Turnaround Lending 2016: What Lenders and Borrowers Need to Know Panel #2 – Getting Out Howard Brownstein Michael St. Patrick Baxter The Brownstein Corp. Covington & Burling LLP Norbert Schmidt Joyce A. Kuhns, Moderator AloStar Bank Offit Kurman, P.A. Allen D. Wilen, Panelist Eisner Amper Patricia B. Jefferson, Panelist Robert P. Gbric, Panelist Miles & Stockbridge PC Capital Business Credit

ROLES AND DUTIES OF KEY PLAYERS: LENDER, FINANCIAL ADVISOR/CRO, LAWYER Turnaround Lending 2016 ROLES AND DUTIES OF KEY PLAYERS: LENDER, FINANCIAL ADVISOR/CRO, LAWYER

Credit Matrix Strong Weak Strong Norbert Schmidt AloStar Bank Weak Watch/Evaluate Expand Exit Extrinsic Factors: Competitive Landscape General Market Conditions Geo Political Factors Capital Markets Rate Environment Weak Strong Norbert Schmidt AloStar Bank Weak Credit Factors: Capital Structure / Liquidity / Management / Competitive Advantage / Assets / Cash Flow

Strategies and Options on Exits, Pros and Cons Turnaround Lending 2016 Strategies and Options on Exits, Pros and Cons Sales: Why Outside? Why Section 363 Sale? Restructure: When Should You Restructure Outside? What Are Benefits of Plan Process? Structured Dismissal: Much to Do About Nothing? Why Shouldn’t Lender Pay Its Tip and Walk?

TURNAROUND LENDING 2016 Short and Long Term Horizons: What Might Affect Outcomes and Approaches?

Conclusions and Take-Aways Turnaround Lending 2016 Conclusions and Take-Aways

Turnaround Lending 2016 ADDITIONAL MATERIALS AND REFERENCES

Links to Relevant Articles Evolving DE Law: http://www.tmajcr.org/journalofcorporaterenewal/june_2016?pg=16#pg16 http://www.tmajcr.org/journalofcorporaterenewal/june_2016?pg=20#pg20 Set me Free: http://www.abi.org/abi-journal/set-me-free-shared-policy-concerns-on-nonconsensual-third-party-releases   You Keep Using that Word: http://www.abi.org/abi-journal/you-keep-using-that-word-what-good-faith-impairment-means-in-a-reorganization-plan Transfer of Claim: http://www.abi.org/abi-journal/transfer-of-claim-held-by-insider-does-not-an-insider-claim-make http://www.abi.org/newsroom/daily-wire/supreme-court-will-review-jevic-to-rule-on-structured-dismissals-and-gift-plans Compiled by Michael St. Patrick Baxter Covington & Burling LLP

Turnaround Professional Roles Financial Advisor Not an agent of the Debtor, no authority to act on Debtor’s behalf Fiduciary duty under applicable state law, plus §327 standards Duties limited by Scope of Work in Employment Application, must seek amendment if duties need to change Chief Restructuring Officer (CRO) Resolution by Board of Debtor, consistent with bylaws Duties and authority specified in board resolution and Employment Application (may be under §365) Generally, FA/CRO deals with bankruptcy-related matters, e/g/. MRO’s, communications with stakeholders in the bankruptcy process: Debtor management, secured and unsecured creditors, shareholders, attorneys, UST, court. Communication and management of expectations are key to avoiding unnecessary disputes and narrowing unavoidable ones Howard Brownstein The Brownstein Corp.

Key Strategic Alternatives & Timeline - I §363 Sale Coordinate bidding and sale procedures with Debtor counsel Identify stalking-horse bidder, negotiate terms and coordinate Asset Purchase Agmt (APA) with Debtor Counsel Design and manage robust sale process: coordinate NDA’s with Debtor counsel, manage VDR, cull proposals and support auction process in coordination with Debtor counsel (and UST?) Testify about sale process If included in Scope of Work, support ownership transition process, manage or support claims adjustment/administration, and distribution of sale proceeds Maintain communications throughout Howard Brownstein The Brownstein Corp.

Key Strategic Alternatives & Timeline - II Reorganization Lead creation of restructuring plan, consistent with projected operations of Debtor post- confirmation Assist Debtor counsel in creating Disclosure Statement and Plan of Reorganization Assist counsel in soliciting support from stakeholder classes, including answering questions from stakeholders within applicable rules Testify about Plan process and feasibility Maintain communications throughout Structured dismissal is variation on above, where permitted Howard Brownstein The Brownstein Corp.

Key Strategic Alternatives & Timeline - III Liquidation (if sale or liquidation not possible) Coordinate with Debtor counsel creation of Liquidating Plan and Liquidating Trust documents Transition to Liquidating Trustee, if appropriate Howard Brownstein The Brownstein Corp.