Commitment Party and the Exit Term Agent agrees it shall use all nonpublic
information received by it in connection with the Exit Term Facility solely for the purposes of
providing the commitments subject of this Exit Commitment Letter and shall treat confidentially
all such information; provided, however, that nothing herein shall prevent any Exit Commitment
Party or the Exit Term Agent from disclosing any such information (a) to any other party hereto
or to any lender under the Exit Term Loan Facility or participants or prospective lenders under
the Exit Term Loan Facility, (b) as may be compelled in a judicial or administrative proceeding
or as otherwise required by law or regulations (in which case we agree to inform you promptly
thereof), (c) upon the request or demand of any regulatory authority, (d) to the legal counsel,
independent auditors, professionals and other experts or agents of such party (collectively,
“Representatives”) who are informed of the confidential nature of such information and are or
have been advised of their obligation to keep information of this type confidential, (e) to any of
its respective affiliates, directors, trustees, officers, employees and agents (provided that any such
affiliate is advised of its obligation to retain such information as confidential, and each Exit
Commitment Party and Exit Term Agent shall be responsible for its affiliates’ compliance with
this paragraph) solely in connection with the Exit Term Loan Facility, (f) to the extent such
information is independently developed by the Exit Commitment Parties, (g) to the extent any
such information becomes publicly available other than by reason of disclosure by any Exit
Commitment Party, the Exit Term Agent, any of their affiliates or Representatives in breach of
this Exit Commitment Letter, (h) to the extent that such information is received by such Exit
Commitment Party or the Exit Term Agent from a third party that is not, to such Exit
Commitment Party’s or the Exit Term Agent’s knowledge, subject to confidentiality obligations
to you, (i) in connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to any Exit Term Loan Document or the enforcement of rights thereunder,
and (j) to the extent consented by you.
Indemnity.
Regardless of whether the Exit Term Loan Facility closes or is closed, you agree to (a) indemnify,
defend and hold each of the Exit Commitment Parties, and their respective affiliates and funds
managed or advised by the Exit Commitment Parties or their affiliates and the principals,
directors, officers, employees, representatives, agents, attorneys and third party advisors of each
of them (each, an “Indemnified Person”), harmless from and against all losses, disputes, claims,
investigations, litigation, proceedings, expenses (including, but not limited to, attorneys’ fees),
damages, and liabilities of any kind to which any Indemnified Person may become subject arising
out of or in connection with any claim, litigation, investigation or proceeding (any of the
foregoing, a “Proceeding”) relating to or in connection with this Exit Commitment Letter, the Fee
Letter, the Exit Term Loan Facility, the use or the proposed use of the proceeds thereof, or any
other transaction contemplated by this Exit Commitment Letter (each, a “Claim”, and
collectively, the “Claims”), regardless of whether such Indemnified Person is a party thereto (and
regardless of whether such matter is initiated by a third party, you, or any of your or its respective
affiliates), and (b) reimburse each Indemnified Person within five (5) business days upon demand
(together with reasonably detailed backup documentation in summary form supporting such
demand) for all reasonable and documented legal and other out-of-pocket expenses incurred in
connection with investigating, preparing to defend or defending, or providing evidence in or
preparing to serve or serving as a witness with respect to, any Proceeding (each, an “Expense”)
by one counsel to the Indemnified Persons taken as a whole and, if necessary, one firm of local
counsel in each appropriate jurisdiction to the Indemnified Persons taken as a whole, and, in the
case of an actual or potential conflict of interest, one additional counsel to the affected
Indemnified Persons taken as a whole; provided that no Indemnified Person shall be entitled to
indemnity hereunder in respect of any Claim or Expense to the extent that the same (i) is found by
a final, non-appealable judgment of a court of competent jurisdiction to have resulted from the
gross negligence, willful misconduct or bad faith of such Indemnified Person or any of its
affiliates and their principals, directors, officers, employees, representatives, agents, attorneys or
third party advisors, (ii) is found by a final, non-appealable judgment of a court of competent
jurisdiction to have resulted from a material breach of the obligations of such Indemnified Person
or any of its affiliates and their principals, directors, officers, employees, representatives, agents,
attorneys or third party advisors under this Exit Commitment Letter or (iii) arises from any
dispute among Indemnified Persons that does not involve or relate to an act or omission by you
and that is brought by an Indemnified Person against another Indemnified Person.
Notwithstanding any other provision of this Exit Commitment Letter, and without limitation of
your indemnification and reimbursement obligations set forth herein, no party hereto shall be
liable for any special, indirect, consequential or punitive damages in connection with the Exit
Term Loan Facilities, this Exit Commitment Letter, the Exit Term Loan Term Sheet, the Fee
Letter or any other transaction contemplated hereby or thereby; provided that this foregoing
sentence shall not limit your indemnity obligations to the extent set forth above in respect of any
actual Claims and Expenses incurred or paid by an Indemnified Person to a third party
unaffiliated with the Exit Commitment Parties that are otherwise required to be indemnified in
accordance with the terms hereof.
Furthermore, you hereby acknowledge and agree that the use of electronic transmission is not
necessarily secure and that there are risks associated with such use, including risks of
interception, disclosure and abuse. You agree to assume and accept such risks and hereby
authorize the use of transmission of electronic transmissions, and that none of the Exit
Commitment Parties nor any of their respective affiliates will have any liability for any damages
arising from the use of such electronic transmission systems, except to the extent such damages
have been found by a final, non-appealable judgment of a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of such Exit Commitment Party or any
of its affiliates and their principals, directors, officers, employees, representatives, agents,
attorneys or third party advisors.
Notwithstanding the above, (a) you shall not be liable for any settlement of any Proceedings
effected without your consent (which consent shall not be unreasonably conditioned, withheld or
delayed), but if settled with your written consent or if there is a judgment for the plaintiff against
any Indemnified Person in any such Proceedings, you agree to indemnify and hold harmless each
Indemnified Person from and against any and all Claims and Expenses by reason of such
settlement or judgment in accordance with this section and (b) each Indemnified Person shall be
obligated to refund or return any and all amounts paid by you under the preceding paragraph to
such Indemnified Person for any losses, claims, damages liabilities or expenses to the extent such
Indemnified Person is not entitled to payment of such amounts in accordance with the terms
hereof. You shall not, without the prior written consent of an Indemnified Person (which consent
shall not be unreasonably conditioned, withheld or delayed), effect any settlement or consent to
the entry of any judgment of any pending or threatened Proceedings in respect of which
indemnity could have been sought hereunder by such Indemnified Person unless such settlement
(i) includes an unconditional release of such Indemnified Person from all liability or claims that
are the subject matter of such Proceedings, (ii) does not include any statement as to or any
admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person and
(iii) contains customary confidentiality and nondisparagement provisions.
In the event that an Indemnified Person is requested or required to appear as a witness in any
action brought by or on behalf of or against you or any of your subsidiaries or affiliates in which
such Indemnified Person is not named as a defendant, or a demand to produce documents or
otherwise respond to discovery requests is made on an Indemnified Person, you agree to
reimburse such Indemnified Person for all reasonable expenses incurred by it in connection with
such Indemnified Person’s response to a discovery request and appearing and/or preparing to
appear as such a witness, including, without limitation, the reasonable fees and expenses of its
legal counsel.
Sharing Information; Absence of Fiduciary Relationship.
You acknowledge that the Exit Commitment Parties and their respective affiliates may be
providing debt financing, equity capital or other services to other companies with which you may
have conflicting interests. Neither the Exit Commitment Parties nor any of their affiliates will use
confidential information obtained from you by virtue of the transactions contemplated by this
Exit Commitment Letter or its other relationships with you in connection with the performance by
it of services for other persons, and neither the Exit Commitment Parties nor any of their affiliates
will furnish any such information to other persons except as permitted under the “Confidentiality”
section herein. You further acknowledge and agree that (a) no fiduciary, advisory or agency
relationship between you and any of the Exit Commitment Parties has been or will be created in
respect of any of the transactions contemplated by this Exit Commitment Letter, irrespective of
whether the Exit Commitment Parties and/or their respective affiliates have advised or are
advising you on other matters and (b) you will not assert any claim against any of the Exit
Commitment Parties for breach or alleged breach of fiduciary duty in respect of any of the
transactions contemplated by this Exit Commitment Letter and agree that none of the Exit
Commitment Parties shall have any direct or indirect liability to you in respect of such a fiduciary
duty claim or to any person asserting a fiduciary duty claim on behalf of or in right of you,
including your stockholders, employees or creditors.
Assignments and Amendments.
This Exit Commitment Letter shall not be assignable by you without the prior written consent of
each of the Exit Commitment Parties (and any purported assignment without such consent shall
be null and void), and is solely for the benefit of the parties hereto and is not intended to confer
any benefits upon, or create any rights in favor of, any person other than the parties hereto and the
Indemnified Persons. The Exit Commitment Parties may assign their respective commitments
hereunder, in whole or in part, (i) to any of their affiliates, any funds or accounts managed,
advised, sub-managed or sub-advised by them or their affiliates, or (ii) subject to the prior written
consent of the Borrowers (such consent not to be unreasonably withheld or delayed) to any
prospective lender under the Exit Term Loan Facility; provided that, (unless such assignee enters
into a separate letter agreement with you affirming its commitments on the same terms as set
forth herein with respect to such assigned portion of the commitments (such agreement not to be
unreasonably conditioned, withheld or delayed by you)), any such assignment shall not relieve,
release or novate them of the obligations hereunder (including the obligation to fund the Exit
Term Loans if all conditions thereto have been satisfied and each Exit Commitment Party shall
retain exclusive control over all rights and obligations with respect to its commitments hereunder,
including all rights with respect to consents, modifications, supplements, waivers and
amendments, until after the closing and funding of the Exit Term Loan Facility has occurred;
provided, further, that any such assignment, or any assignment of such Exit Commitment Parties’
obligations under the Term DIP Facility, shall require the assignee to execute a joinder to this
Exit Commitment Letter and such assignment shall not be effective until the execution and
delivery thereof. This Exit Commitment Letter may not be amended or waived except in a written
instrument signed by you and the Exit Commitment Parties.
Counterparts and Governing Law.
This Exit Commitment Letter may be executed in counterparts, each of which shall be deemed an
original and all of which counterparts shall constitute one and the same document. Delivery of an
executed signature page of this Exit Commitment Letter by facsimile or electronic (including
“PDF”) transmission shall be effective as delivery of a manually executed counterpart hereof.
The laws of the State of New York shall govern all matters arising out of, in connection with or
relating to this Exit Commitment Letter, including, without limitation, its validity, interpretation,
construction, performance and enforcement and any claims sounding in contract law or tort law
arising out of the subject matter hereof.
Venue and Submission to Jurisdiction.
The parties hereto consent and agree that the federal bankruptcy court located in the District of
Delaware, shall have exclusive jurisdiction to hear and determine any claims or disputes between
or among any of the parties hereto pertaining to this Exit Commitment Letter and the Fee Letter,
any other transaction relating hereto or thereto, and any investigation, litigation, or proceeding in
connection with, related to or arising out of any such matters or, if that court does not have
subject matter jurisdiction, then the U.S. District Court for the Southern District of New York
shall have such exclusive jurisdiction or, if that court does not have subject matter jurisdiction,
then any state court located in New York County, State of New York shall have such exclusive
jurisdiction; provided, that the parties hereto acknowledge that any appeal from those courts may
have to be heard by a court located outside of such jurisdiction. The parties hereto expressly
submit and consent in advance to such jurisdiction in any action or suit commenced in any such
court, and hereby waive any objection, which each of the parties may have based upon lack of
personal jurisdiction, improper venue or inconvenient forum.
Waiver of Jury Trial.
THE PARTIES HERETO, TO THE EXTENT PERMITTED BY LAW, WAIVE ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF, IN
CONNECTION WITH OR RELATING TO, THIS EXIT COMMITMENT LETTER, THE FEE
LETTER, AND ANY OTHER TRANSACTION RELATED HERETO OR THERETO. THIS
WAIVER APPLIES TO ANY ACTION, SUIT OR PROCEEDING WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE.
Survival.
The provisions of this letter set forth under this heading and the headings “Expenses”,
“Confidentiality”, “Indemnity”, “Sharing Information; Absence of Fiduciary Relationship”,
“Assignments and Amendments”, “Counterparts and Governing Law”, “Venue and Submission
to Jurisdiction” and “Waiver of Jury Trial” shall survive the termination or expiration of this Exit
Commitment Letter and shall remain in full force and effect regardless of whether the Exit Term
Loan Facility is closed or the credit documentation with respect to the Exit Term Loan Facility
shall be executed and delivered; provided that if the Exit Term Loan Facility is closed and the
credit documentation with respect to the Exit Term Loan Facility shall be executed and delivered,
the provisions under the heading “Expenses”, “Confidentiality”, “Indemnity”, and “Sharing
Information; Absence of Fiduciary Relationship” shall be superseded and deemed replaced by the
terms of the credit documentation with respect to the Exit Term Loan Facility governing such
matters.
Integration.
This Exit Commitment Letter and the Fee Letter supersede any and all discussions, negotiations,
understandings or agreements, written or oral, express or implied, between or among the parties
hereto and their affiliates as to the subject matter hereof.
Patriot Act.
The Exit Commitment Parties hereby notify you that pursuant to the requirements of the USA
PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “PATRIOT
Act”), each Exit Commitment Party may be required to obtain, verify and record information that
identifies the Borrowers and each guarantor, which information includes the name, address, tax
identification number and other information regarding the Borrowers and each guarantor that will
allow such Exit Commitment Party to identify each Borrower and each guarantor in accordance
with the PATRIOT Act. This notice is given in accordance with the requirements of the
PATRIOT Act and is effective as to each Exit Commitment Party.
Please indicate your acceptance of the terms hereof by signing in the appropriate space below.
Unless extended in writing by the Exit Commitment Parties, the commitments and agreements of
the Exit Parties contained herein (subject to the provisions under the heading “Survival”) shall
automatically expire on the first to occur of (a) 5:00 p.m. New York time on October 28, 2020,
and (b) execution and delivery of the credit documentation with respect to the Exit Term Loan
Facility and funding and/or roll-up of the Exit Term Loan Facility.
[SIGNATURE PAGE FOLLOWS]
[Consenting Term Loan Lender Signature Pages Omitted]
[Signature Page to Exit Commitment Letter]
Accepted and agreed to as ofthe date first written above:
APC AUTOMOTIVE TECHNOLOGIES INTERMEDIATE HOLDINGS, LLC
By:Name: Marc Weinsweig Title: Chief Financial Officer
APC AUTOMOTIVE TECHNOLOGIES, LLC
By:Name: Marc Weinsweig Title: Chief Financial Officer
CWD ACQUISITION, LLC
By:Name: Marc Weinsweig Title: Chief Financial Officer
CWD HOLDING CORP.
By:Name: Marc Weinsweig Title: Chief Financial Officer
Exhibit K
Term Exit Facility Term Sheet
APC AUTOMOTIVE TECHNOLOGIES, LLC
EXIT TERM LOAN FACILITY TERM SHEET
Capitalized terms used but not defined in this Exhibit A (this “Term Sheet”) shall have the
meanings ascribed thereto in the Exit Commitment Letter to which this Exhibit A is attached (the
“Exit Commitment Letter”) or the Prepetition First Lien Credit Agreement referenced herein.1 In
the case of any such capitalized term that is subject to multiple and differing definitions, the
appropriate meaning thereof in this Exhibit A shall be determined by reference to the context in
which it is used.
Borrower: AP Acquisition, CWD Buyer, and CWD Corp., are collectively
borrowers under the Prepetition First Lien Credit Agreement, LLC,
as reorganized debtors (the “Borrowers”) upon emergence from a
case filed under Chapter 11 of Title 11 of the United States Code
(the “Bankruptcy Code”) in the United States Bankruptcy Court for
the District of Delaware (the “Bankruptcy Court”) (together with
the Chapter 11 cases (collectively, the “Chapter 11 Cases”) of the
Borrowers affiliated debtors and debtors in possession (collectively
with the Borrowers, the “Debtors”).
Guarantors: Each of (i) Holdco, (ii) Holdco’s existing and future direct and
indirect domestic subsidiaries, (iii) all Guarantors (each as a
reorganized debtor) under the Prepetition First Lien Loan
Documents, and (iv) any holding company or other parent directly
holding the equity interests in Holdco (other than any entity or
other vehicle established by the lenders who are granted the equity
interests in the reorganized Loan Parties pursuant to the approved
plan of reorganization for the Debtors in the Chapter 11 Cases) ((i),
(ii), (iii) and (iv) collectively, the “Guarantors”; together with the
Borrowers, each individually a “Loan Party”, and collectively, the
“Loan Parties”), on a joint and several basis. Exclusions for newly
formed or acquired subsidiaries after the Closing Date (as defined
below) shall be consistent with the Documentation Principles (as
defined below).
1 Reference is hereby made to that certain First Lien Credit Agreement, dated as of May 10, 2017 (as amended,
restated, supplemented or otherwise modified from time to time, the “Prepetition First Lien Credit Agreement”;
together with any Loan Document (as defined in the Prepetition First Lien Credit Agreement), collectively, the
“Prepetition First Lien Loan Documents”), by and among APC Automotive Technologies Intermediate Holdings, LLC
(f/k/a AP Exhaust Intermediate Holdings, LLC), a Delaware limited liability company (“Holdco”), APC Automotive
Technologies, LLC (f/k/a AP Exhaust Acquisition, LLC), a Delaware limited liability company (“AP Acquisition”),
CWD Acquisition, LLC, a Delaware limited liability company (“CWD Buyer”), CWD Holding Corp., a Delaware
corporation, as a Borrower (“CWD Corp.”) and, together with AP Acquisition and CWD Buyer, in their capacities as
borrowers thereunder, the several lenders from time to time party thereto and Wilmington Trust, National Association,
in its capacity as successor administrative agent.
2
Exit Term Agent: Wilmington Trust, National Association (in such capacity, together
with its successors and assigns, the “Exit Term Agent”).
Exit Lenders: The Exit Commitment Parties, together with any other lenders
under the debtor-in-possession term loan credit agreement (the
“DIP Term Loan Credit Agreement,” the loans advanced
thereunder, the “DIP Term Loans,” and the facility thereunder, the
“DIP Term Loan Facility”) who, directly or through one or more
affiliated funds or financing vehicles (or funds or accounts advised
or sub-advised by such person), have committed to finance their
respective pro rata portion of the Exit Term Loan Facility (as
defined below) (together with the Exit Commitment Parties, the
“Exit Term Loan Lenders”).
Type and Amount of the
Exit Term Loan Facility:
A senior secured first-lien term loan facility in an aggregate
principal amount (subject to the following proviso) of $50 million
(the “Exit Term Loan Facility”; the loans under the Exit Term Loan
Facility, the “Exit Term Loans”) comprised of a roll-up and/or
refinancing of all outstanding DIP Term Loans; provided, that, for
the avoidance of doubt, the aggregate principal amount of the Exit
Term Loan Facility on the Effective Date shall include a roll-up
and/or refinancing of all interest, fees, and other amounts owed
under the DIP Term Loan Facility.
Maturity Date: The date that is 5 years following the Closing Date of the Exit Term
Loan Facility.
Exit ABL Facility A senior secured first-lien exit asset-based-lending facility to be
supplied (the “Exit ABL Facility”) to the borrowers under the
Prepetition ABL Credit Agreement (as defined in the DIP Term
Loan Credit Agreement), the terms of which shall be acceptable to
the Exit Commitment Parties. The Exit ABL Facility shall provide
for either (x) a roll-up of obligations under the ABL DIP Facility
(as defined in the DIP Term Loan Credit Agreement) (including all
obligations relating to letters of credit and bank product
obligations) or (y) a refinancing and replacement of the ABL DIP
Facility.
Documentation: The Exit Term Loan Facility will be evidenced by a credit
agreement (the “Exit Term Loan Credit Agreement”), security
documents, guarantees, an intercreditor agreement with the agent
for any Exit ABL Facility (the “Exit Intercreditor Agreement”) and
other legal documentation (collectively, together with the Exit
Term Loan Credit Agreement, the “Exit Term Loan Documents”)
containing the terms set forth in the Exit Commitment Letter and
this Term Sheet, and such other terms as the Borrowers and the
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Exit Commitment Parties shall agree as a result of a good faith
negotiations; it being understood and agreed that the Exit Term
Loan Documents shall: (a) be substantially similar to the definitive
documentation for the DIP Term Loan Credit Agreement
(excluding provisions customary for DIP financings and not exit
financings), (b) give due regard to (i) the operational requirements
of the Loan Parties in light of their consolidated capital structure,
size, industries, businesses and business practices (including,
without limitation, the leverage profile and projected free cash flow
generation of the Loan Parties), in each case, after giving effect to
the Effective Date (as defined in the DIP Term Loan Credit
Agreement), and (ii) the operational and administrative changes
mutually agreed by the Exit Commitment Parties and the
Borrowers, (c) contain representations & warranties, affirmative
covenants, negative covenants and other terms substantially similar
to those in the Prepetition First Lien Credit Agreement (excluding
provisions customary for DIP financings and not exit financings)
with mutually agreed changes (including those set forth herein),
including without limitation to conform to customary terms for exit
financings and give due regard to the operational requirements of
the Loan Parties in light of their consolidated capital structure, size,
industry, business and business practices (including, without
limitation, the leverage profile and projected free cash flow
generation) and (d) the application of fresh start accounting with
respect to the financial definitions shall be as agreed to in the Exit
Term Loan Credit Agreement. The foregoing requirements and
principles shall be referred to herein as the “Documentation
Principles”.
Interest: LIBOR (to be defined in the Exit Term Loan Credit Agreement) +
10.0%, payable in cash. Interest shall be paid quarterly in arrears.
Automatically upon the occurrence of and during the continuance
of a payment or bankruptcy default or event of default under the
Exit Term Loan Documents, and after written notice from the Exit
Term Agent or the Required Lenders (as defined below) upon the
occurrence of and during the continuance of any other default or an
event of default under the Exit Term Loan Documents, the Exit
Term Loans will bear interest at an additional 2.0% per annum
payable in cash.
Amortization: 1.00% per year, paid in equal quarterly installments of 0.25% per
quarter, beginning with the first quarter that occurs after the
Closing Date.
Priority and Security All obligations of the Loan Parties to the Exit Term Agent and the
4
under Exit Term Facility: Exit Term Loan Lenders under the Exit Term Loan Facility,
including, without limitation, all principal, accrued interest,
premiums (if any), costs, fees and expenses or other amounts due
thereunder (collectively, the “Exit Term Loan Obligations”), shall
be secured by liens and security interests on substantially all assets
of the Loan Parties, with such exclusions as agreed to by the Exit
Commitment Parties and the Borrowers, with the same priority on
such collateral as provided under the Prepetition First Lien Loan
Documents. The Exit Term Loan Obligations shall be subject to
the Exit Intercreditor Agreement, which shall be substantially
similar to the ABL Intercreditor Agreement.
Mandatory Prepayments: Customary mandatory prepayment events for financings of this
type and that are no less favorable to the Exit Term Loan Lenders
as the mandatory prepayment provisions set forth in the Prepetition
First Lien Credit Agreement, which such mandatory prepayments
shall be limited to (i) annual excess cash flow, (ii) dispositions, (iii)
casualty and condemnation events, (iv) debt and equity issuances
not otherwise permitted under the Exit Term Loan Credit
Agreement, and (v) refinancing indebtedness.
Prepayment Premium: In the event of any (x) voluntary prepayment, (y) mandatory
prepayment from (i) indebtedness (or issuances of equity) incurred
in violation of the Exit Term Loan Credit Agreement or (ii)
refinancing indebtedness, or (z) sale of all or substantially all of the
assets of, or the equity interests of, any Loan Party or a change of
control, a prepayment premium shall be owed in the amount of the
excess of (a) the present value at such time of (i) all required
interest payments through maturity on the Exit Term Loans being
prepaid, computed using a discount rate equal to the treasury rate
plus 50 basis points, discounted to such date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30 day months),
plus (ii) 110% of the then outstanding principal amount of the Exit
Term Loans, over (b) the then outstanding principal amount of the
Exit Term Loans.
The Exit Term Loan Credit Agreement shall contain customary
“Momentive” language with respect to the prepayment premium.
Conditions Precedent to
the Closing of the Exit
Term Loan Facility:
The conditions precedent for the effectiveness of the Exit Term
Loan Credit Agreement will be limited to: (a) those conditions set
forth in the Commitment Letter under the heading “Conditions
Precedent” and (b) the following:
Delivery of a borrowing request.
By no later than the date the Plan Supplement (as defined
5
in the Bankruptcy Plan) is required to be filed in the
Chapter 11 Cases, the Debtors shall have received an
executed commitment letter by one or more of the lenders
under the DIP Term Loan Facility (or such other party after
approval by the Required Lenders (as defined in the DIP
Term Loan Credit Agreement)) providing a commitment of
an additional $6.5 million to be funded as part of the final
draw under the DIP Term Loan Facility following the entry
of the order approving the DIP Term Loan Facility on a
final basis.
The Exit Term Loan Lenders shall have received (i) a copy
of each organizational document ((x) certificate or articles
of incorporation or organization or certificate of formation,
including all amendments thereto, and (y) by-laws or
operating or limited liability company agreement) of the
Borrowers and the Guarantors as of the Closing Date and,
to the extent applicable, certified as of a recent date by the
appropriate governmental official; (ii) signature and
incumbency certificates of the officers of such person
executing the Exit Term Loan Documents to which such
Loan Party is to be a party on the Closing Date; (iii)
resolutions of the board of directors or similar governing
body of the Borrowers and the Guarantors approving and
authorizing the execution, delivery and performance of the
Exit Term Loan Credit Agreement and the other Exit Term
Loan Documents to which such Loan Party is to be a party
on the Closing Date, certified as of the Closing Date by
such Loan Party as being in full force and effect without
modification or amendment; and (iv) a good standing
certificate (to the extent such concept is known in the
relevant jurisdiction) from the applicable governmental
authority of the Borrowers and the Guarantors’ respective
jurisdiction of incorporation, organization or formation
dated a recent date prior to the Closing Date.
The Exit Term Loan Lenders shall have received a solvency
certificate, in form and substance reasonably satisfactory to
the Exit Term Loan Lenders, certifying that the Loan
Parties and their subsidiaries, on a consolidated basis
immediately after giving effect to the Closing Date, are
solvent as of the Closing Date.
The Exit Term Loan Lenders shall have received at least
five (5) business days prior to the Closing Date such “know
your customer” anti-money laundering rules and Patriot
Act information about the Borrowers and the Guarantors as
6
they shall have reasonably requested in writing.
To the extent not already delivered prior to the Closing
Date, customary insurance certificates and endorsements
thereto naming the Exit Term Agent (on behalf of the Exit
Term Loan Lenders) as an additional insured or loss payee
(and mortgagee), as the case may be, under all insurance
policies to be maintained with respect to the properties of
the Loan Parties forming part of the collateral.
Each Loan Party shall have obtained all material
governmental consents and approvals of other persons, in
each case that are reasonably required in connection with
the transactions contemplated by the Exit Term Loan
Documents and each of the foregoing shall be in full force
and effect.
The Exit Term Loan Lenders shall have received a payoff
letter (or other evidence reasonably satisfactory to the Exit
Term Loan Lenders) with respect to the DIP Term Loan
Facility and the ABL DIP Facility (i) evidencing that, upon
the Closing Date, all obligations under such facilities will
have been satisfied or deemed satisfied in full, and all
commitments thereunder will terminate, and (ii) confirming
that all liens securing such existing indebtedness will be
released.
The Exit Term Loan Lenders shall have received a
completed collateral questionnaire from the Loan Parties.
The Exit Term Agent shall have received UCC-1 financing
statements in a form appropriate for filing in the state of
organization of such entity.
The Exit Term Agent shall have received original stock
certificates or other certificates evidencing the certificated
equity interests pledged pursuant to the Exit Term Loan
Documents, together with an undated stock power for each
such certificate duly executed in blank by the registered
owner thereof, for the Loan Parties and any other entity
required under the Exit Term Loan Documents.
The Exit Term Agent shall have received applicable
intellectual property security agreements, in each case in
form and substance reasonably satisfactory to the Exit
Term Agent.
7
The representations and warranties of each Borrower and
each Guarantor set forth in the Exit Term Loan Credit
Agreement shall be true and correct in all material respects
(without duplication of any materiality qualifier) on and as
of the Closing Date (except to the extent such
representations and warranties expressly relate to an earlier
date, in which case such representations and warranties
shall be true and correct in all material respects (without
duplication of any materiality qualifier) as of such earlier
date).
No default or event of default shall have occurred and be
continuing.
Since the Petition Date (as defined in the Exit Term Loan
Credit Agreement), no event has occurred or condition
arisen, either individually or in the aggregate, that has had
or could reasonably be expected to have a Material Adverse
Effect. “Material Adverse Effect” shall mean any event,
circumstance or condition that materially adversely affects:
(i) the business, operations, properties or financial
condition of the Debtors and their subsidiaries, collectively;
(ii) the legality, validity or enforceability of any Exit Term
Loan Documents; (iii) the ability of the Borrowers or the
Guarantors, taken as a whole, to perform their payment
obligations under the Exit Term Loan Documents; (iv) the
perfection or priority of the liens; or (v) the rights and
remedies of the Agent or the Lenders under the Exit Term
Loan Documents taken as a whole, except, in each case,
those events, circumstances or conditions relating to the
commencement and continuation of the Chapter 11 Cases
or the COVID-19 pandemic.
The Exit Term Loan Lenders shall have received (i) a
customary written opinion of Kirkland & Ellis LLP, New
York and California counsel for the Loan Parties, (ii) a
customary written opinion of Vorys, Sater, Seymour and
Pease LLP, Pennsylvania counsel for the Loan Parties and
(iii) a customary written opinion of Bingham Greenebaum
Doll LLP, Indiana counsel for the Loan Parties, in each case
addressed to the Exit Term Loan Lenders and dated the
Closing Date.
All reasonable and documented (in summary form) out-of-
pocket fees, costs, disbursements and expenses, accrued
and unpaid as of the Closing Date, of (i) the Exit Term
Agent (limited, in the case of counsel, to all reasonable and
8
documented out-of-pocket fees, costs, disbursements and
expenses of the Exit Term Agent’s outside counsel, Arnold
& Porter Kaye Scholer LLP and any successor counsel,
and, to the extent necessary, one firm of local counsel
engaged by the Exit Agent in connection with the Exit Term
Loan Facility), (ii) the Exit Term Loan Lenders (limited, in
the case of counsel, financial advisors and other outside
professional advisors to all reasonable and documented
fees, costs, disbursements and expenses of the Exit Term
Loan Lender’s outside counsel, King & Spalding LLP, and,
to the extent necessary, one firm of local counsel engaged
by the Exit Term Loan Lender in connection with the Exit
Term Loan Facility, and (iii) FTI Consulting, as financial
advisor to the Exit Term Loan Lenders, in each case to the
extent invoices for any such accrued and unpaid amounts
are provided to the Debtors no later than two (2) business
days prior to the Closing Date.
The confirmation of a Bankruptcy Plan (as defined in the
DIP Term Loan Credit Agreement) (including plan
supplements, if any) on terms and substance satisfactory to
the Exit Commitment Parties (it being understood that the
form of the Bankruptcy Plan attached to the RSA is
satisfactory to Exit Commitment Parties) by the
Bankruptcy Court (such order approving the Bankruptcy
Plan, the “Confirmation Order”).
(i) The Confirmation Order and all other reorganization
documents filed in connection with the Bankruptcy Plan
shall not have been reversed, vacated, amended,
supplemented or otherwise modified in any manner
materially adverse to the rights of the Exit Term Agent or
the Exit Term Loan Lenders absent the consent of the Exit
Term Agent at the direction of the Exit Term Loan Lenders
and (ii) the Confirmation Order shall have become a final
order and shall not be subject to a stay or injunction (or
similar prohibition) in effect with respect thereto.
(i) The occurrence of the “effective date” under the
Bankruptcy Plan by the final scheduled maturity date under
the DIP Term Loan Credit Agreement or such later date
acceptable to the Exit Commitment Parties and (ii) the
consummation of the exit transactions on terms consistent
with those outlined in the Bankruptcy Plan pursuant to
material documentation in form and substance reasonably
acceptable to the Exit Term Loan Lenders.
9
The Exit Term Loan Lenders shall have received evidence,
in form and substance satisfactory, that: (i) the absence of
any Bankruptcy Court order or any action, suit,
investigation or proceeding pending or, to the knowledge
of the Loan Parties, threatened in writing in any court or
before any arbitrator or governmental authority that could
reasonably be expected to prevent or restrain the
consummation of the Exit Term Loan Facility; (ii) the entry
of all orders described or referred to herein or in the body
of the Exit Commitment Letter shall have been upon proper
notice as may be required by the Bankruptcy Code, the
Federal Rules of Bankruptcy Procedure and any applicable
bankruptcy rules; and (iii) all of the conditions precedent
set forth in the RSA and the Bankruptcy Plan shall have
been satisfied, as applicable, or waived in accordance with
the Bankruptcy Plan.
The Exit Term Loan Lenders shall have received fully
executed Exit ABL Facility documentation, in form and
substance reasonably satisfactory to the Exit Term Loan
Lenders.
The Exit ABL Facility on terms set forth in the ABL Exit
Facility Commitment Letter shall have become effective
and all conditions to the initial credit extension thereunder
satisfied, including the execution of the intercreditor
agreement entered into with respect to the DIP Facility
among the Exit Term Agent and the agent under the Exit
ABL Facility.
The Borrowers shall demonstrate in form and substance
reasonably satisfactory to Exit Term Loan Lenders that on
the Closing Date and immediately after giving effect to any
credit extensions to be made on the Closing Date, any
extensions of credit or issuances of letters of credit under
the Exit ABL Facility and the payment of all costs and
expenses required to be paid in cash, the Borrowers shall
have liquidity of at least $10,000,000 as of the Closing
Date.2
The Exit Term Loan Lenders shall have received a
borrowing base certificate dated as of the Closing Date,
executed by a responsible officer of the AP Acquisition,
which shall be in form and substance as required to be
2 Note to Draft: To be updated based on final amount contained in the Exit ABL Facility.
10
delivered under the Exit ABL Facility.
Immediately prior to the Closing Date, the RSA shall not
have been terminated by any party.
The settlement with the Department of Justice and the
relator in respect of the asserted claims under the False
Claims Act, in form and substance satisfactory to the Exit
Term Loan Lenders and consistent with the term sheet
setting forth the settlement of such action annexed to the
RSA, shall be effective.
The date that all conditions under this section are satisfied, the
“Closing Date.”
Affirmative and Negative
Covenants:
The definitive Exit Term Loan Documents will contain affirmative
and negative covenants that are consistent with the Documentation
Principles and no less favorable to the Exit Term Loan Lenders
than those existing in the Prepetition First Lien Credit Agreement
(including, for the avoidance of doubt, ratings requirements), with
certain modifications to be mutually agreed by the Exit Term Loan
Lenders and the Borrowers, including, without limitation,
modifications to the amount of permitted indebtedness, permitted
liens, permitted investments, restricted payments, asset
dispositions, junior debt and affiliate transactions.
Financial Covenants: The definitive Exit Term Loan Documents will contain financial
covenants and other additional business key performance
indicators acceptable to the Exit Term Loan Lenders and the
Borrowers, including without limitation (i) compliance with total
net leverage, tested quarterly, with step downs to be mutually
agreed and (ii) compliance with a maximum amount for permitted
capital expenditures, tested annually (with unused amounts may be
carried forward for one year).
Events of Default Limited to the following, in each case, with exceptions, limitations
and qualifications to be mutually agreed, and otherwise shall be
consistent with the Documentation Principles: defaults for
nonpayment of principal, interest, fees or other amounts; failure to
perform negative covenants and the financial covenant (and the
affirmative covenant to maintain each Loan Party’s existence, to
provide written notice of default, or use of proceeds); failure to
perform other covenants (subject to thirty (30) day cure period after
knowledge by Borrower or notice by the Exit Term Agent);
incorrectness in any material respect of any representations or
warranties when made or deemed made; cross-defaults and cross-
acceleration to the Exit ABL Facility and other Indebtedness above
11
an amount to be agreed (after all applicable grace and notice
periods); bankruptcy and insolvency proceedings (subject to a sixty
(60) day cure period in the case of involuntary bankruptcy);
monetary judgment defaults above an amount to be agreed; actual
or asserted invalidity of Exit Term Loan Documents or security
interest granted in a material portion of collateral; ERISA events
that would reasonably be expected to have a material adverse
effect; and change of control.
Additional Provisions The Exit Term Loan Credit Agreement will contain customary
representations and warranties, indemnification, expense
reimbursement and yield protection provisions, assignment and
assumption terms and waiver of jury trial substantially similar to
the corresponding terms in the Prepetition First Lien Credit
Agreement, with such modifications as deemed by the Exit Term
Loan Lenders in their discretion to be appropriate.
Required Lenders: Exit Term Loan Lenders holding more than 50.0% of the
outstanding Exit Term Loans (the “Required Lenders”) except as
to matters requiring unanimity/supermajority or affected lenders
under the Exit Term Loan Credit Agreement; provided that at any
time there are two or more Exit Term Loan Lenders (who are not
affiliates of one another), such holders for Required Lenders are
comprised of at least two Exit Term Loan Lenders (who are not
affiliates of one another).
Removal of Exit Term
Loan Lenders:
The Required Lenders and the Borrowers shall have the right to
cause any Exit Term Loan Lender (under certain customary
“defaulting” lender and other situations consistent with the
Prepetition First Lien Credit Agreement) to assign its Exit Term
Loans and other Exit Term Loan Obligations to one or more
existing Exit Term Loan Lenders.
Governing Law: The laws of the State of New York.
EXHIBIT C
Liquidation Analysis
Page 1 of 7
APC AUTOMOTIVE TECHNOLOGIES HOLDINGS, LLC, et al.
Liquidation Analysis
A chapter 11 plan cannot be confirmed unless the bankruptcy court determines that the
plan is in the “best interests” of all holders of claims and interests that are impaired by the plan
and that have not accepted the plan. The “best interests” test requires a bankruptcy court to find
either that (a) all members of an impaired class of claims or interests have accepted the plan or
(b) the plan will provide a member who has not accepted the plan with a recovery of property of a
value, as of the effective date of the plan, that is not less than the amount that such holder would
recover if the debtor were liquidated under chapter 7 of the Bankruptcy Code on such date.
Accordingly, with the assistance of WeinsweigAdvisors LLC, the Debtors prepared this
hypothetical Liquidation Analysis1 in connection with filing its Disclosure Statement and Plan to
assist the Court in making the findings required under section 1129(a)(7) of the Bankruptcy Code
to confirm the plan.
This Liquidation Analysis indicates the estimated values that may be obtained from a
disposition of the Debtors’ assets under chapter 7 of the Bankruptcy Code as an alternative to the
continued operation of the Debtors’ business as contemplated by the Plan. Accordingly, the asset
values discussed herein may be different than amounts set forth in the Plan.
THIS LIQUIDATION ANALYSIS IS A HYPOTHETICAL EXERCISE THAT HAS
BEEN PREPARED FOR THE SOLE PURPOSE OF PRESENTING A REASONABLE
GOOD FAITH ESTIMATE OF THE PROCEEDS THAT WOULD BE REALIZED IF
THE DEBTORS WERE LIQUIDATED IN ACCORDANCE WITH CHAPTER 7 OF
THE BANKRUPTCY CODE AS OF THE CONVERSION DATE. THIS LIQUIDATION
ANALYSIS IS NOT INTENDED AND SHOULD NOT BE USED FOR ANY OTHER
PURPOSE. THIS LIQUIDATION ANALYSIS DOES NOT PURPORT TO BE A
VALUATION OF THE DEBTORS’ ASSETS AS A GOING CONCERN AND THERE
MAY BE A SIGNIFICANT DIFFERENCE BETWEEN THE VALUES AND
RECOVERIES REPRESENTED IN THIS LIQUIDATION ANALYSIS AND THE
VALUES THAT MAY BE REALIZED OR CLAIMS GENERATED IN AN ACTUAL
LIQUIDATION.
NOTHING CONTAINED IN THIS LIQUIDATION ANALYSIS IS INTENDED TO BE,
OR CONSTITUTES, A CONCESSION, ADMISSION, OR ALLOWANCE OF ANY
CLAIM BY THE DEBTORS. THE ACTUAL AMOUNT OR PRIORITY OF ALLOWED
CLAIMS IN THESE CHAPTER 11 CASES COULD MATERIALLY DIFFER FROM
THE ESTIMATED AMOUNTS SET FORTH AND USED IN THIS LIQUIDATION
ANALYSIS. THE DEBTORS RESERVE ALL RIGHTS TO SUPPLEMENT, MODIFY,
OR AMEND THE ANALYSIS SET FORTH HEREIN.
1 Capitalized terms used but not defined herein have the meanings given to such terms in the Plan or the
Disclosure Statement, as applicable.
Page 2 of 7
General Assumptions
The determination of the costs of, and proceeds generated from, a hypothetical chapter 7
liquidation of the Debtor’s assets is an uncertain process involving the extensive use of estimates
and the assumptions described herein and in the Disclosure Statement (including exhibits, where
applicable) which, although considered reasonable by the Debtors and their advisors, are
inherently subject to business, economic, and competitive uncertainties and contingencies beyond
their control. Inevitably, certain assumptions set forth herein would not materialize in an actual
chapter 7 liquidation scenario, and certain unanticipated events and circumstances could
materialize, both of which would affect the ultimate results in an actual chapter 7 liquidation. In
light of the foregoing, it is important to read and understand these “General Assumptions”
and the “Specific Assumptions and Notes” set forth below.
This analysis is based on management’s good faith assumptions believed to be reasonable
in light of the circumstances under which they are based. This analysis has not been examined or
reviewed by independent accountants in accordance with standards promulgated by the American
Institute of Certified Public Accountants. The estimates and assumptions, although considered
reasonable by the Debtor’s management team, are inherently subject to significant uncertainties
and contingencies beyond management’s control. Accordingly, there can be no assurance that the
results shown would be realized if the Debtors were liquidated, and actual results in such case
could vary materially from those presented.
1. Liquidation Period. This Liquidation Analysis is predicated on the assumption that the
Debtors would convert the chapter 11 cases to a chapter 7 liquidation on May 31, 2020
(the “Liquidation Date”). Except as otherwise set forth herein, this Liquidation Analysis
assumes that substantially all of the Debtors’ U.S. assets would be liquidated over a nine-
month period by a chapter 7 trustee (the “Chapter 7 Trustee”) appointed on the Liquidation
Date.
2. Asset Value. Unless otherwise noted, this Liquidation Analysis is based on the Debtors’
balance sheet as projected as of the Liquidation Date.
3. Claims Estimates. In preparing this Liquidation Analysis, the Debtors have preliminarily
estimated an amount of Allowed Claims for each class based upon a review of the Debtors’
projected balance sheet as of the Liquidation Date. Additional Claims were estimated to
include certain chapter 7 administrative obligations incurred after the Liquidation Date.
The estimate of all Allowed Claims in this Liquidation Analysis is based on the book value
of such Claims. No order or finding has been entered or made by the Bankruptcy Court
estimating or otherwise fixing the amount of Claims at the projected amounts of Allowed
Claims set forth in this Liquidation Analysis. The estimate of the amount of Allowed
Claims set forth in this Liquidation Analysis should not be relied upon for any other
purpose, including, without limitation, any determination of the value of any distribution
to be made on account of Allowed Claims under the Plan. The actual amount of Allowed
Claims could be materially different from the amount of Claims estimated in this
Liquidation Analysis.
Page 3 of 7
4. Certain Exclusions and Assumptions. This Liquidation Analysis does not include
detailed estimates for the tax consequences that may be triggered upon the liquidation and
sale events included in the analysis. Such tax consequences may be material. In addition,
this Liquidation Analysis does not include recoveries resulting from any potential
preference, fraudulent transfer, or other litigation or avoidance actions.
Specific Assumptions and Notes
1. Note 1 – Cash
As of the Liquidation Date, the Debtors are expected to have a zero U.S. cash balance.
2. Note 2 – Accounts Receivable
Accounts receivable, net of allowance for bad debts, as of the Liquidation Date was estimated
to be $75.3 million. Based on contras and potential offsets, management estimates a recovery
of between 30% and 40%.
APC
Liquidation Analysis ESTIMATED NET TOTAL ESTIMATED TOTAL ESTIMATED
$ in '000s BOOK VALUES RECOVERY % RECOVERY $S
31-May-20 LOW MIDPOINT HIGH LOW MIDPOINT HIGH SEE NOTE
A. SUMMARY OF ASSETS & GROSS RECOVERIES
Cash -$ 0.0% 0.0% 0.0% -$ -$ -$ 1
Accounts Receivable 75,281 30.0% 35.0% 40.0% 22,584 26,348 30,112 2
Prepaid Assets 11,707 0.0% 0.0% 0.0% - - - 3
Inventory 176,570 57.5% 60.0% 62.5% 101,528 105,942 110,356 4
Net PP&E 22,577 19.1% 24.3% 29.6% 4,314 5,496 6,678 5
Deposits 6,516 0.0% 0.0% 0.0% - - - 6
Intangibles - Net 155,862 0.3% 0.6% 1.0% 500 1,000 1,500 7
Non-Current Assets 6,440 34.9% 59.9% 84.9% 2,250 3,860 5,470 8
TOTAL ASSETS & ESTIMATED GROSS RECOVERIES 454,953$ 28.8% 31.4% 33.9% 131,176$ 142,646$ 154,117$
B. CREDITOR RECOVERY EXPENSES 9
Professional Fees (6,500) (4,750) (3,000)
Trustee Fees (3,935) (4,279) (4,624)
Wind-Down Expenses (12,599) (11,454) (10,308)
TOTAL CREDITOR RECOVERY EXPENSES (23,034)$ (20,483)$ (17,932)$
C. PROCEEDS AVAILABLE FOR ALLOCATION AFTER CREDITOR RECOVERY EXPENSES 108,141$ 122,163$ 136,185$
D. DISTRIBUTABLE PROCEEDS BY CLAIMANT CLASS
1. ABL Facility Claim (including LCs / Reserves) 90,000$ 90,000$ 90,000$ 10
% Recovery 100.0% 100.0% 100.0%
Net Proceeds Remaining after ABL Facility 18,141 32,163 46,185
2. Term A Claim 209,366 209,366 209,366 11
% Recovery 8.7% 15.4% 22.1%
Net Proceeds Remaining after ABL Facility - - -
3. Term B Claim 145,088 145,088 145,088 12
% Recovery 0.0% 0.0% 0.0%
Net Proceeds Remaining after ABL Facility - - -
4. Unsecured Claims 43,299 53,299 63,299 13
% Recovery 0.0% 0.0% 0.0%
Net Proceeds Remaining after ABL Facility -$ -$ -$
Page 4 of 7
3. Note 3 – Prepaid and Other Current Assets
Prepaid and other current assets were analyzed at the sub-ledger level, with recoverability
estimated as detailed in the table below. Management assumed the Debtors would need to
retain their insurance coverage and various IT licenses and services through the wind-down
period.
4. Note 4 – Inventory
Inventory, net of reserves as of the Liquidation Date was estimated to be $176.6 million.
Recoverability estimates ranging from 57.5% to 62.5% were estimated based on an appraisal
performed by Great American Group Advisory & Valuation Services, L.L.C. in support of the
Debtors’ existing revolving credit facility.
5. Note 5 – Net PP&E
PP&E was analyzed at the subsidiary level. Recoverability reflects management’s best guess
estimate as an appraisal is not available.
ESTIMATED NET ESTIMATED ESTIMATED
BOOK VALUES RECOVERY % RECOVERY $S
$ in '000s 31-May-20 LOW HIGH LOW HIGH
Prepaid Assets
Lift Sales 8,606$ 0.0% 0.0% -$ -$
Stay Bonuses 857 0.0% 0.0% - -
Insurance 971 0.0% 0.0% - -
Computer Maintenance 613 0.0% 0.0% - -
License Fee / Infor 172 0.0% 0.0% - -
Property Tax 167 0.0% 0.0% - -
Bonus 109 0.0% 0.0% - -
Catalogue 92 0.0% 0.0% - -
Dues & Subscriptions 56 0.0% 0.0% - -
R&D 21 0.0% 0.0% - -
Promotion & Advertising 10 0.0% 0.0% - -
Repairs & Maintenance 8 0.0% 0.0% - -
Other 25 0.0% 0.0% - -
Total Prepaid Assets 11,707$ 0.0% 0.0% -$ -$
ESTIMATED NET TOTAL ESTIMATED TOTAL ESTIMATED
BOOK VALUES RECOVERY % RECOVERY $S
$ in '000s 31-May-20 LOW HIGH LOW HIGH
PP&E
Goldsboro / CATCO $12,358 20.0% 30.0% 2,472$ 3,707$
Eastern 2,143 15.0% 30.0% 321 643
Aristo 1,545 35.0% 45.0% 541 695
Centric 6,531 15.0% 25.0% 980 1,633
Total PP&E 22,577$ 19.1% 29.6% 4,314$ 6,678$
Page 5 of 7
6. Note 6 – Deposits & Other Assets
Deposits & other assets were analyzed at the sub-ledger level, with recoverability estimated as
detailed in the table below. The largest component of this asset category relates to a joint
venture in which the Debtors have an ownership interest. Management believes the joint
venture would have zero value in the event of the Debtors’ liquidation. The balance of this
asset category is primarily comprised of deposits for leased real estate. The analysis assumes
that such deposits would be utilized during the liquidation period to reduce rent disbursements.
7. Note 7 – Intangibles - Net
The majority of the intangible asset category relates to purchase price accounting entries made
in conjunction with prior M&A activity. These types of assets are assumed to have zero
recoverable value. A component of intangibles relates to intellectual property, such as brand
names and trademarks. While this intellectual property has not been formally appraised,
management has estimated that it may collectively generate $500 thousand to $1.5 million in
a liquidation scenario.
8. Note 8 – Non-Current Receivables (Including Tax Refund)
Based upon a preliminary tax analysis of the 2019 Out-of-Court Restructuring performed by
Ernst & Young, LLP, management anticipates receiving a $4.5 million tax refund. However,
the potential impact to the refund of a liquidation event has not been assessed. As such,
management’s estimated recovery varies widely from 50.0% to 100.0%, as shown below. The
other component of this asset category relates to the liquidation of amounts due related to cores.
Given the complexity of this asset and the associated amounts due, management anticipates
being able to recover 0.0% to 50.0% of this amount in the event of liquidation.
ESTIMATED NET TOTAL ESTIMATED TOTAL ESTIMATED
BOOK VALUES RECOVERY % RECOVERY $S
$ in '000s 31-May-20 LOW HIGH LOW HIGH
Deposits
Investment in JV 5,845$ 0.0% 0.0% -$ -$
Rent 661 0.0% 0.0% - -
Other 10 0.0% 0.0% - -
Total Deposits 6,516$ 0.0% 0.0% -$ -$
ESTIMATED NET TOTAL ESTIMATED TOTAL ESTIMATED
BOOK VALUES RECOVERY % RECOVERY $S
$ in '000s 31-May-20 LOW HIGH LOW HIGH
Non Current Assets
Tax Refund 4,500$ 50.0% 100.0% 2,250$ 4,500$
Cores Receivable 1,940 0.0% 50.0% - 970
Total Non Current Assets 6,440$ 34.9% 84.9% 2,250$ 5,470$
Page 6 of 7
9. Note 9 – Creditor Recovery Expenses
Creditor Recovery Expenses include the following:
Chapter 7 Professional Fees: Costs for financial and legal advisors to the Chapter 7
Trustee are estimated to range from $3.0 million to $6.5 million.
Chapter 7 Trustee Fees: Chapter 7 Trustee fees were estimated at 3.0% of gross
liquidation proceeds.
Wind-Down Expenses: In order to facilitate an orderly liquidation, management
assumes that the company will continue to operate in a diminishing capacity over some
period following the Liquidation Date. The estimated costs to be incurred during this
wind-down phase are presented in the table below.
10. Note 10 – ABL Claims
ABL Claims outstanding were assumed to total $90.0 million.
11. Note 11 – Term A Claims
Term A Claims outstanding were assumed to total $209.42 million.
12. Note 12 – Term B Claims
Term B Claims outstanding were assumed to total $145.12 million.
13. Note 13 – General Unsecured Claims
General Unsecured Claims outstanding immediately prior to the Liquidation Date were
estimated on the low end to be $43.3 million. The high-end estimate added an additional $20.0
million, assuming additional creditors may emerge in conjunction with the winding-down of
2 NTD: subject to confirmation of claims analysis.
$ in '000s Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Total
Wind-Down Expenses
Indirect Salaries 350$ 350$ 117$ 117$ 117$ 117$ 58$ 58$ 58$ 1,341$
AP Mfg. Labor and Overhead 270 - - - - - - - - 270
PR Taxes & Benefits 77 58 19 19 19 19 10 10 10 241
Bonus - - - - - - - - 676 676
Outsourcing 342 - - - - - - - - 342
Rent 645 645 645 484 323 323 - - - 3,064
Insurance 341 341 341 227 227 227 9 9 9 1,730
Professional Fees 61 61 61 61 61 - - - - 304
T&E 33 33 22 22 11 11 6 6 6 150
Utilities 222 222 222 166 111 111 - - - 1,053
Maintenance 53 53 53 53 53 - - - - 263
Property Taxes 139 139 139 104 69 69 - - - 658
Warehouse 131 131 131 98 65 65 - - - 621
ERP 97 97 97 97 97 97 - - - 584
Supplies 9 9 9 9 9 9 - - - 55
Other 23 23 23 12 12 12 - - - 105
Bank/Credit Card Fees 18 18 18 18 7 7 7 7 7 108
Vehicle 11 11 5 5 3 3 - - - 38
Telephone 3 3 3 3 2 2 2 1 1 21
Rental Income (43) (43) (43) (43) - - - - - (172)
Total Wind-Down Costs 2,781$ 2,150$ 1,862$ 1,453$ 1,186$ 1,072$ 92$ 91$ 767$ 11,454$
Low 90.0% 10,308$
High 110.0% 12,599$
Page 7 of 7
the operations. In the event of liquidation, the aggregate amount of General Unsecured Claims
will likely increase significantly. For example, employees likely will file claims for wages and
other benefits, some of which will be entitled to priority. Landlords may file large claims for
both unsecured and priority amounts.
EXHIBIT D
Valuation Analysis
APC AUTOMOTIVE TECHNOLOGIES HOLDINGS, LLC, et al.
Valuation Analysis1
THE INFORMATION CONTAINED HEREIN IS NOT A PREDICTION OR
GUARANTEE OF THE ACTUAL MARKET VALUE THAT MAY BE REALIZED THROUGH
THE SALE OF ANY SECURITIES TO BE ISSUED PURSUANT TO THE PLAN. THE
INFORMATION IS PRESENTED SOLELY FOR THE PURPOSE OF PROVIDING
ADEQUATE INFORMATION UNDER SECTION 1125 OF THE BANKRUPTCY CODE TO
ENABLE THE HOLDERS OF CLAIMS ENTITLED TO VOTE TO ACCEPT OR REJECT THE
PLAN TO MAKE AN INFORMED JUDGMENT ABOUT THE PLAN AND SHOULD NOT BE
USED OR RELIED UPON FOR ANY OTHER PURPOSE, INCLUDING THE PURCHASE OR
SALE OF CLAIMS AGAINST THE DEBTORS OR ANY OF THEIR AFFILIATES.
The Valuation Analysis does not constitute a recommendation to any holder of Allowed
Claims or any other person as to how such person should vote or otherwise act with respect to the
Plan. Jefferies has not been requested to and does not express any view as to the potential trading
value of the Reorganized Debtors' securities on issuance or at any other time.
Solely for the purposes of the Plan and the Disclosure Statement, Jefferies, as investment
banker to the Debtors, has estimated a range of the total enterprise value (“Enterprise Value”) and
implied equity value (“Equity Value”) of the Reorganized Debtors and their direct and indirect
subsidiaries on a consolidated going-concern basis and pro forma for the transactions contemplated
by the Plan (the “Valuation Analysis”). The Valuation Analysis was based on financial
information provided by the Debtors' management, as well as the Financial Projections attached
to the Disclosure Statement as Exhibit D, and information provided by other sources. The
Valuation Analysis is as of June 30, 2020, with an assumed Effective Date of July 10, 2020.
Based on the projections prepared by management and other information described herein
and solely for purposes of the Plan, Jefferies estimated that the potential range of the Enterprise
Value of the Reorganized Debtors is approximately $195 million to $235 million (with the
midpoint of such range being approximately $215 million).
In addition, based on the Projections and other information described herein and solely for
purposes of the Plan, Jefferies estimated a potential range of total Equity Value of the Reorganized
Debtors, which consists of the Enterprise Value, less funded indebtedness, plus balance sheet cash
on the assumed Effective Date. Jefferies has assumed that the Reorganized Debtors will have
funded indebtedness of approximately $138 million (inclusive of a $32 million settlement payment
to the U.S. Department of Justice) and a pro forma cash balance of $17 million as of the Effective
Date. Based upon the estimated range of Enterprise Value of the Reorganized Debtors and
assuming net debt of $121 million, Jefferies estimated that the potential range of Equity Value for
the Reorganized Debtors is between approximately $74 million and $114 million (with the
midpoint of such range being approximately $94 million).
1 Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the Disclosure
Statement. 2 Reflects U.S. Department of Justice (“DOJ”) deferred settlement amount at Exit. Assumes tax deductibility of the
$4 million deferred settlement amount at an assumed corporate tax rate of 23.7%, per management guidance.
The valuation estimates set forth herein represent a valuation analysis of the Reorganized
Debtors generally based on the application of customary valuation techniques, including
comparable companies analysis, discounted cash flow analysis and precedent transactions
analysis.
For purposes of the Valuation Analysis, Jefferies assumed that no material changes that
would affect estimated value occur between the date of filing of this Disclosure Statement Exhibit
and the assumed Effective Date. Jefferies's Valuation Analysis does not constitute an opinion as
to fairness from a financial point of view of the consideration to be received or paid under the Plan,
of the terms and provisions of the Plan or with respect to any other matters.
1. Valuation Methodologies
In preparing its valuation, Jefferies performed a variety of financial analyses and
considered a variety of factors. The following is a brief summary of the material financial analyses
utilized by Jefferies, which consisted of a (a) comparable companies analysis, (b) discounted cash
flow analysis, and (c) precedent transactions analysis. This summary does not purport to be a
complete description of the analyses performed and factors considered by Jefferies. The
preparation of a valuation analysis is a complex, analytical process involving subjective
determinations about which methodologies of financial analysis are most appropriate and relevant
and the application of those methodologies to particular facts and circumstances in a manner that
is not readily susceptible to summary description. Jefferies’s valuation analysis must be considered
as a whole. Reliance on only one of the methodologies used, or portions of the analysis performed,
could create a misleading or incomplete conclusion as to enterprise value.
a. Comparable Companies Analysis
The comparable companies analysis estimates the value of a company based on a relative
comparison with other publicly traded companies with similar operating and financial
characteristics. Under this methodology, the enterprise value for each selected public company
was determined by examining the trading prices for the equity securities of such company in the
public markets and adding the aggregate market amount of outstanding net debt for such company
and minority interest, less investments in affiliates when applicable. Those enterprise values are
typically expressed as multiples of various measures of operating statistics, most commonly
earnings before interest, taxes, depreciation and amortization (“EBITDA”). In addition, each of
the selected public company's automotive aftermarket exposure, operational performance,
operating margins, profitability, leverage, non-debt liabilities and business trends, among other
factors, were examined. Based on these analyses, financial multiples and ratios are calculated to
apply to the Reorganized Debtors' projected operational performance. In performing its
comparable company analysis, Jefferies focused on EBITDA multiples of the selected comparable
companies to value the Reorganized Debtors. A key factor to this approach is the selection of
companies with relatively similar business and operational characteristics to the Reorganized
Debtors. Common criteria for selecting comparable companies for the analysis include, among
other relevant characteristics, similar lines of businesses, business risks, growth prospects,
maturity of businesses, location, market presence and size and scale of operations. The selection
of appropriate comparable companies is often difficult, a matter of judgment, and subject to
limitations due to sample size and the availability of meaningful market-based information.
Jefferies calculated market multiples for the comparable companies peer group by dividing
the enterprise value of each comparable company by the consensus projected 2021 EBITDA
forecasts as estimated by equity research analysts. In selecting an applicable EBITDA multiple
range to apply to the Reorganized Debtors, Jefferies considered a variety of factors, including both
qualitative attributes and quantitative measures such as historical and projected EBITDA,
EBITDA margins, size, growth and similarity of business lines. Jefferies then applied the selected
range of multiples to the Reorganized Debtors' 2021 forecasted adjusted EBITDA to determine a
range of Enterprise Values.
b. Discounted Cash Flow Analysis
The discounted cash flow (“DCF”) analysis is a forward-looking enterprise valuation
methodology that estimates the value of an asset or business by calculating the present value of
expected future cash flows to be generated by that asset or business. Under this methodology,
projected future cash flows are discounted by the business' weighted average cost of capital (the
“Discount Rate”). The Discount Rate reflects the estimated blended rate of return that would be
required by debt and equity investors to invest in the business based on its capital structure. The
Enterprise Value of the firm is determined by calculating the present value of the Reorganized
Debtors' unlevered after-tax free cash flows based on the Projections plus an estimate for the value
of the firm beyond the projection period known as the terminal value. The terminal value is derived
by making certain adjustments to the forecasted cash flows to estimate “steady-state” cash flows
beyond the forecast period and then applying a perpetuity growth rate.
To estimate the Discount Rate, Jefferies used the cost of equity and the after-tax cost of
debt for the Reorganized Debtors, assuming a targeted long-term debt-to-total capitalization ratio.
Jefferies calculated the cost of equity based on the “Capital Asset Pricing Model,” which assumes
that the required equity return is a function of the risk-free cost of capital and the relationship
between a publicly traded stock's performance and the return on the broader market. In determining
the perpetuity growth rate for the purpose of deriving the terminal value, Jefferies relied upon
various analyses including a review of the long-term expectations for the automotive aftermarket
industry in North America, among other factors. Although formulaic methods are used to derive
the key estimates for the DCF methodology, their application and interpretation still involve
complex considerations and judgments concerning potential variances in the projected financial
and operating characteristics of the Reorganized Debtors, which in turn affect its cost of capital
and terminal growth rate.
In applying the above methodology, Jefferies utilized management's detailed Projections
for the period beginning July 1, 2020, and ending December 31, 2023, to derive unlevered after-
tax free cash flows. See Exhibit E. Free cash flow includes sources and uses of cash not reflected
in the income statement, such as capital expenditures and changes in working capital, among
others. These cash flows, along with the terminal value, are discounted back to the assumed
Effective Date using a range of Discount Rates calculated in a manner described above to arrive
at a range of Enterprise Values.
c. Precedent Transactions Analysis
The precedent transactions analysis estimates the value of a company by examining
historical merger and acquisition transactions with publicly available data. The valuations paid in
such acquisitions or implied in such transactions are analyzed as ratios of various financial results,
most commonly EBITDA. These transaction multiples are calculated based on the purchase price
(including any debt assumed) paid to acquire companies that are comparable to the Reorganized
Debtors.
Jefferies reviewed recent M&A transactions where the target company operates as a
supplier of automotive aftermarket replacement mechanical parts. Certain of the transactions
analyzed may have occurred in different supply chain segments, may include companies serving
different end markets, or may include companies with different underlying growth and cash flow
characteristics, and therefore, may not provide a reliable indication of value.
The analysis of selected precedent transactions necessarily involves complex
considerations and judgments concerning financial and operating characteristics, as well as other
factors that could affect acquisition value. The reasons for, and circumstances surrounding, each
acquisition transaction are specific to such transaction and there are inherent differences between
the businesses, operations, and prospects of each target. Qualitative judgments must be made
concerning the differences between the characteristics of these transactions and other factors that
could affect the price an acquirer is willing to pay for an acquisition. The number of completed
transactions for which public data is available also limits this analysis. Furthermore, the data
available for all the precedent transactions may have discrepancies due to varying sources of
information.
Under this methodology, the enterprise value of such companies is determined by an
analysis of the consideration paid and the debt assumed in the M&A transaction. As in a
comparable company valuation analysis, the analysis establishes benchmarks for valuation by
deriving financial multiples, standardized using common variables, such as recent historical
EBITDA results for the target company. In selecting an applicable EBITDA multiple range to
apply to the Reorganized Debtors, Jefferies considered a variety of both quantitative and
qualitative factors. Jefferies then applied the selected range of multiples to the Reorganized
Debtors LTM March 31, 2020 adjusted EBITDA to determine a range of Enterprise Values.
THE VALUATION ANALYSIS IN THIS EXHIBIT D REFLECTS WORK
PERFORMED BY JEFFERIES ON THE BASIS OF INFORMATION IN RESPECT OF THE
BUSINESS AND ASSETS OF THE DEBTORS AVAILABLE TO JEFFERIES AS OF MAY 28,
2020. IT SHOULD BE UNDERSTOOD THAT, ALTHOUGH SUBSEQUENT
DEVELOPMENTS MAY AFFECT JEFFERIES' CONCLUSIONS, JEFFERIES DOES NOT
HAVE ANY OBLIGATION TO UPDATE, REVISE OR REAFFIRM ITS VALUATION
ANALYSIS AND DOES NOT INTEND TO DO SO.
JEFFERIES ASSUMED THAT THE PROJECTIONS WERE REASONABLY
PREPARED IN GOOD FAITH AND ON A BASIS REFLECTING THE DEBTORS' BEST
ESTIMATES AND JUDGMENTS AS TO THE FUTURE OPERATING AND FINANCIAL
PERFORMANCE OF THE REORGANIZED DEBTORS. THE VALUATION ANALYSIS
ASSUMED THAT THE ACTUAL PERFORMANCE OF THE REORGANIZED DEBTORS
WILL CORRESPOND TO THE PROJECTIONS IN ALL MATERIAL RESPECTS. IF THE
BUSINESS PERFORMS AT LEVELS BELOW OR ABOVE THOSE SET FORTH IN THE
PROJECTIONS, SUCH PERFORMANCE MAY HAVE A MATERIALLY NEGATIVE OR
POSITIVE IMPACT, RESPECTIVELY, ON THE VALUATION ANALYSIS AND
ESTIMATED POTENTIAL RANGES OF ENTERPRISE VALUE AND EQUITY VALUE
THEREIN.
JEFFERIES DID NOT INDEPENDENTLY VERIFY THE PROJECTIONS OR OTHER
INFORMATION THAT JEFFERIES USED IN THE VALUATION ANALYSIS, AND NO
INDEPENDENT VALUATIONS OR APPRAISALS OF THE DEBTORS WERE SOUGHT OR
OBTAINED IN CONNECTION THEREWITH. THE VALUATION ANALYSIS WAS
DEVELOPED SOLELY FOR PURPOSES OF THE PLAN AND THE ANALYSIS OF
POTENTIAL RELATIVE RECOVERIES TO CREDITORS THEREUNDER. THE
VALUATION ANALYSIS REFLECTS THE APPLICATION OF VARIOUS VALUATION
TECHNIQUES, DOES NOT PURPORT TO BE AN OPINION AND DOES NOT PURPORT TO
REFLECT OR CONSTITUTE APPRAISALS, LIQUIDATION VALUES, OR ESTIMATES OF
THE ACTUAL MARKET VALUE THAT MAY BE REALIZED THROUGH THE SALE OF
ANY SECURITIES TO BE ISSUED OR ASSETS TO BE SOLD PURSUANT TO THE PLAN,
WHICH MAY BE SIGNIFICANTLY DIFFERENT THAN THE AMOUNTS SET FORTH IN
THE VALUATION ANALYSIS.
THE VALUE OF AN OPERATING BUSINESS IS SUBJECT TO NUMEROUS
UNCERTAINTIES AND CONTINGENCIES, WHICH ARE DIFFICULT TO PREDICT AND
WILL FLUCTUATE WITH CHANGES IN FACTORS AFFECTING THE FINANCIAL
CONDITION AND PROSPECTS OF SUCH A BUSINESS. AS A RESULT, THE VALUATION
ANALYSIS IS NOT NECESSARILY INDICATIVE OF ACTUAL OUTCOMES, WHICH MAY
BE SIGNIFICANTLY MORE OR LESS FAVORABLE THAN THOSE SET FORTH HEREIN.
BECAUSE SUCH ESTIMATES ARE INHERENTLY SUBJECT TO UNCERTAINTIES,
NEITHER THE DEBTORS, JEFFERIES NOR ANY OTHER PERSON ASSUMES
RESPONSIBILITY FOR THEIR ACCURACY. IN ADDITION, THE POTENTIAL
VALUATION OF NEWLY ISSUED SECURITIES IS SUBJECT TO ADDITIONAL
UNCERTAINTIES AND CONTINGENCIES, ALL OF WHICH ARE DIFFICULT TO
PREDICT. ACTUAL MARKET PRICES OF SUCH SECURITIES AT ISSUANCE WILL
DEPEND UPON, AMONG OTHER THINGS, PREVAILING INTEREST RATES,
CONDITIONS IN THE FINANCIAL AND COMMODITY MARKETS, THE ANTICIPATED
INITIAL SECURITIES HOLDINGS OF PREPETITION CREDITORS, SOME OF WHICH
MAY PREFER TO LIQUIDATE THEIR INVESTMENT RATHER THAN HOLD IT ON A
LONG-TERM BASIS, THE POTENTIALLY DILUTIVE IMPACT OF CERTAIN EVENTS,
INCLUDING THE ISSUANCE OF EQUITY SECURITIES UPON THE EXERCISE OF
WARRANTS OR PURSUANT TO ANY EMPLOYEE INCENTIVE COMPENSATION PLAN,
AND OTHER FACTORS WHICH GENERALLY INFLUENCE THE PRICES OF
SECURITIES.
JEFFERIES IS ACTING AS INVESTMENT BANKER TO THE DEBTORS, AND HAS
NOT BEEN, WILL NOT BE RESPONSIBLE FOR AND WILL NOT PROVIDE ANY TAX,
ACCOUNTING, ACTUARIAL, LEGAL OR OTHER SPECIALIST ADVICE.
THE SUMMARY SET FORTH IN THIS EXHIBIT D DOES NOT PURPORT TO BE A
COMPLETE DESCRIPTION OF THE VALUATION ANALYSIS PERFORMED BY
JEFFERIES. THE PREPARATION OF A VALUATION ANALYSIS INVOLVES VARIOUS
DETERMINATIONS AS TO THE MOST APPROPRIATE AND RELEVANT METHODS OF
FINANCIAL ANALYSIS AND THE APPLICATION OF THESE METHODS IN THE
PARTICULAR CIRCUMSTANCES AND, THEREFORE, SUCH AN ANALYSIS IS NOT
READILY SUITABLE TO SUMMARY DESCRIPTION. THE VALUATION ANALYSIS
PERFORMED BY JEFFERIES IS NOT NECESSARILY INDICATIVE OF ACTUAL VALUES
OR FUTURE RESULTS, WHICH MAY BE SIGNIFICANTLY MORE OR LESS FAVORABLE
THAN THOSE DESCRIBED HEREIN.
EXHIBIT E
Financial Projections
Page 1 of 7
Financial Projections
As further discussed below, the Debtors believe the Plan meets the feasibility requirement set forth
in section 1129(a)(11) of the Bankruptcy Code, as confirmation is not likely to be followed by liquidation
or the need for further financial reorganization of the Reorganized Debtors.
In connection with developing the Plan, and for purposes, in part, of determining whether the Plan
satisfies feasibility standards and the Reorganized Debtors’ ability to meet their obligations under the Plan
and to maintain sufficient liquidity and capital resources to conduct their business, the Debtors’
management team (“Management”) has developed financial projections (the “Financial Projections”) for
the Reorganized Debtors for 2020-2023 (the “Projection Period”). The Financial Projections with respect
to the Reorganized Debtors are attached hereto as Exhibit 1. The Financial Projections include a projected
consolidated (a) income statement, (b) balance sheet and (c) statement of cash flows for the Projection
Period.
The Projections were prepared by the Debtors’ Management and are based on several assumptions
made by Management with respect to the future performance of the reorganized Debtors’ consolidated
operations. The Debtors believe that the Reorganized Debtors will have sufficient liquidity to fund
obligations as they arise, thereby maintaining value. Accordingly, the Debtors believe the Plan satisfies the
feasibility requirement of section 1129(a)(11) of the Bankruptcy Code. The Debtors prepared the Financial
Projections in good faith, based upon estimates and assumptions made by the Debtors’ Management.
The Financial Projections assume that the Plan will be consummated in accordance with its terms
and that all transactions contemplated by the Plan will be consummated by the assumed Effective Date.
Any significant delay in the assumed Effective Date of the Plan may have a material negative impact on
the operations and financial performance of the Debtors, including, but not limited to, an increased risk of
inability to meet sales forecasts and the incurrence of higher reorganization expenses. Additionally, the
estimates and assumptions in the Financial Projections, although considered reasonable by Management,
may not be realized, and are inherently subject to risks, uncertainties, and contingencies. They also are
based on factors such as industry performance, general business, economic, competitive, regulatory,
industry, environmental, and financial conditions, all of which are difficult to predict and generally beyond
the Debtors’ control. The Financial Projections include macroeconomic assumptions developed for key
variables. Because future events and circumstances may well differ from those assumed and unanticipated
events or circumstances may occur, the Debtors expect that the actual and projected results will differ.
Accordingly, the actual results may be materially different from those reflected in the Financial Projections.
No representations can be made as to the accuracy of the Financial Projections or the Reorganized
Debtors’ ability to achieve the projected results. Therefore, the Financial Projections may not be relied
upon as a guaranty or other assurance of the actual results that will occur. The inclusion of the Financial
Projections should not be regarded as an indication that the Debtors considered or consider the Financial
Projections to reliably predict future performance. The Financial Projections are subjective in many
respects and, thus, are susceptible to interpretations and periodic revisions based on actual experience and
recent developments. The Debtors do not intend to update or otherwise revise the Financial Projections to
reflect the occurrence of future events, even if assumptions underlying the Financial Projections do not
come to fruition. The Financial Projections should be read in conjunction with the assumptions and
qualifications set forth therein. The Projections were not prepared with a view toward compliance with
published guidelines of the SEC or guidelines established by the American Institute of Certified Public
Accountants for preparation and presentation of prospective financial information. These Projections do
not reflect the complete or full impacts of “fresh start accounting,” which could result in a material change
Page 2 of 7
to any of the projected values. Emergence is assumed to occur on July 10, 2020 for the purposes of these
projections.
The Debtors’ independent accountants have neither examined nor compiled the accompanying
financial projections and accordingly do not express an opinion or any other form of assurance with respect
to the Projections, do not assume responsibility for the Projections, and disclaim any association with the
Projections. Although Management has prepared the Projections in good faith and believes the assumptions
to be reasonable, it is important to note that Management cannot provide assurance that such assumptions
will be realized. As described in detail in the Disclosure Statement, a variety of risk factors could affect
future financial results and must be considered. Accordingly, the Projections should be reviewed in
conjunction with a review of the disclaimers and risk factors set forth in the Disclosure Statement and the
assumptions described therein, including all relevant qualifications and footnotes.
THE FINANCIAL PROJECTIONS SET FORTH IN EXHIBIT 1 ARE BASED UPON A NUMBER OF
ESTIMATES AND ASSUMPTIONS THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT RISKS,
UNCERTAINTIES, AND CONTINGENCIES BEYOND THE CONTROL OF THE DEBTORS OR THE
REORGANIZED DEBTORS. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT
PROJECTIONS WOULD BE REALIZED IF THE PLAN WERE TO BECOME EFFECTIVE, AND
ACTUAL RESULTS COULD VARY. THE DEBTORS, THE REORGANIZED DEBTORS AND ANY
AFFILIATED ENTITY DO NOT INTEND TO UPDATE OR OTHERWISE REVISE THESE
PROJECTIONS OR TO REFLECT EVENTS OR CIRCUMSTANCES EXISTING OR ARISING AFTER
THE DATE OF THESE PROJECTIONS OR TO REFLECT THE OCCURRENCE OF
UNANTICIPATED EVENTS NOR TO INCLUDE SUCH INFORMATION IN DOCUMENTS
REQUIRED TO BE FILED WITH THE SEC OR OTHERWISE MAKE SUCH INFORMATION
PUBLIC.
Page 3 of 7
Financial Projection General Assumptions
Basis of presentation
Projections are non-GAAP and not created in accordance with American Institute of Certified
Public Accountants Statement of Position 90-7.
Balance sheet projections include emergence sources and uses for illustrative purposes only.
FY20 financial projections include preliminary actual results through April 2020, and projected
results thereafter.
Key Income Statement Assumptions:
1. Gross Sales: Gross sales were developed by the commercial and finance teams for the Brakes and
Exhaust divisions utilizing a composite of historical customer/seasonal trend, industry forecasts,
and discussions with the sales team. The Company’s sales force maintains regular contact with
customers to determine how each business is impacted by COVID-19. Following a volume loss
related to the COVID-19 outbreak, the Company anticipates Emissions recovery in the back half
of the year while the Brakes division is anticipated to face a more prolonged recovery.
2. Core Returns: Core returns are projected at 85% of core gross sales, in line with historic trends.
3. Discounts & Allowances: Discounts & Allowances are based on existing customer and buying
group agreements. Projections factor-in customer and product mix. Discounts and allowances are
provided for several categories, including advertising, promotions, rebates, and warranties.
4. Standard Cost of Goods Sold (“COGS”): Standard COGS are projected based on anticipated costs
of materials and production. The import / distribution business includes anticipated sourcing
savings by category of product while manufacturing COGS includes cost saving initiatives recently
implemented by Management.
5. Selling Expenses: Selling Expenses include advertising, promotions, commercial team salaries,
commissions, and related expenses.
6. General & Administrative Expenses: General & Administrative Expenses are projected to grow by
approximately 1.6% annually with consideration of volume differences and operating efficiencies.
7. Other Income & Expenses: Other Income & Expenses are largely comprised of one-time
restructuring expenses, organizational improvements and transitional expenses related to interim
personnel.
8. Addbacks: Addbacks relate primarily to restructuring and extraordinary organizational
improvement costs.
Key Balance Sheet Assumptions:
1. Accounts Receivable: COVID-19 has caused a slowdown in customer payments. Management
assumed Days Sales Outstanding slowly return to approximate historical levels over a period of
about six months.
2. Inventory: Inventory changes are based on sales projections and target fill rates.
3. Net PP&E: Capital Expenses relate to ongoing maintenance of systems and facilities, safety,
infrastructure improvements, and operating efficiencies.
4. Accounts Payable: Management assumed Days Payables Outstanding gradually return to 35 days
at AP Emissions and 55 days at Centric.
5. Accrued Expenses: Accrued Expenses reflect anticipated operating liabilities based on sales
volume, employee expenses, rebates, property costs, and other expenses.
6. Revolver: Cash is assumed to be swept to the revolver throughout the projection period.
Page 4 of 7
7. Term Debt: Management assumed the $50 million of anticipated debtor-in-possession financing
will be replaced with $50 million of term debt upon exit from bankruptcy. Exit balance excludes
approximately $2.5 million fees paid-in-kind, currently subject to Court approval.
Key Cash Flow Statement Assumptions:
1. Amortization Expense: Reflects non-cash impacts of elimination of pre-petition intangible assets.
2. Debt Discount: Reflects non-cash impacts of elimination of unamortized discount associated with
pre-petition debt.
3. PIK: Reflects non-cash expense incurred in the pre-petition period.
4. Net Borrowing / (Repayment) on Term Debt: Includes $1.742 million of pre-petition debt
amortization.
Page 5 of 7
Exhibit 1: Financial Projections
$ in '000s 2H20 FY20 FY21 FY22 FY23 Notes
APC Consolidated Income Statements
Gross Sales 315,586$ 581,659$ 608,756$ 630,060$ 649,889$ 1
(less) Eliminations - 127 - - -
(less) Core Returns (36,024) (65,005) (67,944) (69,779) (71,663) 2
(less) Discounts & Allowances (53,810) (100,765) (104,459) (107,933) (109,635) 3
Net Sales 225,752 416,017 436,353 452,348 468,591
% of Gross Sales 71.5% 71.5% 71.7% 71.8% 72.1%
Standard COGS 146,517 280,380 284,000 294,694 304,539 4
% of Gross Sales 46.4% 48.2% 46.7% 46.8% 46.9% 4
Other COGS 22,537 33,347 49,566 51,245 52,811
(less) Eliminations - - - - -
Total COGS 169,054 313,726 333,566 345,938 357,350
GrossProfit 56,698 102,290 102,787 106,410 111,241
% of Gross Sales 18.0% 17.6% 16.9% 16.9% 17.1%
Selling Expenses 6,431 11,559 12,692 13,093 13,221 5
Gen & Admin Expenses 31,016 63,694 64,723 65,931 66,786 6
Other (Income) Expenses 24,419 231,368 17,437 16,040 15,195 7
Net Income (Loss) (5,169) (204,330) 7,935 11,345 16,039
% of Gross Sales -1.6% -35.1% 1.3% 1.8% 2.5%
EBITDA 3,023$ (11,192)$ 23,769$ 26,742$ 30,649$
% of Gross Sales 1.0% -1.9% 3.9% 4.2% 4.7%
Addbacks 13,581 32,505 3,154 1,786 208 8
Adjusted EBITDA 16,604$ 21,313$ 26,923$ 28,528$ 30,856$
% of Gross Sales 5.3% 3.7% 4.4% 4.5% 4.7%
Page 6 of 7
Exhibit 1: Financial Projections (cont’d)
$ in '000s Opening Dec-20 Dec-21 Dec-22 Dec-23 Notes
APC Consolidated Balance Sheets
ASSETS
Current Assets
Cash -$ -$ -$ -$ -$
Accounts Receivable 77,354 85,185 73,632 76,593 79,602 1
Lift Prepaid / Tax Receivable 7,301 1,424 224 - -
Prepaid and Other Current Assets 9,035 6,946 6,099 6,099 6,099
Inventory 180,041 177,291 177,269 180,397 176,971 2
Total Current Assets 273,731 270,847 257,224 263,089 262,672
Non Current Assets
Net PP&E 22,120 22,554 21,604 19,505 17,406 3
Deposits / Investment in JV 6,798 6,082 5,902 5,722 5,542
Deferred Tax (2,962) (2,962) (2,962) (2,962) (2,962)
Non-Current Receivables 1,940 1,940 1,940 1,940 1,940
Non Current Assets 27,896 27,614 26,483 24,204 21,925
TOTAL ASSETS 301,627$ 298,460$ 283,707$ 287,293$ 284,597$
LIABLITIES AND EQUITY
Liabilities
Accounts Payable 41,165$ 34,399$ 33,058$ 36,279$ 36,597$ 4
Accrued Expenses 61,921 60,245 50,798 50,798 50,798 5
Revolver 41,114 51,792 40,586 30,106 11,553 6
Term Debt 50,000 49,875 49,375 48,875 48,375 7
Capital Lease 303 194 - - -
Total Liabilities 194,503 196,505 173,817 166,058 147,323
Members' Equity
Equity 776,646 776,646 776,646 776,646 776,646
Retained Earnings (669,522) (674,691) (666,756) (655,411) (639,372)
Total Member's Equity 107,124 101,955 109,890 121,235 137,274
TOTAL LIABLITIES AND EQUITY 301,627$ 298,460$ 283,707$ 287,293$ 284,597$
Page 7 of 7
Exhibit 1: Financial Projections (cont’d)
$ in '000s 2H20 FY20 FY21 FY22 FY23 Notes
APC Consolidated Cash Flow Statements
Investing Activities
Net Income (5,169)$ (204,330)$ 7,935$ 11,345$ 16,039$
Non-Cash Items
Depreciation Expense 3,035 6,275 6,064 6,064 6,064
Amortization Expense - 164,981 - - - 1
Deferred Compensation/Stock Expense - (6) - - -
Debt Discount - 12,670 - - - 2
PIK Interest - 1,354 - - - 3
Total Non-Cash Items 3,035 185,274 6,064 6,064 6,064
Working Capital
Inventory 2,750 (10,560) 23 (3,129) 3,426
Accounts Receivable (7,831) (11,655) 11,553 (2,961) (3,008)
Other Receivable 5,877 2,512 1,200 224 -
Prepaids and Other Current Assets 2,089 2,167 848 - -
Accounts Payable (6,766) (20,232) (1,341) 3,222 318
Accrued Expenses (1,676) 1,720 (9,447) - -
Deposits & Other Assets 716 (390) 180 180 180
Total Working Capital (4,841) (36,439) 3,015 (2,464) 915
Net Cash Provided (Used) by Operating Activities (6,975)$ (55,496)$ 17,014$ 14,945$ 23,018$
Investing Activities
CapEx - PPE (3,469)$ (3,735)$ (5,114)$ (3,965)$ (3,965)$
Net Cash Provided (Used) by Investing Activities (3,469)$ (3,735)$ (5,114)$ (3,965)$ (3,965)$
Financing Activities
Net Borrowing / (Repayment) on Revolver 10,678$ 4,477$ (11,206)$ (10,480)$ (18,553)$
Net Borrowing / (Repayment) on Term Debt (125) 48,133 (500) (500) (500) 4
Capital Lease (Repayment) (109) (223) (194) - -
Net Cash Provided (Used) by Financing Activities 10,444$ 52,386$ (11,900)$ (10,980)$ (19,053)$
Net Cash Produced (Consumed) in Period -$ (6,845)$ -$ -$ -$
Beginning of Period Cash -$ 6,845$ -$ -$ -$
End of Period Cash -$ -$ -$ -$ -$
EXHIBIT F
Corporate Organizational Chart
100% Preferred
Units
50%
AP Emissions Technologies, LLC
(Delaware)62-1738219
AirTek, LLC(Delaware)35-1801239
Aristo, LLC(Delaware)35-1844542
CWD Holding Corp.,(Delaware)26-2177381
CWD Intermediate Holding Corp.,
(Delaware)26-2177285
CWD, LLC(California)91-2015832
Qualis Enterprises, Inc.(Indiana)
84-1646610
Qualis Automotive, L.L.C. (Delaware)36-4287291
AP Exhaust Products DISC, Inc.(Delaware)27-4610288
EasternManufacturing,
LLC(Pennsylvania)
23-2462410
Eastern-Dorman,
LLC(Pennsylvania)
26-2730888
A corporation for US federal income tax purposes
A disregarded entity for US federal income tax purposes
A partnership for US federal income tax purposes
Organizational Chart
Borrower ABL / First Lien Credit Agreement
Guarantor ABL / First Lien Credit Agreement
CWD Acquisition, LLC(Delaware)82-1324286
APCAutomotive
TechnologiesHoldings, LLC(Delaware)46-4364617
APC Automotive Technologies, LLC
(Delaware)37-1746651
APC Automotive Technologies Intermediate
Holdings, LLC (Delaware)38-3920991
Preferred Holder Fund
Notes1 – Ownership is 100% unless otherwise indicated.
100% Common
Units