Exhibit 10.1

 

EXECUTION VERSION

 

THIS RESTRUCTURING SUPPORT AGREEMENT IS PROTECTED BY RULE 408 OF THE FEDERAL
RULES OF EVIDENCE AND ANY OTHER APPLICABLE STATUTES OR DOCTRINES PROTECTING THE
USE OR DISCLOSURE OF CONFIDENTIAL SETTLEMENT DISCUSSIONS.

 

THIS RESTRUCTURING SUPPORT AGREEMENT IS NOT AN OFFER WITH RESPECT TO ANY
SECURITIES OR A SOLICITATION OF VOTES WITH RESPECT TO A PLAN OF REORGANIZATION.
ANY SUCH OFFER OR SOLICITATION WILL COMPLY WITH ALL APPLICABLE SECURITIES LAWS
AND/OR PROVISIONS OF THE BANKRUPTCY CODE.

 

 

Eagle Bulk Shipping Inc.

 

Restructuring Support Agreement

  August 6, 2014  

 

This Restructuring Support Agreement (together with the exhibits annexed hereto,
and as may be amended, restated, supplemented, or otherwise modified from time
to time in accordance with the terms hereof, this “Agreement”), dated as of
August 6, 2014, is entered into by and among: (i) Eagle Bulk Shipping Inc., a
Marshall Islands corporation (“EBS”), and each of its direct and indirect
subsidiaries (each an “Eagle Entity” and, collectively, the “Eagle Entities” or
the “Company”) and (ii) the lenders under the Credit Agreement (as defined
herein) that are (or may become in accordance with Section 11 hereof)
signatories hereto (in their capacity as lenders under the Credit Agreement,
holders of Warrants (as defined below), and/or holders of common stock or other
equity interests in EBS, the “Consenting Lenders”). Each of the Eagle Entities,
the Consenting Lenders, and each other person that becomes a party to this
Agreement in accordance with its terms shall be referred to herein individually
as a “Party” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, the Company and certain lenders under that certain Fourth Amended and
Restated Credit Agreement, dated as of June 20, 2012 (as amended to date and as
may be further amended, restated, supplemented, or otherwise modified from time
to time in accordance with its terms, the “Credit Agreement”), entered into that
certain Waiver and Forbearance Agreement, dated as of March 19, 2014 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Waiver and Forbearance Agreement”);

 

WHEREAS, the Waiver and Forbearance Agreement terminates, subject to the terms
and conditions set forth therein, on August 5, 2014 if the Company and the
Majority Lenders (as defined in the Credit Agreement) have not, on or before
such date, (i) agreed on the terms of a restructuring of the obligations
outstanding under the Credit Agreement and (ii) executed a binding restructuring
support agreement or similar agreement documenting such agreed-upon terms,
including milestones for the commencement, implementation, and closing of the
restructuring;

 

WHEREAS, certain lenders under the Credit Agreement are holders of (i) warrants
to purchase common stock of EBS (the “Warrants”) issued under that certain
Warrant Agreement, dated as of June 20, 2012, between EBS and the other parties
thereto (as amended to date and as may be further amended, restated,
supplemented, or otherwise modified from time to time in accordance with its
terms, the “Warrant Agreement”) and/or (ii) common stock in EBS.

 

WHEREAS, the Parties have engaged in good faith, arm’s-length negotiations
regarding a restructuring transaction (the “Restructuring”) pursuant to the
terms and conditions set forth in this Agreement (the general terms of which are
reflected in the term sheet annexed hereto as Exhibit A (together with all
exhibits thereto, the “Term Sheet”) for illustrative purposes only), including
the proposed prepackaged chapter 11 plan of reorganization for EBS annexed
hereto as Exhibit B (the “Plan”), and the related disclosure statement annexed
hereto as Exhibit C (the “Disclosure Statement”), each of which may be amended,
restated, supplemented, or otherwise modified from time to time pursuant to the
mutual consent of EBS and the Majority Consenting Lenders (as defined below) and
which is incorporated by reference pursuant to Section 2 hereof; 1

 

WHEREAS, it is contemplated that the Restructuring will be implemented through a
voluntary case commenced by EBS and, if necessary, one or more of the Eagle
Entities (the “Chapter 11 Case(s)”) under chapter 11 of title 11 of the United
States Code, 11 U.S.C. §§ 101–1532 (as amended, the “Bankruptcy Code”) in the
United States Bankruptcy Court for the Southern District of New York (the
“Bankruptcy Court”), pursuant to the Plan;

 

WHEREAS, certain of the Consenting Lenders have agreed to provide financing and
otherwise extend credit to the Company and consent to the use of cash collateral
during the pendency of the Chapter 11 Case(s) pursuant to and subject to the
terms and conditions of the Financing Orders and the DIP Credit Agreement (each
as defined below);

 

 
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EXECUTION VERSION
 

 

NOW, THEREFORE, in consideration of the promises and mutual covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each of the Parties,
intending to be legally bound, hereby agrees as follows:

 

AGREEMENT

 

1.     Effective Date. This Agreement shall become effective, and the
obligations contained herein shall become binding upon the Parties (the
“Effective Date”), upon the execution and delivery of counterpart signature
pages to this Agreement by and among (a) the Company and (b) the Consenting
Lenders constituting collectively more than 50% of the current Lenders under the
Credit Agreement and holding claims equal to at least 66 2/3% in amount of the
total outstanding Loans under the Credit Agreement (the “Required Lenders”).

 

2.     Exhibits and Schedules. Each of the Exhibits and Schedules annexed hereto
is expressly incorporated herein and made a part of this Agreement, and all
references to this Agreement shall include the Exhibits and Schedules. Subject
to the following sentence, in the event of any inconsistencies between the terms
of this Agreement and the Plan, (i) prior to the entry of the Confirmation Order
(as defined below), this Agreement shall govern, and (ii) on and after the entry
of the Confirmation Order, the Plan shall govern. The use of cash collateral and
debtor-in-possession financing prior to the Consummation Date shall be governed
by the terms of, as applicable, (a) the interim order authorizing the use of
cash collateral and debtor-in-possession financing, in the form annexed hereto
as Exhibit D or such other form as is reasonably acceptable to the Company and
the Majority Consenting Lenders (the “Interim Financing Order”), (b) the final
order authorizing the use of cash collateral and debtor-in-possession financing
in such form as is reasonably acceptable to the Company and the Majority
Consenting Lenders (the “Final Financing Order” and together with the Interim
Financing Order, the “Financing Orders”), and (c) the debtor-in-possession
credit agreement (the “DIP Credit Agreement”) to be entered into in accordance
with the Financing Orders. For the avoidance of doubt, the Term Sheet annexed
hereto as Exhibit A is provided solely for illustrative purposes and shall have
no binding effect on any of the Parties except as expressly provided herein.

 

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1

Capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in the Plan or Credit Agreement, as applicable.

 

 
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EXECUTION VERSION
 

 

3.     Definitive Documentation. The definitive documents and agreements (the
“Definitive Documentation”) governing the Restructuring shall include: (a) the
Plan (and all schedules, exhibits and supplements thereto) and the Confirmation
Order; (b) the Disclosure Statement (and all exhibits thereto) with respect to
the Plan; (c) the solicitation materials with respect to the Plan (collectively,
the “Solicitation Materials”); (d) the documents identified on Exhibit E hereto
(collectively, the “Consummation Documents”); (e) the DIP Credit Agreement, (f)
the Financing Orders; and (g) the new credit agreement (the “Exit Financing”).
Other than the Plan (excluding the schedules, exhibits and supplements thereto
that have not been negotiated and completed as of the date of this Agreement),
the Disclosure Statement, and the Interim Financing Order, the Definitive
Documentation identified in the foregoing sentence (i) remains subject to
negotiation and completion and (ii) shall upon completion (x) contain terms,
conditions, representations, warranties, and covenants consistent with the terms
of this Agreement and (y) be in form and substance reasonably acceptable to the
Company and the Majority Consenting Lenders.

 

4.     Milestones. The Company shall implement the Restructuring on the
following timeline (in each case, a “Milestone”):

 

 

(a)

on or before August 6, 2014, EBS shall commence a solicitation of the Lenders
seeking the approval and acceptance of the Plan;

 

 

(b)

on or before August 6, 2014, EBS shall receive the approval and acceptance of
the Plan by Lenders collectively constituting the Required Lenders as of such
date (the “Lender Class Acceptance”);

 

 

(c)

upon the occurrence of the Lender Class Acceptance, EBS shall commence the
Chapter 11 Case on or before August 6, 2014;

 

 

(d)

no later than the date of the commencement of the Chapter 11 Case (the “Petition
Date”), EBS shall file with the Bankruptcy Court the Plan, the Disclosure
Statement, a motion seeking approval of the DIP Facility (as defined below), and
a motion seeking a joint hearing to consider the adequacy of the Disclosure
Statement, approval of the Company’s prepetition solicitation of the Lenders,
and confirmation of the Plan (the “Joint Disclosure Statement and Plan
Confirmation Hearing”);

 

 
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EXECUTION VERSION
 

 

 

(e)

no later than 5 business days after the Petition Date, the Bankruptcy Court
shall enter a final order scheduling the Joint Disclosure Statement and Plan
Confirmation Hearing;

 

 

(f)

no later than 5 business days after the Petition Date, the Bankruptcy Court
shall enter the Interim Financing Order in the form annexed hereto or in such
other form as is reasonably acceptable to the Company and the Majority
Consenting Lenders, authorizing the Company to enter into a post-petition credit
facility (the “DIP Facility”) and use cash collateral, and scheduling a final
hearing with respect to such matters;

 

 

(g)

no later than 37 days after the Petition Date, the Bankruptcy Court shall enter
the Final Financing Order in a form reasonably acceptable to the Company and the
Majority Consenting Lenders;

 

 

(h)

no later than 37 days after the Petition Date, the Bankruptcy Court shall
commence the Joint Disclosure Statement and Plan Confirmation Hearing;

 

 

(i)

no later than 45 days after the Petition Date, the Bankruptcy Court shall enter
an order (1) approving the adequacy of the Disclosure Statement and the
Company’s prepetition solicitation of the Lenders and (2) confirming the Plan
(the “Confirmation Order”); and

 

 

(j)

no later than 60 days after the Petition Date, the effective date of the Plan
(the “Consummation Date”) shall occur.

 

Notwithstanding the above, a specific Milestone may be extended or waived with
the express prior written consent of both the Company and the Majority
Consenting Lenders; provided, however, that in the event that the Company or the
Majority Consenting Lenders determine, in their exercise of their reasonable
discretion and after consultation with the professionals for the other parties,
that commencing a Chapter 11 Case for one or more Eagle Entities (other than
EBS) is necessary or advisable to facilitate the consummation of the
Restructuring, then any of the foregoing Milestone dates that falls on or after
the date of such decision shall automatically be deferred by 20 business days.

 

5.     Commitment of Consenting Lenders. Subject to compliance in all material
respects by the other Parties with the terms of this Agreement, from the
Effective Date and until the occurrence of a Termination Date, each Consenting
Lender shall (severally and not jointly):

 

 

(a)

support and take all actions necessary or reasonably requested by the Company to
facilitate consummation of the Restructuring, including without limitation, to
(i) timely vote all of its claims (as defined in section 101(5) of the
Bankruptcy Code) against, and interests in, the Company, now or hereafter owned
by such Consenting Lender or for which it now or hereafter serves as the
nominee, investment manager, or advisor for holders thereof, to accept the Plan
in accordance with the applicable procedures set forth in the Disclosure
Statement and the solicitation materials with respect to the Plan, provided,
further, that any Consenting Lender, simultaneously with its execution of this
Agreement, shall deliver and release to the Company’s solicitation agent such
Consenting Lender’s executed ballot accepting the Plan, and (ii) to the extent
such election is available, not elect on its ballot to preserve claims, if any,
that each Consenting Lender may own or control that may be affected by any
releases contemplated by the Plan;

 

 
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EXECUTION VERSION
 

 

 

(b)

not withdraw, amend, or revoke (or cause to be withdrawn, amended, or revoked)
its vote with respect to the Plan;

 

 

(c)

(i) support the confirmation of the Plan and approval of the Disclosure
Statement and the solicitation procedures and (ii) not (1) object to, delay,
interfere, impede, or take any other action to delay, interfere or impede,
directly or indirectly, with the Restructuring, confirmation of the Plan, or
approval of the Disclosure Statement or the solicitation procedures (including,
but not limited to, joining in or supporting any efforts to object to or oppose
any of the foregoing), or (2) propose, file, support, or vote for, directly or
indirectly, any restructuring, workout, or chapter 11 plan for the Company other
than the Restructuring and the Plan;

 

 

(d)

not commence any proceeding to oppose or alter any of the terms of the Plan or
any other document filed by EBS or the Company in connection with the
confirmation of the Plan (as long as such documents are materially consistent
with the terms and conditions of this Agreement);

 

 

(e)

support (and not object to) the “first day” motions and other motions consistent
with this Agreement filed by EBS or the Company in furtherance of the
Restructuring, including, but not limited to, any motion seeking approval of the
DIP Facility on the terms set forth in the Financing Orders;

 

 

(f)

not, nor encourage any other person or entity to, take any action, including,
without limitation, initiating or joining in any legal proceeding, which is
inconsistent with this Agreement, or delay, impede, appeal, or take any other
negative action, directly or indirectly, that could reasonably be expected to
interfere with the approval, acceptance, confirmation, consummation, or
implementation of the Restructuring or the Plan, as applicable;

 

 

(g)

use commercially reasonable efforts to execute any document and give any notice,
order, instruction, or direction necessary or reasonably requested by the
Company to support, facilitate, implement, consummate, or otherwise give effect
to the Restructuring;

 

 

(h)

use good faith efforts to negotiate, execute and implement the Definitive
Documentation on terms not materially inconsistent with the Term Sheet,
including the exhibits thereto;

 

 
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EXECUTION VERSION
 

 

 

(i)

support (and not object to) the Company’s efforts to obtain the Exit Financing
Facility, and not object to, or support the efforts of any other Person to
oppose or object to, the Exit Financing Facility;

 

 

(j)

support (and not object to), and enter into any amendments to the Finance
Documents and/or provide direction and instructions to the Agent and the
Security Trustee (each as defined in the Credit Agreement) as may be reasonably
requested by the Company to effectuate, the priming, subordination and/or
release of (i) all claims against the Company (including, for the avoidance of
doubt, EBS’ subsidiaries) under the Finance Documents and (ii) the liens,
security interests, mortgages and other encumbrances granted by the Company
(including, for the avoidance of doubt, EBS’ subsidiaries) securing the
obligations under the Finance Documents, in each case as contemplated pursuant
to, and in order to facilitate the implementation and/or consummation of, (1)
the DIP Facility and the Financing Orders, (2) the Plan, and (3) the Exit
Financing Facility (as defined in the Plan);

 

 

(k)

support the Company’s efforts to remain listed on the NASDAQ Global Select
Market (“NASDAQ”) and, if the Company loses its NASDAQ listing for any reason
prior to the consummation of the Restructuring, support the Company’s good faith
efforts to become relisted on NASDAQ;

 

 

(l)

not exercise any right or remedy or take any action (or initiate, join in, or
encourage in any way an instruction or direction to any other party, including,
but not limited to, the Agent or the Security Trustee, to take any action) in
respect of any potential, actual, or alleged occurrence of any “Default” or
“Event of Default” under the Credit Agreement that exists or otherwise has been
acknowledged as of the date hereof and is described on Schedule 1 hereto or that
would be triggered as a result of the commencement or pendency of the Chapter 11
Case(s); and

 

 

(m)

not instruct (or join in any direction requesting that) the Agent and/or
Security Trustee under the Credit Agreement or the related loan documents to
take any action, or refrain from taking any action, that would be inconsistent
with this Agreement or the Restructuring.

 

Notwithstanding the foregoing, nothing in this Agreement and neither a vote to
accept the Plan by any Consenting Lender nor the acceptance of the Plan by any
Consenting Lender shall (w) be construed to prohibit any Consenting Lender from
contesting whether any matter, fact, or thing is a breach of, or is inconsistent
with, this Agreement, (x) be construed to prohibit any Consenting Lender from
appearing as a party-in-interest in any matter to be adjudicated in the Chapter
11 Cases, so long as such appearance and the positions advocated in connection
therewith are not inconsistent with this Agreement and are not for the purpose
of hindering, delaying, or preventing the consummation of the Restructuring, (y)
impair or waive the rights of any Consenting Lender to assert or raise any
objection permitted under this Agreement in connection with any hearing on
confirmation of the Plan or in the Bankruptcy Court, or (z) impair or waive the
rights of any Consenting Lender under any applicable credit agreement,
indenture, or other loan document except as contemplated by this Agreement; nor
shall anything in this Agreement or a vote to accept the Plan cast by any
Consenting Lender limit any rights a Consenting Lender has in its capacity as a
post-petition lender under (and subject to) the DIP Credit Agreement and the
Financing Orders, including to take or direct any action relating to
maintenance, protection, or preservation of any collateral securing the DIP
Facility.

 

 
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EXECUTION VERSION
 

 

6.     Commitment of the Company. Subject to compliance in all material respects
by the Consenting Lenders with the terms of this Agreement, from the Effective
Date and until the occurrence of a Termination Date (as defined below):

 

 

(a)

Subject to paragraph (b) immediately below, the Company (i) agrees to (A)
support and complete the Restructuring and all transactions set forth in the
Plan and this Agreement, (B) complete the Restructuring and all transactions set
forth or described in the Plan in accordance with the Milestones set forth in
Section 3 of this Agreement, (C) negotiate in good faith all Definitive
Documentation that is subject to negotiation as of the Effective Date, (D) take
any and all necessary actions in furtherance of the Restructuring, this
Agreement, and the Plan, (E) make commercially reasonable efforts to obtain any
and all required regulatory and/or third-party approvals for the Restructuring,
and (F) use good faith efforts to negotiate, execute and implement the
Definitive Documentation on terms not materially inconsistent with the Term
Sheet, including the exhibits thereto, and (ii) shall not undertake any actions
materially inconsistent with the adoption and implementation of the Plan and
confirmation thereof.

 

 

(b)

Notwithstanding anything to the contrary herein, (i) the Company’s obligations
hereunder (including, without limitation, the obligations of the Company’s board
of directors and officers) are subject at all time to the fulfillment of their
respective fiduciary duties, (ii) nothing in this Agreement shall require the
Company, the board of directors, or officers of any Eagle Entity to take any
action, or to refrain from taking any action, that is required to comply with
such director’s, officer’s, or manager’s fiduciary obligations under applicable
law, and (iii) to the extent that such fiduciary obligations require the
Company, the board of directors, or officers to terminate the Company’s
obligations under this Agreement, the Company, the board of directors, and/or
the officers may do so without incurring any liability to any Party under this
Agreement except as otherwise set forth herein.

 

7.     Consenting Lenders’ Termination Events. A Consenting Lender shall have
the right, but not the obligation, to terminate its own obligations under this
Agreement, upon five (5) days’ prior written notice to all Parties setting forth
the basis for termination following the occurrence of any of the following
events (each, a “Lender Termination Event”), unless such event has been waived,
in writing, by such Consenting Lender or the Majority Consenting Lenders (as
defined herein):

 

 
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EXECUTION VERSION
 

 

 

(a)

the failure to meet any Milestone, unless such failure is the result of any act,
omission, or delay on the part of any Consenting Lender or such Milestone is
waived in accordance herewith;

 

 

(b)

the occurrence of a material breach of this Agreement by the Company that has
not been cured (if susceptible to cure) within five (5) days after the receipt
by the Company of written notice of such breach;

 

 

(c)

the occurrence of (i) any Event of Default under (and as defined in) the Credit
Agreement (other than any Acknowledged Default or any Event of Default triggered
as a result of the commencement or pendency of the Chapter 11 Cases) or the DIP
Credit Agreement or (ii) a violation of the Company’s obligations under
Financing Orders, in each case, which Event of Default or violation has not been
cured (if susceptible to cure) in accordance with the terms set forth therein;

 

 

(d)

entry of an order by the Bankruptcy Court converting the Chapter 11 Case to a
case under chapter 7 of the Bankruptcy Code;

 

 

(e)

entry of an order by the Bankruptcy Court appointing a trustee, receiver, or
examiner with expanded powers beyond those set forth in section 1106(a)(3) and
(4) of the Bankruptcy Code in the Chapter 11 Case;

 

 

(f)

entry of an order by the Bankruptcy Court terminating any Eagle Entity’s
exclusive right to file a plan of reorganization pursuant to section 1121 of the
Bankruptcy Code;

 

 

(g)

any Eagle Entity amends or modifies, or files a pleading seeking authority to
amend or modify, the Definitive Documentation, unless such amendment or
modification is (i) consistent with this Agreement or (ii) reasonably acceptable
to the Majority Consenting Lenders;

 

 

(h)

entry of an order by the Bankruptcy Court amending or modifying the Definitive
Documentation, unless such amendment or modification is (i) consistent with this
Agreement or (ii) reasonably acceptable to the Majority Consenting Lenders;

 

 

(i)

either (i) the board of directors of any Eagle Entity and the officers of such
Eagle Entity determine to pursue any Alternative Transaction (as defined below),
including any plan of reorganization (other than the Plan) or (ii) any Eagle
Entity files, propounds, or otherwise publicly supports or announces that any
Eagle Entity will support any Alternative Transaction, including any plan of
reorganization other than the Plan, or files any motion or application seeking
authority to sell any material assets, without the prior written consent of the
Majority Consenting Lenders;

 

 
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EXECUTION VERSION
 

 

 

(j)

the issuance by any governmental authority, including the Bankruptcy Court, any
regulatory authority, or any other court of competent jurisdiction, of any
ruling or order enjoining the substantial consummation of the Restructuring;
provided, however, that the Company shall have five (5) days after issuance of
such ruling or order to obtain relief that would allow consummation of the
Restructuring in a manner that (i) does not prevent or diminish in a material
way compliance with the terms of the Plan and this Agreement or (ii) is
reasonably acceptable to the Majority Consenting Lenders;

 

 

(k)

the Bankruptcy Court enters any order authorizing the use of cash collateral or
post-petition financing that is not substantially in the form of the Interim
Financing Order or otherwise consented to by the Majority Consenting Lenders;

 

 

(l)

either (i) any Eagle Entity files a motion, application or adversary proceeding
(or supports such a filing) (1) challenging the validity, enforceability,
perfection or priority of, or seeking avoidance or subordination of, the loans
under the Credit Agreement or the DIP Credit Agreement or the liens securing
such obligations, (2) asserting any other cause of action against and/or with
respect or relating to such obligations or the liens securing such obligations,
or (3) challenging the validity of the Warrants, the Warrant Agreement (as
amended) or any claims asserted by a holder of such Warrants (to the extent such
holder is also a Consenting Lender) in respect of such Warrants; or (ii) the
Bankruptcy Court (or any court with jurisdiction over the Chapter 11 Cases)
enters an order providing relief against the interests of the Consenting Lenders
(in their capacity as holders of loans under the Credit Agreement or the DIP
Credit Agreement or as holders of Warrants) with respect to any of the foregoing
causes of action or proceedings;

 

 

(m)

a breach by any Eagle Entity of any representation, warranty, or covenant of
such Eagle Entity set forth in Section 16(b) of this Agreement that could
reasonably be expected to have a material adverse impact on the Restructuring or
the consummation of the Restructuring that (if susceptible to cure) remains
uncured for a period of five (5) days after the receipt by the Company of
written notice of such breach;

 

 

(n)

a breach by any Eagle Entity of any of its obligations under this Agreement that
could reasonably be expected to have a material adverse impact on the
Restructuring or the consummation of the Restructuring that (if susceptible to
cure) remains uncured for a period of five (5) days after the receipt by the
Company of written notice of such breach;

 

 

(o)

the Exit Financing amount or terms differ in a meaningful way from the terms of
that certain financing proposal received by the Company on July 29, 2014
reflecting a $225,000,000 term loan component and a $50,000,000 revolving credit
facility component; or

 

 
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EXECUTION VERSION
 

 

 

(p)

the Consummation Date shall not have occurred by November 30, 2014.

 

As used herein, the term “Majority Consenting Lenders” shall mean at least four
(4) Consenting Lenders who are not affiliates of each other and who hold, in the
aggregate, at least 66 2/3% of the principal amount of total outstanding Loans
under the Credit Agreement held by all Consenting Lenders. Notwithstanding the
foregoing, Sections 7(o) and (p) hereof may not be amended, waived or otherwise
modified without the consent of such affected Consenting Lender.

 

8.     Company’s Termination Events. The Company may, in its sole discretion,
terminate this Agreement as to all Parties upon five (5) days’ prior written
notice to the Consenting Lenders setting forth the basis for termination,
delivered in accordance with this Agreement, following the occurrence of any of
the following events (each a “Company Termination Event” and, together with the
Lender Termination Events, the “Termination Events”):

 

 

(a)

a breach by a Consenting Lender of any of the representations, warranties, or
covenants of such Consenting Lender set forth in Section 15 of this Agreement
that that could reasonably be expected to have a material adverse impact on the
Restructuring or the consummation of the Restructuring that (if susceptible to
cure) remains uncured for a period of five (5) days after the receipt by the
Consenting Lenders of written notice of such breach;

 

 

(b)

a breach by any Consenting Lender of any of its obligations under this Agreement
that could reasonably be expected to have a material adverse impact on the
Restructuring or the consummation of the Restructuring that (if susceptible to
cure) remains uncured for a period of five (5) days after the receipt by the
Consenting Lenders of written notice of such breach;

 

 

(c)

the Company’s board of directors determines, (i) consistent with Section 6(b)
above that continued pursuit or support of the Restructuring (including, without
limitation, the Plan or the solicitation of the Plan) would be inconsistent with
the exercise of its fiduciary duties or (ii) to pursue an Alternative
Transaction consistent with Section 17 below;

 

 

(d)

the Consenting Lenders at any time constitute less than the Required Lenders;

 

 

(e)

the issuance by any governmental authority, including the Bankruptcy Court or
any other regulatory authority or court of competent jurisdiction, of any
injunction, judgment, decree, charge, ruling, or order preventing the
consummation of a material portion of the Restructuring; or

 

 

(f)

the Consummation Date shall not have occurred by November 30, 2014.

 

 
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EXECUTION VERSION
 

 

9.     Mutual Termination; Automatic Termination. This Agreement, and the
obligations of all Parties hereunder, may be terminated by mutual agreement by
and among the Company and the Majority Consenting Lenders. This Agreement and
the obligations of all Parties hereunder shall terminate automatically on the
Consummation Date.

 

10.     Effect of Termination.

 

(a)     The earliest date on which a Party’s termination of this Agreement is
effective in accordance with Section 7, Section 8, or Section 9 of this
Agreement shall be referred to as a “Termination Date.” Termination shall not
relieve any Party from liability for its breach or non-performance of its
obligations hereunder prior to the Termination Date. Upon any Party’s
termination of this Agreement in accordance with its terms prior to the date on
which the Confirmation Order is entered by the Bankruptcy Court, such Party
shall have the immediate right, without further order of the Bankruptcy Court,
and without the consent of the Company, to withdraw or change any vote
previously tendered by such Party, irrespective of whether any voting deadline
or similar deadline or bar date has passed, provided that such Party is not then
in material breach of its obligations under this Agreement; provided further
that, for the avoidance of doubt, the foregoing shall not be construed to
prohibit any Party from contesting whether such terminating Party’s termination
of this Agreement is in accordance with the terms of this Agreement. Any
Consenting Lender withdrawing or changing its vote(s) pursuant to this Section
10(a) shall promptly provide written notice of such withdrawal or change to each
other Party and, if such withdrawal or change occurs on or after the Petition
Date, file notice of such withdrawal or change with the Bankruptcy Court.

 

(b)     All Parties’ obligations under this Agreement shall be terminated
effective immediately, and all Parties hereto shall be released from their
respective commitments, undertakings, and agreements upon the occurrence of
termination of this Agreement (i) by the Required Lenders pursuant to Section 7
or (ii) as provided in Section 8 or 9.  Notwithstanding the foregoing, each of
the following shall survive termination of the Agreement by any Party, and all
rights and remedies with respect to such claims shall not be prejudiced in any
way: (i) any claim for breach of this Agreement that occurs prior to the
Termination Date, (ii) the Company’s obligations in Sections 13 and 14 of this
Agreement (subject to the terms and conditions of such Sections), (iii) Section
10(a) and (iv) this Section 10(b).

 

(c)     Except with respect to Section 8(c) of this Agreement, no occurrence
shall constitute a Termination Event if such occurrence is the result of the
action or omission of the Party seeking to terminate this Agreement.

 

11.     Cooperation and Support. The Company shall provide draft copies of all
“first day” motions and “second day” motions that any Eagle Entity intends to
file with the Bankruptcy Court to counsel for the Consenting Lenders at least
four (4) calendar days (or as soon thereafter as is reasonably practicable under
the circumstances) prior to the date when such Eagle Entity intends to file such
document, and shall consult in good faith with such counsel regarding the form
and substance of any such proposed filing with the Bankruptcy Court. The Company
will use reasonable efforts to provide draft copies of all other material
pleadings any Eagle Entity intends to file with the Bankruptcy Court to counsel
to the Consenting Lenders at least three (3) calendar days prior to filing such
pleading to the extent practicable and shall consult in good faith with such
counsel regarding the form and substance of any such proposed pleading. For the
avoidance of doubt, the Parties agree to negotiate in good faith the Definitive
Documentation that is subject to negotiation and completion, consistent with the
last sentence of Section 3 hereof.

 

 
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EXECUTION VERSION
 

 

12.     Transfers of Claims and Interests.

 

(a)     Each Consenting Lender shall not (i) sell, transfer, assign,
hypothecate, pledge, grant a participation interest in, or otherwise dispose of,
directly or indirectly, its right, title, or interest in respect of any of such
Consenting Lender’s interests in the Credit Agreement, or any other claim
against, or interests in, the Company, as applicable, in whole or in part, or
(ii) grant any proxies, deposit any of such Consenting Lender’s interests in the
Credit Agreement, or any other claim against or interests in the Company, as
applicable, into a voting trust, or enter into a voting agreement with respect
to any such claims or interests (the actions described in clauses (i) and (ii)
are collectively referred to herein as a “Transfer” and the Consenting Lender
making such Transfer is referred to herein as the “Transferor”), unless such
Transfer is to another Consenting Lender or any other entity that (x) first
agrees, in writing, to be bound by the terms of this Agreement by executing and
delivering to the Company, at least five (5) business days prior to
effectiveness of the relevant Transfer, a Transferee Joinder substantially in
the form annexed hereto as Exhibit F (the “Transferee Joinder”) and (y) is
reasonably capable, after due inquiry and investigation by the Transferor, of
fulfilling its obligations under this Agreement. With respect to the Credit
Agreement and any other claims against, or interests in, the Company held by the
relevant transferee upon consummation of a Transfer, such transferee shall be
deemed to make all of the representations and warranties of a Consenting Lender
set forth in this Agreement, and shall be deemed to be a Party and a Consenting
Lender for all purposes under the Agreement. Upon compliance with the foregoing,
the Transferor shall be deemed to relinquish its rights under this Agreement
solely to the extent of such transferred rights and obligations but shall
otherwise remain party to this Agreement as a Consenting Lender with respect to
any interest in the Credit Agreement or other claim not so transferred. Any
Transfer made in violation of this Section 11 shall be deemed null and void and
of no force or effect, regardless of any prior notice provided to the Company
and/or the Consenting Lenders, and shall not create any obligation or liability
of the Company to the purported transferee (it being understood that the
putative transferor shall continue to be bound by the terms and conditions set
forth in this Agreement).

 

(b)     Notwithstanding Section 12(a), (i) a Consenting Lender may transfer (by
purchase, sale, assignment, participation or otherwise) its right, title, and/or
interest in respect of any of such Consenting Lender’s interests in the Credit
Agreement to an entity that is acting in its capacity as a Qualified Marketmaker
without the requirement that the Qualified Marketmaker be or become a Consenting
Lender, provided that such transfer shall only be valid if such Qualified
Marketmaker transfers (by purchase, sale, assignment, participation or
otherwise) such right, title and/or interest within five (5) business days of
its receipt thereof to a transferee that is, or concurrent with such transfer
becomes, a Consenting Lender, and (ii) to the extent that a party to this
Agreement is acting in its capacity as a Qualified Marketmaker, it may transfer
(by purchase, sale, assignment, participation or otherwise) any right, title, or
interest in respect of any interests in the Credit Agreement that the Qualified
Marketmaker acquires from a holder of such interests who is not a Consenting
Lender without the requirement that the transferee be or become a Consenting
Lender.  For these purposes, a “Qualified Marketmaker” means an entity that (x)
holds itself out to the market as standing ready in the ordinary course of its
business to purchase from customers and sell to customers claims against the
Eagle Entities (including debt securities or other debt) or enter with customers
into long and short positions in claims against the Eagle Entities (including
debt securities or other debt), in its capacity as a dealer or market maker in
such claims against the Eagle Entities, and (y) is in fact regularly in the
business of making a market in claims against issuers or borrowers (including
debt securities or other debt).

 

 
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EXECUTION VERSION
 

 

13.     RSA Fee. In exchange for the Consenting Lenders’ agreement to pursue the
Restructuring on the terms set forth in the Plan and entry into this Agreement,
each Consenting Lender shall earn a cash fee equal to 3.0% of the total
outstanding principal amount of Loans owed to such Consenting Lender (the “RSA
Fee”). Payment of the RSA Fee shall be deferred so long as this Agreement
remains in full force and effect, provided, however, that the RSA Fee shall
automatically be cancelled, discharged, and forfeited by each Consenting Lender
(a) upon the Consummation Date of the Plan, or (b) if EBS commenced the Chapter
11 Case and the Minimum Consenting Lender Condition (as defined below) no longer
remains satisfied (unless the failure to satisfy the Minimum Consenting Lender
Condition is based on the Consenting Lenders’ termination of this Agreement
pursuant to Section 7 hereof); provided, further, that each Consenting Lender’s
respective portion of the RSA Fee automatically shall be cancelled, discharged
and forfeited if such Consenting Lender (i) breaches any of its material
obligations under this Agreement, or (ii) breaches any of the representations,
warranties, or covenants of such Consenting Lender set forth in Section 16(a) of
this Agreement. If the RSA Fee becomes due and payable, then, at the Company’s
election, the RSA Fee may be converted on a dollar-for-dollar basis into
additional PIK Loans for each Consenting Lender entitled to the RSA Fee;
provided, however, that if this Agreement is terminated by virtue of the
Company’s entry into and consummation of an Alternative Transaction, the RSA Fee
shall be paid in cash upon the substantial consummation of such Alternative
Transaction.

 

“Minimum Consenting Lender Condition” as that term is used herein means that the
Required Lenders remain party to and bound by this Agreement.

 

14.     Professional Fees and Expenses. Until the occurrence of a Termination
Date, the Company shall pay or reimburse when due all reasonable and documented
fees and expenses of the Consenting Lenders incurred by the following advisors
to the Consenting Lenders in connection with the Restructuring: (i) Paul, Weiss,
Rifkind, Wharton & Garrison LLP (“Paul Weiss”) as set forth in that certain fee
letter, dated as of January 1, 2014, between Eagle and Paul Weiss; (ii) Houlihan
Lokey Capital, Inc. (“Houlihan”) as set forth in that certain letter agreement,
dated as of February 1, 2014, among Eagle, Houlihan, Paul Weiss, and the Lender
Group (as defined therein); (iii) maritime and appropriate foreign counsel
engaged by Paul Weiss; and (iv) to the extent reasonably necessary, local
counsel. For the avoidance of doubt, nothing in this Section 14 shall be
construed as limiting any of the Company’s obligations under the Credit
Agreement.

 

15.     Acknowledgment. No securities of the Company are being offered or sold
hereby and this Agreement neither constitutes an offer to sell nor a
solicitation of an offer to buy any securities of the Company. This Agreement is
not, and shall not be deemed to be, a solicitation of a vote for the acceptance
of the Plan. The acceptance of the Plan by each of the Consenting Lenders will
not be solicited until such Parties have received the Disclosure Statement and
related ballots in accordance with applicable law (including as provided under
sections 1125(g) and 1126(b) of the Bankruptcy Code) and will be subject to
sections 1125, 1126, and 1127 of the Bankruptcy Code.

 

 
13

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EXECUTION VERSION
 

 

16.     Representations and Warranties.

 

 

(a)

Each of the Consenting Lenders hereby represents and warrants on a several and
not joint basis for itself and not any other person or entity that the following
statements are true, correct, and complete as of the date hereof:

 

 

(i)

it is duly organized, validly existing, and in good standing under the laws of
the jurisdiction of its organization, and it has the requisite corporate power
and authority to enter into this Agreement and to carry out the transactions
contemplated by, and perform its respective obligations under, this Agreement;

 

 

(ii)

the execution and delivery of this Agreement and the performance of its
obligations hereunder have been duly authorized by all necessary corporate or
other organizational action on its part and no other proceedings on its part are
necessary to authorize and approve this Agreement or any of the transactions
contemplated herein;

 

 

(iii)

this Agreement has been duly executed and delivered by the Consenting Lender and
constitutes the legal, valid, and binding agreement of the Consenting Lender,
enforceable against the Consenting Lender in accordance with its terms;

 

 

(iv)

the execution, delivery, and performance by it of this Agreement does not and
shall not (A) violate any provision of law, rule, or regulation applicable to
it, or its certificate of incorporation or bylaws or other organizational
documents, or (B) conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under any material contractual
obligation to which it is a party;

 

 

(v)

the execution, delivery, and performance by it of this Agreement does not and
shall not require any registration or filing with, consent or approval of,
notice to, or any other action to, with, or by any federal, state or other
governmental authority or regulatory body, except (A) any of the foregoing as
may be necessary and/or required for disclosure by the Securities and Exchange
Commission and applicable state securities or “blue sky” laws, (B) any of the
foregoing as may be necessary and/or required in connection with the Chapter 11
Cases, including the approval of the Disclosure Statement and confirmation of
the Plan, (C) filings of amended certificates of incorporation or articles of
formation or other organizational documents with applicable state authorities,
and other registrations, filings, consents, approvals, notices, or other actions
that are reasonably necessary to maintain permits, licenses, qualifications, and
governmental approvals to carry on the business of the Company, and (D) any
other registrations, filings, consents, approvals, notices, or other actions,
the failure of which to make, obtain, or take, as applicable, would not be
reasonably likely, individually or in the aggregate, to materially delay or
materially impair the ability of any Party hereto to consummate the transactions
contemplated hereby;

 

 
14

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EXECUTION VERSION
 

 

 

(vi)

subject to the provisions of sections 1125 and 1126 of the Bankruptcy Code, this
Agreement is the legally valid and binding obligation of it, 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;

 

 

(vii)

it (A) is a sophisticated party with respect to the transactions described
herein with sufficient knowledge and experience in financial and business
matters and is capable of evaluating the merits and risks of owning and
investing in securities of the Company (including any securities that may be
issued in connection with the Restructuring), making an informed decision with
respect thereto, and evaluating properly the terms and conditions of the Plan
and this Agreement, (B) has been represented and advised by legal and financial
advisors in connection with this Agreement, (C) has been afforded the
opportunity to discuss the Plan, the Disclosure Statement and other information
concerning the Company with the Company’s representatives, (D) has independently
and without reliance upon the Company or any officer, employee, agent, or
representative thereof, and based on such information as the Consenting Lender
has deemed appropriate, made its own analysis and decision to enter into this
Agreement and will not seek rescission or revocation of this Agreement, and (E)
acknowledges that it has entered into this Agreement voluntarily and of its own
choice and not under coercion or duress;

 

 

(viii)

it (A) is the sole legal or beneficial owner of the principal amount of claims
set forth on Exhibit G, has all necessary investment or voting discretion with
respect to such claims, or otherwise has the power and authority to bind any
other legal or beneficial holder of such claims, free and clear of any pledge,
lien, security interest, charge, claim, equity, option, proxy, voting
restriction, right of first refusal or other limitation on disposition, or
encumbrances of any kind, and (B) is exclusively entitled (for its own accounts
or for the accounts of such other legal or beneficial owners) to all of the
rights and economic benefits of such claims; and

 

 

(ix)

it has made no prior assignment, sale, participation, grant, conveyance, or
other transfer of, and has not entered into any other agreement to assign, sell,
participate, grant, convey, or otherwise transfer, in whole or in part, any
portion of its right, title, or interest in any claim set forth on Exhibit G,
except to the extent such agreement is in accordance with the terms of this
Agreement.

 

 

(b)

Each of the Eagle Entities hereby represents and warrants on a several and not
joint basis for itself and not any other person or entity that the following
statements are true, correct, and complete as of the date hereof:

 

 
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EXECUTION VERSION
 

 

 

(i)

it is duly organized, validly existing, and in good standing under the laws of
the jurisdiction of its organization, and it has the requisite corporate power
and authority to enter into this Agreement and to carry out the transactions
contemplated by, and perform its respective obligations under, this Agreement;

 

 

(ii)

the execution and delivery of this Agreement and the performance of its
obligations hereunder have been duly authorized by all necessary corporate or
other organizational action on its part, including approval of each of the
independent director(s) of each of the corporate entities that comprise the
Eagle Entities;

 

 

(iii)

the execution, delivery, and performance by it of this Agreement does not and
shall not (A) violate any provision of law, rule, or regulation applicable to
it, or its certificate of incorporation or bylaws or other organizational
documents, or (B) conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under any material contractual
obligation to which it is a party (other than, for the avoidance of doubt, a
default that would be triggered as a result of the Chapter 11 Case(s) or any
Eagle Entity’s undertaking to implement the Restructuring through the Chapter 11
Case(s))

 

 

(iv)

this Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid, and binding agreement of the Company, enforceable
against the Company in accordance with its terms;

 

 

(v)

the execution, delivery, and performance by it of this Agreement does not and
shall not require any registration or filing with, consent or approval of,
notice to, or any other action to, with, or by any federal, state or other
governmental authority or regulatory body, except (A) any of the foregoing as
may be necessary and/or required for disclosure by the Securities and Exchange
Commission and applicable state securities or “blue sky” laws, (B) any of the
foregoing as may be necessary and/or required in connection with the Chapter 11
Cases, including the approval of the Disclosure Statement and confirmation of
the Plan, (C) filings of amended certificates of incorporation or articles of
formation or other organizational documents with applicable state authorities,
and other registrations, filings, consents, approvals, notices, or other actions
that are reasonably necessary to maintain permits, licenses, qualifications, and
governmental approvals to carry on the business of the Company, and (D) any
other registrations, filings, consents, approvals, notices, or other actions,
the failure of which to make, obtain or take, as applicable, would not be
reasonably likely, individually or in the aggregate, to materially delay or
materially impair the ability of any Party hereto to consummate the transactions
contemplated hereby;

 

 

(vi)

it (A) is a sophisticated party with respect to the transactions described
herein with sufficient knowledge and experience in financial and business
matters and is capable of evaluating the merits and risks of the Restructuring,
making an informed decision with respect thereto, and evaluating properly the
terms and conditions of the Plan and this Agreement, (B) has been represented
and advised by legal and financial advisors in connection with this Agreement,
(C) has independently and without reliance upon the Consenting Lenders or any
officer, employee, agent, or representative thereof, and based on such
information as the Company has deemed appropriate, made its own analysis and
decision to enter into this Agreement and will not seek rescission or revocation
of this Agreement, and (D) acknowledges that it has entered into this Agreement
voluntarily and of its own choice and not under coercion or duress;

 

 
16

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EXECUTION VERSION
 

 

 

(vii)

subject to the provisions of sections 1125 and 1126 of the Bankruptcy Code, this
Agreement is the legally valid and binding obligation of it, 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; and

 

 

(viii)

except as disclosed to the Consenting Lenders and described on Schedule 1
annexed hereto, it has no knowledge of any “Default” or “Event of Default” under
the Credit Agreement which has occurred and is continuing.

 

17.     Right to Solicit Alternative Transactions. The Company shall not be
entitled to solicit, encourage, and initiate any offer or proposal from, enter
into any agreement with, or engage in any discussions or negotiations with, any
person or entity concerning any actual or proposed transaction involving any or
all of (i) another financial and/or corporate restructuring of any Eagle Entity,
(ii) the issuance, sale, or other disposition of any equity or debt interests,
or any material assets, of any Eagle Entity, (iii) a merger, consolidation,
business combination, liquidation, recapitalization, refinancing, or similar
transaction involving any Eagle Entity, and/or (iv) any chapter 11 plan of
reorganization other than the Plan (each, an “Alternative Transaction”);
provided, however, that the Company may respond to any proposal or offer for an
Alternative Transaction to the extent that the board of directors of the Company
determines in good faith, and consistent with its fiduciary duties, that such a
response is necessary; provided, further, however, that the Company shall
promptly, and in no event later than 4 calendar days after receipt, provide
copies of all such documentations and materials received by the Company
concerning such an Alternative Transaction to the advisors to the Consenting
Lenders.

 

18.     Survival of Agreement. Each of the Parties acknowledges and agrees that
this Agreement is being executed in connection with negotiations concerning a
possible financial restructuring of the Company and in contemplation of possible
chapter 11 filings by the Company and the rights granted in this Agreement are
enforceable by each signatory hereto without approval of any court, including
the Bankruptcy Court.

 

19.     No Waiver or Admissions. If the transactions contemplated herein are or
are not consummated, or if this Agreement is terminated for any reason, nothing
herein shall be construed as a waiver by any Party of any or all of such Party’s
rights, remedies, or interests, and the Parties expressly reserve any and all of
their respective rights, remedies, and interests. 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 which it
has asserted or could assert. No Party shall have, by reason of this Agreement,
a fiduciary relationship in respect of any other Party or any person or entity,
and nothing in this Agreement, expressed or implied, is intended to or shall be
so construed as to impose upon any Party any obligations in respect of this
Agreement except as expressly set forth herein. This Agreement and the
Restructuring are part of a proposed settlement of a dispute among the Parties.
Except as otherwise expressly provided herein, including, but not limited to,
Section 33 hereof, pursuant to Federal Rule of Evidence 408 and any applicable
state rules of evidence, this Agreement and all negotiations relating thereto
shall not be admissible into evidence in any proceeding other than a proceeding
involving enforcement of the terms of this Agreement.

 

 
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EXECUTION VERSION
 

 

20.     Relationship Among Parties. Notwithstanding anything herein to the
contrary, the duties and obligations of the Parties under this Agreement shall
be several, not joint. No prior history, pattern, or practice of sharing
confidences among or between Parties shall in any way affect or negate this
understanding and Agreement.

 

21.     Specific Performance; Remedies Cumulative. Each Party acknowledges and
agrees that the exact nature and extent of damages resulting from a breach of
this Agreement are uncertain at the time of entering into this Agreement and
that any such breach of this Agreement would result in damages that would be
difficult to determine with certainty. It is understood and agreed by the
Parties that money damages may not be a sufficient remedy for any breach of this
Agreement by any Party, and that each non-breaching Party shall be entitled to
seek specific performance and injunctive or other equitable relief as a remedy
of any such breach, including, without limitation, an order of the Bankruptcy
Court or other court of competent jurisdiction requiring any Party to comply
promptly with any of its obligations hereunder. Such remedy shall not be deemed
to be the exclusive remedy for the breach of this Agreement by any Party or its
representatives. All rights, powers, and remedies provided under this Agreement
or otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise of any right, power, or remedy by any
Party hereto shall not preclude the simultaneous or later exercise of any other
such right, power, or remedy hereunder.

 

22.     Governing Law & Jurisdiction. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to such state’s choice of law provisions which would require the application of
the law of any other jurisdiction. By its execution and delivery of this
Agreement, each of the Parties irrevocably and unconditionally agrees for itself
that any legal action, suit, or proceeding against it with respect to any matter
arising under, arising out of, or in connection with this Agreement or for
recognition or enforcement of any judgment rendered in any such action, suit, or
proceeding, shall be brought in either the United States District Court for the
Southern District of New York or any New York State court sitting in New York
City, and by execution and delivery of this Agreement, each of the Parties
irrevocably accepts and submits itself to the exclusive jurisdiction of such
court, generally and unconditionally, with respect to any such action, suit or
proceeding. Notwithstanding the foregoing, if the Chapter 11 Cases are
commenced, each Party agrees that the Bankruptcy Court shall have exclusive
jurisdiction of all matters arising under, arising out of, or in connection with
this Agreement. By execution and delivery of this 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, or proceeding or other contested matter
arising under, arising out of, or in connection with this Agreement, or for
recognition or enforcement of any judgment rendered or order entered in any such
action, suit, proceeding, or other contested matter.

 

 
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EXECUTION VERSION
 

 

23.     Waiver of Right to Trial by Jury. Each of the Parties waives any right
to have a jury participate in resolving any dispute, whether sounding in
contract, tort, or otherwise, between any of them arising out of, arising under,
in connection with, relating to, or incidental to the relationship established
between any of them in connection with this Agreement. Instead, any disputes
resolved in court shall be resolved in a bench trial without a jury.

 

24.     Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon each of the Parties and their respective successors, assigns,
heirs, transferees, executors, administrators, and representatives, in each case
solely as such parties are permitted under this Agreement; provided, however,
that nothing contained in this Section 24 shall be deemed to permit any
transfer, tender, vote, or consent of any claims other than in accordance with
the terms of this Agreement.

 

25.     No Third-Party Beneficiaries. This Agreement shall be solely for the
benefit of the Parties hereto (or any other party that may become a Party to
this Agreement pursuant to Section 11 of this Agreement), and no other person or
entity shall be a third-party beneficiary of this Agreement.

 

26.     Notices. All notices (including, without limitation, any notice of
termination) and other communications from any Party given or made pursuant to
this Agreement shall be in writing and shall be deemed to have been duly given:
(a) upon personal delivery to the Party to be notified, (b) when sent by
confirmed electronic mail if sent during normal business hours of the recipient,
and if not so confirmed, on the next business day, (c) three (3) days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (d) one (1) business day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent:

 

 

(a)

To the Company:

 

Eagle Bulk Shipping Inc.

477 Madison Avenue

New York, NY 10022

Attn:     Adir Katzav, Chief Financial Officer

Tel:        (212) 785-2500

Fax:        (212) 785-3311

Email:    akatzav@eagleships.com

 

 
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EXECUTION VERSION
 

 

With a copy (which shall not constitute notice) to:

 

Milbank, Tweed, Hadley & McCloy LLP

601 S. Figueroa St., 30th Floor

Los Angeles, CA 90017

Attn:     Paul S. Aronzon

Tel:        (213) 892-4377

Fax:        (213) 629-5063

Email:    paronzon@milbank.com

 

Milbank, Tweed, Hadley & McCloy LLP

1 Chase Manhattan Plaza

New York, NY 10005

Attn:     Tyson M. Lomazow

Tel:        (212) 530-5367

Fax:        (212) 822-5367

Email:    tlomazow@milbank.com

 

 

(b)

To the address set forth on each Consenting Lender’s signature page (or as
directed by any transferee thereof), as the case may be, with a copy (which
shall not constitute notice) to:

 

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, NY 10019

Attn:      Andrew N. Rosenberg

Tel:        (212) 373-3158

Fax:        (212) 492-0158
Email:     arosenberg@paulweiss.com

Attn:      Alice B. Eaton

Tel:        (212) 373-3125

Fax:        (212) 492-0125
Email:     aeaton@paulweiss.com

 

27.     Entire Agreement. This Agreement, including the Exhibits and Schedules
hereto, constitutes the entire agreement of the Parties with respect to the
subject matter of this Agreement, and supersedes all other prior negotiations,
agreements, representations, warranties, term sheets, proposals, and
understandings, whether written, oral, or implied, among the Parties with
respect to the subject matter of this Agreement; provided, however, that any
confidentiality agreement executed by any Party shall survive this Agreement and
shall continue in full force and effect, subject to the terms thereof,
irrespective of the terms hereof.

 

28.     Time Periods. If any time period or other deadline provided in this
Agreement expires on a day that is not a business day, then such time period or
other deadline, as applicable, shall be deemed extended to the next succeeding
business day.

 

29.     Severability of Provisions. If any provision of this Agreement for any
reason is held by a court of competent jurisdiction to be invalid, illegal, or
unenforceable in any respect, the remaining provisions shall remain in full
force and effect if the essential terms and conditions of this Agreement for
each party remain valid, binding, and enforceable.

 

 
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EXECUTION VERSION
 

 

30.     Amendments. Except as otherwise provided herein, this Agreement may not
be modified, amended, or supplemented without the prior written consent of the
Company and the Majority Consenting Lenders.

 

31.     Reservation of Rights. If the transactions contemplated by this
Agreement and the Plan are not consummated as provided herein, if a Termination
Event occurs, or if this Agreement is otherwise terminated for any reason, the
Consenting Lenders and the Company each fully reserve any and all of their
respective rights, remedies, and interests under the Credit Agreement (and all
documents executed and delivered in connection therewith), applicable law, and
in equity.

 

32.     Counterparts. This Agreement may be executed in one or more
counterparts, each of which, when so executed, shall be deemed an original and
all of which shall constitute one and the same Agreement. The signatures of all
of the Parties need not appear on the same counterpart. Delivery of an executed
signature page of this Agreement by facsimile or electronic mail shall be
effective as delivery of a manually executed signature page of this Agreement.

 

33.     Public Disclosure. The Company may, in its sole discretion, disclose
this Agreement (including the signature pages hereto) in a press release and/or
public filing, including the Chapter 11 Case; provided, however, that after the
commencement of the Chapter 11 Case, the Parties may disclose the existence of,
or the terms of, this Agreement, the Plan, the Disclosure Statement, or any
other material term of the transaction contemplated herein without the express
written consent of the other Parties.

 

34.     Headings. The section headings of this Agreement are for convenience
only and shall not affect the interpretation hereof. References to sections,
unless otherwise indicated, are references to sections of this Agreement.

 

35.     Interpretation. This Agreement constitutes a fully negotiated agreement
among commercially sophisticated parties and therefore shall not be construed or
interpreted for or against any Party, and any rule or maxim of construction to
such effect shall not apply to this Agreement.

 

 

 

[Signatures and exhibits follow]

 

 
21

--------------------------------------------------------------------------------

EXECUTION VERSION
 

 

BORROWER:

EAGLE BULK SHIPPING INC.,

                       

By: 

  /s/ Adir Katzav      

Name:

Adir Katzav

     

Title:

Chief Financial Officer

 

 

 

GUARANTORS:

AVOCET SHIPPING LLC

 

BITTERN SHIPPING LLC

 

CANARY SHIPPING LLC

 

CARDINAL SHIPPING LLC

 

CONDOR SHIPPING LLC

 

CRANE SHIPPING LLC

 

CRESTED EAGLE SHIPPING LLC

 

CROWNED EAGLE SHIPPING LLC

 

EGRET SHIPPING LLC

 

FALCON SHIPPING LLC

 

GANNET SHIPPING LLC

 

GOLDEN EAGLE SHIPPING LLC

 

GOLDENEYE SHIPPING LLC

 

GREBE SHIPPING LLC

 

HARRIER SHIPPING LLC

 

HAWK SHIPPING LLC

 

IBIS SHIPPING LLC

 

IMPERIAL EAGLE SHIPPING LLC

 

JAEGER SHIPPING LLC

 

JAY SHIPPING LLC

 

KESTREL SHIPPING LLC

 

KINGFISHER SHIPPING LLC

 

KITE SHIPPING LLC

 

KITTIWAKE SHIPPING LLC

 

MARTIN SHIPPING LLC

 

MERLIN SHIPPING LLC

 

NIGHTHAWK SHIPPING LLC

 

ORIOLE SHIPPING LLC

 

OSPREY SHIPPING LLC

 

OWL SHIPPING LLC

 

PEREGRINE SHIPPING LLC

 

PETREL SHIPPING LLC

 

PUFFIN SHIPPING LLC

 

REDWING SHIPPING LLC

 

ROADRUNNER SHIPPING LLC

 

SANDPIPER SHIPPING LLC

 

SHRIKE SHIPPING LLC

 

SKUA SHIPPING LLC

 

[Signature Page to Restructuring Support Agreement]

 

 
 

--------------------------------------------------------------------------------

EXECUTION VERSION
 

 

 

SPARROW SHIPPING LLC

 

STELLAR EAGLE SHIPPING LLC

 

TERN SHIPPING LLC

 

THRASHER SHIPPING LLC

 

THRUSH SHIPPING LLC

 

WOODSTAR SHIPPING LLC

 

WREN SHIPPING LLC

 

GRIFFON SHIPPING LLC

 

HERON SHIPPING LLC

 

EAGLE BULK (DELAWARE) LLC

 

EAGLE SHIPPING INTERNATIONAL

 

(USA) LLC

 

 

 

By: Eagle Bulk Shipping Inc., its Sole Member

                       

By: 

 

/s/ Adir Katzav

 

   

Name:

Adir Katzav

 

 

 

Title:

Chief Financial Officer

 

 

 

 

EAGLE MANAGEMENT CONSULTANTS LLC

   

EAGLE SHIP MANAGEMENT LLC

             

By: Eagle Shipping International (USA) LLC, its Sole Member

   

By: Eagle Bulk Shipping Inc., its Sole Member

                       

By: 

 

/s/ Adir Katzav

 

   

Name:

Adir Katzav

 

 

 

Title:  

Chief Financial Officer 

 

 

 

 

 

 

AGALI SHIPPING S.A.

 

KAMPIA SHIPPING S.A.

 

MARMARO SHIPPING S.A.

 

MESTA SHIPPING S.A.

 

MYLOS SHIPPING S.A.

 

NAGOS SHIPPING S.A.

 

RAHI SHIPPING S.A.

 

SIRIKARI SHIPPING S.A.

 

SPILIA SHIPPING S.A.

 

[Signature Page to Restructuring Support Agreement]

 

 
 

--------------------------------------------------------------------------------

EXECUTION VERSION
 

 

 

ANEMI MARITIME SERVICES S.A.

                       

By:

 

/s/ Adir Katzav

    Name: Adir Katzav  

 

Title:

Attorney-In-Fact

                                 

EAGLE BULK PTE. LTD.

   

EAGLE MANAGEMENT CONSULTANCY PTE. LTD.

                       

By:

 

/s/ Adir Katzav

    Name: Adir Katzav  

  Title: Attorney-In-Fact  

 

[Signature Page to Restructuring Support Agreement]

 

 
 

--------------------------------------------------------------------------------

 

 

LENDERS:

OAKTREE HUNTINGTON INVESTMENT FUND, L.P.

     

By: Oaktree Huntington Investment Fund GP, L.P.

 

Its: General Partner

     

By: Oaktree Huntington Investment Fund GP Ltd.

 

Its: General Partner

     

By: Oaktree Capital Management, L.P.

 

Its: Director

 

 

By:

 

/s/ Emily Stephens

     

Name:

Emily Stephens

     

Title:

Managing Director

             

By:

 

/s/ Mahesh Balakrishnan

     

Name:

Mahesh Balakrishnan      

Title:

Senior Vice President  

 

 

OAKTREE OPPORTUNITIES FUND VIIIB DELAWARE, L.P.

     

By: Oaktree Fund GP, LLC

 

Its: General Partner

     

By: Oaktree Capital I, L.P.

 

Its: General Partner

     

By: OCM Holdings I, LLC

 

Its: General Partner

\

   

By: Oaktree Fund GP I, L.P.

 

Its: Managing Member

 

 

By:

 

/s/ Emily Stephens

     

Name:

Emily Stephens

     

Title:

Managing Director

             

By:

 

/s/ Mahesh Balakrishnan

     

Name:

Mahesh Balakrishnan

     

Title:

Senior Vice President

 

 

 
 

--------------------------------------------------------------------------------

 

 

 

OAKTREE OPPS IX HOLDCO LTD.

     

OAKTREE OPPS IX (PARALLEL 2) HOLDCO LTD.

     

OAKTREE VOF (CAYMAN) 1 CTB LTD.

     

OAKTREE HUNTINGTON (CAYMAN) 5 CTB LTD.

     

OAKTREE OPPS VIII (CAYMAN) 3 CTB LTD.

     

OAKTREE OPPS IX PARALLEL (CAYMAN) 1 CTB LTD.

     

OAKTREE OPPS IX (CAYMAN) 1 CTB LTD.

     

OAKTREE OPPS IX PARALLEL 2 (CAYMAN) 1 CTB LTD.

     

By: Oaktree Capital Management, L.P.

 

Their: Director

 

 

By:

 

/s/ Emily Stephens

     

Name:

Emily Stephens

     

Title:

Managing Director

             

By:

 

/s/ Mahesh Balakrishnan

     

Name:

Mahesh Balakrishnan

     

Title:

Senior Vice President

 

 

 
 

--------------------------------------------------------------------------------

 

 

 

OAKTREE VALUE OPPORTUNITIES FUND HOLDINGS, L.P.

     

By: Oaktree Value Opportunities Fund GP, L.P.

 

Its: General Partner

     

By: Oaktree Value Opportunities Fund GP, Ltd.

 

Its: General Partner

     

By: Oaktree Capital Management, L.P.

 

Its: Director

 

 

By:

 

/s/ Emily Stephens

     

Name:

Emily Stephens

     

Title:

Managing Director

             

By:

 

/s/ Mahesh Balakrishnan

     

Name:

Mahesh Balakrishnan

     

Title:

Senior Vice President

 

 

 
 

--------------------------------------------------------------------------------

 

 

 

CANYON BALANCED MASTER FUND, LTD.

     

CANYON BLUE CREDIT INVESTMENT FUND L.P.

     

CANYON DISTRESSED OPPORTUNITY INVESTING FUND, L.P.

     

CANYON DISTRESSED OPPORTUNITY MASTER FUND, L.P.

     

CANYON VALUE REALIZATION FUND L.P.

     

CANYON VALUE REALIZATION MAC 18 LTD.

     

CANYON-GRF MASTER FUND II, LP

     

CANYON-TCDRS FUND, LLC

     

CITI CANYON LTD.

     

PERMAL CANYON FUND LTD

     

THE CANYON VALUE REALIZATION MASTER FUND, L.P.

     

AAI CANYON FUND PLC, an umbrella investment company with variable capital and
segregated liability between sub-funds, solely in respect of Canyon Reflection
Fund

     

By: Canyon Capital Advisors LLC

     

On behalf of the above-referenced funds and accounts

   

 

 

By:

 

/s/ John P. Plaga

     

Name:

John P. Plaga

     

Title:

Authorized Signatory

 

 

 

Please send notices to:

     

Canyon Partners, LLC

 

2000 Avenue of the Stars, 11th Floor

 

Los Angeles, CA 90067

 

 
 

--------------------------------------------------------------------------------

 

 

 

Attn: Canyon Legal

 

Facsimile: (310) 272-1371

 

EMAIL: Legal@canyonpartners.com

             

MIDTOWN ACQUISITIONS L.P.

     

By: Midtown Acquisitions GP LLC, its general partner

 

 

By:

 

/s/ Connor Bastable

     

Name:

Connor Bastable

     

Title:

Manager

 

 

 

Please send notices to:

     

Midtown Acquisitions L.P.

 

65 East 55th Street, 19th Floor

 

New York, NY 10022

     

Attn: Scott Vogel, Christian Cantalupo

 

Facsimile: 212-371-4318

 

EMAIL: svogel@dkpartners.com 

  ccantalupo@dkpartners.com      

GOLDMAN SACHS LENDING PARTNERS

 

 

By:

 

/s/ Dennis Lafferty

     

Name:

Dennis Lafferty

     

Title:

Managing Director

 

 

 

Please send notices to:

     

Goldman, Sachs & Co.

 

30 Hudson Street, 5th Floor

 

Jersey City, NJ 07302

 

Attn: Michelle Latzoni

 

Facsimile: 646-769-7700

 

EMAIL: gs-sbd-admin-contacts@ny.email.gs.com

 

 
 

--------------------------------------------------------------------------------

 

 

 

BRIGADE OPPORTUNISTIC CREDIT FUND 16 LLC

     

By: Brigade Capital Management, LP, as Investment Manager

 

 

By:

 

/s/ Raymond Luis

     

Name:

Raymond Luis

     

Title:

CFO

 

 

 

Please send notices to:

     

Brigade Capital Management, LP

 

399 Park Avenue, 16th Floor

 

New York, NY 10022

     

Attn: Jim Keogh

 

Facsimile: 469-304-2965

 

EMAIL:14693042965@tls.ldsprod.com

 

BankDebt@brigadecapital.com

     

BRIGADE OPPORTUNISTIC CREDIT LBG FUND LTD.

     

By: Brigade Capital Management, LP, as Investment Manager

 

 

By:

 

/s/ Raymond Luis

     

Name:

Raymond Luis

     

Title:

CFO

 

 

 

Please send notices to:

     

Brigade Capital Management, LP

 

399 Park Avenue, 16th Floor

 

New York, NY 10022

     

Attn: Jim Keogh

 

Facsimile: 469-304-2965

 

EMAIL:14693042965@tls.ldsprod.com

 

BankDebt@brigadecapital.com

 

 
 

--------------------------------------------------------------------------------

 

 

 

BIRCH CAPITAL FUND SPC LIMITED –BOND SEGREGATED PORTFOLIO

     

By: Brigade Capital Management, LP, as Investment Manager

 

 

By:

 

/s/ Raymond Luis

     

Name:

Raymond Luis

     

Title:

CFO

 

 

 

Please send notices to:

     

Brigade Capital Management, LP

 

399 Park Avenue, 16th Floor

 

New York, NY 10022

     

Attn: Jim Keogh

 

Facsimile: 469-304-2965

 

EMAIL:14693042965@tls.ldsprod.com

 

BankDebt@brigadecapital.com

     

BIG RIVER GROUP FUND SPD LIMITED –BOND SEGREGATED PORTFOLIO

     

By: Brigade Capital Management, LP, as Investment Manager

 

 

By:

 

/s/ Raymond Luis

     

Name:

Raymond Luis

     

Title:

CFO

 

 

 

Please send notices to:

     

Brigade Capital Management, LP

 

399 Park Avenue, 16th Floor

 

New York, NY 10022

     

Attn: Jim Keogh

 

Facsimile: 469-304-2965

 

EMAIL:14693042965@tls.ldsprod.com

 

BankDebt@brigadecapital.com

 

 
 

--------------------------------------------------------------------------------

 

 

 

BRIGADE CREDIT FUND II LTD.

     

By: Brigade Capital Management, LP, as Investment Manager

 

 

By:

 

/s/ Raymond Luis

     

Name:

Raymond Luis

     

Title:

CFO

 

 

 

Please send notices to:

     

Brigade Capital Management, LP

 

399 Park Avenue, 16th Floor

 

New York, NY 10022

     

Attn: Jim Keogh

 

Facsimile: 469-304-2965

 

EMAIL:14693042965@tls.ldsprod.com

 

BankDebt@brigadecapital.com

     

BRIGADE DISTRESSED VALUE MASTER FUND, LTD.

     

By: Brigade Capital Management, LP, as Investment Manager

 

 

By:

 

/s/ Raymond Luis

     

Name:

Raymond Luis

     

Title:

CFO

 

 

 

Please send notices to:

     

Brigade Capital Management, LP

 

399 Park Avenue, 16th Floor

 

New York, NY 10022

     

Attn: Jim Keogh

 

Facsimile: 469-304-2965

 

EMAIL:14693042965@tls.ldsprod.com

 

BankDebt@brigadecapital.com

 

 
 

--------------------------------------------------------------------------------

 

 

 

BRIGADE LEVERAGED CAPITAL STRUCTURES FUND LTD.

     

By: Brigade Capital Management, LP, as Investment Manager

 

 

By:

 

/s/ Raymond Luis

     

Name:

Raymond Luis

     

Title:

CFO

 

 

 

Please send notices to:

     

Brigade Capital Management, LP

 

399 Park Avenue, 16th Floor

 

New York, NY 10022

     

Attn: Jim Keogh

 

Facsimile: 469-304-2965

 

EMAIL:14693042965@tls.ldsprod.com

 

BankDebt@brigadecapital.com

     

BRIGADE OPPORTUNISTIC CREDIT FUND - ICL LP

     

By: Brigade Capital Management, LP, as Investment Manager

 

 

By:

 

/s/ Raymond Luis

     

Name:

Raymond Luis

     

Title:

CFO

 

 

 

Please send notices to:

     

Brigade Capital Management, LP

 

399 Park Avenue, 16th Floor

 

New York, NY 10022

     

Attn: Jim Keogh

 

Facsimile: 469-304-2965

 

EMAIL:14693042965@tls.ldsprod.com

 

BankDebt@brigadecapital.com

 

 
 

--------------------------------------------------------------------------------

 

 

 

CITIGROUP PENSION PLAN

     

By: Brigade Capital Management, LP, as Investment Manager

 

 

By:

 

/s/ Raymond Luis

     

Name:

Raymond Luis

      Title: CFO  

 

 

Please send notices to:

     

Brigade Capital Management, LP

 

399 Park Avenue, 16th Floor

 

New York, NY 10022

     

Attn: Jim Keogh

 

Facsimile: 469-304-2965

 

EMAIL:14693042965@tls.ldsprod.com

 

BankDebt@brigadecapital.com

     

FUTURE DIRECTIONS CREDIT OPPORTUNITIES FUND/BRIGADE

     

By: Brigade Capital Management, LP, as Investment Manager

 

 

By:

 

/s/ Raymond Luis

     

Name:

Raymond Luis

     

Title:

CFO

 

 

 

Please send notices to:

     

Brigade Capital Management, LP

 

399 Park Avenue, 16th Floor

 

New York, NY 10022

     

Attn: Jim Keogh

 

Facsimile: 469-304-2965

 

EMAIL:14693042965@tls.ldsprod.com

 

BankDebt@brigadecapital.com

 

 
 

--------------------------------------------------------------------------------

 

 

 

FEDEX CORPORATION EMPLOYEES' PENSION TRUST

     

By: Brigade Capital Management, LP, as Investment Manager

 

 

By:

 

/s/ Raymond Luis

     

Name:

Raymond Luis

     

Title:

CFO

 

 

 

Please send notices to:

     

Brigade Capital Management, LP

 

399 Park Avenue, 16th Floor

 

New York, NY 10022

     

Attn: Jim Keogh

 

Facsimile: 469-304-2965

 

EMAIL:14693042965@tls.ldsprod.com

 

BankDebt@brigadecapital.com

     

FIRST ENERGY CORP. SYSTEM MASTER RETIREMENT TRUST

     

By: Brigade Capital Management, LP, as Investment Manager

 

 

By:

 

/s/ Raymond Luis

     

Name:

Raymond Luis

     

Title:

CFO

 

 

 

Please send notices to:

     

Brigade Capital Management, LP

 

399 Park Avenue, 16th Floor

 

New York, NY 10022

     

Attn: Jim Keogh

 

Facsimile: 469-304-2965

 

EMAIL:14693042965@tls.ldsprod.com

 

BankDebt@brigadecapital.com

 

 
 

--------------------------------------------------------------------------------

 

 

 

LOS ANGELES COUNTY EMPLOYEES RETIREMENT ASSOCIATION/BRIGADE

     

By: Brigade Capital Management, LP, as Investment Manager

 

 

By:

 

/s/ Raymond Luis

     

Name:

Raymond Luis

     

Title:

CFO

 

 

 

Please send notices to:

     

Brigade Capital Management, LP

 

399 Park Avenue, 16th Floor

 

New York, NY 10022

     

Attn: Jim Keogh

 

Facsimile: 469-304-2965

 

EMAIL:14693042965@tls.ldsprod.com

 

BankDebt@brigadecapital.com

     

OCA BRIGADE CREDIT FUND II LLC

     

By: Brigade Capital Management, LP, as Investment Manager

 

 

By:

 

/s/ Raymond Luis

     

Name:

Raymond Luis

     

Title:

CFO

 

 

 

Please send notices to:

     

Brigade Capital Management, LP

 

399 Park Avenue, 16th Floor

 

New York, NY 10022

     

Attn: Jim Keogh

 

Facsimile: 469-304-2965

 

EMAIL:14693042965@tls.ldsprod.com

 

BankDebt@brigadecapital.com

 

 
 

--------------------------------------------------------------------------------

 

 

 

RUSSELL INVESTMENT COMPANY

  RUSSELL MULTI-STRATEGY   ALTERNATIVE FUND      

By: Brigade Capital Management, LP, as Investment Manager

 

 

By:

 

/s/ Raymond Luis

     

Name:

Raymond Luis

     

Title:

CFO

 

 

 

Please send notices to:

     

Brigade Capital Management, LP

 

399 Park Avenue, 16th Floor

 

New York, NY 10022

     

Attn: Jim Keogh

 

Facsimile: 469-304-2965

 

EMAIL:14693042965@tls.ldsprod.com

 

BankDebt@brigadecapital.com

         

TEXAS ABSOLUTE CREDIT OPPORTUNITIES STRATEGY LP

     

By: Brigade Capital Management, LP, as Investment Manager

 

 

By:

 

/s/ Raymond Luis

     

Name:

Raymond Luis

     

Title:

CFO

 

 

 

Please send notices to:

     

Brigade Capital Management, LP

 

399 Park Avenue, 16th Floor

 

New York, NY 10022

     

Attn: Jim Keogh

 

Facsimile: 469-304-2965

 

EMAIL:14693042965@tls.ldsprod.com

 

BankDebt@brigadecapital.com

 

 
 

--------------------------------------------------------------------------------

 

 

 

TASMAN FUND LP

     

By: Brigade Capital Management, LP, as Investment Manager

 

 

By:

 

/s/ Raymond Luis

     

Name:

Raymond Luis

     

Title:

CFO

 

 

 

Please send notices to:

     

Brigade Capital Management, LP

 

399 Park Avenue, 16th Floor

 

New York, NY 10022

     

Attn: Jim Keogh

 

Facsimile: 469-304-2965

 

EMAIL:14693042965@tls.ldsprod.com

 

BankDebt@brigadecapital.com

     

THE COCA-COLA COMPANY MASTER RETIREMENT TRUST

     

By: Brigade Capital Management, LP, as Investment Manager

 

 

By:

 

/s/ Raymond Luis

     

Name:

Raymond Luis

     

Title:

CFO

 

 

 

Please send notices to:

     

Brigade Capital Management, LP

 

399 Park Avenue, 16th Floor

 

New York, NY 10022

     

Attn: Jim Keogh

 

Facsimile: 469-304-2965

 

EMAIL:14693042965@tls.ldsprod.com

 

BankDebt@brigadecapital.com

 

 
 

--------------------------------------------------------------------------------

 

 

 

BANK OF AMERICA, N.A., solely on behalf of Global Credit & Special Situations

 

 

By:

 

/s/ Jonathan M Barnes

     

Name:

Jonathan M Barnes

     

Title:

Vice President

 

 

 

Please send notices to:

     

Bank of America, N.A.

 

214 North Tryon Street

 

NC1-027-15-01

 

Charlotte, NC 28255

     

Attn: Jonathan M Barnes/Credit Info Group

 

Facsimile: 704-409-0768

 

EMAIL: jon.barnes@baml.com

 

Bas.infomanager@bankofamerica.com

     

* For the avoidance of doubt, Bank of America, N.A. (“BANA”) is executing this
Agreement solely in connection with interests which are the record and
beneficial ownership of the Global Credit & Special Situations (“GCSS”) business
unit and for no other line of business at Bank of America Merrill Lynch,
including without limitation, shares held in accounts for which BANA is the
investment manager, but not related to the GCSS business unit.

 

 
 

--------------------------------------------------------------------------------

 

 

 

MERRILL LYNCH CREDIT PRODUCTS, LLC, solely on behalf of Global Credit & Special
Situations

 

 

By:

 

/s/ Jonathan M Barnes

     

Name:

Jonathan M Barnes

     

Title:

Vice President

 

 

 

Please send notices to:

     

Merrill Lynch Credit Products, LLC

 

214 North Tryon Street

 

NC1-027-15-01

 

Charlotte, NC 28255

     

Attn: Jonathan M Barnes/Credit Info Group

 

Facsimile: 704-409-0768

 

EMAIL: jon.barnes@baml.com

 

Bas.infomanager@bankofamerica.com

     

* For the avoidance of doubt, Merrill Lynch Credit Products, LLC (“MLCP”) is
executing this Agreement solely in connection with interests which are the
record and beneficial ownership of the Global Credit & Special Situations
(“GCSS”) business unit and for no other line of business at Bank of America
Merrill Lynch.

 

 
 

--------------------------------------------------------------------------------

 

 

 

BLUEBAY ASSET MANAGEMENT LLP, acting as agent for BlueBay Funds Management
Company S.A. acting for and on behalf of BlueBay Specialised Funds: Global
Unconstrained High Yield (Master) Fund

     

BLUEBAY ASSET MANAGEMENT LLP, acting as agent for BlueBay Global Monthly Income
Bond Fund

     

BLUEBAY ASSET MANAGEMENT LLP, acting as agent for BlueBay COF Loan Investments
S.A.

     

BLUEBAY ASSET MANAGEMENT LLP, acting as agent for BlueBay Global Unconstrained
High Yield Investments (Luxembourg) S.à.r.l

     

BLUEBAY ASSET MANAGEMENT LLP, acting as agent for BlueBay European Distressed
Opportunities Investments (Luxembourg) S.à.r.l

 

 

By:

 

/s/ Timothy Horan

     

Name:

Timothy Horan

     

Title:

Credit Analyst

 

 

 

PANNING MASTER FUND, LP

     

By: Panning Capital Management, LP, its investment manager

 

 

By:

 

/s/ Kieran Goodwin

     

Name:

Kieran Goodwin

     

Title:

Authorized Signatory

 

 

 

Please send notices to:

     

Panning Master Fund, LP

 

510 Madison Ave., 24th Fl

 

New York, NY 10022

 

Attn: Robert Bowers

 

Facsimile: 212-916-1861

 

EMAIL: Robert@panning.com

 

 
 

--------------------------------------------------------------------------------

 

 

 

OCP INVESTMENT TRUST

     

By: Onex Credit Partners, LLC, its manager

 

 

By:

 

/s/ Kevin Connors

     

Name:

Kevin Connors

     

Title:

Portfolio Manager

 

 

 

Please send notices to:

     

notifications@onexcredit.com

     

Attn: Andrew Walker

 

Facsimile: 201-541-2611

 

EMAIL: notifications@onexcredit.com

     

ONEX DEBT OPPORTUNITY FUND, LTD.

     

By: Onex Credit Partners, LLC, its investment manager

 

 

By:

 

/s/ Kevin Connors

     

Name:

Kevin Connors

     

Title:

Portfolio Manager

 

 

 

Please send notices to:

     

notifications@onexcredit.com

     

Attn: Andrew Walker

 

Facsimile: 201-541-2611

 

EMAIL: notifications@onexcredit.com

 

 

 
 

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Exhibit A

 

to the Restructuring Support Agreement

 

TERM SHEET

 

Summary of Proposed Restructuring
Terms and Conditions for Eagle Bulk Shipping Inc.

 

This preliminary term sheet (the “Term Sheet”) summarizes the material terms and
conditions of certain transactions to take place in connection with a proposed
restructuring (the “Restructuring”) of the capital structure and financial
obligations of Eagle Bulk Shipping Inc., a Marshall Islands company (“Eagle”),
and all of its direct and indirect subsidiaries (collectively, with Eagle, the
“Company”). The regulatory, tax, accounting, and other legal and financial
matters and effects related to the Restructuring have not been fully evaluated,
and any such evaluation may affect the terms and structure of any Restructuring.
The transactions contemplated in this Term Sheet are subject in all respects to
the negotiation, execution, and delivery of definitive documentation.

 

THIS TERM SHEET DOES NOT CONSTITUTE (NOR SHALL IT BE CONSTRUED AS) AN OFFER WITH
RESPECT TO ANY SECURITIES OR A SOLICITATION OF ACCEPTANCES OR REJECTIONS AS TO
ANY CHAPTER 11 PLAN, IT BEING UNDERSTOOD THAT SUCH A SOLICITATION, IF ANY, ONLY
WILL BE MADE IN COMPLIANCE WITH APPLICABLE PROVISIONS OF ALL APPLICABLE LAW.
THIS TERM SHEET DOES NOT ADDRESS ALL TERMS THAT WOULD BE REQUIRED IN CONNECTION
WITH ANY POTENTIAL RESTRUCTURING AND ENTRY INTO OR THE CREATION OF ANY BINDING
AGREEMENT IS SUBJECT TO THE EXECUTION OF DEFINITIVE DOCUMENTATION IN FORM AND
SUBSTANCE CONSISTENT WITH THIS TERM SHEET AND OTHERWISE ACCEPTABLE TO THE
COMPANY. THIS TERM SHEET HAS BEEN PRODUCED FOR DISCUSSION AND SETTLEMENT
PURPOSES ONLY AND IS SUBJECT TO THE PROVISIONS OF RULE 408 OF THE FEDERAL RULES
OF EVIDENCE AND OTHER SIMILAR APPLICABLE STATE AND FEDERAL RULES (INCLUDING,
WITHOUT LIMITATION, RULES APPLICABLE IN THE MARSHALL ISLANDS AND/OR SINGAPORE)
PROTECTING THE USE OR DISCLOSURE OF CONFIDENTIAL INFORMATION AND INFORMATION
EXCHANGED IN THE CONTEXT OF SETTLEMENT DISCUSSIONS. THIS TERM SHEET AND THE
INFORMATION CONTAINED HEREIN IS STRICTLY CONFIDENTIAL AND SHALL NOT BE SHARED
WITH ANY OTHER PARTY ABSENT THE PRIOR WRITTEN CONSENT OF THE COMPANY OR ITS
COUNSEL.

 

OVERVIEW

Parties

Eagle and all of its direct and indirect subsidiaries.

 

Those certain lenders under the Fourth Amended and Restated Credit Agreement,
dated as of June 20, 2012, by and among Eagle, as borrower, the financial
institutions listed therein, as original lenders, the subsidiaries of Eagle
listed therein, as original guarantors, The Royal Bank of Scotland
plc (“RBS”), as original Agent and Security Trustee (as amended from time to
time, the “Credit Agreement”), holding the Term Loans1 and the PIK Loans in an
amount sufficient to consummate the transactions set forth herein under the
terms of the Credit Agreement (collectively, the “Consenting Lenders”), and
Wilmington Trust (London) Limited (“Wilmington”), as successor Agent and
Security Trustee under the Credit Agreement.

 

 

--------------------------------------------------------------------------------

1 Capitalized terms used but not otherwise defined herein have the meanings
ascribed to such terms in the Credit Agreement.

 

 
1 

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Economic Terms of Restructuring

The principal economic terms of the Restructuring shall consist of the
following:

 

i.     The Loans (and any Amended Lender Warrant Shares (defined below)) shall
be exchanged for (a) cash, on a pro rata basis, in an amount up to the amount of
any New Debt (as defined below) less (1) the amount of any Outstanding Trade
Obligations (defined below) and (2) any amount necessary to fully fund a working
capital reserve equal to the Minimum Liquidity Amount (defined below) upon
consummation of the Restructuring following payment of the Restructuring
Expenses (defined below) (such cash payment to the Lenders, the “Lender Cash
Distribution”) and (b) new shares, on a pro rata basis, of Common Stock that
will provide the Lenders with 99.5% of the total outstanding Common Stock of the
Company after such issuance (the “Lender Shares Issuance”), subject to dilution
by the Management Incentive Plan and the Equity Warrants (as such terms are
described below).

 

ii.    The Company shall incur senior secured indebtedness in an amount up to
forty percent (40%) of the appraised value of the fleet with a new, third-party
senior secured credit facility (the “New Debt”), which shall be on market terms
and conditions, which terms and conditions shall be acceptable to the Company
and the Consenting Lenders.

 

iii.    Holders of unsecured claims shall be paid in full, provided that no
material unsecured claims exist except as incurred in the ordinary course of
business or as specifically identified herein; provided, further, that subject
to the consent of the Majority Consenting Lenders,2 up to $12 million in
unsecured obligations of the Company (whether a direct obligation of Eagle or
any of its direct or indirect subsidiaries) outstanding on the effective date of
the Restructuring shall be paid from the proceeds of the New Debt (the
“Outstanding Trade Obligations”).

 

iv.    The Management Incentive Plan (as described below) shall be implemented.

 

v.    Current holders of Common Stock (other than Consenting Lenders who hold
Amended Lender Warrants or Amended Lender Warrant Shares) shall receive or
retain (as applicable), on a pro rata basis, (a) shares equal to 0.5% of the
total outstanding Common Stock of the Company after the Lender Shares Issuance,
subject to dilution by the Management Incentive Plan and the Equity Warrants,
and (b) warrants (the “Equity Warrants”) providing the right to acquire 7.5% of
the Common Stock at an exercise price equal to the face amount of the principal
of the Loans outstanding immediately prior to the consummation of the
Restructuring (this assumes all accrued interest will be paid in cash).3 The
Equity Warrants shall expire seven (7) years after the effective date of the
Restructuring. Customary terms for public company warrants to be agreed.

 

“Amended Lender Warrant Shares” as that term is used herein means the shares
issued on account of an exercise of the Amended Lender Warrants.

 

“Amended Lender Warrants” as that term is used herein means the Warrants issued
in respect of “Exercise Commencement Date B” and “Exercise Commencement Date C”
(each, as denoted on Schedule 1 to the Warrant Agreement), as such warrants were
amended pursuant to that certain Amendment No. 1 to Warrant Agreement, dated as
of July 2, 2014, by and between Eagle and the majority holders of the Warrants.

 

 

--------------------------------------------------------------------------------

2 “Majority Consenting Lenders” means at least four (4) Consenting Lenders who
are not affiliates of each other and who hold, in the aggregate, at least 66
2/3% of the principal amount of total outstanding Loans under the Credit
Agreement held by all Consenting Lenders. 

3 The Equity Warrants will be structured such that decisions regarding the
timing for issuance of the New Debt and how the proceeds of such New Debt will
be used will be value neutral to the Equity Warrants.

 

 
2 

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IMPLEMENTATION OF THE RESTRUCTURING

Restructuring Support Agreement

The Company and the Consenting Lenders shall execute a restructuring support
agreement (the “RSA”) with standard terms and conditions evidencing their intent
to support consummation of the Restructuring.

 

Prepackaged Plan of Reorganization and Chapter 11 Case

The Restructuring shall be implemented pursuant to a prepackaged chapter 11 plan
of reorganization for (the “Plan”) and a voluntary case commenced by Eagle and,
if necessary, one or more of Eagle’s direct or indirect subsidiaries (the
“Chapter 11 Case(s)”) under chapter 11 of title 11 of the United States Code, 11
U.S.C. §§ 101–1532 (as amended, the “Bankruptcy Code”) in the United States
Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”).

 

GENERAL TERMS OF THE RESTRUCTURING

New Liquidity Facility; Application of New Debt Proceeds

The Company may enter into a new revolving credit facility for working capital
purposes (the “New Liquidity Facility”) in the principal amount of up to $50
million. The New Liquidity Facility may be provided by third party financing
sources, and the Consenting Lenders shall have no obligation to provide such
financing.

 

If the Company is unable to implement the New Liquidity Facility in connection
with the consummation of the Restructuring, then the Lender Cash Distribution
will be adjusted accordingly to fully fund a working capital reserve equal to
the Minimum Liquidity Amount upon consummation of the Restructuring following
payment of any Outstanding Trade Obligations and the Restructuring Expenses.

 

For the avoidance of doubt, (a) the minimum liquidity reserve (inclusive of any
minimum liquidity requirements under the New Debt) based on the cash on hand and
borrowing availability under the New Liquidity Facility, if applicable,
immediately following the consummation of the Restructuring (including, but not
limited to, following payment of or allocation for the Lender Cash Distribution,
the Outstanding Trade Obligations, and the Restructuring Expenses) shall be no
less than $72.5 million (the “Minimum Liquidity Amount”) and (b) any proceeds of
the New Debt shall first be applied towards the payment in full of (i) the
Outstanding Trade Obligations and (ii) any amount necessary to satisfy the
Minimum Liquidity Amount following payment of the fees and expenses incurred in
connection with the Restructuring, as well as the funding obligations under the
Plan (the “Restructuring Expenses”).4

 

 

--------------------------------------------------------------------------------

4 The working capital reserve shall include the amount of any unused
availability under a New Liquidity Facility.

 

 
3 

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Management Incentive Plan

As part of the Restructuring, Eagle shall institute a new management incentive
plan reserving certain Common Stock of Reorganized Eagle as follows, which plan
will supersede any prior management or employee stock compensation plan of Eagle
and any of its affiliates and subsidiaries (the “New Management Incentive
Plan”). Upon completion of the Restructuring, senior management and certain
other employees of the Company will:

 

(a)   receive, pursuant to the vesting schedule described below, 2.0% of the
Common Stock outstanding as of the effective date of the Restructuring on a
fully-diluted basis (the “MIP Shares”); and

 

(b)  be issued the following incentive awards (the “MIP Options”) from the New
Management Incentive Plan based on different levels of appreciation above
Eagle’s reorganization enterprise value (as determined by a bankruptcy court)
(the “Reorganization Enterprise Value”) as follows: (i) seven (7) year stock
options to acquire 2.5% of Common Stock based on the Reorganization Equity Value
(defined below); and (ii) seven (7) year stock options to acquire 3.0% of Common
Stock based on a premium to the Reorganization Equity Value equivalent to a
30.2% premium to the Reorganization Enterprise Value. For the avoidance of
doubt, the amount of the premium referenced in the foregoing clause (ii) would
be calculated by dividing (a) the amount in dollars that is equal to 30.2% of
the Reorganization Enterprise Value into (b) the dollar amount of the
Reorganized Equity Value.  Such premium would then be applied to the
Reorganization Equity Value to derive the applicable strike price on the tranche
of warrants in the foregoing clause (ii).  “Reorganization Equity Value” as used
herein means, on the effective date of the Restructuring, the Reorganization
Enterprise Value less the New Debt incurred.4

 

The MIP Shares and the MIP Options will generally vest over four (4) years
through annual installments, each in an amount equal to 25% of such shares or
options, as applicable, commencing on the first anniversary of the
Restructuring.

 

In addition, no less than 2.5% of the shares of Common Stock of Reorganized
Eagle (on a fully diluted basis), subject to upward adjustment as may be agreed
to by Eagle and the Majority Consenting Lenders prior to the effective date of
the Restructuring, will be reserved for future issuances by Reorganized Eagle to
senior management and certain other employees of Reorganized Eagle at the
direction of the Reorganized Eagle’s Board of Directors.

 

The Company’s Chief Executive Officer shall receive not less than 60% of the
total compensation to be awarded under the Management Incentive Plan. Other
terms with respect to the MIP Shares and the MIP Options for the Company’s Chief
Executive Officer shall be determined in connection with the employment
agreement, and applicable award agreements, as set forth on Exhibit A.

 

Participants in the Management Incentive Plan will be entitled to the Minority
Shareholder Protections discussed below.

 

The Management Incentive Plan will be structured as an omnibus incentive plan
and will contain provisions consistent with this Term Sheet and other
provisions, including without limitation adjustment provisions to reflect any
transaction involving company shares, including as a result of dividends,
recapitalization, stock split, etc., so as to prevent any diminution or
enlargement of the holder’s rights under the award.   In addition, awards that
expire or are forfeited or cancelled will again be available for issuance under
the Management Incentive Plan and awards may not be materially amended in an
adverse manner without the consent of any holder who is senior management. The
MIP Shares will have the right to receive dividends or other distributions at
the same time and in the same form as a holder of Common Stock; provided that
(i) dividends or other distributions in respect of unvested MIP Shares will be
paid at the same time as underlying MIP Shares are settled and (ii) provided
further than the MIP Shares will not receive a dividend from the proceeds of the
New Debt if the New Debt is incurred after closing. The senior management will
also have the right to elect a net settlement (i.e., on a cashless basis) with
respect to both the MIP Shares and the MIP Options.

 

 

--------------------------------------------------------------------------------

5 The calculation of the actual strike price of the management options will be
set to take into account the Reorganization Enterprise Value and the amount of
the New Debt and the use of the proceeds thereof.

  

 
4 

--------------------------------------------------------------------------------

 

 

Releases

The Plan shall provide for customary mutual releases and/or waivers, including
standard carveouts, among the Company, each of the Consenting Lenders, RBS, as
original Agent and Security Trustee under the Credit Agreement, Wilmington, as
successor Agent and Security Trustee under the Credit Agreement, and each of
their respective directors, officers, funds, affiliates, members, employees,
partners, managers, agents, representatives, principals, consultants, and
professional advisors (each in their capacity as such) (collectively, the
“Released Parties”) of any and all claims, obligations (contractual or
otherwise), suits, judgments, damages, rights, liabilities, or causes of action,
whether known or unknown, foreseen or unforeseen, relating to any actions,
transactions, events, or omissions before the effective date of the
Restructuring in any way relating to the Company, the obligations under the
Credit Agreement, or the Restructuring, that a Released Party would have been
legally entitled to assert in their own right or on behalf of another party
(including, for the avoidance of doubt, the Company) against another Released
Party.

 

Employment Agreements

Upon and following any consummation of the Restructuring, the Employment
Agreement between Eagle, Eagle Shipping International (USA) LLC, a Marshall
Islands Company, and Sophocles Zoullas, dated June 19, 2008 (as amended,
modified or restated from time to time, the “Zoullas Employment Agreement”)
shall be amended as set forth on Exhibit A.

 

Board of Directors

The Board of Directors shall consist of seven (7) members, one of whom shall be
Eagle’s Chief Executive Officer (Sophocles Zoullas), who also shall serve as
Chairman of the Board. The remaining six (6) directors shall be selected by the
Majority Consenting Lenders in their sole discretion; provided that the
Consenting Lenders shall consult in good faith with management and the
independent board committee concerning the individuals selected; provided,
further, that sufficient independent directors will be selected to comply with
any applicable listing requirements. The Board may appoint a non-executive,
independent lead director with responsibilities customary for an independent
lead director.

 

 

 
5 

--------------------------------------------------------------------------------

 

 

Senior Officers

The senior officers (“Senior Officers”) of the Company shall be:

 

Chief Executive Officer:

 

●  Sophocles Zoullas

 

Chief Financial Officer:

 

●  Adir Katzav

 

President of Eagle Shipping International (USA) LLC:

 

●  Alexis Zoullas

 

Amended Articles & Bylaws

The Company’s existing articles and bylaws will be subject to customary
amendments and modifications and shall include certain rights and protections
for minority shareholders customary for a listed public company (collectively,
the “Minority Shareholder Protections”) as well as the maximum protections
available with respect to affiliate transactions for public companies, including
any merger, consolidation or reorganization of the Company, any sale, transfer
or other disposition of all or substantially all of the assets of the Company,
any other change in control of the Company or all or substantially all of its
assets involving an affiliate (any such transactions, “Material Transactions”).

 

Registration Rights

The Company and the Consenting Lenders shall negotiate in good faith a
registration rights agreement providing for (1) the right of shareholders
requiring registration rights to require the Company to register with the SEC
shares of Common Stock and Equity Warrants and shares of Common Stock underlying
Equity Warrants, in each case issued to them pursuant to the Restructuring, and
(2) “piggy-back” registration rights with customary cutbacks for such
shareholders.

 

Public Status

Eagle shall remain a public company and shall file reports under the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.

 

Listing Status

Eagle shall remain listed on the Nasdaq Global Select Market.  To ensure Eagle’s
continued listing, the Consenting Lenders shall provide Eagle with sufficient
time and cooperation to take the necessary steps to comply with all applicable
Nasdaq requirements, as shall be reasonably agreed between the parties. In the
event that Eagle loses its Nasdaq listing for any reason prior to the
consummation of the Restructuring, (i) the Consenting Lenders agree to
support Eagle’s good faith efforts to become relisted on Nasdaq and (ii) Eagle
shall use commercially reasonable efforts to comply with listing requirements
while delisted, subject to the terms and conditions of the Restructuring.

 

 

 
6 

--------------------------------------------------------------------------------

 

 

Fees & Expenses / Expense Reimbursement

The Company shall pay the fees and expenses incurred by the following advisors
to the Consenting Lenders and Wilmington, as successor Agent and Security
Trustee under the Credit Agreement, acting jointly: (i) Paul, Weiss, Rifkind,
Wharton & Garrison LLP (“Paul Weiss”) as set forth in that certain fee letter,
dated as of January 1, 2014, between Eagle and Paul Weiss; (ii) Houlihan Lokey
Capital, Inc.  (“Houlihan”) as set forth in that certain letter agreement, dated
as of February 1, 2014, among Eagle, Houlihan, Paul Weiss, and the Lender Group
(as defined therein), and (iii) maritime and appropriate foreign counsel engaged
by Paul Weiss.

 

Right to Solicit Alternative Restructurings

Notwithstanding anything to the contrary herein, the Company shall not be
entitled to solicit, encourage, and initiate any offer or proposal from, enter
into any agreement with, or engage in any discussions or negotiations with, any
person or entity concerning any actual or proposed transaction involving any or
all of (i) another financial and/or corporate restructuring of any member of the
Company, (ii) the issuance, sale, or other disposition of any equity or debt
interests, or any material assets, of any member of the Company, or (iii) a
merger, consolidation, business combination, liquidation, recapitalization,
refinancing, or similar transaction involving any member of the Company (each,
an “Alternative Transaction”); provided, however, that the Company may respond
to any proposal or offer for an Alternative Transaction to the extent that the
Board of Directors of the Company determines in good faith, and consistent with
its fiduciary duties, that such a response is necessary; provided, further,
however, that the Company shall promptly provide copies of all such
documentations and materials received by the Company concerning such an
Alternative Transaction to Paul Weiss.

 

Tax, Securities, and Corporate Matters

The issuance of shares and the transactions discussed herein are subject to
ongoing tax diligence, securities compliance, and other corporate review.

 

Insurance

All insurance premiums on existing policies shall be paid as of the effective
date of the closing of the Restructuring or when earlier due. On or before the
closing of the Restructuring, the Company shall obtain reasonably sufficient
tail coverage (i.e., D&O insurance coverage that extends beyond the end of the
policy period through the end of any applicable statute of limitations period)
under a directors’ and officers’ liability insurance policy for the Company’s
current and former directors, officers, and managers.

 

 

 
7 

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Delphin Management Agreement

The Company shall use its best efforts to amend the Management Agreement between
Eagle Bulk and Delphin Shipping LLC on terms and conditions acceptable to the
Company and the Consenting Lenders, provided that if the parties are unable to
do so, the Company, at the direction of the Consenting Lenders, shall take
reasonably necessary steps to not renew the management agreement.

 

If the Delphin management agreement is not amended as set forth herein, it will
be rejected in the Chapter 11 Case; provided that the foregoing terms and
requirements with respect to the Delphin management agreement may be waived by
the Company and the Consenting Lenders.

 

Other Terms and Conditions

The Plan, the definitive documentation and other material agreements shall be in
form and substance satisfactory to the Consenting Lenders and shall contain such
other terms and conditions as are customary for transactions of this type.

 

 

 
8 

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Exhibit A to Term Sheet

 

 

EAGLE BULK SHIPPING INC.

 

EXHIBIT A:
Employment Agreement Term Sheet

 

 

The following sets forth the principal terms of the current employment agreement
(the “Agreement”) between Sophocles M. Zoullas (the “Executive”), Eagle Shipping
International (USA) LLC, a Marshall Islands limited liability company (the
“Company”) and its parent, Eagle Bulk Shipping Inc., a Marshall Islands
corporation (the “Parent”), as well as proposed changes to the Agreement. Except
as otherwise provided in this term sheet, the terms of the current employment
agreement between the Executive and the Company (the “Existing Agreement) will
be incorporated into the Agreement. Certain defined terms have the meanings
given to them in the Existing Agreement. THIS TERM SHEET DOES NOT BY ITSELF
CREATE ANY RIGHTS OR OBLIGATIONS AND IS SUBJECT TO THE EXECUTION OF A DEFINITIVE
WRITTEN AGREEMENT REGARDING THE SUBJECT MATTER DESCRIBED HEREIN.

 

 

Provision

Current Agreement Description

 

Title/Position

Executive shall serve as the Chief Executive Officer of the Company and
the Executive shall continue to serve as the Chairman; provided that the Board
may add a position of a non-executive, independent lead director or may elect to
separate the positions of Chief Executive Officer and Chairman, and neither
action will constitute Good Reason.

 

Term

Current term to end on June 18, 2017, subject to automatic 1 year extensions on
each anniversary thereof, unless either party provides 90 days’ advance written.

 

Non-renewal is to be treated the same as a termination by the Company without
Cause/by the Executive for Good Reason.

 

 

 
 

--------------------------------------------------------------------------------

 

 

Provision 

Current Agreement Description

 

Duties

During the Term, Executive shall devote substantially all of his business time
and attention to the business and affairs of the Company and the Parent and use
his reasonable best efforts to faithfully perform his duties and
responsibilities; but notwithstanding the foregoing, nothing in the Agreement
shall preclude the Executive (i) from engaging, consistent with his duties and
responsibilities hereunder, in charitable, educational and community affairs,
including serving on the board of directors of any charitable, educational or
community organization, (ii) from managing his personal passive investments,
(iii) upon approval of the Board, which approval shall not be unreasonably
withheld, from serving as a director of another company; (iv) from engaging in
activities approved by the Board and (v) from managing his investment in Delphin
Shipping LLC, provided that such management does not materially interfere with
the Executive’s duties with the Company. The Executive agrees not to take
personal advantage of any business opportunities relating to general shipping
which may arise during the Executive’s employment hereunder which could
reasonably be expected to be business opportunities that the Company or the
Parent might pursue.

 

The following language will be clarified to provide that Executive will not have
any majority ownership interest or active day-to-day management role in any
opportunity that the Board elects not to participate in:

 

“The Executive further agrees to disclose all such opportunities, and the
material facts attendant thereto, to the Board for consideration by the Company
and the Parent. If within 15 business days of the Executive disclosing such
business opportunities to the Board, the Board fails to adopt a resolution (and
to provide a copy of same to the Executive) that it may pursue such business
opportunity, the Company and the Parent will be deemed to have declined to
pursue such opportunity, in which event the Executive shall be free to pursue
it.”

 

Base Salary and Annual Cash Bonus Opportunity

$850,000 base salary per annum. 

 

Base Salary shall be reviewed for increase at such time, and in the same manner
as the salaries of senior officers of the Company are reviewed generally.

 

For first two years of contract term, the Executive will be eligible for a
target annual cash bonus opportunity equal to 50% of base salary with a maximum
annual cash bonus opportunity of 75% base salary.

 

Performance goals to be set by Compensation committee following reasonable
consultation with Executive.

 

Equity Vesting on Termination: Death/Disability

One year additional vesting in equity-based awards; provided that, in all cases,
no less than two years of total vesting.

 

 

 
 

--------------------------------------------------------------------------------

 

 

Provision 

Current Agreement Description

   

Termination by the Company w/o Cause or by Executive with Good Reason

●     Accrued Obligations;

 

●     Severance equal to 2X the sum of Executive’s Base Salary plus bonus (for
purposes of this calculation, bonus is to be equal to (i) 62.5% of Base Salary
if such separation occurs during the first two years following the effective
date of the Agreement and (ii) 100% of Base Salary thereafter) payable in a lump
sum within 60 days following the termination;

 

●     Continued medical and life insurance benefits for two years, subject to
Executive’s continued payment of required contributions as if an active
employee; and

 

●     One year additional vesting in equity-based awards; provided that, in all
cases, no less than two years of total vesting.

 

Termination by the Company w/o Cause or by Executive with Good Reason within 2
years following a Change in Control

No enhanced severance upon a termination following a Change in Control. The 2x
severance will apply if there is a termination following a Change in Control.

 

 

 

280G Golden Parachute

280G best-net provision.

 

Clawback

Clawback provision shall be inserted, applicable to the extent required by
applicable law (including without limitation Section 304 of the Sarbanes Oxley
Act and Section 954 of the Dodd Frank Act).

 

 

 
 

--------------------------------------------------------------------------------

 

 

Provision  Current Agreement Description    

Non-Competition and
Non-Solicitation

Non-compete and non-solicit (employees and customers): During the Term and for
one year post termination for any reason.

 

Competitive Activity definition to be read as follows:

 

“Competitive Activity” means involvement in the management or operation of or
control, direct or indirect, of a company that operates vessels, of which at
least 80% (by number of ships) are dry bulk vessels, wherever such business is
located in the world if such business is or reasonably could become a competitor
of the Company at the time the Executive becomes affiliated with such company.

 

Indemnification

Subject to the Executive’s review of final language, indemnification provision
to be updated to provide for a carve-out that no indemnification will be
provided for any claims initiated by the Executive against the Company, the
Board or its officers and directors unless approved in advance in writing by the
Board.

 

Language to be consistent for all senior executive officers and directors.

 

 

 

 

 
 

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Exhibit B

 

to the Restructuring Support Agreement

 

PLAN

 

 

 

 

 

 

 
 

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Paul S. Aronzon (pro hac vice pending)

Haig M. Maghakian (pro hac vice pending)

MILBANK, TWEED, HADLEY & MCCLOY LLP

601 S. Figueroa St., 30th Floor
Los Angeles, CA 90017

(213) 892-4000

 

- and –

 

Tyson M. Lomazow

Matthew Brod

MILBANK, TWEED, HADLEY & MCCLOY LLP

One Chase Manhattan Plaza

New York, NY 10005

(212) 530-5000

 

Proposed Counsel to Debtor and Debtor in Possession

 

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK

 

       

)

 

In re:

)

Chapter 11

 

)

 

EAGLE BULK SHIPPING INC. 

)

Case No. 14-                    (     )

 

)

 

Debtor.

)

   

)

   

)

 

 

DEBTOR’S PREPACKAGED PLAN OF REORGANIZATION
PURSUANT TO CHAPTER 11 OF THE BANKRUPTCY CODE

 

NO CHAPTER 11 CASE HAS BEEN COMMENCED AT THIS TIME. THE SOLICITATION MATERIALS
ACCOMPANYING THIS PREPACKAGED PLAN OF REORGANIZATION HAVE NOT BEEN APPROVED BY
THE COURT. FOLLOWING THE COMMENCEMENT OF THE CHAPTER 11 CASE, THE DEBTOR EXPECTS
TO PROMPTLY SEEK ENTRY OF AN ORDER SCHEDULING A COMBINED HEARING ON THE ADEQUACY
OF THE DISCLOSURE STATEMENT AND SOLICITATION PROCEDURES AND CONFIRMATION OF THE
PLAN.

 

 

Dated:

August 6, 2014
New York, New York

 

 
 

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TABLE OF CONTENTS

 

    Page      

INTRODUCTION

 

1      

ARTICLE I. DEFINITIONS AND CONSTRUCTION OF TERMS  

1      

A.

Definitions.

1

B.

Interpretation, Application of Definitions, and Rules of Construction.

14

C.

Computation of Time.

15

     

ARTICLE II. ADMINISTRATIVE Claims, DIP Claims, and PRIORITY CLAIMS  

15      

A.

Administrative Claims (Other Than Fee Claims).

15

B.

DIP Claims.

15

C.

Fee Claims.

16

D.

Priority Tax Claims.

16

E.

U.S. Trustee Fees.

17

     

ARTICLE III. CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS  

17      

A.

Classification of Claims and Equity Interests.

17

B.

Record Date.

17

C.

Summary of Classification and Class Identification.

18

D.

Treatment of Classified Claims and Equity Interests.

18

E.

Special Provision Regarding Unimpaired and Reinstated Claims.

21

     

ARTICLE IV. MEANS FOR IMPLEMENTATION OF THE PLAN  

21      

A.

General Settlement of Claims and Interests.

21

B.

Exit Financing.

22

C.

Voting of Claims.

22

D.

Nonconsensual Confirmation.

22

E.

Issuance of New Eagle Common Stock and New Eagle Equity Warrants and Entry into
the Registration Rights Agreement.

22

F.

The New Eagle Equity Warrants.

24

G.

Continued Corporate Existence and Vesting of Assets.

25

H.

Fee Claims Escrow Account.

25

I.

Claims Against Non-Debtor Subsidiaries.

26

J.

Subsidiary Equity Interests.

26

     

ARTICLE V. PROVISIONS REGARDING CORPORATE GOVERNANCE OF THE REORGANIZED DEBTOR  

26      

A.

Organizational Documents.

26

B.

Appointment of Officers and Directors.

26

 

 
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C.

Powers of Officers.

27

D.

New CEO Employment Agreement, Existing Benefits Agreements, and Retiree
Benefits.

27

E.

Management Incentive Program.

27

F.

Indemnification of Directors, Officers, and Employees.

28

     

ARTICLE VI. CONFIRMATION OF THE PLAN  

28      

A.

Conditions to Confirmation.

28

B.

Waiver of Conditions Precedent to Confirmation.

29

C.

Discharge of the Debtor.

29

D.

Injunction.

29

E.

Preservation of Causes of Action.

31

F.

Votes Solicited in Good Faith.

32

G.

Prepetition Credit Facility Agent and Consenting Lenders’ Fees and Expenses.

32

H.

Cancellation of Certain Indebtedness, Agreements, and Existing Securities.

32

I.

Claims Incurred After the Effective Date.

33

J.

Releases, Exculpations, and Injunctions of Released Parties.

33

K.

Preservation of Insurance.

36

     

ARTICLE VII. DISTRIBUTIONS UNDER THE PLAN  

36      

A.

Procedures for Treating Disputed Claims.

36

B.

Allowed Claims and Equity Interests.

37

C.

Allocation of Consideration.

39

D.

Estimation.

40

E.

Insured Claims.

40

     

ARTICLE VIII. RETENTION OF JURISDICTION  

40    

ARTICLE IX. EXECUTORY CONTRACTS AND UNEXPIRED LEASES  

42      

A.

Assumption of Executory Contracts and Unexpired Leases.

42

B.

Cure Claims.

43

C.

Reservation of Rights.

44

D.

Rejection of Executory Contracts and Unexpired Leases.

44

E.

Assignment.

45

F.

Insurance Policies.

45

G.

Post-Petition Contracts and Leases.

45

     

ARTICLE X. EFFECTIVENESS OF THE PLAN  

45      

A.

Conditions Precedent to Effectiveness.

45

B.

Waiver of Conditions Precedent to Effectiveness.

46

C.

Effect of Failure of Conditions.

46

 

 
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D.

Vacatur of Confirmation Order.

46

E.

Modification of the Plan.

47

F.

Revocation, Withdrawal, or Non-Consummation.

47

     

ARTICLE XI. MISCELLANEOUS PROVISIONS  

47      

A.

Immediate Binding Effect.

47

B.

Governing Law.

48

C.

Filing or Execution of Additional Documents.

48

D.

Term of Injunctions or Stays.

48

E.

Withholding and Reporting Requirements.

48

F.

Exemption From Transfer Taxes.

48

G.

Plan Supplement.

49

H.

Notices.

49

I.

Conflicts.

50

 

 
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INTRODUCTION

 

Eagle Bulk Shipping Inc. proposes the following prepackaged plan of
reorganization under section 1121(a) of chapter 11 of title 11 of the United
States Code.

 

Claims against, and Equity Interests in, the Debtor will be treated as set forth
herein. Reference is made to the Disclosure Statement accompanying the Plan,
including the exhibits thereto, for a discussion of the Debtor’s history,
business, results of operations, and projections for future operations and risk
factors, together with a summary and analysis of the Plan.

 

THIS PLAN SHOULD BE CONSIDERED ONLY IN CONJUNCTION WITH THE DISCLOSURE
STATEMENT AND RELATED MATERIALS TRANSMITTED HEREWITH. THE DISCLOSURE
STATEMENT IS INTENDED TO PROVIDE YOU WITH INFORMATION YOU NEED TO MAKE AN
INFORMED JUDGMENT WHETHER TO ACCEPT OR REJECT THIS PLAN.

 

ARTICLE I.
DEFINITIONS AND CONSTRUCTION OF TERMS

 

A.

Definitions.

 

Unless otherwise defined herein, the following terms shall have the respective
meanings set forth below:

 

1.     Accrued Professional Compensation: means, at any given time, and
regardless of whether such amounts are billed or unbilled, all accrued,
contingent, and/or unpaid fees and expenses (including success fees) for legal,
financial advisory, accounting, and other services, and reimbursement of
expenses by any Professional that the Court has not, as of the Effective Date,
denied by Final Order (i) all to the extent that any such fees and expenses have
not been previously paid (regardless of whether a fee application has been filed
for any such amount) and (ii) after applying the remaining balance of any
retainer that has been provided by the Debtor to such Professional; provided,
however, that Accrued Professional Compensation shall not include fees and
expenses that are reasonably incurred by the Prepetition Credit Facility Agent
or the DIP Agent or that are awardable and allowable under section 503 of the
Bankruptcy Code. To the extent the Court denies or reduces by a Final Order any
amount of a Professional’s fees or expenses, then those reduced or denied
amounts shall no longer constitute Accrued Professional Compensation.

 

2.     Administrative Claim: means any right to payment constituting a cost or
expense of administration of the Chapter 11 Case of a kind specified under
section 503(b) of the Bankruptcy Code and entitled to priority under
sections 507(a)(2), 507(b) or 1114(e)(2) of the Bankruptcy Code, including, but
not limited to, (i) any actual and necessary costs and expenses of preserving
the Estate, (ii) any actual and necessary costs and expenses of operating the
Debtor’s business, (iii) any indebtedness or obligations assumed by the Debtor
in connection with the conduct of its businesses, (iv) all compensation and
reimbursement of expenses of Professionals to the extent awarded by the Court
under sections 330, 331 or 503 of the Bankruptcy Code, (v) any fees or charges
assessed against the Estate under section 1930 of title 28 of the United States
Code, and (vi) any Claim for goods delivered to the Debtor within twenty
(20) days of the Petition Date and entitled to administrative priority pursuant
to section 503(b)(9) of the Bankruptcy Code.

 

 
 

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3.     Allowed: means, (i) with respect to any Claim, (a) following the Claims
Objection Deadline, any Claim as to which no objection or request for estimation
has been filed prior to the Claims Objection Deadline, (b) a Claim that has been
expressly allowed by Final Order, (c) a Claim as to which the Debtor or the
Reorganized Debtor agree to the amount and/or priority thereof in writing, (d) a
Claim that is expressly allowed pursuant to the terms of this Plan, or (e) a
Claim that is listed in the Schedules (to the extent the Debtor files Schedules
in the Chapter 11 Case) as liquidated, non-contingent, and undisputed and (ii)
with respect to any Equity Interest, such Equity Interest is reflected as
outstanding in the stock transfer ledger or similar register of the Debtor on
the Record Date and is not subject to any objection or challenge. If a Claim or
Equity Interest is Allowed only in part, any provisions hereunder with respect
to Allowed Claims or Allowed Equity Interests are applicable solely to the
Allowed portion of such Claim or Equity Interest.

 

4.     Amended Lender Warrants: means the warrants issued in respect of Exercise
Commencement Date B and Exercise Commencement Date C (each, as denoted on
Schedule 1 to the Warrant Agreement), as amended pursuant to the Warrant
Agreement Amendment.

 

5.     Ballots: means each of the ballots distributed with the Disclosure
Statement to each holder of an Impaired Claim that is entitled to vote to accept
or reject the Plan.

 

6.     Bankruptcy Code: means title 11 of the United States Code, 11 U.S.C. §§
101-1532, as in effect with respect to the Chapter 11 Case.

 

7.     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, and local rules of the Court, as the context may
require, as in effect with respect to the Chapter 11 Case.

 

8.     Bar Date: means the date or dates established by Order of the Court, by
which holders of Claims subordinated pursuant to section 510(b) of the
Bankruptcy Code must file proofs of Claim.

 

9.     Bar Date Order: means the order of the Court establishing the Bar Date.

 

10.     Business Day: means any day on which commercial banks are open for
business, and not authorized to close, in New York, New York, except any day
designated as a legal holiday by Bankruptcy Rule 9006(a).

 

11.     Cash: means legal tender of the United States of America.

 

 
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12.     Causes of Action: means any and all claims, causes of actions,
cross-claims, counterclaims, third-party claims, indemnity claims, reimbursement
claims, contribution claims, defenses, demands, rights, actions, debts, damages,
judgments, remedies, Liens, indemnities, guarantees, suits, obligations,
liabilities, accounts, offsets, recoupments, powers, privileges, licenses, and
franchises of any kind or character whatsoever, known or unknown, contingent or
noncontingent, matured or unmatured, suspected or unsuspected, disputed or
undisputed, foreseen or unforeseen, direct or indirect, choate or inchoate,
whether arising before, on, or after the Petition Date, including through the
Effective Date, in contract or in tort, in law or in equity, or pursuant to any
other theory of law. For the avoidance of doubt, the term “Causes of Action”
shall include: (i) all rights of setoff, counterclaim, or recoupment and claims
on contracts or for breaches of duties imposed by law or in equity; (ii) the
right to object to Claims; (iii) all claims pursuant to sections 362, 510, 542,
543, 544 through 550, 552 or 553 of the Bankruptcy Code; (iv) all claims and
defenses, including fraud, mistake, duress, and usury and any other defenses set
forth in section 558 of the Bankruptcy Code; and (v) any state law fraudulent
transfer claims.

 

13.     Chapter 11 Case: means the chapter 11 case commenced by the Debtor.

 

14.     Claim: means a “claim” against the Debtor, as such term is defined in
section 101(5) of the Bankruptcy Code.

 

15.     Claims Objection Deadline: means the first Business Day that is the
later of (i) one-hundred eighty (180) days after the Effective Date, (ii) ninety
(90) days from the date by which a holder of a Claim is required to file a proof
of Claim pursuant to an order of the Court, or (iii) such other later date the
Court may establish upon a motion by the Debtor or the Reorganized Debtor, which
motion may be approved without a hearing and without notice to any party.

 

16.     Class: means a group of Claims or Equity Interests classified under the
Plan.

 

17.     Collateral: means any property, or interest in property, of the Estate
subject to a Lien to secure the payment or performance of a Claim, which Lien
has not been avoided or is not subject to avoidance under the Bankruptcy Code or
is otherwise invalid under the Bankruptcy Code or applicable law.

 

18.     Combined Notice: has the meaning ascribed to such term in the
Solicitation Procedures Motion.

 

19.     Confirmation: means the entry of the Confirmation Order on the docket of
the Chapter 11 Case.

 

20.     Confirmation Date: means the date of Confirmation.

 

21.     Confirmation Hearing: means the hearing held by the Court pursuant to
Bankruptcy Rule 3020(b)(2) and section 1128 of the Bankruptcy Code, including
any adjournments thereof, at which the Court will consider confirmation of the
Plan.

 

22.     Confirmation Order: means the order entered by the Court confirming the
Plan pursuant to section 1129 of the Bankruptcy Code.

 

 
3 

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23.     Consenting Lenders: has the meaning ascribed to such term in the
Restructuring Support Agreement.

 

24.     Court: means (i) the United States Bankruptcy Court for the Southern
District of New York, (ii) to the extent there is no reference pursuant to
section 157 of title 28 of the United States Code, the United States District
Court for the Southern District of New York, and (iii) any other court having
jurisdiction over the Chapter 11 Case or proceedings arising therein.

 

25.     Cure Claim: means a Claim in an amount equal to all unpaid monetary
obligations under an Executory Contract or Unexpired Lease assumed by the Debtor
pursuant to section 365 of the Bankruptcy Code, to the extent such obligations
are enforceable under the Bankruptcy Code and applicable non-bankruptcy law. Any
Cure Claim to which the holder thereof disagrees with the priority and/or amount
thereof as determined by the Debtor shall be deemed a Disputed Claim under this
Plan.

 

26.     Debtor: means EBS.

 

27.     Delphin Management Agreement: means that certain Management Agreement,
dated as of August 4, 2009, by and between Delphin Shipping LLC and EBS.

 

28.     DIP Agent: means Wilmington Trust (London) Limited, or its duly
appointed successor, in its capacity as agent and security trustee under the DIP
Facility.

 

29.     DIP Claims: means all Claims arising under, or related to, the DIP
Facility.

 

30.     DIP Credit Agreement: means that certain Superpriority
Debtor-in-Possession Credit Agreement, by and among the Debtor, as borrower, the
DIP Guarantors, and the DIP Lenders, approved by the DIP Orders.

 

31.     DIP Facility: means the debtor-in-possession financing facility approved
by the DIP Orders and established pursuant to the DIP Credit Agreement.

 

32.     DIP Guarantors: means the guarantors party to the DIP Credit Agreement.

 

33.     DIP Lenders: means the lenders party to the DIP Credit Agreement.

 

34.     DIP Orders: means the Interim DIP Order and the Final DIP Order.

 

35.     Disclosure Statement: means the Disclosure Statement for Debtor’s
Prepackaged Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy
Code, in furtherance of this Plan.

 

 
4 

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36.     Disputed: means, with respect to any Claim or Equity Interest, other
than a Claim or Equity Interest that has been Allowed pursuant to the Plan or a
Final Order, a Claim or Equity Interest (i) that is listed in the Schedules (to
the extent the Debtor files Schedules in the Chapter 11 Case) as unliquidated,
contingent, or disputed, and as to which no request for payment or proof of
Claim or Equity Interest has been filed, (ii) as to which a proper and timely
request for payment or proof of Claim or Equity Interest has been filed, but
with respect to which an objection or request for estimation has been filed and
has not been withdrawn or determined by a Final Order, (iii) as to which a
request for payment was required to be filed but as to which a request for
payment was not properly filed, (iv) that is disputed in accordance with the
provisions of the Plan, or (v) that is otherwise disputed by the Debtor or the
Reorganized Debtor upon notice to the holder of such Claim or Equity Interest.

 

37.     DTC: means the Depository Trust Company.

 

38.     Eagle: means EBS and the Non-Debtor Subsidiaries.

 

39.     EBS: means Eagle Bulk Shipping Inc.

 

40.     Effective Date: means the date which is the first Business Day selected
by the Debtor, in consultation with the Majority Consenting Lenders, on which
(a) all of the conditions to the occurrence of the Effective Date specified in
Article X.A have been satisfied or waived in accordance with Article X.B and
(b) no stay of the Confirmation Order is in effect, provided that if the first
Business Day is a designated legal holiday in the United States or the United
Kingdom, then the Effective Date will be the next Business Day in the United
States and the United Kingdom.

 

41.     Entity: means an “entity” as such term is defined in section 101(15) of
the Bankruptcy Code.

 

42.     Equity Interest: means any “equity security” (as such term is defined in
section 101(16) of the Bankruptcy Code) in the Debtor, including any issued or
unissued share of common stock, preferred stock, or other instrument evidencing
an ownership interest in the Debtor, whether or not transferable, and any
option, warrant, or right, contractual or otherwise, to acquire any such
interest in the Debtor that existed immediately prior to the Effective Date, and
any Claim against the Debtor subordinated pursuant to section 510(b) of the
Bankruptcy Code.

 

43.     Estate: means the estate of the Debtor created in the Chapter 11 Case
pursuant to section 541 of the Bankruptcy Code.

 

44.     Exchange Act: means the Securities Exchange Act of 1934, as amended.

 

45.     Executory Contract: means a contract to which the Debtor is a party that
is subject to assumption or rejection under section 365 of the Bankruptcy Code.

 

46.     Existing Benefits Agreement: means all employment, retirement,
severance, indemnification, and similar or related agreements, arrangements, and
policies with the members of Eagle’s management team or directors as of the
Petition Date.

 

47.     Existing Management Incentive Programs: means all contracts, agreements,
policies, programs, and plans for incentive compensation for the officers and
employees of Eagle who served in such capacity at any time, in each case as in
effect immediately prior to the Effective Date.

 

 
5 

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48.     Exit Facility Amount: means the amount of the indebtedness incurred, as
of the Effective Date, under the Exit Financing Facility.

 

49.     Exit Financing Facility: means the new credit facility entered into by
the Reorganized Debtor on the terms set forth in the Exit Financing Facility
Credit Agreement, which credit facility is anticipated to be in an amount of
$275 million (inclusive of a $50 million revolving credit facility).

 

50.     Exit Financing Facility Credit Agreement: means the credit agreement, to
be effective as of the Effective Date, that will govern the Exit Financing
Facility.

 

51.     Fee Claim: means a Claim for Accrued Professional Compensation.

 

52.     Fee Claims Escrow Account: means the account established on the
Effective Date pursuant to Article IV.H.

 

53.     Final DIP Order: means the order of the Court authorizing, among other
things, on a final basis, the Debtor to enter into the DIP Facility and incur
postpetition obligations thereunder and use cash collateral.

 

54.     Final Order: means an order or judgment of the Court which has not been
modified, amended, reversed, vacated, or stayed, and as to which (a) the time to
appeal, petition for certiorari, or move for a new trial, stay, reargument, or
rehearing has expired and as to which no appeal, petition for certiorari, or
motion for new trial, stay, reargument, or rehearing shall then be pending or
(b) if an appeal, writ of certiorari, new trial, stay, reargument, or rehearing
thereof has been sought, such order or judgment of the Court shall have been
affirmed by the highest court to which such order was appealed, or certiorari
shall have been denied, or a new trial, stay, reargument, or rehearing shall
have been denied or resulted in no modification of such order, and the time to
take any further appeal, petition for certiorari, or move for a new trial, stay,
reargument, or rehearing shall have expired, as a result of which such order
shall have become final in accordance with Bankruptcy Rule 8002; provided, that
the possibility that a motion under Rule 60 of the Federal Rules of Civil
Procedure, or any analogous rule under the Bankruptcy Rules, may be filed
relating to such order, shall not cause an order not to be a Final Order.

 

55.     Former Prepetition Credit Facility Agent: means The Royal Bank of
Scotland plc, in its capacity as former agent and former security trustee under
the Prepetition Credit Agreement.

 

56.     General Unsecured Claim: means any Claim that is not Secured or entitled
to priority under the Bankruptcy Code or an order of the Court, including any
Claim arising from the rejection of an Executory Contract or Unexpired Lease
under section 365 of the Bankruptcy Code.

 

57.     Governmental Unit: has the meaning set forth in section 101(27) of the
Bankruptcy Code.

 

 
6 

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58.     Guarantee: means each guarantee of the Prepetition Credit Facility
Claims, including, but not limited to, the guarantees, indemnities, and other
credit support provided by any of the Non-Debtor Subsidiaries pursuant to the
Prepetition Finance Documents.

 

59.     Guarantee Claim: means a “claim,” as such term is defined in
section 101(5) of the Bankruptcy Code, arising from each Guarantee.

 

60.     Impaired: means, when used with respect to Claims or Equity Interests,
Claims or Equity Interests that are “impaired” within the meaning of
section 1124 of the Bankruptcy Code.

 

61.     Insured Claim: means any Claim or portion of a Claim that is, or may be,
insured under any of the Debtor’s insurance policies.

 

62.     Intercompany Claims: means any Claim held by a Non-Debtor Subsidiary
against the Debtor.

 

63.     Interim DIP Order: means the order of the Court authorizing, among other
things, on an interim basis, the Debtor to enter into the DIP Facility and incur
postpetition obligations thereunder and use cash collateral.

 

64.     Lien: has the meaning set forth in section 101(37) of the Bankruptcy
Code and includes, but is not limited to, any Lien, mortgage, deed of trust,
pledge, security interest, or other encumbrance granted by the Non-Debtor
Subsidiaries pursuant to any of the Prepetition Finance Documents.

 

65.     Majority Consenting Lenders: has the meaning ascribed to such term in
the Restructuring Support Agreement.

 

66.     Management Incentive Program: means the equity-based management
incentive program described in Article V.E to be implemented by the Reorganized
Debtor, which shall be included in the Plan Supplement.

 

67.     New Board: means the board of directors of the Reorganized Debtor to be
constituted as of the Effective Date pursuant to Article V.B, whose identity
shall be disclosed in the Plan Supplement.

 

68.     New CEO Employment Agreement: means the employment agreement between the
Reorganized Debtor, Eagle Shipping International (USA) LLC, and Sophocles
Zoullas, as Chief Executive Officer of the Reorganized Debtor, the form of which
shall be included as an exhibit to the Plan Supplement and in accordance with
Article V.D.

 

69.     New Eagle By-Laws: means the amended and restated by-laws of the
Reorganized Debtor, the form of which shall be included in the Plan Supplement.

 

70.     New Eagle Charter: means the amended and restated articles of
incorporation of the Reorganized Debtor, the form of which shall be included in
the Plan Supplement.

 

 
7 

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71.     New Eagle Common Stock: means the shares of common stock of the
Reorganized Debtor authorized pursuant to the Plan and the New Eagle Charter and
issued pursuant to the Plan and the Management Incentive Plan (including,
without limitation, the shares issuable upon the exercise of the New Eagle
Equity Warrants and the New Eagle MIP Options).

 

72.     New Eagle Equity Warrants: means the warrants to purchase shares of New
Eagle Common Stock, representing an aggregate total of 7.5% of the total number
of shares of New Eagle Common Stock issuable pursuant to the Plan (subject to
dilution from the New Eagle MIP Primary Equity, the New Eagle MIP Reserved
Equity, and the New Eagle MIP Options), exercisable at any time for a period of
seven (7) years from the Effective Date, at a strike price per share equal to
the amount derived by dividing (a) (1) the principal amount of the outstanding
Term Loans and PIK Loans (each, as defined in the Prepetition Credit Agreement),
immediately prior to the Effective Date, plus (2) any accrued but unpaid
interest under the Prepetition Credit Agreement immediately prior to the
Effective Date, minus (3) the Prepetition Credit Facility Cash Distribution by
(b) the aggregate number of shares issued under the Plan pursuant to the
Prepetition Credit Facility Equity Distribution and the Shareholder Equity
Distribution, which warrants will be issued by the Reorganized Debtor pursuant
to the terms of the New Eagle Equity Warrant Agreement.

 

73.     New Eagle Equity Warrant Agreement: means the warrant agreement that
will govern the terms of the New Eagle Equity Warrants, the form of which shall
be included in the Plan Supplement.

 

74.     New Eagle MIP Option Agreements: means the option agreements that will
govern the terms of the New Eagle MIP Options, the forms of which shall be
included as an exhibit to the Plan Supplement.

 

75.     New Eagle MIP Options: means the following two tiers of options, which
will be issued by the Reorganized Debtor to senior management and certain other
employees of the Reorganized Debtor or the Non-Debtor Subsidiaries, and will
generally vest over four (4) years through annual installments, each in an
amount equal to 25% of such options, in accordance with the terms of the
Management Incentive Program:  (i) seven (7) year stock options to acquire
shares representing 2.5% of the total number of shares of New Eagle Common
Stock, on a fully diluted basis, based on a total implied equity value for the
Reorganized Debtor equal to the Plan Enterprise Value minus the Exit Facility
Amount; and (ii) seven (7) year stock options to acquire shares representing
3.0% of the total number of shares of New Eagle Common Stock, on a fully diluted
basis, based on a total implied equity value equal to (x) 130.2% times the Plan
Enterprise Value minus (y) the Exit Facility Amount.

 

76.     New Eagle MIP Primary Equity: means a number of shares of New Eagle
Common Stock equal to 2.0% of the total number of shares of New Eagle Common
Stock, on a fully diluted basis, which will be issued by the Reorganized Debtor
to senior management and certain other employees of the Reorganized Debtor or
the Non-Debtor Subsidiaries, and will generally vest over four (4) years through
annual installments, each in an amount equal to 25% of such shares, in
accordance with the terms of the Management Incentive Program.

 

 
8 

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77.     New Eagle MIP Primary Equity Agreements: means the restricted stock
agreements that will govern the terms of the New Eagle MIP Primary Equity, the
forms of which shall be included as an exhibit to the Plan Supplement.

 

78.     New Eagle MIP Reserved Equity: means a number of shares of New Eagle
Common Stock equal to 2.5% of the total number of shares of New Eagle Common
Stock, on a fully diluted basis, subject to upward adjustment as may be agreed
by the Debtor and the Majority Consenting Lenders prior to the Effective Date,
which will be reserved for future issuances by the Reorganized Debtor to senior
management and certain other employees of the Reorganized Debtor at the
direction of the New Board.

 

79.     Non-Debtor Subsidiaries: means, collectively: Agali Shipping S.A.; Anemi
Maritime Services S.A.; Avocet Shipping LLC; Bittern Shipping LLC; Canary
Shipping LLC; Cardinal Shipping LLC; Condor Shipping LLC; Crane Shipping LLC;
Crested Eagle Shipping LLC; Crowned Eagle Shipping LLC; Eagle Bulk (Delaware)
LLC; Eagle Bulk Pte. Ltd.; Eagle Management Consultancy Pte. Ltd.; Eagle
Management Consultants LLC; Eagle Ship Management LLC; Eagle Shipping
International (USA) LLC; Egret Shipping LLC; Falcon Shipping LLC; Gannet
Shipping LLC; Golden Eagle Shipping LLC; Goldeneye Shipping LLC; Grebe Shipping
LLC; Griffon Shipping LLC; Harrier Shipping LLC; Hawk Shipping LLC; Heron
Shipping LLC; Ibis Shipping LLC; Imperial Eagle Shipping LLC; Jaeger Shipping
LLC; Jay Shipping LLC; Kampia Shipping S.A.; Kestrel Shipping LLC; Kingfisher
Shipping LLC; Kite Shipping LLC; Kittiwake Shipping LLC; Marmaro Shipping S.A.;
Martin Shipping LLC; Merlin Shipping LLC; Mesta Shipping S.A.; Mylos Shipping
S.A.; Nagos Shipping S.A.; Nighthawk Shipping LLC; Oriole Shipping LLC; Osprey
Shipping LLC; Owl Shipping LLC; Peregrine Shipping LLC; Petrel Shipping LLC;
Puffin Shipping LLC; Rahi Shipping S.A.; Redwing Shipping LLC; Roadrunner
Shipping LLC; Sandpiper Shipping LLC; Shrike Shipping LLC; Sirikari Shipping
S.A.; Skua Shipping LLC; Sparrow Shipping LLC; Spilia Shipping S.A.; Stellar
Eagle Shipping LLC; Tern Shipping LLC; Thrasher Shipping LLC; Thrush Shipping
LLC; Woodstar Shipping LLC; Wren Shipping LLC.

 

80.     Other Priority Claim: means a Claim entitled to priority pursuant to
section 507(a) of the Bankruptcy Code, other than (i) an Administrative Claim,
or (ii) a Priority Tax Claim.

 

81.     Other Secured Claim: means any Claim that is Secured, other than a
Prepetition Credit Facility Claim or a DIP Claim.

 

82.     Outstanding Trade Obligations: means up to $12 million in unsecured
obligations of Eagle (whether a direct obligation of the Debtor or a Non-Debtor
Subsidiary) outstanding on the Effective Date, which, subject to the consent of
the Majority Consenting Lenders, shall be paid from the proceeds of the Exit
Financing Facility.

 

83.     Person: means any individual, corporation, partnership, limited
liability company, association, indenture trustee, organization, joint stock
company, joint venture, estate, trust, Governmental Unit or any political
subdivision thereof, or any other Entity.

 

 
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84.     Petition Date: means the date on which the Debtor commenced the
Chapter 11 Case.

 

85.     Plan: means this Debtor’s Prepackaged Plan of Reorganization Pursuant to
Chapter 11 of the Bankruptcy Code, together with all addenda, exhibits,
schedules, or other attachments, if any, including the Plan Supplement, each of
which is incorporated herein by reference, and as may be amended, modified, or
supplemented from time to time in accordance with the terms herein and in the
Restructuring Support Agreement, as applicable.

 

86.     Plan Enterprise Value: means $900 million.

 

87.     Plan Scheduling Motion: means the motion filed by the Debtor,
substantially contemporaneously with the filing of the Chapter 11 Case, seeking
entry of an order scheduling an objection deadline and combined hearing on the
Debtor’s Disclosure Statement and Plan Confirmation, (b) approving the form and
notice of the Confirmation Hearing, (c) establishing procedures for objections
to the Disclosure Statement and the Plan, (d) approving Solicitation Procedures,
and (e) granting related relief.

 

88.     Plan Scheduling Order: means the order granting the Plan Scheduling
Motion.

 

89.     Plan Supplement: means the compilation of documents and forms of
documents, schedules, and exhibits to the Plan to be filed with the Court on
notice to parties-in-interest, including, but not limited to, the following,
each of which must be in form and substance reasonably satisfactory to the
Majority Consenting Lenders: (i) the Rejection Schedule; (ii) the New Eagle
Charter; (iii) the New Eagle By-Laws; (iv) the New Eagle MIP Option Agreements;
(v) the New Eagle MIP Primary Equity Agreements; (vi) the New Eagle Equity
Warrant Agreement; (vii) the identity and affiliations of the officers and
members of the New Board of the Reorganized Debtor; (viii) a list of retained
Causes of Action; (ix) the Management Incentive Program; (x) the New CEO
Employment Agreement; (xi) the Registration Rights Agreement; (xii) the Exit
Financing Facility documents; and (xiii) the Delphin Management Agreement, as
amended. The Debtor shall file forms of the materials comprising the Plan
Supplement no later than the Plan Supplement Filing Date.

 

90.     Plan Supplement Filing Date: means the date that is five (5) Business
Days before the deadline to object to the confirmation of the Plan.

 

91.     Prepetition Credit Agreement: means the Fourth Amended and Restated
Credit Agreement, dated as of June 20, 2012 (as amended, modified, or
supplemented from time to time), by and among EBS, as borrower, the Prepetition
Credit Facility Lenders, the Non-Debtor Subsidiaries, as guarantors, and the
Prepetition Credit Facility Agent.

 

92.     Prepetition Credit Facility: means the credit facility under the
Prepetition Credit Agreement.

 

93.     Prepetition Credit Facility Agent: means Wilmington Trust (London)
Limited, as successor agent and successor security trustee under the Prepetition
Credit Agreement.

 

 
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94.     Prepetition Credit Facility Cash Distribution: means a Cash distribution
to the Prepetition Credit Facility Lenders in an amount up to the Exit Facility
Amount, less (i) the DIP Claims, (ii) the amount of the Outstanding Trade
Obligations, (iii) the Shareholder Cash Distribution, (iv) the proceeds
necessary to pay the Restructuring Expenses, and (v) such amount as necessary to
provide Eagle with $72.5 million in total liquidity (inclusive of any minimum
liquidity requirements under the Exit Financing Facility) upon the Effective
Date (including cash and unfunded revolver commitments).

  

95.     Prepetition Credit Facility Claims: means the Claims evidenced by,
derived from, based upon, relating to, or arising from, the Prepetition Credit
Facility.

 

96.     Prepetition Credit Facility Equity Distribution: means a number of
shares of New Eagle Common Stock equal to 99.5% of the total number of shares of
New Eagle Common Stock issued and outstanding on the Effective Date. The
Prepetition Credit Facility Equity Distribution shall be subject to dilution
from the New Eagle Equity Warrants, the New Eagle MIP Primary Equity, the New
Eagle MIP Reserved Equity, and the New Eagle MIP Options.

 

97.     Prepetition Credit Facility Lenders: means the lenders under the
Prepetition Credit Agreement.

 

98.     Prepetition Finance Documents: means the “Finance Documents” (as such
term is defined in the Prepetition Credit Agreement), including all agreements,
instruments, and documents governing the Guarantees.

 

99.     Priority Tax Claim: means any Claim that is entitled to priority in
right of payment under sections 502(i) and 507(a)(8) of the Bankruptcy Code.

 

100.     Professional: means any professional employed or retained in the
Chapter 11 Case pursuant to sections 327 or 328 of the Bankruptcy Code.

 

101.     Pro Rata: means, with respect to any Claim, the proportion that the
amount of such Claim bears to the aggregate amount of all Claims (including
Disputed Claims) in the applicable Class or group of Classes, unless the Plan
provides otherwise.

 

102.     Record Date: means, for purposes of making distributions under the
Plan, the Confirmation Date.

 

103.     Registration Rights Agreement: means the Registration Rights Agreement
among the Reorganized Debtor and the Registration Rights Parties, having the
terms set forth in Article IV.E.2, the form of which shall be included in the
Plan Supplement.

 

104.     Registration Rights Parties: means any recipient of shares of New Eagle
Common Stock that (together with its affiliates and related funds) receives 10%
or more of the New Eagle Common Stock under the Plan or who otherwise reasonably
believes that it, together with its affiliated funds, may be an “affiliate” of
the Reorganized Debtor, who executes the Registration Rights Agreement.

 

105.     Registration Statement: means a registration statement on Form S-1 for
the registration of the sale on a delayed or continuous basis of the New Eagle
Common Stock received by the Registration Rights Parties under the Plan and
requested to be included therein by the Registration Rights Parties.

 

 
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106.     Reinstated: means, with respect to a Claim, (a) in accordance with
section 1124(1) of the Bankruptcy Code, being treated such that the legal,
equitable, and contractual rights to which such Claim entitles its holder are
left unaltered, or (b) if applicable under section 1124 of the Bankruptcy Code:
(i) having all prepetition and postpetition defaults with respect thereto other
than defaults relating to the insolvency or financial condition of the Debtor or
its status as debtor under the Bankruptcy Code cured, (ii) having its maturity
date reinstated, (iii) compensating the holder of such Claim for damages
incurred as a result of its reasonable reliance on a provision allowing the
Claim’s acceleration, and (iv) not otherwise altering the legal, equitable and
contractual rights to which the Claim entitles the holder thereof.

 

107.     Rejection Damage Claims: means Claims for damages arising from the
rejection of Executory Contracts or Unexpired Leases. Unless otherwise agreed to
in writing by the Debtor, all Rejection Damage Claims shall be deemed Disputed
Claims.

 

108.     Rejection Notice: means a notice of an Executory Contract or Unexpired
Lease to be rejected under the Plan pursuant to section 365 of the Bankruptcy
Code which notice shall include (i) the procedures for objection to proposed
rejection of Executory Contracts and Unexpired Leases, (ii) the procedures for
filing Rejection Damage Claims, and (iii) procedures for resolution by the Court
of any related disputes.

 

109.     Rejection Schedule: means the schedule of Executory Contracts and
Unexpired Leases to be rejected pursuant to the Plan and the effective date of
such rejection, which shall be included in the Plan Supplement.

 

110.     Released Parties: means each of: (a) the Debtor and Reorganized Debtor;
(b) the Non-Debtor Subsidiaries; (c) the Prepetition Credit Facility Agent; (d)
the Consenting Lenders; (e) the DIP Agent and the DIP Lenders; and (f) with
respect to each of the foregoing Entities in clauses (a) through (e), such
Entity’s predecessors, Professionals, successors and assigns, affiliates,
subsidiaries, funds, portfolio companies, management companies, and each of
their respective current and former (to the extent employed or serving at any
time during the Chapter 11 Case) directors, officers, members, employees,
partners, managers, independent contractors, agents, representatives,
principals, consultants, financial advisors, attorneys, accountants, investment
bankers, and other professional advisors (each solely in their capacity as
such).

 

111.     Releasing Parties: means each of:  (a) the Prepetition Credit Facility
Agent; (b) the Former Prepetition Credit Facility Agent; (c) the DIP Agent and
the DIP Lenders; (d) holders of Impaired Claims other than those who voted to
reject the Plan and checked the opt out box on the Ballot, and returned it in
accordance with the instructions set forth thereon, indicating that they opt not
to grant the releases provided in the Plan, (e) the Consenting Lenders, (f) to
the fullest extent permissible under applicable law (i) holders of Unimpaired
Claims, and (ii) holders of Equity Interests other than those who have checked
the opt out box on the Combined Notice, and returned it in accordance with the
instructions set forth thereon, indicating that they opt not to grant the
releases provided in the Plan, and (g) with respect to each of the foregoing
Entities in clauses (a) through (f), such Entity’s predecessors, successors and
assigns, affiliates, subsidiaries, funds, portfolio companies, management
companies (but excluding any predecessors, portfolio companies, or management
companies of any Consenting Lender), and each of their respective current and
former shareholders, directors, officers, members, employees, partners,
managers, independent contractors, agents, representatives, principals,
consultants, financial advisors, attorneys, accountants, investment bankers, and
other professional advisors (each solely in their capacity as such).

 

 
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112.     Reorganized Debtor: means the Debtor, or any successor thereto by
merger, consolidation, or otherwise, on and after the Effective Date.

 

113.     Restructuring Expenses: the fees and expenses incurred in connection
with the Chapter 11 Case, as well as the funding of obligations necessary to
implement the Plan, including, but not limited to, any costs or reserves
associated with the Exit Financing Facility, the fees due and owing to the
U.S. Trustee and the fees and expenses of Professionals, the Prepetition Credit
Facility Agent, the DIP Agent, and the Consenting Lenders.

 

114.     Restructuring Support Agreement: means the agreement, effective as of
August 6, 2014, among Eagle and certain holders of the Prepetition Credit
Facility Claims, as it may be amended, modified or supplemented by the parties
thereto in accordance with the terms of such agreement.

 

115.     RSA Fee: has the meaning ascribed to such term in the Restructuring
Support Agreement.

 

116.     Securities Act: means the Securities Act of 1933, as amended.

 

117.     Schedules: means, to the extent the Court has not waived the
requirement to file the Schedules, the schedules of assets and liabilities,
statements of financial affairs, and lists of holders of Claims and Equity
Interests, filed with the Court by the Debtor, including any amendments or
supplements thereto.

 

118.     Secured: means when referring to 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 reason of a Court order, or
that is subject to setoff pursuant to section 553 of the Bankruptcy Code, to the
extent of the value of the Claim holder’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 as a Claim that is Secured.

 

119.     Shareholder Cash Distribution: means the aggregate amount of Cash
payments, as determined by the Debtor in consultation with the Majority
Consenting Lenders, that may be distributed to holders of Equity Interests who
would otherwise be entitled to a distribution of less than one hundred (100)
shares of New Eagle Common Stock under the Plan, pursuant to Article
III.D.6.(b).

 

 
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120.     Shareholder Equity Distribution: means shares of New Eagle Common Stock
in an amount equal to 0.5% of the New Eagle Common Stock issued and outstanding
on the Effective Date. The Shareholder Equity Distribution shall be subject to
dilution from the New Eagle Equity Warrants, the New Eagle MIP Primary Equity,
the New Eagle MIP Reserved Equity, and the New Eagle MIP Options.

 

121.     Solicitation Procedures: means the procedures with respect to the
solicitation and tabulation of votes to accept or reject the Plan.

 

122.     Solicitation Procedures Motion: has the meaning ascribed to such term
in the Disclosure Statement.

 

123.     Subsidiary Equity Interests: means any “equity security” (as such term
is defined in section 101(16) of the Bankruptcy Code) in the Non-Debtor
Subsidiaries, including any issued or unissued share of common stock, preferred
stock, or other instrument evidencing an ownership interest in the Non-Debtor
Subsidiaries, whether or not transferable, and any option, warrant, or right,
contractual or otherwise, to acquire any such interest in the Non-Debtor
Subsidiaries that existed immediately prior to the Effective Date.

 

124.     Unexpired Lease: means a lease to which the Debtor is a party that is
subject to assumption or rejection under section 365 of the Bankruptcy Code.

 

125.     Unimpaired: means any Class of Claims or Equity Interests that is not
Impaired under the Plan within the meaning of section 1124 of the Bankruptcy
Code.

 

126.     U.S. Trustee: means the United States Trustee for the Southern District
of New York.

 

127.     Voting Deadline: means August 12, 2014 at 5:00 p.m. (prevailing Eastern
Time) or such other later date established by the Debtor or the Court, which is
the deadline for submitting Ballots to either accept or reject the Plan in
accordance with section 1126 of the Bankruptcy Code.

 

128.     Voting Record Date: means July 31, 2014.

 

129.     Warrant Agreement: means that certain Warrant Agreement, dated as of
June 20, 2012, among EBS and the financial institutions parties thereto, as
amended.

 

130.     Warrant Agreement Amendment: means that certain Amendment No. 1 to
Warrant Agreement, dated as of July 2, 2014, among EBS and the financial
institutions parties thereto.

 

B.

Interpretation, Application of Definitions, and Rules of Construction.

 

Except as expressly provided herein, each capitalized term used in the Plan
shall either have (i) the meaning ascribed to such term in Article I or (b) if
such term is not defined in Article I, but such term is defined in the
Bankruptcy Code or Bankruptcy Rules, the meaning ascribed to such term in the
Bankruptcy Code or the Bankruptcy Rules, as the case may be. Meanings of
capitalized terms shall be equally applicable to both the singular and plural
forms of such terms. The words “herein,” “hereof,” and “hereunder” and other
words of similar import refer to the Plan as a whole (and, for the avoidance of
doubt, the Plan Supplement) and not to any particular section or subsection in
the Plan unless expressly provided otherwise. The words “includes” and
“including” are not limiting and mean that the things specifically identified
are set forth for purposes of illustration, clarity or specificity and do not in
any respect qualify, characterize or limit the generality of the class within
which such things are included. Captions and headings to articles, sections and
exhibits are inserted for convenience of reference only, are not a part of this
Plan, and shall not be used to interpret this Plan. The rules of construction
set forth in section 102 of the Bankruptcy Code shall apply to this Plan.

 

 
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C.

Computation of Time.

 

Except as otherwise specifically provided in the Plan, in computing any period
of time prescribed or allowed by this Plan, the provisions of Bankruptcy
Rule 9006(a) shall apply.

 

ARTICLE II.
ADMINISTRATIVE CLAIMS, DIP CLAIMS, AND PRIORITY CLAIMS

 

In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative
Claims, DIP Claims, Fee Claims, and Priority Tax Claims, each as described
below, have not been classified and thus are excluded from the classes of Claims
and Equity Interests set forth in Article III.

 

A.

Administrative Claims (Other Than Fee Claims).

 

Each holder of an Allowed Administrative Claim (other than an Administrative
Claim that is a Fee Claim or a DIP Claim) as of the Effective Date shall receive
(i) Cash in an amount equal to the amount of such Allowed Administrative Claim
as soon as practicable after the later of (a) the Effective Date, if such
Administrative Claim is Allowed as of the Effective Date, (b) thirty (30) days
after the date such Administrative Claim becomes an Allowed Administrative
Claim, if such Administrative Claim is Disputed as of, or following, the
Effective Date, or (c) the date such Allowed Administrative Claim becomes due
and payable by its terms, or as soon thereafter as is practicable, or (ii) such
other treatment as the Debtor and such holder shall have agreed in writing;
provided, however, that Allowed Administrative Claims (other than Fee Claims and
DIP Claims) that arise in the ordinary course of the Debtor’s business shall be
paid in the ordinary course of business in accordance with the terms, and
subject to the conditions, of any agreements governing, instruments evidencing,
or other documents relating to, such transactions.

 

B.

DIP Claims.

 

On the Effective Date, except to the extent that a Holder of an Allowed DIP
Claim agrees to less favorable treatment, in full and final satisfaction,
settlement, release, and discharge of, each Allowed DIP Claim, each such Holder
shall receive payment in full in Cash on the Effective Date.

 

 
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C.

Fee Claims.

 

1.     Final Fee Applications.

 

All requests for compensation or reimbursement of Fee Claims shall be filed and
served on the Reorganized Debtor, counsel to the Reorganized Debtor, the
U.S. Trustee, counsel to the Prepetition Credit Facility Agent, and such other
entities who are designated by the Bankruptcy Rules, the Confirmation Order, or
other order of the Court, no later than sixty (60) days after the Effective
Date, unless otherwise agreed by the Debtor. Holders of Fee Claims that are
required to file and serve applications for final allowance of their Fee Claims
that do not file and serve such applications by the required deadline shall be
forever barred from asserting such Claims against the Debtor, Reorganized
Debtor, or their respective properties, and such Fee Claims shall be deemed
discharged as of the Effective Date. Objections to any Fee Claims must be filed
and served on the Reorganized Debtor, counsel to the Reorganized Debtor, counsel
to the Prepetition Credit Facility Agent, and the requesting party no later than
thirty (30) days after the filing of the final applications for compensation or
reimbursement (unless otherwise agreed by the party requesting compensation of a
Fee Claim).

 

2.     Post-Effective Date Fees and Expenses.

 

The Reorganized Debtor shall pay in Cash the reasonable legal, professional, or
other fees and expenses incurred by the Debtor’s Professionals on and after the
Effective Date, in the ordinary course of business, and without any further
notice to or action, order, or approval of the Court. Upon the Effective Date,
any requirement that Professionals comply with sections 327 through 331 of the
Bankruptcy Code in seeking retention or compensation for services rendered after
such date shall terminate, and Professionals may be employed and paid in the
ordinary course of business without any further notice to, or action, order, or
approval of, the Court.

 

D.

Priority Tax Claims.

 

Each holder of an Allowed Priority Tax Claim due and payable on or before the
Effective Date shall receive, at the option of the Debtor, in full satisfaction,
settlement, release, and discharge of, and in exchange for, such Priority Tax
Claim, one of the following treatments: (i) payment in full in Cash as soon as
practicable after the Effective Date in the amount of such Allowed Priority Tax
Claim, plus statutory interest on any outstanding balance from the Effective
Date, calculated at the prevailing rate under applicable nonbankruptcy law for
each taxing authority and to the extent provided for by section 511 of the
Bankruptcy Code, and in a manner not less favorable than the most favored
nonpriority General Unsecured Claim provided for by the Plan (other than cash
payments made to a class of creditors pursuant to section 1122(b) of the
Bankruptcy Code); (ii) payment in full in Cash, payable in equal Cash
installments made on a quarterly basis in accordance with section 1129(a)(9)(C)
of the Bankruptcy Code, over a period not to exceed five (5) years following the
Petition Date, plus statutory interest on any outstanding balance from the
Effective Date, calculated at the prevailing rate under applicable nonbankruptcy
law for each taxing authority and to the extent provided for by section 511 of
the Bankruptcy Code, and in a manner not less favorable than the most favored
nonpriority General Unsecured Claim provided for by the Plan (other than cash
payments made to a class of creditors pursuant to section 1122(b) of the
Bankruptcy Code); or (iii) such other treatment as may be agreed upon by such
holder and the Debtor or otherwise determined upon a Final Order of the Court.

 

 
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E.

U.S. Trustee Fees.

 

Notwithstanding anything to the contrary contained herein, on the Effective
Date, the Debtor shall pay, in full, in Cash, any fees due and owing to the
U.S. Trustee at the time of Confirmation. On and after the Effective Date, the
Reorganized Debtor shall be responsible for filing required post-confirmation
reports and paying quarterly fees due to the U.S. Trustee for the Reorganized
Debtor until the entry of a final decree in the Chapter 11 Case or until the
Chapter 11 Case is converted or dismissed.

 

ARTICLE III.
CLASSIFICATION AND TREATMENT OF
CLAIMS AND EQUITY INTERESTS

 

A.

Classification of Claims and Equity Interests.

 

Except for those Claims addressed in Article II, all Claims and Equity Interests
are placed in the Classes set forth below. A Claim or Equity Interest is placed
in a particular Class solely to the extent that the Claim or Equity Interest
falls within the description of that Class, and the portion of a Claim or Equity
Interest which does not fall within such description shall be classified in
another Class or Classes to the extent that such portion falls within the
description of such other Class or Classes. A Claim is also placed in a
particular Class for the purpose of receiving distributions pursuant to the Plan
solely to the extent that such Claim is an Allowed Claim in that Class and such
Claim has not been paid, released, or otherwise settled before the Effective
Date.

 

B.

Record Date.

 

As of the close of business on the Record Date, the claims register (for Claims)
and transfer ledger (for Equity Interests) shall be closed, and there shall be
no further changes in the record holders of any Claims or Equity Interests. The
Reorganized Debtor shall have no obligation to, but may, in consultation with
the Majority Consenting Lenders, recognize any transfer of any Claims or Equity
Interests occurring after the Record Date. The Reorganized Debtor shall instead
be entitled to recognize and deal for purposes under the Plan with only those
record holders stated on the claims register (for Claims) and transfer ledgers
(for Equity Interests) as of the close of business on the Record Date.

 

 
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C.

Summary of Classification and Class Identification.

 

Below is a chart identifying Classes of Claims and Equity Interests, a
description of whether each Class is Impaired, and each Class’s voting rights
with respect to the Plan.

 

Class

Claim or Equity Interest

Status

Voting Rights

1

Other Priority Claims

Unimpaired

Deemed to Accept

2

Other Secured Claims

Unimpaired

Deemed to Accept

3

Prepetition Credit Facility Claims

Impaired

Entitled to Vote

4

General Unsecured Claims

Unimpaired

Deemed to Accept

5

Intercompany Claims

Unimpaired

Deemed to Accept

6

Equity Interests in EBS

Impaired

Deemed to Reject

 

Section 1129(a)(10) of the Bankruptcy Code shall be satisfied, for the purposes
of Confirmation, by acceptance of the Plan by an Impaired Class of Claims;
provided, however, that in the event no holder of a Claim with respect to a
specific voting Class timely submits a Ballot indicating acceptance or rejection
of the Plan, such Class will be deemed to have accepted the Plan. The Debtor
hereby requests that the Court confirm the Plan pursuant to section 1129(b) of
the Bankruptcy Code with respect to any rejecting Class of Claims or Equity
Interests. The Debtor reserves the right to modify the Plan in accordance with
Article X.E hereof, including the right to withdraw the Plan at any time before
the Effective Date.

 

D.

Treatment of Classified Claims and Equity Interests.

 

1.     Class 1 - Other Priority Claims.

 

(a)     Classification: Class 1 consists of Other Priority Claims.

 

(b)     Treatment: Except to the extent that a holder of an Allowed Other
Priority Claim agrees in writing to less favorable treatment, in full and final
satisfaction, settlement, release, and discharge of, and in exchange for, each
Allowed Other Priority Claim, each holder of an Allowed Other Priority Claim
shall receive payment in Cash in an amount equal to such Allowed Other Priority
Claim as soon as practicable after the later of (i) the Effective Date and
(ii) thirty (30) days after the date when such Other Priority Claim becomes an
Allowed Other Priority Claim.

 

(c)     Voting: Class 1 is Unimpaired by the Plan, and each holder of a Class 1
Other Priority Claim is conclusively presumed to have accepted the Plan pursuant
to section 1126(f) of the Bankruptcy Code. Therefore, holders of Class 1 Other
Priority Claims are not entitled to vote to accept or reject the Plan.

 

2.     Class 2 - Other Secured Claims.

 

(a)     Classification: Class 2 consists of Other Secured Claims.

 

(b)     Treatment: Except to the extent that a holder of an Allowed Other
Secured Claim agrees in writing to less favorable treatment, at the option of
the Debtor, in full and final satisfaction, settlement, release and discharge of
and in exchange for such Other Secured Claim, each holder of an Allowed Other
Secured Claim shall: (i) have its Allowed Other Secured Claim Reinstated and
rendered Unimpaired, (ii) receive Cash in an amount equal to such Allowed Other
Secured Claim, including any interest on such Allowed Other Secured Claim, if
such interest is required to be paid pursuant to sections 506(b)
and/or 1129(a)(9) of the Bankruptcy Code, as soon as practicable after the later
of (a) the Effective Date, and (b) thirty (30) days after the date such Other
Secured Claim becomes an Allowed Other Secured Claim, or (iii) receive the
Collateral securing its Allowed Other Secured Claim as soon as practicable after
the later of (a) the Effective Date and (b) thirty (30) days after the date such
Other Secured Claim becomes an Allowed Other Secured Claim.

 

 
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(c)     Voting: Class 2 is Unimpaired by the Plan, and each holder of a Class 2
Other Secured Claim is conclusively presumed to have accepted the Plan pursuant
to section 1126(f) of the Bankruptcy Code. Therefore, holders of Class 2 Other
Secured Claims are not entitled to vote to accept or reject the Plan.

 

3.     Class 3 – Prepetition Credit Facility Claims.

 

(a)     Classification: Class 3 consists of Prepetition Credit Facility Claims.

 

(b)     Allowance: Prepetition Credit Facility Claims shall be Allowed on the
Effective Date for all purposes in an amount of no less than $1,188,847,632.09,
plus accrued but unpaid interest through the Effective Date to the extent
legally permissible, and shall not be subject to any avoidance, reductions,
setoff, offset, recoupment, 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.

 

(c)     Treatment: Except to the extent that a holder of an Allowed Prepetition
Credit Facility Claim agrees in writing to such other treatment, and the Debtor
and the Majority Consenting Lenders, each in their sole discretion, agree in
writing to such other treatment, in full and final satisfaction, settlement,
release, and discharge of, and in exchange for, the Prepetition Credit Facility
Claims, on or as soon as practicable after the Effective Date, each holder of an
Allowed Prepetition Credit Facility Claim shall receive its Pro Rata share of:
(i) the Prepetition Credit Facility Cash Distribution; and (ii) the Prepetition
Credit Facility Equity Distribution. Each holder of an Allowed Prepetition
Credit Facility Claim shall only receive one recovery in full and complete
satisfaction of all Prepetition Credit Facility Claims and Guarantee Claims held
by such claimant, which recovery is specified in this Article III.D.3(c).

 

(d)     Voting: Class 3 is Impaired. Therefore, holders of Class 3 Prepetition
Credit Facility Claims are entitled to vote to accept or reject the Plan.

 

4.     Class 4 – General Unsecured Claims.

 

(a)     Classification: Class 4 consists of General Unsecured Claims.

 

 
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(b)     Treatment: In full and final satisfaction, settlement, release, and
discharge of, and in exchange for, each Allowed General Unsecured Claim, on the
Effective Date, each holder of an Allowed General Unsecured Claim shall, at the
discretion of the Debtor, and only to the extent such holder’s Allowed General
Unsecured Claim was not previously paid, pursuant to an order of the Court or
otherwise: (i) have its Allowed General Unsecured Claim Reinstated as an
obligation of the Reorganized Debtor, and be paid in accordance with the
ordinary course terms, (ii) receive such other treatment as may be agreed
between such holder and the Reorganized Debtor, or (iii) receive such other
treatment that will render it Unimpaired pursuant to section 1124 of the
Bankruptcy Code.

 

(c)     Voting: Class 4 is Unimpaired. Therefore, holders of Class 4 General
Unsecured Claims are not entitled to vote to accept or reject the Plan.

 

5.     Class 5 – Intercompany Claims.

 

(a)     Classification: Class 5 consists of Intercompany Claims.

 

(b)     Treatment: On the Effective Date, Intercompany Claims, if any, will be
Reinstated in full. On and after the Effective Date, the Reorganized Debtor and
the Non-Debtor Subsidiaries will be permitted to transfer funds between and
among themselves as they determine to be necessary or appropriate to enable the
Reorganized Debtor to satisfy its obligations under the Plan. Except as set
forth herein, any changes to intercompany account balances resulting from such
transfers will be accounted for and settled in accordance with the Debtor’s
historical intercompany account settlement practices.

 

(c)     Voting: Class 5 is Unimpaired. Holders of Class 5 Intercompany Claims
are conclusively presumed to have accepted the Plan pursuant to section 1126(f)
of the Bankruptcy Code. Therefore, holders of Class 5 Intercompany Claims are
not entitled to vote to accept or reject the Plan.

 

6.     Class 6 – Equity Interests in EBS.

 

(a)     Classification: Class 6 consists of Equity Interests in EBS.

 

(b)     Treatment: On the Effective Date, Equity Interests shall be cancelled
and discharged and shall be of no further force or effect, whether surrendered
for cancellation or otherwise, and holders of Equity Interests shall not receive
or retain any property under the Plan on account of such Equity Interests.
Notwithstanding the foregoing, on or as soon as practicable after the Effective
Date, holders of Equity Interests (other than Consenting Lenders who hold either
Amended Lender Warrants or Equity Interests based upon the exercise of Amended
Lender Warrants) shall receive, in exchange for the surrender or cancellation of
their Equity Interests and for the releases by such holders of the Released
Parties, their Pro Rata share of the Shareholder Equity Distribution and their
Pro Rata share of the New Eagle Equity Warrants, each of which shall come from
amounts which holders of Prepetition Credit Facility Claims would otherwise be
entitled to under the Plan; provided, however, that, notwithstanding Article
VII.B.9, the Debtor may, in consultation with the Majority Consenting Lenders,
(i) provide any holder of an Equity Interest that would otherwise be entitled to
a distribution of less than one (1) share of New Eagle Common Stock under this
Article III.D.6.(b) with a distribution of one (1) share of New Eagle Common
Stock or (ii) provide any holder of an Equity Interest that would otherwise be
entitled to a distribution of less than one hundred (100) shares of New Eagle
Common Stock under this Article III.D.6.(b) with a Cash payment equal to the
value of such New Eagle Common Stock. Notwithstanding anything contained herein
to the contrary, Consenting Lenders who hold either Amended Lender Warrants or
Equity Interests based upon the exercise of Amended Lender Warrants shall not
receive or retain any property under the Plan on account of such Amended Lender
Warrants or Equity Interests.

 

 
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(c)     Voting: Class 6 is Impaired. Holders of Class 6 Equity Interests in EBS
are conclusively presumed to have rejected the Plan pursuant to section 1126(g)
of the Bankruptcy Code. Therefore, holders of Class 6 Equity Interests in EBS
are not entitled to vote to accept or reject the Plan.

 

E.

Special Provision Regarding Unimpaired and Reinstated Claims.

 

Except as otherwise specifically provided in this Plan, nothing herein shall be
deemed to affect, diminish, or impair the Debtor’s or the Reorganized Debtor’s
rights and defenses, both legal and equitable, with respect to any Reinstated
Claim or Unimpaired Claim, including, but not limited to, legal and equitable
defenses to setoffs or recoupment against Reinstated Claims or Unimpaired
Claims. Except as otherwise specifically provided in this Plan, nothing herein
shall be deemed to be a waiver or relinquishment of any Claim, Cause of Action,
right of setoff, or other legal or equitable defense which the Debtor had
immediately prior to the Petition Date against, or with respect to, any Claim
left Unimpaired by this Plan. Except as otherwise specifically provided in this
Plan, the Reorganized Debtor shall have, retain, reserve, and be entitled to
assert, all such Claims, Causes of Action, rights of setoff, and other legal or
equitable defenses which they had immediately prior to the Petition Date fully
as if the Chapter 11 Case had not been commenced, and all of the Debtor’s legal
and equitable rights with respect to any Reinstated Claim or Claim left
Unimpaired by this Plan may be asserted by the Reorganized Debtor after the
Confirmation Date and the Effective Date to the same extent as if the Chapter 11
Case had not been commenced.

 

ARTICLE IV.
MEANS FOR IMPLEMENTATION OF THE PLAN

 

A.

General Settlement of Claims and Interests.

 

As discussed in the Disclosure Statement, the provisions of the Plan shall, upon
consummation, constitute a good faith compromise and settlement, pursuant to
Bankruptcy Rule 9019 and section 1123 of the Bankruptcy Code, among the Debtor
and the Consenting Lenders of all disputes among the parties, including those
arising from, or related to, (i) the Prepetition Credit Facility Claims and the
Guarantee Claims, (ii) the Guarantees, (iii) the total enterprise value of the
Debtor’s estate and the Reorganized Debtor for allocation purposes under the
Plan, (iv) the treatment and distribution to holders of Equity Interests, and
(v) the Existing Management Incentive Programs. In the event that, for any
reason, the Confirmation Order is not entered or the Effective Date does not
occur, the Debtor and the Consenting Lenders reserve all of their respective
rights with respect to any and all disputes resolved and settled under the Plan.
The entry of the Confirmation Order shall constitute the Court’s approval of
each of the compromises and settlements embodied in the Plan, and the Court’s
findings shall constitute its determination that such compromises and
settlements are in the best interests of the Debtor, its estate, creditors, and
other parties-in-interest, and are fair, equitable, and within the range of
reasonableness. The Plan and the Confirmation Order shall have res judicata,
collateral estoppel, and estoppel (judicial, equitable, or otherwise) effect
with respect to all matters provided for, or resolved pursuant to, the Plan
and/or the Confirmation Order, including, without limitation, the release,
injunction, exculpation, discharge, and compromise provisions contained in the
Plan and/or the Confirmation Order.

 

 
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B.

Exit Financing.

 

On or before the Effective Date, the Debtor shall be authorized, without the
need for any further corporate action or without any further action by the
Debtor or the Reorganized Debtor, as applicable, to enter into the Exit
Financing Facility Credit Agreement and any ancillary documents necessary or
appropriate to satisfy the conditions to effectiveness of the Exit Financing
Facility. The proceeds of the Exit Financing Facility shall be used to pay (i)
the DIP Claims, the Prepetition Credit Facility Cash Distribution, the
Outstanding Trade Obligations, the Shareholder Cash Distribution, and the
Restructuring Expenses and (ii) following the payment, or reserving for the
payment, of each the foregoing, such amount as necessary to provide Eagle with
$72.5 million in total liquidity (inclusive of any minimum liquidity
requirements under the Exit Financing Facility) upon the Effective Date
(including cash and unfunded revolver commitments). The Exit Financing Facility
will be Secured by some or all of the collateral securing the Prepetition Credit
Facility.

  

C.

Voting of Claims.

 

Each holder of an Allowed Claim as of the Voting Deadline in an Impaired Class
of Claims that is not (a) deemed to have rejected the Plan or (b) conclusively
presumed to have accepted the Plan, and that held such Claim as of the Voting
Record Date, shall be entitled to vote to accept or reject the Plan. The
instructions for completion of the Ballots are set forth in the instructions
accompanying each Ballot. Approval for the Solicitation Procedures will be
sought in the Plan Scheduling Motion and are described in the Disclosure
Statement.

 

D.

Nonconsensual Confirmation.

 

The Debtor intends to request confirmation of the Plan under section 1129(b) of
the Bankruptcy Code with respect to any impaired Class that has not accepted or
is deemed to have rejected the Plan pursuant to section 1126 of the Bankruptcy
Code, including Class 6 (Equity Interests in EBS).

 

E.

Issuance of New Eagle Common Stock and New Eagle Equity Warrants and Entry into
the Registration Rights Agreement.

 

1.     Issuance of Securities. Shares of New Eagle Common Stock shall be
authorized under the New Eagle Charter, and shares of New Eagle Common Stock
shall be issued on the Effective Date and distributed as soon as practicable
thereafter in accordance with the Plan. The number of shares of New Eagle Common
Stock to be distributed as set forth in this Plan, and the number of shares of
New Eagle Common Stock issuable upon exercise of New Eagle Equity Warrants and
New Eagle MIP Options and corresponding strike prices, are subject to adjustment
by the Debtor in a manner that does not alter the respective percentages of the
outstanding New Eagle Common Stock allocated to any Class or Claim holder,
except for immaterial changes resulting from the treatment of fractional shares.
To the extent that Cash is distributed to any holder of Equity Interests
pursuant to the Shareholder Cash Distribution, any shares or fractional shares
of New Eagle Common Stock that would otherwise be distributed to such holder
shall be allocated to Class 6 Equity Interests. All of the New Eagle Common
Stock, issuable in accordance with the Plan, when so issued, shall be duly
authorized, validly issued, fully paid, and non-assessable. The issuance of the
New Eagle Common Stock, the New Eagle Equity Warrants, the New Eagle MIP Primary
Equity, and the New Eagle MIP Options by the Reorganized Debtor, and the
issuance of shares pursuant to the exercise of New Eagle Equity Warrants and New
Eagle MIP Options, is authorized without the need for any further corporate
action and without any further action by any holder of a Claim or Equity
Interest.

 

 
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Except as provided below, the New Eagle Common Stock distributed under the Plan
will be issued in book-entry form, and DTC or its nominee will be the holder of
record of such New Eagle Common Stock. One or more global certificates
representing such New Eagle Common Stock will be registered with an agent for
the New Eagle Common Stock, in the name of, and will be deposited with, DTC or
its nominee. The ownership interest of each holder of such New Eagle Common
Stock, and transfers of ownership interests therein, will be recorded on the
records of the direct and indirect participants in DTC. To receive distributions
of New Eagle Common Stock, holders of Prepetition Credit Facility Claims will be
required to designate a direct or indirect participant in DTC with whom such
holder has an account into which such New Eagle Common Stock may be deposited.
The New Eagle Common Stock issuable to holders of Equity Interests will, with
respect to Equity Interests held through DTC, be delivered by the Reorganized
Debtor to the holders of Equity Interests through DTC, and holders that do not
hold their Equity Interests in DTC will be required to designate a direct or
indirect participant in DTC with whom such holder has an account into which such
New Eagle Common Stock may be deposited.

 

2.     Entry into the Registration Rights Agreement. On or as soon as
practicable after the Effective Date, the Reorganized Debtor and the
Registration Rights Parties will enter into the Registration Rights Agreement.
The Registration Rights Agreement shall provide the Registration Rights Parties
with (i) subject to the percentage ownership threshold specified in the
Registration Rights Agreement, the right to require the Reorganized Debtor to
register, under the Securities Act, the sale of the shares of New Eagle Common
Stock, the New Eagle Equity Warrants (including the shares issuable upon
exercise thereof), the New Eagle MIP Primary Equity, and the New Eagle MIP
Options (including the shares issuable upon exercise thereof), in each case
issued under the Plan to the Registration Rights Parties exercising such rights,
and (ii) for all Registration Rights Parties, piggyback registration rights,
with customary cutbacks, with respect to such securities.

 

3.     Exemption from Registration. The offering of the New Eagle Common Stock
under Article III of the Plan shall be exempt from the registration requirements
of section 5 of the Securities Act and other applicable law under section
4(a)(2) of the Securities Act. The issuance and distribution of the New Eagle
Common Stock and the New Eagle Equity Warrants under Article III of the Plan,
and the New Eagle Common Stock issuable upon exercise of the New Eagle Equity
Warrants shall be exempt from the registration requirements of section 5 of the
Securities Act and any other applicable law requiring registration of an offer
or sale of securities under section 1145(a) of the Bankruptcy Code, except with
respect to any person that is deemed an “underwriter” under section 1145(b) of
the Bankruptcy Code, in which case the New Eagle Common Stock and the New Eagle
Equity Warrants shall be issued pursuant to another available exemption from
registration under the Securities Act and other applicable law. The New Eagle
Common Stock underlying the Management Incentive Program, the New Eagle MIP
Options, and the New Eagle Common Stock issuable upon exercise of the New Eagle
MIP Options will be issued pursuant to another available exemption from
registration under the Securities Act and other applicable law.

 

 
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The New Eagle Common Stock distributed or issued under the Plan to persons who
may be deemed underwriters under section 1145(b) of the Bankruptcy Code will, at
the option of the recipient thereof, be issued either (i) in the form of
registered stock certificates bearing a legend indicating that transfer may be
restricted under federal and state securities laws or (ii) in book-entry form
and included in a ledger identified as “restricted” and indicating in such
ledger that transfer may be restricted under federal and state securities laws.

 

4.     SEC Reporting Requirements and Listing of New Eagle Common Stock. As of
the Effective Date, the Reorganized Debtor will be a reporting company under the
Securities Exchange Act of 1934, 15 U.S.C. §§ 78(a) -78(pp). EBS intends to
remain listed following the Petition Date on the Nasdaq Global Select Market
(“NASDAQ”), the Reorganized Debtor intends to continue such NASDAQ listing in
respect of the New Eagle Common Stock, and the Consenting Lenders have agreed to
provide EBS with sufficient time and cooperation to take the necessary steps to
comply with all applicable NASDAQ requirements, as shall be reasonably agreed
between EBS and the Consenting Lenders, in order for EBS to maintain such NASDAQ
listing and for the Reorganized Debtor to be able to continue such listing upon
the Effective Date. In the event EBS loses its NASDAQ listing prior to the
Effective Date, the Consenting Lenders have agreed to support EBS’ good faith
efforts to become relisted on NASDAQ, and EBS will use commercially reasonable
efforts to comply with the NASDAQ listing requirements while delisted, subject
to the terms and conditions of the Plan.

 

F.

The New Eagle Equity Warrants.

 

1.     Issuance. The New Eagle Equity Warrants will be issued pursuant to the
terms of the New Eagle Equity Warrant Agreement. Each New Eagle Equity Warrant
will, subject to the anti-dilution adjustments described below, be exercisable
for one (1) share of New Eagle Common Stock.

 

2.     Anti-Dilution Protection. The New Eagle Equity Warrant Agreement shall
provide the New Eagle Equity Warrants with customary anti-dilution protection in
the event of any stock split, reverse stock split, stock dividend,
reclassification, dividend, or other distributions (including, but not limited
to, cash dividends), or business combination transaction. The New Eagle Equity
Warrants shall be subject to dilution from the New Eagle MIP Primary Equity, the
New Eagle MIP Reserved Equity, and the New Eagle MIP Options.

 

 
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3.     Form. Except as provided below, all New Eagle Equity Warrants distributed
under the Plan will be issued in book-entry form and DTC or its nominee will be
the holder of record of New Eagle Equity Warrants. One or more global warrant
certificates representing such New Eagle Equity Warrants will be registered with
a warrant agent for the New Eagle Equity Warrants, in the name of, and will be
deposited with, DTC or its nominee. The ownership interest of each holder of
such New Eagle Equity Warrants, and transfers of ownership interests therein,
will be recorded on the records of the direct and indirect participants in DTC.
Holders of Equity Interests that hold such Equity Interests in DTC will receive
their New Eagle Equity Warrants by deposit to the account of a direct or
indirect participant in DTC in which such Equity Interests are held. Holders
that do not hold their Equity Interests in DTC will be required to designate a
direct or indirect participant in DTC with whom such holder has an account into
which such New Eagle Equity Warrants may be deposited. Beneficial owners of the
New Eagle Equity Warrants will be required to follow the procedures that DTC or
its direct or indirect participants may establish for exercising their rights in
respect of the New Eagle Equity Warrants, including exercise and transfer
thereof. New Eagle Common Stock issuable upon exercise of such New Eagle Equity
Warrants will be issued in book-entry form and held through DTC.

 

The New Eagle Equity Warrants distributed under the Plan to any persons who may
be deemed underwriters under section 1145(b) of the Bankruptcy Code will be
issued in the form of registered warrant certificates and will bear a legend
indicating that transfer may be restricted under federal and state securities
laws.

 

G.

Continued Corporate Existence and Vesting of Assets.

 

Except as otherwise provided herein: (i) the Debtor will, as Reorganized Debtor,
continue to exist after the Effective Date as a separate legal entity, with all
of the powers of such a legal entity under applicable law and without prejudice
to any right to alter or terminate such existence (whether by merger,
dissolution or otherwise) under applicable law; and (ii) on the Effective Date,
all property of the Debtor’s Estate, and any property acquired by the Debtor or
the Reorganized Debtor under the Plan, will vest in such Reorganized Debtor free
and clear of all Claims, Liens, charges, other encumbrances, Equity Interests,
and other interests, except for the Liens and Claims established under the Plan
(including in respect of the Exit Financing Facility).

 

On and after the Effective Date, the Reorganized Debtor may operate its business
and may use, acquire, and dispose of property and compromise or settle any
claims without supervision or approval by the Court and free of any restrictions
of the Bankruptcy Code or Bankruptcy Rules, subject only to those restrictions
expressly imposed by the Plan or the Confirmation Order as well as the documents
and instruments executed and delivered in connection therewith, including the
documents, exhibits, instruments, and other materials comprising the Plan
Supplement. Without limiting the foregoing, the Reorganized Debtor may pay the
charges that they incur from and after the Effective Date for Fee Claims,
disbursements, expenses, or related support services (including fees relating to
the preparation of Professional fee applications) without application to, or the
approval of, the Court.

 

H.

Fee Claims Escrow Account.

 

On the Effective Date, the Reorganized Debtor shall establish the Fee Claim
Escrow Account in an amount equal to all asserted Fee Claims of Professionals
outstanding as of the Effective Date (including, for the avoidance of doubt, any
reasonable estimates for unbilled amounts payable by the Debtor or the
Reorganized Debtor). Amounts held in the Fee Claims Escrow Account shall not
constitute property of the Reorganized Debtor. The Fee Claims Escrow Account may
be an interest-bearing account. In the event there is a remaining balance in the
Fee Claims Escrow Account following payment to all holders of Fee Claims under
the Plan, any such amounts shall be returned to the Reorganized Debtor.

 

 
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I.

Claims Against Non-Debtor Subsidiaries.

 

Any claim (as such term is defined in section 101(5) of the Bankruptcy Code),
Cause of Action, or remedy asserted against a Non-Debtor Subsidiary by the
Debtor will be reinstated, adjusted (including by contribution, distribution in
exchange for new debt or equity, or otherwise), paid, continued, cancelled, or
discharged to the extent determined appropriate by the Reorganized Debtor. Any
such transaction may be effectuated on the Effective Date or subsequent to the
Effective Date without any further action by the Court or by the stockholders of
the Reorganized Debtor.

 

J.

Subsidiary Equity Interests.

 

The Subsidiary Equity Interests shall be retained and the legal, equitable, and
contractual rights to which the holder of such Allowed Subsidiary Equity
Interests is entitled shall remain unaltered.

 

ARTICLE V.
PROVISIONS REGARDING CORPORATE GOVERNANCE
OF THE REORGANIZED DEBTOR

 

A.

Organizational Documents.

 

The New Eagle Charter will be filed on or immediately before the Effective Date
with the applicable authority in the jurisdiction of incorporation in accordance
with the corporate laws of its jurisdiction of incorporation or as soon
thereafter as is practicable. The New Eagle By-Laws will be deemed to have been
adopted and will become effective on the Effective Date. The New Eagle Charter
shall prohibit the issuance of nonvoting equity securities only so long as, and
to the extent that, the issuance of nonvoting equity securities is prohibited by
the Bankruptcy Code. The New Eagle Charter and the New Eagle By-Laws will
include certain rights and protections for minority shareholders as are
customary for a listed public company, as well as the maximum protections
available with respect to transactions for public companies involving an
affiliate, including, but not limited to, any merger, consolidation or
reorganization of the Reorganized Debtor, any sale, transfer, or other
disposition of all or substantially all of the assets of the Reorganized Debtor,
or any other change in control of the Reorganized Debtor or all or substantially
all of its assets.

 

B.

Appointment of Officers and Directors.

 

As of the Effective Date, the term of the current members of the board of
directors of EBS shall expire without further action by any Person. The initial
directors of the New Board shall consist of Sophocles Zoullas (who shall remain
as Chairman on the Effective Date ) and six (6) other directors selected by the
Majority Consenting Lenders in their sole discretion and to be disclosed in the
Plan Supplement; provided, however, that the Consenting Lenders shall consult in
good faith with management and the independent board committee concerning the
individuals selected; provided, further, that the Consenting Lenders shall
designate sufficient independent directors to comply with NASDAQ listing
requirements.

 

 
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The existing officers of Eagle as of the Petition Date shall remain in their
current capacities as officers of Eagle.

 

C.

Powers of Officers.

 

Subject to approval of the New Board, the officers of the Debtor, the
Reorganized Debtor, and the Non-Debtor Subsidiaries, as the case may be, shall
have the power to enter into or execute any documents or agreements that they
deem reasonable and appropriate to effectuate the terms of the Plan.

 

D.

New CEO Employment Agreement, Existing Benefits Agreements, and Retiree
Benefits.

 

From and after the Effective Date, Sophocles Zoullas shall be employed and serve
as the Chief Executive Officer of the Reorganized Debtor in accordance with the
New CEO Employment Agreement. Except as set forth in the Rejection Schedule (or
as such benefits may be otherwise terminated by the Debtor in a manner
permissible under applicable law), and except as amended by the New CEO
Employment Agreement, all Existing Benefits Agreements shall be deemed assumed
as of the Effective Date. Notwithstanding anything to the contrary contained
herein, pursuant to section 1129(a)(13) of the Bankruptcy Code, on and after the
Effective Date, all retiree benefits (as such term is defined in section 1114 of
the Bankruptcy Code), if any, shall continue to be paid in accordance with
applicable law.

 

E.

Management Incentive Program.

 

On the Effective Date, the Reorganized Debtor shall adopt the Management
Incentive Program, which shall supersede the Existing Management Incentive
Programs in their entirety and shall provide for the distribution, and the
reservation for future issuance, as applicable, of the New Eagle MIP Primary
Equity, the New Eagle MIP Reserved Equity, and the New Eagle MIP Options to the
Reorganized Debtor’s senior management and certain other employees.

 

The Management Incentive Plan will be structured as an omnibus incentive plan
and will contain adjustment provisions to reflect any transaction involving
shares of New Eagle Common Stock, including as a result of any dividend,
recapitalization, or stock split, so as to prevent any diminution or enlargement
of the holder’s rights under the award.  In addition, awards that expire or are
forfeited or cancelled will again be available for issuance under the Management
Incentive Plan and awards may not be materially amended in an adverse manner
without the consent of any holder who is senior management. The New Eagle MIP
Primary Equity will have the right to receive dividends or other distributions
at the same time and in the same form as a holder of New Eagle Common Stock;
provided, however, that dividends or other distributions in respect of unvested
New Eagle MIP Primary Equity will be paid at the same time as underlying New
Eagle MIP Primary Equity are settled. The Reorganized Debtor’s senior management
will also have the right to elect a net settlement (e.g., on a cashless basis)
with respect to both the New Eagle MIP Primary Equity and the New Eagle MIP
Options.

 

 
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Allocation of the New Eagle MIP Primary Equity, the New Eagle MIP Reserved
Equity, and the New Eagle MIP Options to the Reorganized Debtor’s senior
management and certain other employees shall be determined by the New Board;
provided, however, that Sophocles Zoullas, as Chief Executive Officer of the
Reorganized Debtor, shall receive not less than 60% of the total compensation to
be awarded under the Management Incentive Plan.

 

On the Effective Date, the Existing Management Incentive Programs will be deemed
to have been terminated, cancelled, and of no further force and effect, and the
participants thereunder shall have no further rights thereunder. To the extent
that any Existing Management Incentive Program is an executory contract, each
such Existing Management Incentive Program shall be deemed rejected as of the
Effective Date.

 

F.

Indemnification of Directors, Officers, and Employees.

 

Notwithstanding any other provisions of the Plan, from and after the Effective
Date, indemnification obligations owed by the Debtor or the Reorganized Debtor
to directors, officers, or employees of the Debtor who served or were employed
by the Debtor on or after the Petition Date, to the extent provided in the
articles or certificates of incorporation, by-laws or similar constituent
documents, by statutory law or by written agreement, policies or procedures of
the Debtor, will be deemed to be, and treated as though they are, executory
contracts that are assumed pursuant to the Plan and section 365 of the
Bankruptcy Code. All such indemnification obligations shall survive confirmation
of the Plan, remain unaffected thereby, and not be discharged, irrespective of
whether indemnification, defense, reimbursement or limitation is owed in
connection with an event occurring before, on, or after the Petition Date.

 

Indemnification obligations owed to any Professionals retained pursuant to
sections 327 or 328 of the Bankruptcy Code and by order of the Court, to the
extent such indemnification obligations relate to the period after the Petition
Date, shall be deemed to be, and shall be treated as though they are, executory
contracts that are assumed pursuant to the Plan and section 365 of the
Bankruptcy Code, as and to the extent such indemnification was approved by order
of the Court.

 

ARTICLE VI.
CONFIRMATION OF THE PLAN

 

A.

Conditions to Confirmation.

 

The following are conditions to the entry of the Confirmation Order, unless such
conditions, or any of them, have been satisfied or duly waived in accordance
with Article VI.B:

 

1.     The Court shall have approved the Disclosure Statement, which shall be in
form and substance reasonably acceptable to the Debtor and the Majority
Consenting Lenders.

 

2.     The Confirmation Order shall be in form and substance reasonably
acceptable to the Debtor and the Majority Consenting Lenders.

 

 
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3.     The Plan (which, for purposes of this Article VI.A.3 shall exclude the
Plan Supplement), shall be in form and substance mutually acceptable to the
Debtor and the Majority Consenting Lenders.

 

4.     The Plan Supplement shall be in form and substance reasonably acceptable
to the Debtor and the Majority Consenting Lenders.

 

B.

Waiver of Conditions Precedent to Confirmation.

 

The Debtor, with the consent of the Majority Consenting Lenders (which consent
shall not be unreasonably withheld, conditioned or delayed), may waive the
conditions set forth in Article VI.A above at any time without leave or order of
the Court and without any formal action.

 

C.

Discharge of the Debtor.

 

Pursuant to section 1141(d) of the Bankruptcy Code, and except as otherwise
specifically provided in the Plan or in any contract, instrument, or other
agreement or document created pursuant to the Plan, the distributions, rights,
and treatment that are provided in the Plan shall be in complete satisfaction,
discharge, and release of Claims (including any Intercompany Claims resolved or
compromised after the Effective Date by the Reorganized Debtor), Equity
Interests, the RSA Fee, and Causes of Action of any nature whatsoever, including
any interest accrued on Claims or Equity Interests from and after the Petition
Date, whether known or unknown, against, liabilities of, Liens on, obligations
of, rights against and Equity Interests in, the Debtor or any of its assets or
properties, regardless of whether any property shall have been distributed or
retained pursuant to the Plan on account of such Claims and Equity Interests,
including demands, liabilities and Causes of Action that arose before the
Effective Date, any liability (including withdrawal liability) to the extent
such Claims or Equity Interests relate to services performed by employees of the
Debtor before the Effective Date and that arise from a termination of
employment, 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: (i) a proof of Claim or Equity
Interest based upon such debt, right, or Equity Interest is filed or deemed
filed pursuant to section 501 of the Bankruptcy Code; (ii) a Claim or Equity
Interest based upon such debt, right or Equity Interest is Allowed; or (iii) the
holder of such a Claim or Equity Interest has accepted the Plan or is entitled
to receive a distribution hereunder. Any default by the Debtor with respect to
any Claim or Equity Interest that existed immediately before or on account of
the filing of the Chapter 11 Case shall be deemed cured on the Effective Date.
The Confirmation Order shall be a judicial determination of the discharge of all
Claims and Equity Interests subject to the Effective Date occurring.

 

D.

Injunction.

 

FROM AND AFTER THE EFFECTIVE DATE, ALL PERSONS ARE PERMANENTLY ENJOINED FROM
COMMENCING OR CONTINUING IN ANY MANNER, ANY CAUSE OF ACTION RELEASED OR TO BE
RELEASED PURSUANT TO THE PLAN OR THE CONFIRMATION ORDER.

 

 
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FROM AND AFTER THE EFFECTIVE DATE, TO THE EXTENT OF THE RELEASES AND EXCULPATION
GRANTED IN THIS ARTICLE VI, THE RELEASING PARTIES SHALL BE PERMANENTLY ENJOINED
FROM COMMENCING OR CONTINUING IN ANY MANNER AGAINST THE RELEASED PARTIES AND
THEIR ASSETS AND PROPERTIES, AS THE CASE MAY BE, ANY SUIT, CAUSE OF ACTION, OR
OTHER PROCEEDING, ON ACCOUNT OF OR RESPECTING ANY CLAIM, DEMAND, LIABILITY,
OBLIGATION, DEBT, RIGHT, CAUSE OF ACTION, EQUITY INTEREST, OR REMEDY RELEASED OR
TO BE RELEASED PURSUANT TO THIS ARTICLE VI OR THE CONFIRMATION ORDER.

 

EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THE PLAN, THE PLAN SUPPLEMENT OR
RELATED DOCUMENTS, OR FOR OBLIGATIONS ISSUED PURSUANT TO THE PLAN, ALL PERSONS
WHO HAVE HELD, HOLD, OR MAY HOLD CLAIMS, GUARANTEE CLAIMS, OR EQUITY INTERESTS
THAT HAVE BEEN RELEASED OR DISCHARGED PURSUANT TO THIS ARTICLE VI OR ARE SUBJECT
TO EXCULPATION PURSUANT TO THIS ARTICLE VI ARE PERMANENTLY ENJOINED, FROM AND
AFTER THE EFFECTIVE DATE, FROM TAKING ANY OF THE FOLLOWING ACTIONS:
(1) COMMENCING OR CONTINUING IN ANY MANNER ANY ACTION OR OTHER PROCEEDING OF ANY
KIND ON ACCOUNT OF OR IN CONNECTION WITH OR WITH RESPECT TO ANY SUCH CLAIMS,
GUARANTEE CLAIMS, OR EQUITY INTERESTS; (2) ENFORCING, ATTACHING, COLLECTING, OR
RECOVERING BY ANY MANNER OR MEANS ANY JUDGMENT, AWARD, DECREE, OR ORDER AGAINST
SUCH RELEASED PARTIES ON ACCOUNT OF OR IN CONNECTION WITH OR WITH RESPECT TO ANY
SUCH CLAIMS, GUARANTEE CLAIMS, OR EQUITY INTERESTS; (3) CREATING, PERFECTING, OR
ENFORCING ANY ENCUMBRANCE OF ANY KIND AGAINST SUCH RELEASED PARTIES OR AGAINST
THE PROPERTY OR ESTATES OF SUCH RELEASED PARTIES ON ACCOUNT OF OR IN CONNECTION
WITH OR WITH RESPECT TO ANY SUCH CLAIMS, GUARANTEE CLAIMS, OR EQUITY INTERESTS;
(4) ASSERTING ANY RIGHT OF SETOFF, SUBROGATION, OR RECOUPMENT OF ANY KIND
AGAINST ANY OBLIGATION DUE FROM THE DEBTOR, THE REORGANIZED DEBTOR, OR ANY
NON-DEBTOR SUBSIDIARY OR AGAINST THE PROPERTY OR INTERESTS IN PROPERTY OF THE
DEBTOR, THE REORGANIZED DEBTOR, OR ANY NON-DEBTOR SUBSIDIARY ON ACCOUNT OF OR IN
CONNECTION WITH OR WITH RESPECT TO ANY SUCH CLAIMS, GUARANTEE CLAIMS, OR EQUITY
INTERESTS; AND (5) COMMENCING OR CONTINUING IN ANY MANNER ANY ACTION OR OTHER
PROCEEDING OF ANY KIND ON ACCOUNT OF OR IN CONNECTION WITH OR WITH RESPECT TO
ANY SUCH CLAIMS, GUARANTEE CLAIMS, OR EQUITY INTERESTS RELEASED, SETTLED, OR
DISCHARGED PURSUANT TO THE PLAN.

 

THE RIGHTS AFFORDED IN THE PLAN AND THE TREATMENT OF ALL CLAIMS, GUARANTEE
CLAIMS, AND EQUITY INTERESTS HEREIN SHALL BE IN EXCHANGE FOR AND IN COMPLETE
SATISFACTION OF ALL CLAIMS, GUARANTEE CLAIMS, AND EQUITY INTERESTS OF ANY NATURE
WHATSOEVER, INCLUDING ANY INTEREST ACCRUED ON CLAIMS OR GUARANTEE CLAIMS FROM
AND AFTER THE PETITION DATE, AGAINST THE DEBTOR AND THE NON-DEBTOR SUBSIDIARIES
OR ANY OF THEIR ASSETS, PROPERTIES, OR ESTATES. ON THE EFFECTIVE DATE, ALL SUCH
CLAIMS AND GUARANTEE CLAIMS SHALL BE FULLY RELEASED AND DISCHARGED, AND THE
EQUITY INTERESTS SHALL BE CANCELLED.

 

 
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EXCEPT AS OTHERWISE EXPRESSLY PROVIDED FOR HEREIN OR IN OBLIGATIONS ISSUED
PURSUANT HERETO FROM AND AFTER THE EFFECTIVE DATE, ALL CLAIMS AND GUARANTEE
CLAIMS SHALL BE FULLY RELEASED AND DISCHARGED, AND ALL EQUITY INTERESTS SHALL BE
CANCELLED, AND THE DEBTOR’S AND NON-DEBTOR SUBSIDIARIES’ LIABILITY WITH RESPECT
THERETO SHALL BE EXTINGUISHED COMPLETELY, INCLUDING ANY LIABILITY OF THE KIND
SPECIFIED UNDER SECTION 502(G) OF THE BANKRUPTCY CODE.

 

EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THE PLAN, THE PLAN SUPPLEMENT OR
RELATED DOCUMENTS, OR FOR OBLIGATIONS ISSUED PURSUANT TO THE PLAN, ALL PERSONS
SHALL BE PRECLUDED FROM ASSERTING AGAINST THE DEBTOR, ITS ESTATE, THE
REORGANIZED DEBTOR, EACH OF THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, AND EACH OF
THEIR ASSETS AND PROPERTIES, AND EACH OF THE RELEASED PARTIES, ANY OTHER CLAIMS
OR EQUITY INTERESTS BASED UPON ANY DOCUMENTS, INSTRUMENTS, OR ANY ACT OR
OMISSION, TRANSACTION, OR OTHER ACTIVITY OF ANY KIND OR NATURE THAT OCCURRED
BEFORE THE EFFECTIVE DATE.

 

E.

Preservation of Causes of Action.

 

In accordance with section 1123(b) of the Bankruptcy Code, and except as
expressly provided herein (including Article VI.J.1), the Reorganized Debtor
shall retain all Causes of Action, including those Causes of Action listed as
retained Causes of Action on an exhibit to the Plan Supplement. Nothing
contained in this Plan, the Plan Supplement, or the Confirmation Order shall be
deemed a waiver or relinquishment of any claim, Cause of Action, right of
setoff, or other legal or equitable defense of the Debtor that is not
specifically waived or relinquished by this Plan. The Reorganized Debtor shall
have, retain, reserve, and be entitled to assert, all such claims, Causes of
Action, rights of setoff, and other legal or equitable defenses that the Debtor
had immediately before the Petition Date as fully as if the Chapter 11 Case had
not been commenced, and all of the Reorganized Debtor’s legal and equitable
rights respecting any claim that is not specifically waived or relinquished by
this Plan may be asserted after the Effective Date to the same extent as if the
Chapter 11 Case had not been commenced. No Person may rely on the absence of a
specific reference in the Plan or the Disclosure Statement to any Cause of
Action against them as any indication that the Debtor or the Reorganized Debtor,
as applicable, will not pursue any and all available Causes of Action against
such Person. The Debtor or the Reorganized Debtor, as applicable, expressly
reserve all rights to prosecute any and all Causes of Action against any Person,
in accordance with the Plan. From and after the Effective Date, the Debtor or
the Reorganized Debtor, as applicable, shall have the exclusive right,
authority, and discretion to determine and to initiate, file, prosecute,
enforce, abandon, settle, compromise, release, withdraw, or litigate to judgment
any Cause of Action and to decline to do any of the foregoing without further
notice to or action, order, or approval of the Court. The Reorganized Debtor is
deemed representatives of the Estate for the purpose of prosecuting any Claim or
Cause of Action and any objections to Claims pursuant to 11 U.S.C.
§ 1123(b)(3)(B).

 

 
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F.

Votes Solicited in Good Faith.

 

The Debtor has, and upon entry of the Confirmation Order shall be deemed to
have, solicited acceptances of the Plan in good faith and in compliance with the
applicable provisions of the Bankruptcy Code. The Debtor, and its respective
affiliates, agents, directors, officers, members, employees, and Professionals,
have participated in good faith and in compliance with the applicable provisions
of the Bankruptcy Code in the offer and issuance of the securities offered and
sold under the Plan and therefore have not been, and on account of such offer
and issuance will 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 the offer or issuance of the securities offered and distributed
under the Plan.

 

G.

Prepetition Credit Facility Agent and Consenting Lenders’ Fees and Expenses.

 

On the Effective Date, the Reorganized Debtor shall pay, in full, in Cash, the
unpaid reasonable fees, expenses, costs, and other charges of the Prepetition
Credit Facility Agent and the Consenting Lenders (including the fees and
expenses of Paul, Weiss, Rifkind, Wharton & Garrison LLP, Houlihan Lokey
Capital, Inc., and maritime and appropriate foreign counsel engaged by Paul
Weiss), in each case in accordance with the DIP Orders and the Restructuring
Support Agreement, and as required by the underlying credit agreement,
indemnity, or fee letter.

 

H.

Cancellation of Certain Indebtedness, Agreements, and Existing Securities.

 

On the Effective Date, except as otherwise specifically provided for in the
Plan: the obligations of the Debtor and the Non-Debtor Subsidiaries under the
Restructuring Support Agreement, the Existing Management Incentive Programs, the
Guarantees, the Prepetition Finance Documents, and any other certificate, share,
note, bond, indenture, purchase right, option, warrant, or other instrument or
document directly or indirectly evidencing or creating any indebtedness or
obligation of or ownership interest in the Debtor or the Non-Debtor Subsidiaries
giving rise to any Claim or Equity Interest (except such certificates, notes, or
other instruments or documents evidencing indebtedness or obligations of the
Debtor or the Non-Debtor Subsidiaries that are specifically reinstated pursuant
to the Plan), shall be cancelled as to the Debtor and the Non-Debtor
Subsidiaries, and the Reorganized Debtor and the Non-Debtor Subsidiaries shall
not have any continuing obligations thereunder; and the obligations of the
Debtor and the Non-Debtor Subsidiaries pursuant, relating, or pertaining to any
agreements, indentures, certificates of designation, by-laws, or certificate or
articles of incorporation or similar documents governing the shares,
certificates, notes, bonds, purchase rights, options, warrants, or other
instruments or documents evidencing or creating any indebtedness or obligation
of the Debtor or the Non-Debtor Subsidiaries (except such agreements,
certificates, notes, or other instruments evidencing indebtedness or obligations
of the Debtor or the Non-Debtor Subsidiaries that are specifically reinstated
pursuant to the Plan or assumed by the Debtor) shall be released and discharged;
provided, however, that, notwithstanding the occurrence of the Confirmation Date
or the Effective Date, any such indenture or agreement that governs the rights
of the holder of a Claim shall continue in effect solely for purposes of
(a) allowing holders of such Claims to receive distributions under the Plan as
provided herein, (b) allowing the Prepetition Credit Facility Agent to make
distributions under the Plan as provided herein, and deduct therefrom such
reasonable compensation, fees, and expenses due thereunder or incurred in making
such distributions, to the extent not paid by the Debtor and authorized under
such agreement, and (c) allowing the Prepetition Credit Facility Agent to seek
compensation and/or reimbursement of fees and expenses in accordance with the
terms of the Plan. For the avoidance of doubt, nothing in this section shall
affect the discharge of or result in any obligation, liability, or expense of
the Debtor, the Reorganized Debtor, or the Non-Debtor Subsidiaries or affect the
discharge of Claims or Equity Interests pursuant to the Bankruptcy Code, the
Confirmation Order, or the Plan, or result in any additional obligation,
expense, or liability of the Debtor, the Reorganized Debtor, or the Non-Debtor
Subsidiaries. On and after the Effective Date, all duties and responsibilities
of the Prepetition Credit Facility Agent shall be discharged except to the
extent required to effectuate the Plan. Notwithstanding anything in this
paragraph to the contrary, the DIP Credit Agreement shall continue in effect
solely for the purpose of allowing the DIP Agent to receive distributions from
the Debtor under the Plan and to make further distributions to the Holders of
DIP Claims on account of such Claims, as set forth in Article VII of the Plan.

 

 
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I.

Claims Incurred After the Effective Date.

 

Claims incurred by the Debtor after the Effective Date may be paid by the
Reorganized Debtor in the ordinary course of business and without application
for or Court approval, subject to any agreements with such holders of a Claim
and applicable law.

 

J.

Releases, Exculpations, and Injunctions of Released Parties.

 

1.     Releases by the Debtor. On the Effective Date, and notwithstanding any
other provisions of the Plan, the Debtor, the Reorganized Debtor, and the
Non-Debtor Subsidiaries, on behalf of themselves and the Estate, shall be deemed
to unconditionally release the Released Parties from any and all claims,
obligations, suits, judgments, damages, rights, Causes of Action, and
liabilities whatsoever, whether known or unknown, foreseen or unforeseen,
existing or hereafter arising, in law, equity or otherwise, assertable on behalf
of or derivative from the Debtor or the Non-Debtor Subsidiaries, based in whole
or in part upon actions taken solely in their respective capacities described
herein or any omission, transaction, agreement, event, or other occurrence
taking place on or before the Effective Date in any way relating to the Debtor,
the Non-Debtor Subsidiaries, the Chapter 11 Case, the purchase, sale, or
rescission of the purchase or sale of any security of the Debtor, the
Reorganized Debtor, or the Non-Debtor Subsidiaries, the Disclosure Statement,
the Restructuring Support Agreement, the Plan Supplement or any of the documents
included therein, the Plan, or any related agreements, instruments, or other
documents, provided, however, that (a) no individual shall be released from any
act or omission that constitutes gross negligence, willful misconduct, or fraud
as determined by a Final Order, (b) other than with respect to the
Prepetition Credit Facility Claims, the Reorganized Debtor shall not relinquish
or waive the right to assert any of the foregoing as a legal or equitable
defense or right of set-off or recoupment against any Claims of any such persons
asserted against the Debtor, and (c) the foregoing release shall not apply to
obligations arising under the Exit Financing Facility.

 

 
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2.     Releases by Holders of Claims and Equity Interests. On the Effective
Date, and notwithstanding any other provisions of the Plan, (i) each Releasing
Party will be deemed to have forever released and covenanted with the Released
Parties not to sue or otherwise seek recovery from any Released Party on account
of any Claim or Guarantee Claim, including any Claim or Cause of Action based
upon tort, breach of contract, violations of federal or state securities laws or
otherwise, or any other legal or equitable theory, based in whole or in part
upon any act, occurrence, or failure to act from the beginning of time through
the Effective Date in any way related to the Debtor, the Non-Debtor
Subsidiaries, or their respective businesses and affairs and (ii) each Releasing
Party will be deemed to have forever released and covenanted with the Released
Parties not to assert against any Released Party any Claim, Guarantee Claim,
obligation, right, Cause of Action, or liability that any holder of a Claim or
Guarantee Claim may be entitled to assert, whether known or unknown, foreseen or
unforeseen, existing or hereafter arising, based in whole or in part on any act
or omission, transaction, or occurrence from the beginning of time through the
Effective Date in any way relating to the Debtor or the Non-Debtor Subsidiaries,
the purchase, sale, or rescission of the purchase or sale of any security of the
Debtor, the Reorganized Debtor, or the Non-Debtor Subsidiaries, the subject
matter of, or the transactions or events giving rise to, any Claim, Guarantee
Claim, or Equity Interest, the Debtor’s restructuring, the Chapter 11 Case, the
Restructuring Support Agreement, the Plan, the Disclosure Statement, the Plan
Supplement or any of the documents included therein, the DIP Facility, the DIP
Credit Agreement, or any agreements, instruments, or other documents relating to
any of the foregoing, or the preparation and negotiation of the Exit Financing
Facility, provided, however, the foregoing release will not (i) apply to
obligations arising under the Plan, (ii) apply to obligations arising under the
Exit Financing Facility, (iii) be construed to prohibit a party in interest from
seeking to enforce the terms of the Plan, and (iv) apply to any act or omission
that constitutes gross negligence, willful misconduct, or fraud as determined by
a Final Order.

 

3.     Release of Liens. Except as otherwise expressly 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, and other security interests against any property of the Debtor’s
Estate 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, and
other security interests shall revert to the Reorganized Debtor and each of its
successors and assigns.

 

4.     Release and Discharge of Non-Debtor Subsidiaries. On the Effective Date,
the Prepetition Credit Facility Agent, any future agent or security trustee
under the Prepetition Credit Agreement, and the holders of the Prepetition
Credit Facility Claims shall be deemed to have forever waived, released, and
discharged all Liens granted by the Non-Debtor Subsidiaries pursuant to any of
the Prepetition Finance Documents, Guarantees, Guarantee Claims, and Causes of
Action, rights, and liabilities arising from the Guarantees. In addition, the
Confirmation Order shall authorize and direct the Prepetition Credit Facility
Agent and any future agent or security trustee under the Prepetition Credit
Agreement to take, or refrain from taking, whatever action may be necessary or
appropriate to effectuate the foregoing, including, without limitation,
providing a release of all Liens granted by the Non-Debtor Subsidiaries pursuant
to any of the Prepetition Finance Documents, Guarantees, Guarantee Claims, and
Causes of Action, rights, and liabilities arising from the Guarantees.

 

 
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5.     Exculpation and Injunction. The Debtor, the Reorganized Debtor, and the
other Released Parties (i) shall have no liability whatsoever to any holder or
purported holder of an Administrative Claim, Claim, or Equity Interest for any
act or omission that occurred during and in connection with the Chapter 11 Case
or in connection with or arising out of the preparation and filing of the
Chapter 11 Case, the preparation and negotiation of the Restructuring Support
Agreement, the preparation, negotiation, and filing of the Plan, the Disclosure
Statement, the negotiation of the documents included in the Plan Supplement, the
preparation and negotiation of the Exit Financing Facility, the pursuit of
approval of the Disclosure Statement or the solicitation of votes for
confirmation of the Plan, the Chapter 11 Case, the consummation of the Plan or
the Exit Financing Facility, the administration of the Plan or the property to
be distributed under the Plan, or any transaction contemplated by the Plan or
Disclosure Statement or in furtherance thereof except for any act or omission
that constitutes willful misconduct, gross negligence, or fraud as determined by
a Final Order, and (ii) in all respects, shall be entitled to rely upon the
advice of counsel with respect to their duties and responsibilities under the
Plan. This exculpation shall be in addition to, and not in limitation of, all
other releases, indemnities, exculpations, and any other applicable law or rules
protecting such Released Parties from liability. Without limiting the generality
of the foregoing, the Released Parties shall be entitled to and granted the
protections and benefits of section 1125(e) of the Bankruptcy Code. Pursuant to
section 105 of the Bankruptcy Code, no holder or purported holder of an
Administrative Claim, Claim, or Equity Interest shall be permitted to commence
or continue any Cause of Action, employment of process, or any act to collect,
offset, or recover any Claim against a Released Party that accrued on or before
the Effective Date and that has been released or waived pursuant to this Plan.

 

6.     Liabilities to, and Rights of, Governmental Units.

 

As to the United States of America, its agencies, departments, or agents
(collectively, the “United States”), nothing in the Plan or Confirmation Order
shall limit or expand the scope of discharge, release, or injunction to which
the Debtor or the Reorganized Debtor are entitled to under the Bankruptcy Code.
The discharge, release, and injunction provisions contained in the Plan and
Confirmation Order are not intended and shall not be construed to bar the United
States from, subsequent to the Confirmation Order, pursuing any police or
regulatory action, except to the extent those discharge and injunctive
provisions bar a Governmental Unit from pursuing Claims.

 

 
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Notwithstanding anything contained in the Plan or Confirmation Order to the
contrary, nothing in the Plan or Confirmation Order shall discharge, release,
impair, or otherwise preclude: (1) any liability to a Governmental Unit that is
not a Claim; (2) any Claim of a Governmental Unit arising on or after the
Confirmation Date; (3) any valid right of setoff or recoupment of the United
States against the Debtor; or (4) any liability of the Debtor or the Reorganized
Debtor under environmental law to any Governmental Unit as the owner or operator
of property that such entity owns or operates after the Confirmation Date,
except those obligations to reimburse costs expended or paid by a Governmental
Unit before the Petition Date or to pay penalties owing to a Governmental Unit
for violations of environmental laws or regulations that occurred before the
Petition Date. Nor shall anything in the Plan or Confirmation Order: (i) enjoin
or otherwise bar the United States or any Governmental Unit from asserting or
enforcing, outside the Court, any liability described as not discharged in the
preceding sentence; or (ii) divest any court of jurisdiction to determine
whether any liabilities asserted by the United States or any Governmental Unit
are discharged or otherwise barred by the Plan, Confirmation Order, or the
Bankruptcy Code.

 

Moreover, nothing in the Plan or Confirmation Order shall release or exculpate
any non-Debtor, including any Released Parties, from any liability to the United
States, including but not limited to any liabilities arising under the Internal
Revenue Code, the environmental laws, or the criminal laws against the Released
Parties, nor shall anything in the Plan or Confirmation Order enjoin the United
States from bringing any claim, suit, action, or other proceeding against the
Released Parties for any liability whatsoever; provided, however, that the
foregoing sentence shall not limit the scope of discharge granted to the Debtor
under sections 524 and 1141 of the Bankruptcy Code.

 

K.

Preservation of Insurance.

 

The Debtor’s discharge and release from all claims, including all Claims and
Guarantee Claims, as provided herein, shall not, except as necessary to be
consistent with this Plan, diminish or impair the enforceability of any
insurance policy that may provide coverage for claims, including Claims and
Guarantee Claims, against the Debtor, the Reorganized Debtor, the Non-Debtor
Subsidiaries, their current and former directors and officers, or any other
Person.

 

ARTICLE VII.
DISTRIBUTIONS UNDER THE PLAN

 

A.

Procedures for Treating Disputed Claims.

 

1.     Filing Proofs of Claim. Except as required by the Bar Date Order, holders
of Claims need not file proofs of Claim with the Court. In the event that a
holder of a Claim elects to file a proof of Claim with the Court, it will be
deemed to have consented to the exclusive jurisdiction of the Court for all
purposes with respect to the determination, liquidation, allowance, or
disallowance of such Claim.

 

2.     Disputed Claims. If the Debtor disputes any Claim as to which no proof of
Claim has been filed, such dispute shall be determined, resolved, or
adjudicated, as the case may be, in a manner as if the Chapter 11 Case had not
been commenced, provided, however, that the Reorganized Debtor may elect, at its
sole option, to object under section 502 of the Bankruptcy Code to any Claim or
proof of Claim filed by or on behalf of a holder of a Claim.

 

 
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3.     Objections to Claims. Except insofar as a Claim is Allowed under the
Plan, the Debtor, the Reorganized Debtor, and any other party in interest shall
be entitled to object to Claims. Any objections to Claims shall be filed and
served by the Claims Objection Deadline.

 

4.     Disallowance of Claims. With respect to each Claim not subject to the Bar
Date Order, except as provided herein or otherwise agreed, any and all proofs of
Claim shall be deemed expunged from the claims register on the Effective Date
without any further notice to or action, order, or approval of the Court and the
Claim on which such proof of Claim was filed shall be determined, resolved, or
adjudicated, as the case may be, in the manner as if the Chapter 11 Case had not
been commenced and shall survive the Effective Date as if the Chapter 11 Case
had not been commenced.

 

With respect to each General Unsecured Claim and Claim subordinated pursuant to
section 510(b) of the Bankruptcy Code subject to the Bar Date Order, except as
provided herein or otherwise agreed, any and all proofs of Claim filed after the
Bar Date shall be deemed disallowed and expunged as of the Effective Date
without any further notice to or action, order, or approval of the Court, and
holders of such Claims may not receive any distributions on account of such
Claims.

 

B.

Allowed Claims and Equity Interests.

 

1.     Delivery of Distributions in General. Except as otherwise provided
herein, distributions under the Plan shall be made by the Reorganized Debtor (or
its agent or designee) to the holders of Allowed Claims and Allowed Equity
Interests in all Classes for which a distribution is provided in this Plan at
the addresses set forth on the Schedules (if filed) or in the Debtor’s books and
records, as applicable, unless such addresses are superseded by proofs of Claim
or Equity Interests or transfers of Claim filed pursuant to Bankruptcy Rule 3001
by the Record Date (or at the last known addresses of such holders if the Debtor
or the Reorganized Debtor have been notified in writing of a change of address).

 

2.     Delivery of Distributions to Prepetition Credit Facility Claims. The
Prepetition Credit Facility Agent shall be deemed to be the holder of all
Prepetition Credit Facility Claims for purposes of distributions to be made
hereunder, and all distributions on account of the Prepetition Credit Facility
Claims shall be made to the Prepetition Credit Facility Agent. As soon as
practicable following compliance with the requirements set forth in Article VII
of the Plan, the Prepetition Credit Facility Agent shall arrange to deliver or
direct the delivery of such distributions to or on behalf of the holders of
Allowed Prepetition Credit Facility Claims in accordance with the terms of the
Prepetition 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 Prepetition Credit Facility Agent shall not have any liability to
any person with respect to distributions made or directed to be made by the
Prepetition Credit Facility Agent.

 

 
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3.     Delivery of Distributions on DIP Claims. The DIP Agent shall be deemed to
be the holder of all DIP Claims for purposes of distributions to be made
hereunder, and all distributions on account of such DIP Claims shall be made to
the DIP Agent. As soon as practicable following compliance with the requirements
set forth in Article VII of the Plan, the DIP Agent shall arrange to deliver or
direct the delivery of such distributions to or on behalf of the Holders of DIP
Claims in accordance with the terms of the DIP Facility, subject to any
modifications to such distributions in accordance with the terms of this Plan.
Notwithstanding anything in the Plan to the contrary, and without limiting the
exculpation and release provisions of the Plan, the DIP Agent shall not have any
liability to any person with respect to distributions made or directed to be
made by the DIP Agent.

 

4.     Distribution of Cash. Any payment of Cash by the Reorganized Debtor
pursuant to the Plan shall be made at the option and in the sole discretion of
the Reorganized Debtor by (i) a check drawn on, or (ii) wire transfer from, a
domestic bank selected by the Reorganized Debtor.

 

5.     Unclaimed Distributions of Cash. Any distribution of Cash under the Plan
that is unclaimed after six (6) months after it has been delivered (or attempted
to be delivered) shall, pursuant to section 347(b) of the Bankruptcy Code,
become the property of the Reorganized Debtor notwithstanding any state or other
escheat or similar laws to the contrary, and the entitlement by the holder of
such unclaimed Allowed Claim or Allowed Equity Interest to such distribution or
any subsequent distribution on account of such Allowed Claim or Allowed Equity
Interest shall be extinguished and forever barred.

 

6.     Distributions of New Eagle Common Stock and New Eagle Equity Warrants. On
the Effective Date, the Reorganized Debtor (or its agent or designee) shall
distribute (i) the Prepetition Credit Facility Equity Distribution to the
holders of the Prepetition Credit Facility Claims, (ii) the Shareholder Equity
Distribution to the holders of Equity Interests, and (iii) the New Eagle Equity
Warrants to the holders of Equity Interests.

 

7.     Unclaimed Distributions of New Eagle Common Stock and New Eagle Equity
Warrants. Any distribution of New Eagle Common Stock and New Eagle Equity
Warrants under the Plan that is unclaimed after six (6) months after it has been
delivered (or attempted to be delivered) shall be retained by the Reorganized
Debtor, notwithstanding any state or other escheat or similar laws to the
contrary, and the entitlement by the holder of such Allowed Claim or Allowed
Equity Interest to such distribution or any subsequent distribution on account
of such Allowed Claim or Allowed Equity Interest shall be extinguished and
forever barred.

 

8.     Saturdays, Sundays, or Legal Holidays. If any payment, distribution 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, and shall be deemed to have
been completed as of the required date.

 

9.     Fractional New Eagle Common Stock and New Eagle Equity Warrants and De
Minimis Distributions. Notwithstanding any other provision in the Plan to the
contrary, no fractional shares of New Eagle Common Stock or fractional New Eagle
Equity Warrants shall be issued or distributed pursuant to the Plan. Subject to
Article III.D.6.(b), whenever any distribution of a fraction of a share of New
Eagle Common Stock or a fractional New Eagle Equity Warrant would otherwise be
required under the Plan, the actual distribution made shall reflect a rounding
of such fraction to the nearest whole share or warrant (up or down), with half
shares or warrants or less being rounded down and fractions in excess of a half
of a share or warrant being rounded up. No consideration will be provided in
lieu of fractional shares that are rounded down. Fractional shares of New Eagle
Common Stock or New Eagle Equity Warrants, as applicable, that are not
distributed in accordance with this Article VII.B.9 shall be cancelled. The
Reorganized Debtor shall not be required to, but may in its sole and absolute
discretion, make any payment on account of any Claim or Equity Interest in the
event that the costs of making such payment exceeds the amount of such payment.

 

 
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10.     Distributions to Holders of Claims:

 

(a)     Initial Distribution to Claims Allowed as of the Effective Date. On or
as soon as reasonably practicable after the Effective Date, or as otherwise
expressly set forth in the Plan, the Reorganized Debtor (or its agent or
designee) shall distribute Cash or Collateral, as the case may be, to the
holders of Allowed Claims as contemplated herein.

 

(b)     Claims Allowed after the Effective Date. Each holder of a Claim that
becomes an Allowed Claim subsequent to the Effective Date shall receive the
distribution to which such holder of an Allowed Claim is entitled as set forth
in Article III, and distributions to such holder shall be made in accordance
with the provisions of this Plan. As soon as practicable after the date that the
Claim becomes an Allowed Claim, the Reorganized Debtor shall provide to the
holder of such Claim the distribution (if any) to which such holder is entitled
under this Plan as of the Effective Date, without any interest to be paid on
account of such Claim.

 

11.     Special Rules for Distributions to Holders of Disputed Claims and
Disputed Equity Interests. Notwithstanding any provision otherwise in the Plan
and except as otherwise agreed to by the relevant parties, no partial payments
and no partial distributions shall be made with respect to a Disputed Claim or
Disputed Equity Interest until all such disputes in connection with such
Disputed Claim or Disputed Equity Interest, respectively, have been resolved by
settlement or Final Order. In the event that there are Disputed Claims or
Disputed Equity Interests requiring adjudication and resolution, the Reorganized
Debtor shall establish appropriate reserves for potential payment of such Claims
or Equity Interests.

 

12.     Interest on Claims and Equity Interests. Except as specifically provided
for in the Plan, no Claims or Equity Interests, Allowed or otherwise (including
Administrative Claims), shall be entitled, under any circumstances, to receive
any interest on a Claim or Equity Interests.

 

C.

Allocation of Consideration.

 

The aggregate consideration to be distributed to the holders of Allowed Claims
in each Class under the Plan shall be treated as first satisfying an amount
equal to the principal amount of the Allowed Claim for such holders, and any
remaining consideration as satisfying accrued, but unpaid and interest, as
applicable.

 

 
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D.

Estimation.

 

Before or after the Effective Date, the Debtor or the Reorganized Debtor, as
applicable, may (but is not required to), at any time, request that the Court
estimate (i) any Disputed Claim or Disputed Equity Interest pursuant to
section 502(c) of the Bankruptcy Code or (ii) any contingent or unliquidated
Claim or Equity Interest pursuant to section 502(c) of the Bankruptcy Code, for
any reason, regardless of whether the Debtor or the Reorganized Debtor has
previously objected to such Claim or Equity Interest or whether the Court has
ruled on any such objection. The Court will retain jurisdiction to estimate any
Claim or Equity Interest at any time, including during proceedings concerning
any objection to such Claim or Equity Interest. In the event that the Court
estimates any Claim or Equity Interest, such estimated amount shall constitute
either the Allowed amount of such Claim or Equity Interest or a maximum
limitation on such Claim or Equity Interest for all purposes under the Plan
(including for purposes of distributions), as determined by the Court. If the
estimated amount constitutes the maximum limitation on such Claim or Equity
Interest, the Debtor or the Reorganized Debtor, as the case may be, may elect to
pursue supplemental proceedings to object to any ultimate allowance of such
Claim or Equity Interest. All of the aforementioned objection, estimation, and
resolution procedures are cumulative and not necessarily exclusive of one
another.

 

E.

Insured Claims.

 

If any portion of an Allowed Claim is an Insured Claim, no distributions under
the Plan shall be made on account of such Allowed Claim until the holder of such
Allowed Claim has exhausted all remedies with respect to any applicable
insurance policies. To the extent that the Debtor’s insurers agree to satisfy a
Claim in whole or in part, then immediately upon such agreement, the portion of
such Claim so satisfied may be expunged without an objection to such Claim
having to be filed and without any further notice to or action, order or
approval of the Court.

 

ARTICLE VIII.
RETENTION OF JURISDICTION

 

Notwithstanding the entry of the Confirmation Order and the occurrence of the
Effective Date, on and after the Effective Date, the Court shall retain
exclusive jurisdiction over all matters arising out of, or related to, the
Chapter 11 Case and the Plan pursuant to sections 105(a) and 1142 of the
Bankruptcy Code, including jurisdiction:

 

(i)     to resolve any matters related to (a) the assumption, assumption and
assignment, or rejection of any Executory Contract or Unexpired Lease to which
the Debtor or the Reorganized Debtor is party or with respect to which the
Debtor or the Reorganized Debtor may be liable and to hear, determine, and, if
necessary, liquidate, any Claims arising therefrom, including Cure Claims
pursuant to section 365 of the Bankruptcy Code; (b) the Reorganized Debtor
amending, modifying, or supplementing, after the Effective Date, pursuant to
Article IX, any Executory Contracts or Unexpired Leases to the Rejection
Schedule or otherwise; and (c) any dispute regarding whether a contract or lease
is or was executory or expired;

 

 
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(ii)     to determine, adjudicate, or decide any other applications, adversary
proceedings, contested matters, and any other matters pending on the Effective
Date;

 

(iii)     to ensure that distributions to holders of Allowed Claims and Equity
Interests are accomplished as provided herein;

 

(iv)     to resolve disputes as to the ownership of any Claim or Equity
Interest;

 

(v)     to allow, disallow, determine, liquidate, classify, estimate, or
establish the priority, secured or unsecured status, or amount of any Claim or
Equity 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 Equity
Interests;

 

(vi)     to enter and implement such orders as may be appropriate in the event
the Confirmation Order is for any reason stayed, revoked, reversed, modified, or
vacated;

 

(vii)     to issue such orders in aid of execution of the Plan, to the extent
authorized by section 1142 of the Bankruptcy Code;

 

(viii)     to consider any modifications of the Plan, to cure any defect or
omission, or to reconcile any inconsistency in any order of the Court, including
the Confirmation Order;

 

(ix)     to hear and determine all applications for compensation and
reimbursement of expenses of professionals under sections 330, 331, and 503(b)
of the Bankruptcy Code;

 

(x)     to hear and determine disputes arising in connection with the
interpretation, implementation, consummation, or enforcement of the Plan,
including the release of the Guarantee Claims;

 

(xi)     to hear and determine any issue for which the Plan requires a Final
Order of the Court;

 

(xii)     to hear and determine matters concerning state, local, and federal
taxes in accordance with sections 346, 505, and 1146 of the Bankruptcy Code;

 

(xiii)     to hear and determine disputes arising in connection with
compensation and reimbursement of expenses of professionals for services
rendered during the period commencing on the Petition Date through and including
the Effective Date;

 

(xiv)     to hear and determine any Causes of Action preserved under the Plan;

 

(xv)     to hear and determine any matter regarding the existence, nature, and
scope of the Debtor’s discharge;

 

(xvi)     to hear and determine any matter, case, controversy, suit, dispute, or
Cause of Action (i) regarding the existence, nature, and scope of the discharge,
releases, injunctions, and exculpation provided under the Plan, and (ii) enter
such orders as may be necessary or appropriate to implement such discharge,
releases, injunctions, exculpations, and other provisions;

 

 
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(xvii)     to enter a final decree closing the Chapter 11 Case;

 

(xviii)     to 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 consummation or enforcement of the Plan;

 

(xix)     to adjudicate any and all disputes arising from or relating to
distributions under the Plan;

 

(xx)     to enforce all orders previously entered by the Court; and

 

(xxi)     to hear any other matter not inconsistent with the Bankruptcy Code.

 

For the avoidance of doubt, the Court shall not retain exclusive jurisdiction
with respect to the following documents entered into by the Reorganized Debtor
on or after the Effective Date: (i) the Exit Financing Facility Credit
Agreement, (ii) the Registration Rights Agreement, (iii) the New Eagle By-Laws,
(iv) the New Eagle Charter, (v) the New Eagle Equity Warrant Agreement, (vi) the
New Eagle MIP Option Agreements, and (vii) the New Eagle MIP Primary Equity
Agreements.

 

ARTICLE IX.
EXECUTORY CONTRACTS AND UNEXPIRED LEASES

 

A.

Assumption of Executory Contracts and Unexpired Leases.

 

Except as otherwise provided herein, each Executory Contract and Unexpired Lease
not previously assumed, assumed and assigned, or rejected shall be deemed
automatically assumed pursuant to sections 365 and 1123 of the Bankruptcy Code
as of the Effective Date, unless any such executory contract or unexpired lease:
(i) is expressly identified on the Rejection Schedule; (ii) has been previously
rejected by the Debtor by Final Order or has been rejected by the Debtor by
order of the Court as of the Effective Date, which order becomes a Final Order
after the Effective Date; (iii) is the subject of a motion to reject pending as
of the Effective Date; or (iv) is otherwise rejected pursuant to the terms
herein.

 

Subject to certain amendments that are reasonably satisfactory to the Debtor and
the Majority Consenting Lenders, the Delphin Management Agreement shall be
assumed pursuant to sections 365 and 1123 of the Bankruptcy Code as of the
Effective Date.

 

The Confirmation Order will constitute an order of the Court approving such
assumptions pursuant to sections 365 and 1123 of the Bankruptcy Code as of the
Effective Date or as otherwise set forth in the Plan Supplement.

 

 
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B.

Cure Claims.

 

At the election of the Debtor or the Reorganized Debtor, as applicable, any
monetary defaults under each Executory Contract and Unexpired Lease to be
assumed under the Plan shall be satisfied pursuant to section 365(b)(1) of the
Bankruptcy Code in one of the following ways: (i) payment of the Cure Claim in
Cash on or as soon as reasonably practicable following the occurrence of
(A) thirty (30) days after the determination of the Cure Claim, and (B) the
Effective Date or such other date as may be set by the Court; or (ii) on such
other terms as agreed to by the Debtor or the Reorganized Debtor and the
non-Debtor counterparty to such Executory Contract or Unexpired Lease. In the
event of a dispute pertaining to assumption or assignment, the Cure Claim
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. No later than the Plan Supplement Filing Date, to the
extent not previously filed with the Court and served on affected
counterparties, the Debtor shall provide for notices of proposed assumption and
proposed cure amounts to be sent to applicable contract and lease
counterparties, together with procedures for objecting thereto and resolution of
disputes by the Court. Any objection by a contract or lease counterparty to a
proposed assumption or related cure amount must be filed, served, and actually
received by the Debtor by the date on which objections to Confirmation are due
(or such other date as may be provided in the applicable assumption notice). Any
counterparty to an Executory Contract or Unexpired Lease that fails to object
timely to the proposed assumption or cure amount will be deemed to have assented
to such assumption or cure amount.

 

The only adequate assurance of future performance shall be the promise of the
Reorganized Debtor to perform all obligations under any executory contract or
unexpired lease under this Plan.

 

ASSUMPTION OF ANY EXECUTORY CONTRACT OR UNEXPIRED LEASE PURSUANT TO THE PLAN OR
OTHERWISE 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 BEFORE THE DATE THE DEBTOR OR THE REORGANIZED DEBTOR
ASSUMES SUCH EXECUTORY CONTRACT OR UNEXPIRED LEASE. ANY PROOFS OF CLAIM FILED
WITH RESPECT TO AN EXECUTORY CONTRACT OR UNEXPIRED LEASE THAT HAS BEEN ASSUMED
SHALL BE DEEMED DISALLOWED AND EXPUNGED, WITHOUT FURTHER NOTICE TO OR ACTION,
ORDER OR APPROVAL OF THE COURT.

 

Obligations arising under insurance policies assumed by the Debtor before the
Effective Date shall be adequately protected in accordance with any order
authorizing such assumption.

 

 
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C.

Reservation of Rights.

 

Neither the exclusion nor inclusion of any contract or lease in the Plan
Supplement, as applicable, nor anything contained in the Plan, shall constitute
an admission by the Debtor that any such contract or lease is in fact an
Executory Contract or Unexpired Lease or that any Reorganized Debtor has any
liability thereunder. In the event a written objection is filed with the Court
as to whether a contract or lease is executory or unexpired, the right of the
Debtor or the Reorganized Debtor to move to assume or reject such contract or
lease shall be extended until the date that is thirty (30) days after the entry
of a Final Order by the Court determining that the contract or lease is
executory or unexpired, in which case the deemed assumptions and rejections
provided for in the Plan shall not apply to such contract or lease.

 

D.

Rejection of Executory Contracts and Unexpired Leases.

 

1.     Rejection Schedule. The Debtor will file the Rejection Schedule with the
Court no later than five (5) Business Days before the deadline to object to the
Plan. The Rejection Schedule will include (a) the name of the non-Debtor
counterparty, (b) the legal description of the contract or lease to be rejected,
and (c) the proposed effective date of rejection (if not the Effective Date). On
or as soon as practicable thereafter, the Debtor will serve a Rejection Notice
as well as notice of filing of the Rejection Schedule upon each non-Debtor
counterparty listed thereon that will describe the procedures by which such
parties may object to the proposed rejection of their respective Executory
Contract or Unexpired Lease and explain how such disputes will be resolved by
the Court if the parties are not able to resolve a dispute consensually.

 

The Confirmation Order will constitute an order of the Court approving such
rejections pursuant to sections 365 and 1123 of the Bankruptcy Code as of the
Effective Date or as otherwise set forth in the Plan Supplement.

 

2.     Rejection Damage Claims. If the rejection by the Debtor, pursuant to the
Plan or otherwise, of an Executory Contract or Unexpired Lease gives rise to a
Rejection Damage Claim, a proof of Claim must be filed with the Court within
(i) thirty (30) days after the date of entry of an order of the Court approving
such rejection, or (ii) if the Executory Contract or Unexpired Lease is listed
on the Rejection Schedule, within thirty (30) days after the date of entry of
the Confirmation Order. For the avoidance of doubt, all Allowed Rejection Damage
Claims shall be treated as General Unsecured Claims.

 

3.     REQUIREMENT TO FILE A PROOF OF CLAIM FOR REJECTION DAMAGE CLAIMS. ANY
REJECTION DAMAGE CLAIMS THAT ARE NOT TIMELY FILED SHALL BE DISALLOWED
AUTOMATICALLY, FOREVER BARRED FROM ASSERTION, AND SHALL NOT BE ENFORCEABLE
AGAINST ANY REORGANIZED DEBTOR WITHOUT THE NEED FOR ANY OBJECTION BY THE
REORGANIZED DEBTOR OR FURTHER NOTICE TO OR ACTION, ORDER, OR APPROVAL OF THE
COURT, AND ANY REJECTION DAMAGE CLAIM SHALL BE DEEMED FULLY SATISFIED, RELEASED
AND DISCHARGED, NOTWITHSTANDING ANYTHING IN THE SCHEDULES OR A PROOF OF CLAIM TO
THE CONTRARY.

 

 
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E.

Assignment.

 

Any Executory Contract or Unexpired Lease to be held by the Debtor or the
Reorganized Debtor and assumed hereunder or otherwise in the Chapter 11 Case, if
not expressly assigned to a third party previously in the Chapter 11 Case, will
be deemed assigned to the Reorganized Debtor pursuant to section 365 of the
Bankruptcy Code. If an objection to a proposed assumption, assumption and
assignment, or Cure Claim is not resolved in favor of the Debtor before the
Effective Date, the applicable Executory Contract or Unexpired Lease may be
designated by the Debtor or the Reorganized Debtor for rejection within five
(5) Business Days of the entry of the order of the Court resolving the matter
against the Debtor. Such rejection shall be deemed effective as of the Effective
Date.

 

F.

Insurance Policies.

 

Notwithstanding anything in this Plan to the contrary, all of the Debtor’s
insurance policies and any agreements, documents or instruments relating
thereto, are treated as and deemed to be Executory Contracts under the Plan. On
the Effective Date, the Debtor shall be deemed to have assumed all insurance
policies and any agreements, documents, and instruments related thereto.

 

G.

Post-Petition Contracts and Leases.

 

All contracts, agreements, and leases that were entered into by the Debtor or
assumed by the Debtor after the Petition Date shall be deemed assigned by that
Debtor to the Reorganized Debtor on the Effective Date.

 

ARTICLE X.
EFFECTIVENESS OF THE PLAN

 

A.

Conditions Precedent to Effectiveness.

 

The Plan shall not become effective unless and until the Confirmation Date has
occurred and the following conditions have been satisfied in full or waived in
accordance with Article X.B:

 

1.     the Confirmation Order entered by the Court shall be in form and
substance reasonably acceptable to the Debtor and the Majority Consenting
Lenders;

 

2.     the Confirmation Order shall not have been stayed, modified, or vacated
on appeal;

 

3.     the Definitive Documentation (as such term is defined in the
Restructuring Support Agreement) shall be in form and substance reasonably
acceptable to the Debtor and the Majority Consenting Lenders;

 

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;

 

 
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5.     all authorizations, consents, and regulatory approvals required (if any)
for the Plan’s effectiveness shall have been obtained;

 

6.     the Reorganized Debtor shall have executed the Exit Financing Facility
Credit Agreement, and all conditions precedent to effectiveness of the Exit
Financing Facility shall have been satisfied or waived;

 

7.     the Fee Claims Escrow Account shall be established and shall have been
funded in full, in Cash in accordance with, and in the amounts required by, the
Plan; and

 

8.     the Reorganized Debtor, Eagle Shipping International (USA) LLC, and
Sophocles Zoullas each shall have executed the New CEO Employment Agreement.

 

B.

Waiver of Conditions Precedent to Effectiveness.

 

The Debtor, with the consent of the Majority Consenting Lenders (which consent
shall not be unreasonably withheld, conditioned, or delayed), may waive
conditions set forth in Article X.A above at any time without leave of or order
of the Court and without any formal action.

 

C.

Effect of Failure of Conditions.

 

In the event that the Effective Date does not occur on or before sixty (60) days
after the Confirmation Date, upon notification submitted by the Debtor to the
Court: (i) the Confirmation Order may be vacated, (ii) no distributions under
the Plan shall be made; (iii) the Debtor and all holders of Claims and Equity
Interests shall be restored to the status quo ante as of the day immediately
preceding the Confirmation Date as though the Confirmation Date had never
occurred; and (iv) the Debtor’s obligations with respect to the Claims and
Equity Interests shall remain unchanged and nothing contained in the Plan shall
constitute or be deemed a waiver, release, or discharge of any Claims or Equity
Interests by or against the Debtor or any other person or to prejudice in any
manner the rights of the Debtor or any person in any further proceedings
involving the Debtor unless extended by Court order.

 

D.

Vacatur of Confirmation Order.

 

If a Final Order denying confirmation of the Plan is entered, or if the
Confirmation Order is vacated, then the Plan shall be null and void in all
respects, and nothing contained in the Plan shall: (i) constitute a waiver,
release, or discharge of any Claims, Guarantee Claims, or Equity Interests;
(ii) prejudice in any manner the rights of the holder of any Claim, Guarantee
Claim, or Equity Interest; (iii) prejudice in any manner any right, remedy, or
claim of the Debtor or the Non-Debtor Subsidiaries; or (iv) be deemed an
admission against interest by the Debtor or the Non-Debtor Subsidiaries.

 

 
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E.

Modification of the Plan.

 

Subject to the limitations contained in the Plan, and subject to the terms of
the Restructuring Support Agreement, (i) the Debtor reserves the right, in
accordance with the Bankruptcy Code and the Bankruptcy Rules, 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 (ii) after
entry of the Confirmation Order, the Debtor or the Reorganized Debtor, as the
case may be, may, upon order of the Court, amend or modify the Plan, in
accordance with section 1127(b) of the Bankruptcy Code. Notwithstanding the
foregoing, the Confirmation Order shall authorize the Debtor or the Reorganized
Debtor, as the case may be, to make appropriate technical adjustments, remedy
any defect or omission, or reconcile any inconsistencies in the Plan, the
documents included in the Plan Supplement, any and all exhibits to the Plan,
and/or the Confirmation Order, as may be necessary to carry out the purposes and
effects of the Plan, provided, however, that such action does not materially and
adversely affect the treatment of holders of Allowed Claims or Equity Interests
pursuant to the Plan.

 

F.

Revocation, Withdrawal, or Non-Consummation.

 

1.     Right to Revoke or Withdraw. The Debtor reserves the right to revoke or
withdraw the Plan at any time before the Effective Date; provided, however, that
this provision shall have no impact on the rights of the Consenting Lenders, as
set forth in the Restructuring Support Agreement, in respect of any such
revocation or withdrawal.

 

2.     Effect of Withdrawal, Revocation, or Non-Consummation. If the Debtor
revokes or withdraws the Plan prior to the Effective Date, or if the
Confirmation Date or the Effective Date does not occur, the Plan, any settlement
or compromise embodied in the Plan (including the fixing or limiting to an
amount certain any Claim or Equity Interest or Class of Claims or Equity
Interests), the assumption or rejection of Executory Contracts, Unexpired Leases
or benefit plans effected by the Plan, any release, exculpation, or
indemnification provided for in the Plan, and any document or agreement executed
pursuant to the Plan shall be null and void. In such event, nothing contained
herein, and no acts taken in preparation for consummation of the Plan shall be
deemed to constitute a waiver or release of any Claims by or against or Equity
Interests in the Debtor or any other Person, to prejudice in any manner the
rights of the Debtor or any Person in any further proceedings involving the
Debtor, or to constitute an admission of any sort by the Debtor or any other
Person.

 

ARTICLE XI.
MISCELLANEOUS PROVISIONS

 

A.

Immediate Binding Effect.

 

Notwithstanding Bankruptcy Rules 3020(e), 6004(h), 7062, or otherwise, upon the
occurrence of the Effective Date, the terms of the Plan shall be immediately
effective and enforceable and deemed binding upon the Debtor, the Reorganized
Debtor, and any and all holders of Claims or Equity Interests (irrespective of
whether such Claims or Equity 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 with the Debtor.

 

 
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B.

Governing Law.

 

Unless a rule of law or procedure is supplied by federal law (including the
Bankruptcy Code and Bankruptcy Rules), the laws of the State of New York
(without reference to the conflicts of laws provisions thereof that would
require or permit the application of the law of another jurisdiction) shall
govern the construction and implementation of the Plan and any agreements,
documents, and instruments executed in connection with the Plan, unless
otherwise specified.

 

C.

Filing or Execution of Additional Documents.

 

On or before the Effective Date or as soon thereafter as is practicable, the
Debtor or the Reorganized Debtor shall (on terms materially consistent with the
Plan) file with the Court or execute, as appropriate, such agreements and other
documents as may be necessary or appropriate to effectuate and further evidence
the terms and conditions of the Plan, which shall be in form and substance
reasonably acceptable to the Majority Consenting Lenders.

 

D.

Term of Injunctions or Stays.

 

All injunctions or stays provided for in the Chapter 11 Case under sections 105
or 362 of the Bankruptcy Code, or otherwise, and in existence on the
Confirmation Date, shall remain in full force and effect until the Effective
Date.

 

E.

Withholding and Reporting Requirements.

 

In connection with the Plan and all instruments issued in connection therewith
and distributions thereon, the Reorganized Debtor shall comply with all
withholding and reporting requirements imposed by any United States federal,
state, local, or non-U.S. taxing authority and all distributions hereunder shall
be subject to any such withholding and reporting requirements. Notwithstanding
any provision in the Plan to the contrary, the Reorganized Debtor 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 distribution pending receipt of
information necessary or appropriate to facilitate such distributions, or
establishing any other mechanisms they believe are reasonable and appropriate.

 

F.

Exemption From Transfer Taxes.

 

Pursuant to, and to the fullest extent permitted by, section 1146(a) of the
Bankruptcy Code, all transfers of property pursuant hereto, including (i) the
issuance, transfer, or exchange under the Plan of New Eagle Common Stock, the
New Eagle Equity Warrants, the New Eagle MIP Primary Equity, the New Eagle MIP
Reserved Equity, the New Eagle MIP Options, and the security interests in favor
of the lenders under the Exit Financing Facility, (ii) the making or assignment
of any lease or sublease, or (iii) the making or delivery of any other
instrument whatsoever, in furtherance of or in connection with the Plan, shall
not be subject to any stamp, conveyance, mortgage, sales or use, real estate
transfer, recording, or other similar tax or governmental assessment, and upon
entry of the Confirmation Order, the appropriate state or local governmental
officials or agents shall forgo the collection of any such tax or governmental
assessment and accept for filing and recordation any of the foregoing
instruments or other documents without the payment of any such tax, recordation
fee, or governmental assessment.

 

 
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G.

Plan Supplement.

 

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. The documents
contained in the Plan Supplement shall be available online at www.pacer.gov and
www.eaglebulkrestructuring.com. Holders of Claims or Equity Interests may obtain
a copy of the Plan Supplement upon written request to counsel to the Debtor. The
Debtor reserves the right, in accordance with the terms hereof, to modify,
amend, supplement, restate, or withdraw any part of the Plan Supplement after
they are filed and shall promptly make such changes available online at
www.pacer.gov and www.eaglebulkrestructuring.com.

 

H.

Notices.

 

All notices, requests, and demands hereunder to be effective shall be made in
writing or by e-mail, and unless otherwise expressly provided herein, shall be
deemed to have been duly given when actually delivered or, in the case of notice
by facsimile transmission, when received and telephonically confirmed. Each of
such notices shall be addressed as follows:

 

1.     To the Debtor: Eagle Bulk Shipping Inc., 477 Madison Avenue, New York, NY
10022, attention: Adir Katzav, Chief Financial Officer, Tel: (212) 785-2500, Fax
(212) 785-3311, with a copy to (i) Milbank, Tweed, Hadley & McCloy LLP, 601 S.
Figueroa St., 30th Floor, Los Angeles, CA 90017, attention: Paul S. Aronzon,
Esq. and Haig M. Maghakian, Esq., Tel.: (213) 892-4000, Fax: (213) 629-5063,
e-mail: paronzon@milbank.com, hmaghakian@milbank.com; and (ii) Milbank, Tweed,
Hadley & McCloy LLP, 1 Chase Manhattan Plaza, New York, NY 10005, attention:
Tyson M. Lomazow, Esq. and Matthew Brod, Esq., Tel.: (212) 530-5000, Fax: (212)
530-5219, e-mail: tlomazow@milbank.com, mbrod@milbank.com.

 

2.     To the Prepetition Credit Facility Agent: (i) if by mail to: Paul, Weiss,
Rifkind, Wharton & Garrison LLP, 1285 Avenue of the Americas, New York, NY
10019, attention: Andrew N. Rosenberg, Esq. and Alice B. Eaton, Esq.; (ii) if by
e-mail to: arosenberg@paulweiss.com, aeaton@paulweiss.com.

 

3.     To the U.S. Trustee: (i) if by mail to: 201 Varick Street, New York,
NY 10014-4811, attention: Paul K. Schwartzberg, Esq. and Michael Driscoll, Esq.,
Tel.: (212) 510-0500, Fax: (212) 668-2255; (ii) if by e-mail to:
Paul.Schwartzberg@usdoj.gov, Michael.Driscoll@usdoj.gov.

 

 
49 

--------------------------------------------------------------------------------

 

 

I.

Conflicts.

 

The terms of the Plan shall govern in the event of any inconsistency between the
Plan and the Disclosure Statement. In the event of any inconsistency with the
Plan and the Confirmation Order, the Confirmation Order shall govern with
respect to such inconsistency.

 

 

 

 

 

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

 

 

 

 

 

 
50 

--------------------------------------------------------------------------------

 

 

Dated: August 6, 2014

 

EAGLE BULK SHIPPING INC.

 

 

 

By:                                                
Name: Adir Katzav
Title: Chief Financial Officer

 

 
 

--------------------------------------------------------------------------------

 

 

 

 

Exhibit C

 

to the Restructuring Support Agreement

 

DISCLOSURE STATEMENT

 

 

 

 
 

--------------------------------------------------------------------------------

 

 

THIS SOLICITATION IS BEING COMMENCED TO OBTAIN ACCEPTANCES OF THE PLAN OF THE
DEBTOR PRIOR TO THE FILING BY THE DEBTOR OF ITS CASE UNDER CHAPTER 11 OF THE
BANKRUPTCY CODE. BECAUSE NO CHAPTER 11 CASE HAS YET BEEN COMMENCED, THIS
DISCLOSURE STATEMENT HAS NOT YET BEEN APPROVED BY THE COURT AS CONTAINING
ADEQUATE INFORMATION WITHIN THE MEANING OF SECTION 1125(A) OF THE BANKRUPTCY
CODE OR COMPLYING WITH APPLICABLE NON-BANKRUPTCY LAW, ALTHOUGH THE DEBTOR
BELIEVES IT DOES. FOLLOWING THE COMMENCEMENT OF ITS CHAPTER 11 CASE, THE DEBTOR
EXPECTS TO PROMPTLY SEEK ENTRY OF AN ORDER (I) APPROVING (A) THIS DISCLOSURE
STATEMENT AS CONTAINING ADEQUATE INFORMATION WITH RESPECT TO THE PLAN AND BEING
IN COMPLIANCE WITH APPLICABLE NON-BANKRUPTCY LAW AND (B) THE SOLICITATION OF
VOTES WITH RESPECT TO THE PLAN AS HAVING BEEN IN COMPLIANCE WITH SECTION 1126(B)
OF THE BANKRUPTCY CODE, AND (II) CONFIRMING THE PLAN. THE VOTING DEADLINE
IS AUGUST 12, 2014 AT 5:00 P.M. (PREVAILING EASTERN TIME) UNLESS EXTENDED BY THE
DEBTOR OR THE COURT. THESE MATERIALS HAVE NOT BEEN REVIEWED OR APPROVED BY THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY SECURITIES REGULATORY
BODY.

 

 

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK

     

x

 

In re:

:

Chapter 11

 

:

 

EAGLE BULK SHIPPING INC.,

:

Case No.

 

:

 

Debtor.

:

   

:

   

x

 

 

DISCLOSURE STATEMENT FOR DEBTOR’S

PREPACKAGED PLAN OF REORGANIZATION

PURSUANT TO CHAPTER 11 OF THE BANKRUPTCY CODE

 

  Paul S. Aronzon (pro hac vice pending)   Haig M. Maghakian (pro hac vice
pending)   MILBANK, TWEED, HADLEY & McCLOY LLP   601 S. Figueroa St., 30th Floor
  Los Angeles, CA 90017   (213) 892-4000      

- and –

 

Tyson M. Lomazow

Matthew Brod

 

MILBANK, TWEED, HADLEY & McCLOY LLP 

 

One Chase Manhattan Plaza

 

New York, NY 10005

 

(212) 530-5000

      Proposed Counsel to Debtor and Debtor in Possession

 

Dated: August 6, 2014

 

 
 

--------------------------------------------------------------------------------

 

 

NOTICE TO EMPLOYEES, TRADE CREDITORS,
AND OTHER HOLDERS OF GENERAL UNSECURED CLAIMS

 

THE DEBTOR INTENDS TO CONTINUE OPERATING ITS BUSINESS IN CHAPTER 11 IN THE
ORDINARY COURSE OF BUSINESS AND TO SEEK TO OBTAIN THE NECESSARY RELIEF FROM THE
COURT TO HONOR ITS OBLIGATIONS AND PAY ITS EMPLOYEES, TRADE CREDITORS, AND OTHER
GENERAL UNSECURED CLAIMS IN FULL AND IN ACCORDANCE WITH EXISTING BUSINESS TERMS.

 

DISCLAIMER

 

The information contained in this disclosure statement including the Exhibits
annexed hereto (collectively, the “Disclosure Statement”) is included herein for
purposes of soliciting acceptances of the Plan and may not be relied upon for
any purpose other than to determine how to vote on the Plan. No person is
authorized by the Debtor in connection with the Plan or the solicitation of
acceptances of the Plan to give any information or to make any representation
regarding this Disclosure Statement or the Plan other than as contained in this
Disclosure Statement and the Exhibits annexed hereto, incorporated by reference
or referred to herein, and if given or made, such information or representation
may not be relied upon as having been authorized by the Debtor.

 

The Disclosure Statement shall not be construed to be advice on the tax,
securities, or other legal effects of the Plan as to holders of Claims against,
or Equity Interests in, the Debtor, the Reorganized Debtor, or any other person.
Each holder should consult with its own legal, business, financial, and tax
advisors with respect to any matters concerning this Disclosure Statement, the
solicitation of votes to accept the Plan, the Plan, and the transactions
contemplated hereby and thereby.

 

Each holder of an impaired Claim entitled to vote on the Plan should carefully
review the Plan, this Disclosure Statement, and the Exhibits to both documents
in their entirety before casting a ballot. Plan summaries and statements made in
this Disclosure Statement are qualified in their entirety by reference to the
Plan and the Exhibits annexed to the Plan and this Disclosure Statement. Please
be advised, however, that the statements contained in this Disclosure Statement
are made as of the date hereof unless another time is specified herein, and
holders of Claims reviewing this Disclosure Statement should not infer at the
time of such review that there has not been any change in the information set
forth herein since the date hereof unless so specified. In the event of any
conflict between the descriptions set forth in this Disclosure Statement and the
terms of the Plan, the terms of the Plan shall govern.

 

As to contested matters, existing litigation involving, or possible litigation
to be brought by, or against, the Debtor, adversary proceedings, and other
actions or threatened actions, this Disclosure Statement and Plan shall not
constitute, or be construed as, an admission of any fact or liability, a
stipulation, or a waiver, but rather as a statement made without prejudice
solely for settlement purposes in accordance with Federal Rule of Evidence 408,
with full reservation of rights, and is not to be used for any litigation
purpose whatsoever by any person, party, or entity.

 

 
i 

--------------------------------------------------------------------------------

 

 

The Board of Directors of the Debtor has approved the Plan and recommends that
the holders of Claims in the impaired class entitled to vote (Class 3), vote to
accept the Plan. The Plan has been negotiated with, and has the support of, an
overwhelming percentage of the Debtor’s secured lenders. This Disclosure
Statement, the Plan, and the accompanying documents have been extensively
negotiated with the legal and/or financial advisors to the Consenting Lenders.
The votes on the Plan are being solicited in accordance with the Restructuring
Support Agreement dated August 6, 2014, which was executed by a majority of
holders of loans under the Prepetition Credit Facility, who hold substantially
in excess of two-thirds of the principal amounts outstanding thereunder.

 

The Debtor intends to confirm the Plan and cause the Effective Date to occur
promptly after confirmation of the Plan. There can be no assurance, however, as
to when and whether confirmation of the Plan and the Effective Date actually
will occur. The confirmation and effectiveness of the Plan are subject to
material conditions precedent. See Section VII.A -- “Conditions Precedent to
Effectiveness.” There is no assurance that these conditions will be satisfied or
waived. Procedures for distributions under the Plan are described under
Section VI.F -- “Distributions Under the Plan.” Distributions will be made only
in compliance with these procedures.

 

If the Plan is confirmed by the Court and the Effective Date occurs, all holders
of Claims against, and Equity Interests in, the Debtor (including, without
limitation, those holders of Claims and Equity Interests that do not submit
ballots to accept or reject the Plan or that are not entitled to vote on the
Plan) will be bound by the terms of the Plan and the transactions contemplated
thereby.

 

If the financial restructuring of the indebtedness contemplated by the Plan is
not approved and consummated, there can be no assurance that the Debtor will be
able to effectuate an alternative restructuring or successfully emerge from its
chapter 11 case, and the Debtor may be forced into a liquidation under chapter 7
of the Bankruptcy Code or under the laws of other countries. As reflected in the
Liquidation Analysis, the Debtor believes that if operations are liquidated
under chapter 7 of the Bankruptcy Code or otherwise, the value of the assets
available for payment of creditors would be significantly lower than the value
of the distributions contemplated by and under the Plan.

 

This Disclosure Statement contains projected financial information regarding the
Reorganized Debtor and certain other forward-looking statements, all of which
are based on various estimates and assumptions. The management of the Debtor
prepared the projections with the assistance of its professionals. The Debtor’s
management did not prepare the projections in accordance with Generally Accepted
Accounting Principles (“GAAP”) or International Financial Reporting Standards
(“IFRS”) or to comply with the rules and regulations of the SEC or any foreign
regulatory authority.

 

 
ii 

--------------------------------------------------------------------------------

 

 

SPECIAL NOTICE REGARDING FEDERAL AND STATE SECURITIES LAWS

 

As of the date of distribution, neither this Disclosure Statement nor the Plan
has been filed with or reviewed by the Court, and neither this Disclosure
Statement nor the Plan has been filed with the United States Securities and
Exchange Commission (the “SEC”) or any state authority. The Plan has not been
approved or disapproved by the SEC or any state securities commission and
neither the SEC nor any state securities commission has passed upon the accuracy
or adequacy of this Disclosure Statement or the merits of the Plan. Any
representation to the contrary is a criminal offense.

 

This Disclosure Statement has been prepared pursuant to section 1125 of the
Bankruptcy Code and Bankruptcy Rule 3016(b) (but has not yet been approved by
the Court as complying with section 1125 of the Bankruptcy Code and Bankruptcy
Rule 3016(b)). The securities to be issued under the Plan on or after the
Effective Date will not have been the subject of a registration statement filed
with the SEC under the Securities Act or any securities regulatory authority of
any state under any state securities laws (“Blue Sky Laws”).

 

Prior to the filing of the chapter 11 case, the Debtor will rely on the
exemption provided by section 4(a)(2) of the Securities Act and applicable
exemptions from Blue Sky Laws. After the commencement of the chapter 11 case,
the Debtor intends to rely on the exemption from the Securities Act and Blue Sky
Laws registration requirements provided by section 1145(a)(1) of the Bankruptcy
Code to exempt the issuance of securities issued under, or in connection with,
the Plan, except to the extent that any person receiving securities under the
Plan may be deemed an “underwriter” within the meaning of section 1145(b) of the
Bankruptcy Code.

 

This Disclosure Statement contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995. 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,” “will,”
“should,” “could,” “intend,” “consider,” “expect,” “plan,” “anticipate,”
“believe,” “predict,” “estimate,” or “continue” or the negative thereof or other
variations thereon or comparable terminology. You are cautioned that all
forward-looking statements involve risks and uncertainties that could cause
actual events or results to differ materially from those referred to in such
forward-looking statements. Important factors that could cause or contribute to
such differences include those in Article X: “Certain Risk Factors to be
Considered,” generally and in particular “Additional Factors to be
Considered--Forward-Looking Statements are not Assured, and Actual Results May
Vary.” The Liquidation Analysis set forth in Exhibit D, distribution projections
and other information contained herein and annexed hereto are estimates only,
and the timing and amount of actual distributions to Holders of Allowed Claims
and Allowed Equity Interests may be affected by many factors that cannot be
predicted. Any analyses, estimates or recovery projections may or may not turn
out to be accurate.

 

 
iii 

--------------------------------------------------------------------------------

 

 

TABLE OF CONTENTS

Page

 

I.

INTRODUCTION AND EXECUTIVE SUMMARY

1

  A.

Overview of Chapter 11.

4

B.

Voting Rights.

4

  C.

Entitlement to Vote.

5

D.

Solicitation and Voting Process.

6

    1.

The “Solicitation Package”.

6

  2.

Voting Deadline.

7

    3.

Voting Instructions.

7

E.

The Confirmation Hearing.

9

         

II.

SUMMARY OF TREATMENT OF CLAIMS AND EQUITY INTERESTS UNDER THE PLAN

10

         

III.

COMPANY BACKGROUND

13

  A.

Eagle’s Business.

13

  B.

Eagle’s Prepetition Capital Structure.

13

  C.

Eagle’s Equity Holders.

15

         

IV.

EVENTS LEADING TO THE COMMENCEMENT OF THE CHAPTER 11 CASE

15

  A.

The International Dry Bulk Shipping Market.

15

  B.

Industry Instability in 2012 Led to Prepetition Credit Facility Amendments.

16

  C.

2013’s Events Set Stage for the Present 2014 Financial Restructuring.

18

  D.

Prepetition Restructuring Initiatives.

19

  E.

The Restructuring Support Agreement.

21

         

V.

THE ANTICIPATED CHAPTER 11 CASE

24

  A.

Expected Timetable of the Chapter 11 Case.

24

  B.

Significant First Day Motions and Retention of Professionals.

25

    1.

Approval of Solicitation Procedures and Scheduling of Confirmation Hearing.

25

    2.

DIP/Cash Collateral.

25

    3.

Stabilizing Operations.

26

    4.

Operational Initiatives Regarding Executory Contracts.

28

    5.

Procedural Motions and Professional Retention Applications.

29

  C.

Value of the New Eagle Equity Warrants.

29

  D.

Exit Financing Facility.

29

         

VI.

SUMMARY OF THE PREPACKAGED PLAN

29

  A.

Classification and Treatment of Unclassified Claims, Claims, and Equity
Interests Under the Plan.

29

    1.

Description and Treatment of Unclassified Claims.

30

    2.

Classification and Treatment of Claims and Equity Interests.

31

 

 
iv 

--------------------------------------------------------------------------------

 

 

  B.

Means for Implementation of the Plan.

35

    1.

General Settlement of Claims and Interests.

35

    2.

Exit Financing.

36

    3.

Voting of Claims.

36

    4.

Nonconsensual Confirmation.

36

    5.

Issuance of New Eagle Common Stock and New Eagle Equity Warrants and Entry into
the Registration Rights Agreement.

36

    6.

The New Eagle Equity Warrants.

38

    7.

Continued Corporate Existence and Vesting of Assets.

39

    8.

Fee Claims Escrow Account.

40

    9.

Claims Against Non-Debtor Subsidiaries.

40

    10.

Subsidiary Equity Interests.

40

  C.

Provisions Regarding Corporate Governance of the Reorganized Debtor.

40

    1.

Organizational Documents.

40

    2.

Appointment of Officers and Directors.

41

    3.

Powers of Officers.

41

    4.

New CEO Employment Agreement, Existing Benefits Agreements, and Retiree
Benefits.

41

    5.

Management Incentive Program.

41

    6.

Indemnification of Directors, Officers, and Employees.

42

  D.

Effect of Confirmation of the Plan.

43

 

  1.

Discharge of the Debtor.

43

    2.

Injunction.

43

  3.

Preservation of Causes of Action.

45

    4.

Votes Solicited in Good Faith.

45

  5.

Prepetition Credit Facility Agent and Consenting Lenders’ Fees and Expenses.

46

    6.

Cancellation of Certain Indebtedness, Agreements, and Existing Securities.

46

  7.

Claims Incurred After the Effective Date.

47

    8.

Releases, Exculpations, and Injunctions of Released Parties.

47

  E.

Distributions Under the Plan.

51

 

  1.

Procedures for Treating Disputed Claims.

51

  2.

Allowed Claims and Equity Interests.

52

    3.

Allocation of Consideration.

54

  4.

Estimation.

55

    5.

Insured Claims.

55

  F.

Retention of Jurisdiction.

55

  G.

Executory Contracts and Unexpired Leases.

57

  1.

Assumption of Executory Contracts and Unexpired Leases.

57

    2.

Cure Claims.

57

  3.

Reservation of Rights.

58

    4.

Rejection of Executory Contracts and Unexpired Leases.

59

  5.

Assignment.

59

    6.

Insurance Policies.

60

  7.

Post-Petition Contracts and Leases.

60

 

 
v 

--------------------------------------------------------------------------------

 

 

  H.

Miscellaneous Provisions.

60

  1.

Immediate Binding Effect.

60

    2.

Governing Law.

60

  3.

Filing or Execution of Additional Documents.

60

    4.

Term of Injunctions or Stays.

61

  5.

Withholding and Reporting Requirements.

61

    6.

Exemption From Transfer Taxes.

61

  7.

Plan Supplement.

61

    8.

Conflicts.

62

         

VII.

CONFIRMATION AND EFFECTIVENESS OF THE PLAN

62

  A.

Conditions to Confirmation.

62

  B.

Waiver of Conditions Precedent to Confirmation.

62

  C.

Conditions Precedent to Effectiveness.

62

  D.

Waiver of Conditions Precedent to Effectiveness.

63

  E.

Effect of Failure of Conditions.

63

  F.

Vacatur of Confirmation Order.

64

  G.

Modification of the Plan.

64

  H.

Revocation, Withdrawal, or Non-Consummation.

64

  1.

Right to Revoke or Withdraw.

64

    2.

Effect of Withdrawal, Revocation, or Non-Consummation.

64

         

VIII.

CONFIRMATION PROCEDURES

65

  A.

Combined Disclosure Statement and Confirmation Hearing.

65

  B.

Confirmation of the Plan.

65

  1.

Acceptance.

65

    2.

Standards for Confirmation.

66

  3.

Feasibility.

69

    4.

Valuation of the Debtor.

70

  5.

Best Interests Test.

70

         

IX.

FINANCIAL PROJECTIONS AND VALUATION

72

  A.

Financial Projections.

72

    1.

Scope of Financial Projections.

74

  B.

Valuation of the Reorganized Debtor as of July 15, 2014.

75

         

X.

CERTAIN RISK FACTORS TO BE CONSIDERED

76

  A.

Certain Bankruptcy Law Considerations.

76

    1.

Parties in Interest May Object to the Debtor’s Classification of Claims and
Interests.

76

  2.

Contingencies Not to Affect Votes of Impaired Classes to Accept or Reject the
Plan.

76

    3.

The Debtor May Fail to Satisfy the Solicitation Requirements Requiring a
Re-Solicitation.

76

  4.

Risk of Non-Confirmation, Non-Occurrence, or Delay of the Plan.

77

 

  5.

Risk of Non-Occurrence of the Effective Date.

78

 

 
vi 

--------------------------------------------------------------------------------

 

 

  6.

The DIP Facility and Cash Collateral May Be Insufficient to Fund the Debtor’s
Business Operations, or May Be Unavailable if the Debtor Does Not Comply with
Its Terms.

78

    7.

Impact of the Chapter 11 Case on the Debtor.

79

  8.

The Plan is Based Upon Assumptions the Debtor Developed Which May Prove
Incorrect and Could Render the Plan Unsuccessful.

79

  B.

Certain Risks Related to the Exit Financing Facility.

80

  1.

Ability to Maintain Sufficient Liquidity.

80

    2.

Restrictive Covenants in the Exit Financing Facility.

81

C.

Certain Risks Related to the Debtor’s Business and Operations.

81

    1.

The Continuing Global Economic Downturn May Continue to Negatively Impact the
Debtor’s Business.

81

  2.

Dependence on Spot Charters.

82

    3.

Reliance on a Limited Number of Charterers.

82

  4.

Increased Operating Costs Could Adversely Affect Cash Flows and Financial
Condition.

82

    5.

Highly Competitive International Shipping Industry and Ability to Effectively
Compete.

83

  6.

Inadequate Liquidity Could Materially Adversely Affect Eagle’s Future Business
Operations.

83

    7.

Potential for Vessel Arrests.

84

  8.

Operational Hazards and Adequacy of Insurance.

84

    9.

Laws and Regulations.

85

  10.

Ability to Attract and Retain Key Management Personnel and other Employees in
the Shipping Industry.

86

    11.

Failure to Qualify Under IRC Section 883.

87

  12.

Treatment by United States Tax Authorities as a “Passive Foreign Investment
Company.”

87

    13.

Treatment by United States Tax Authorities as a “Controlled Foreign
Corporation.”

88

  14.

Discharge of Prepetition Claims and Related Legal Proceedings.

89

  D.

Certain Risks Relating to the Shares of New Eagle Common Stock and the New Eagle
Equity Warrants Under the Plan.

89

  1.

Significant Holders.

89

    2.

Restrictions on Transfer of New Eagle Common Stock.

89

  3.

Lack of Established Market for New Eagle Common Stock and the New Eagle Equity
Warrants.

89

    4.

The Anti-Dilution Protection for the New Eagle Equity Warrants Does Not Cover
All Transactions that Could Adversely Affect Such Warrants.

90

  5.

Historical Financial Information of the Debtor May Not Be Comparable to the
Financial Information of the Reorganized Debtor.

90

    6.

The Financial Projections Set forth in this Disclosure Statement May Not Be
Achieved.

91

 

 
vii 

--------------------------------------------------------------------------------

 

 

  7.

Incorporation under the Laws of the Republic of the Marshall Islands and
Enforcement of United States Judgments by Investors.

91

  E.

Additional Factors to Be Considered.

92

  1.

The Debtor Has No Duty to Update.

92

    2.

No Representations Outside this Disclosure Statement Are Authorized.

92

  3.

Forward-Looking Statements Are Not Assured, and Actual Results May Vary.

92

    4.

No Legal or Tax Advice Is Provided to You by This Disclosure Statement.

93

         

XI.

ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN

93

A.

Alternative Plan of Reorganization or Plan of Liquidation.

93

  B.

Liquidation Under Chapter 7.

94

         

XII.

SECURITIES LAW MATTERS

94

A.

Bankruptcy Code Exemptions from Registration Requirements.

94

    1.

Securities Issued in Reliance on Section 1145 of the Bankruptcy Code.

94

  2.

Subsequent Transfers of 1145 Securities.

95

    3.

Subsequent Transfers of the New Eagle Common Stock and New Eagle Equity Warrants
Issued to Affiliates.

96

  4.

New Eagle MIP Primary Equity and New Eagle MIP Options.

97

         

XIII.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN

98

  A.

Introduction.

98

B.

Certain United States Federal Income Tax Consequences to Eagle.

99

 

  1.

Exemption of Operating Income from United States Federal Income Taxation.

99

 

  2.

Taxation in the Absence of Section 883 Exemption.

100

 

  3.

Cancellation of Indebtedness.

101

C.

Certain United States Federal Income Tax Consequences to Holders of Claims and
Equity Interests.

101

 

  1.

Claims – In General.

102

 

  2.

Claims that Are Tax Securities.

103

 

  3.

Holders of Equity Interests.

104

D.

Information Reporting and Backup Withholding.

104

  E.

Certain United States Federal Income Tax Consequences to Recipients of New Eagle
Common Stock and New Eagle Equity Warrants.

104

 

  1.

Distributions.

104

 

  2.

Sale, Exchange, or Exercise of New Eagle Common Stock or New Eagle Equity
Warrants.

105

 

  3.

Passive Foreign Investment Company Status.

105

 

  4.

Controlled Foreign Corporation Status.

108

 

 
viii 

--------------------------------------------------------------------------------

 

 

         

XIV.

CERTAIN MARSHALL ISLANDS TAX CONSEQUENCES

108

         

XV.

RECOMMENDATION AND CONCLUSION

108

 

 
ix 

--------------------------------------------------------------------------------

 

 

TABLE OF EXHIBITS

 

Exhibit A:

Debtor’s Prepackaged Plan of Reorganization Pursuant to Chapter 11 of the
Bankruptcy Code

 

Exhibit B:

Eagle’s Prepetition Corporate Structure

 

Exhibit C:

Financial Projections

 

Exhibit D:

Liquidation Analysis

 

Exhibit E:

Valuation Analysis

 

THE DEBTOR HEREBY ADOPTS AND INCORPORATES EACH EXHIBIT ANNEXED TO THIS
DISCLOSURE STATEMENT BY REFERENCE AS THOUGH FULLY SET FORTH HEREIN.

 

 
x 

--------------------------------------------------------------------------------

 

 

I.     INTRODUCTION AND EXECUTIVE SUMMARY

 

Eagle Bulk Shipping Inc., a Marshall Islands corporation (“EBS”), as chapter 11
debtor and debtor in possession (the “Debtor”) in the above-referenced
chapter 11 case (the “Chapter 11 Case”), submits this Disclosure Statement
pursuant to section 1126 of title 11 of the United States Code (the “Bankruptcy
Code”) for use in the solicitation of votes on the Debtor’s Prepackaged Plan of
Reorganization Pursuant to Chapter 11 of the Bankruptcy Code, dated as of August
6, 2014 (as the same may be amended from time to time, the “Plan”). A copy of
the Plan is annexed as Exhibit A to this Disclosure Statement. Capitalized terms
used but not otherwise defined herein have the meanings ascribed to such terms
in the Plan. For the avoidance of doubt, EBS’ direct and indirect subsidiaries
are not presently contemplated to be debtors in the Chapter 11 Case.

 

The purpose of this Disclosure Statement is to provide information of a kind,
and in sufficient detail, to enable creditors of the Debtor that are entitled to
vote on the Plan to make informed decisions on whether to vote to accept or
reject the Plan. This Disclosure Statement sets forth certain information
regarding the prepetition operating and financial history of EBS and its
Non-Debtor Subsidiaries (collectively, “Eagle”), the Debtor’s need to seek
chapter 11 protection, significant events that are expected to occur during the
Chapter 11 Case, and the Debtor’s anticipated organization, operations, and
liquidity upon successful emergence from chapter 11 protection.

 

The Plan and this Disclosure Statement are the result of months of discussions
followed by extensive and vigorous negotiations among Eagle and its secured
lenders. The culmination of these negotiations was the entry into the
Restructuring Support Agreement by Eagle and a majority of holders of loans
under the Prepetition Credit Facility, who hold substantially in excess
of two-thirds of the principal amounts outstanding thereunder. As described in
more detail below, the Plan substantially deleverages the Debtor’s balance sheet
by converting over 80% of its approximately $1.2 billion of debt into equity in
the Reorganized Debtor and repaying the balance of such debt in cash from the
proceeds of the Exit Financing Facility. As part of the overall settlement
embodied in the Restructuring Support Agreement and the Plan, the
Prepetition Credit Facility Lenders are voluntarily forgoing their right to part
of the distributions under the Plan that they are otherwise entitled to receive
so that the Debtor can provide new common stock and warrants to holders of
Equity Interests in exchange for the surrender or cancellation of their Equity
Interests.

 

The key components of the Plan are as follows:

 

 

●

Holders of Allowed General Unsecured Claims will not be affected by the filing
of the Chapter 11 Case and, subject to Court approval, are anticipated to be
paid in full in the ordinary course of business during the pendency of the
Chapter 11 Case or reinstated and left unimpaired under the Plan in accordance
with their terms.

 

 

●

Payment in full, in cash, of all Allowed Administrative Claims, DIP Claims, Fee
Claims, Priority Tax Claims, statutory fees, Other Priority Claims, and Other
Secured Claims.

 

 
 

--------------------------------------------------------------------------------

 

 

 

●

The Prepetition Credit Facility Lenders will receive (i) 99.5% of the
Reorganized Debtor’s new common stock (subject to dilution) and (ii) the
Prepetition Credit Facility Cash Distribution.

 

 

●

Equity Interests will receive the Shareholder Equity Distribution, representing
0.5% of the Reorganized Debtor’s new common stock (or, if applicable, the
Shareholder Cash Distribution), and the New Eagle Equity Warrants, representing
7.5% of the Reorganized Debtor’s new common stock (each, subject to dilution),
from amounts otherwise distributable to the Prepetition Credit Facility Lenders
in exchange for the cancellation or surrender of Equity Interests and for the
release by such holders of the Released Parties.

 

 

●

Entry into the Exit Financing Facility, the proceeds of which will be used to
pay (i) the DIP Claims, the Prepetition Credit Facility Cash Distribution, the
Outstanding Trade Obligations, the Shareholder Cash Distribution, and the
Restructuring Expenses and (ii) such amount as necessary to provide Eagle with
$72.5 million in total liquidity (inclusive of any minimum liquidity
requirements under the Exit Financing Facility) upon the Effective Date
(including cash and unfunded revolver commitments), following the payment, or
reserving for the payment, of each the foregoing.

 

Eagle and the other parties to the Restructuring Support Agreement believe that
the proposed restructuring under the Plan is extremely favorable for all
stakeholders because it achieves a substantial deleveraging of EBS’ balance
sheet (by approximately $975 million) through consensus with the overwhelming
majority of EBS’ creditors and eliminates potential deterioration of value – and
disruptions to worldwide operations – that could otherwise result from a
protracted and contentious bankruptcy case or cases. The refinancing and
conversion into equity of more than $1.2 billion of Eagle’s debt in the
aggregate is expected to generate approximately $37.5 million of cash flow
annually due to the reduced interest expense. Importantly, Eagle would not be
able to implement the conversion of debt-to-equity proposed under the Plan
without the support of its creditor constituents. In sum, the Plan embodies a
global settlement as part of an expeditious and consensual restructuring,
including a distribution to current equity holders on account of the surrender
or cancellation of their Equity Interests from value that would otherwise be
distributable to EBS’ creditors. This avoids potential litigation that could
decrease value for all stakeholders and delay (and possibly derail) the
restructuring process – including the cessation of international operations from
vessel arrests or loss of charter hires that, in turn, would devastate future
revenues. The significant support obtained by Eagle pursuant to the
Restructuring Support Agreement provides a fair and reasonable path for an
expeditious consummation of the Plan and the preservation of Eagle’s ordinary
course of business.

 

The Plan also contemplates that the Reorganized Debtor will remain a listed,
public company upon emergence from chapter 11. The Debtor is currently a
publicly held reporting company, with its shares of common stock trading on the
NASDAQ Global Select Market (“NASDAQ”) under the ticker symbol “EGLE.” The
Debtor intends to remain listed following the Petition Date on NASDAQ and the
Reorganized Debtor intends to continue such NASDAQ listing in respect of the New
Eagle Common Stock. As a public company, the Debtor is currently subject to, and
satisfies, various ongoing legal and listing requirements, including, among
others, (i) having independent directors comprise a majority of the Debtor’s
board of directors and (ii) having the board of directors convene regular
executive sessions (i.e., meetings solely comprised of independent directors and
without the Debtor’s management). In addition, the Debtor maintains, among
others, separate audit, compensation, and nominating and governance committees,
each of which is solely comprised of independent directors. During the months
leading up to the Chapter 11 Case, the Debtor’s independent directors were
advised by independent counsel and played a significant role in representing the
interests of the Debtor’s shareholders and advocating on their behalf in
connection with the restructuring negotiations.

 

 
2 

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Additionally, as described in Section VI herein, the Plan provides for certain
releases of Claims against, among others, the Debtor, the Reorganized Debtor,
the Non-Debtor Subsidiaries, the parties to the Restructuring Support Agreement,
the Prepetition Credit Facility Agent, the DIP Agent, and each of their
professionals, employees, officers, and directors.

 

FOR A COMPLETE UNDERSTANDING OF THE PLAN, YOU SHOULD READ THIS DISCLOSURE
STATEMENT, THE PLAN, AND THE EXHIBITS THERETO IN THEIR ENTIRETY. IF ANY
INCONSISTENCY EXISTS BETWEEN THE PLAN AND THIS DISCLOSURE STATEMENT, THE TERMS
OF THE PLAN ARE CONTROLLING. ALL EXHIBITS TO THIS DISCLOSURE STATEMENT ARE
INCORPORATED INTO AND ARE A PART OF THIS DISCLOSURE STATEMENT AS IF SET FORTH IN
FULL HEREIN.

 

THE DEBTOR HAS NOT YET COMMENCED A BANKRUPTCY CASE UNDER CHAPTER 11 OF THE
BANKRUPTCY CODE. THE DEBTOR EXPECTS TO FILE ITS BANKRUPTCY CASE AFTER IT
SOLICITS THE VOTES OF THE IMPAIRED CLASS OF CLAIMS ENTITLED TO VOTE ON THE PLAN.

 

BECAUSE NO BANKRUPTCY CASE HAS YET BEEN COMMENCED, THIS DISCLOSURE STATEMENT HAS
NOT YET BEEN APPROVED BY ANY COURT WITH RESPECT TO WHETHER IT CONTAINS ADEQUATE
INFORMATION WITHIN THE MEANING OF SECTION 1125(a) OF THE BANKRUPTCY CODE.
NONETHELESS, ONCE THE CHAPTER 11 CASE IS COMMENCED, THE DEBTOR EXPECTS TO
PROMPTLY SEEK ENTRY OF AN ORDER OF THE COURT APPROVING THIS DISCLOSURE
STATEMENT PURSUANT TO SECTION 1125 OF THE BANKRUPTCY CODE AND DETERMINING THAT
THE SOLICITATION OF VOTES ON THE PLAN BY MEANS OF THIS DISCLOSURE STATEMENT WAS
IN COMPLIANCE WITH SECTION 1125(a) OF THE BANKRUPTCY CODE.

 

Each holder of a Claim entitled to vote on the Plan should read this Disclosure
Statement, the Plan, and the instructions accompanying the Ballots in their
entirety before voting on the Plan. These documents contain, among other things,
important information concerning the classification of Claims for voting
purposes and the tabulation of votes. The statements contained in this
Disclosure Statement are made only as of the date hereof unless otherwise
specified, and there can be no assurance that the statements contained herein
will be correct at any time hereafter. All creditors should also carefully read
Section X of this Disclosure Statement – “Certain Risk Factors to be Considered”
– before voting to accept or reject the Plan.

 

 
3 

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THE DEBTOR AND THE CONSENTING LENDERS BELIEVE THAT IMPLEMENTATION OF THE PLAN IS
IN THE BEST INTERESTS OF THE DEBTOR AND ITS STAKEHOLDERS. FOR ALL OF THE REASONS
DESCRIBED IN THIS DISCLOSURE STATEMENT, THE DEBTOR URGES YOU TO RETURN YOUR
BALLOT ACCEPTING THE PLAN BY THE VOTING DEADLINE (I.E., THE DATE BY WHICH YOUR
BALLOT MUST BE ACTUALLY RECEIVED), WHICH IS AUGUST 12, 2014 AT 5:00 P.M.
(PREVAILING EASTERN TIME).

 

 

A.

Overview of Chapter 11.

 

Chapter 11 is the principal business reorganization chapter of the Bankruptcy
Code. Under chapter 11, a debtor is authorized to reorganize its business for
the benefit of itself, its creditors, and its equity interest holders. Another
goal of chapter 11 is to promote equality of treatment for similarly situated
creditors and equity interest holders, subject to the priority of distributions
prescribed by the Bankruptcy Code, with respect to distribution of a debtor’s
assets. The commencement of a chapter 11 case creates an estate that is
comprised of all of the legal and equitable interests of the debtor as of the
filing date. The Bankruptcy Code provides that the debtor may initially continue
to operate its business and remain in possession of its property as a “debtor in
possession.”

 

Consummation of a plan of reorganization is the principal objective of a
chapter 11 reorganization case. A plan of reorganization sets forth the means
for satisfying claims against, and equity interests in, the debtor. Confirmation
of a plan of reorganization by the bankruptcy court makes the plan of
reorganization binding upon a debtor, any issuer of securities under the plan of
reorganization, any person acquiring property under the plan, and any holder of
a claim or equity interest in a debtor. Subject to certain limited exceptions,
the confirmation order discharges a debtor from any debt that arose before
confirmation of the plan of reorganization and substitutes the debt with the
obligations specified under the confirmed plan of reorganization.

 

The Bankruptcy Code also authorizes a debtor to solicit votes for the acceptance
of a plan of reorganization prior to the filing of a chapter 11 case through a
so-called “prepackaged” plan of reorganization process. Because the solicitation
of acceptances takes place all or in part before the bankruptcy filing, the
duration of a prepackaged bankruptcy case is often less than in conventional
bankruptcy cases. Prior to soliciting acceptances of the proposed plan,
sections 1125(a) and 1126(b) of the Bankruptcy Code require the plan proponent
to prepare and distribute a disclosure statement containing adequate information
of a kind, and in sufficient detail, to enable a hypothetical reasonable
investor to make an informed judgment whether to accept or reject the plan. The
Debtor is submitting this Disclosure Statement to, and soliciting votes from,
the Holders of Impaired Claims against it in order to satisfy the requirements
of sections 1125(a) and 1126(b) of the Bankruptcy Code.

 

 
4 

--------------------------------------------------------------------------------

 

 

 

B.

Voting Rights.

 

Only administrative expenses, claims, and equity interests that are “allowed”
may receive distributions under a chapter 11 plan. An “allowed” administrative
expense, claim, or equity interest means that a debtor agrees or, in the event
of a dispute, that the Court determines, that the administrative expense, claim,
or equity interest, including the amount thereof, is in fact a valid obligation
of, or equity interest in, a debtor. The Bankruptcy Code also requires that, for
purposes of treatment and voting, a plan of reorganization categorize the
different claims against, and equity interests in, a debtor into separate
classes based upon their legal nature. Claims of a substantially similar legal
nature are typically classified together, as are equity interests of a
substantially similar legal nature. Because an entity may hold multiple claims
and/or equity interests that give rise to different legal rights, the holders of
such claims and/or equity interests may find themselves as members of multiple
classes of claims and/or equity interests.

 

Under a plan of reorganization, the separate classes of claims and equity
interests must be designated either as “impaired” (i.e., altered by the plan) or
“unimpaired” (unaltered by the plan). If a class of claims or interests is
“impaired,” the Bankruptcy Code affords certain rights to the holders of such
claims or equity interests, such as the right to vote on the plan (unless the
plan deems the holder to reject the plan), and the right to receive an amount
under the plan of reorganization that is not less than the value that the holder
would receive if the debtor against which such claims or equity interests are
asserted were liquidated under chapter 7.

 

Under section 1124 of the Bankruptcy Code, a class of claims or equity interests
is “impaired” unless, with respect to each claim or interest of such class, the
plan of reorganization (i) does not alter the legal, equitable, or contractual
rights of the holders of such claims or interests or (ii) irrespective of the
holders’ right to receive accelerated payment of such claims or interests after
the occurrence of a default, cures all defaults (other than those arising from,
among other things, the debtor’s insolvency or the commencement of a bankruptcy
case), reinstates the maturity of the claims or interests in the class,
compensates the holders of such claims or interests for any damages incurred as
a result of their reasonable reliance upon any acceleration rights, and does not
otherwise alter their legal, equitable, or contractual rights.

 

Only holders of allowed claims or equity interests in impaired classes of claims
or equity interests that receive or retain property on account of such claims or
equity interests under a proposed plan of reorganization, but are not otherwise
deemed to reject the plan, are entitled to vote on such a plan. Holders of
unimpaired claims or equity interests are deemed to accept the plan under
section 1126(f) of the Bankruptcy Code and are not entitled to vote. Holders of
claims or equity interests that do not receive or retain any property on account
of such claims or equity interests are deemed to reject the plan under
section 1126(g) of the Bankruptcy Code and are not entitled to vote.

 

 

C.

Entitlement to Vote.

 

As discussed in further detail below, pursuant to the Plan:

 

 

●

Holders of Claims in Class 3 are impaired and will receive distributions under
the Plan on account of such Claims. As a result, Holders of Claims in such Class
are entitled to vote to accept or reject the Plan;

 

 

●

Holders of Claims and Intercompany Claims in Classes 1, 2, 4, and 5, as
applicable, are unimpaired. As a result, Holders of Claims and Intercompany
Claims in those Classes are deemed to have accepted the Plan and are not
entitled to vote to accept or reject the Plan.

 

 
5 

--------------------------------------------------------------------------------

 

 

 

●

Holders of Equity Interests in Class 6 are impaired, are not entitled to receive
or retain any property on account of such Equity Interests, and are deemed to
have rejected the Plan. As a result, Holders of Equity Interests in Class 6 are
not entitled to vote to accept or reject the Plan.

 

The Bankruptcy Code defines “acceptance” of a plan by a class of claims as
acceptance by creditors in that class that hold at least two-thirds in dollar
amount and more than one-half in number of the claims actually voted to accept
or reject the plan. Your vote on the Plan is important. The Bankruptcy Code
requires as a condition to confirmation of a plan of reorganization that each
class that is impaired and entitled to vote under a plan votes to accept such
plan, unless the plan is being confirmed under the “cram down” provisions of
section 1129(b) of the Bankruptcy Code.

 

Section 1129(b) permits confirmation of a plan of reorganization notwithstanding
the non-acceptance of the plan by one or more impaired classes of claims or
equity interests, so long as at least one impaired class of claims or interests
votes to accept a proposed plan. Under that section, a plan may be confirmed by
a bankruptcy court if it does not “discriminate unfairly” and is “fair and
equitable” with respect to each non-accepting class. The Debtor intends to
pursue a “cram down” of the Holders of Equity Interests in Class 6, who are
deemed to have rejected the Plan.

 

 

D.

Solicitation and Voting Process.

 

The following summarizes the procedures to accept or reject the Plan. Holders of
Claims entitled to vote are encouraged to review the relevant provisions of the
Bankruptcy Code and Bankruptcy Rules and/or to consult their own attorneys.

 

 

1.

The “Solicitation Package”.

 

The following materials are provided to each holder of a Claim that is entitled
to vote on the Plan:

 

 

●

the applicable Ballot and voting instructions;

 

 

●

a Disclosure Statement with all exhibits; and

 

 

●

the Plan.

 

The holders of Claims in Class 3 will receive the Solicitation Package,
including the Ballot, via electronic mail.

 

 
6 

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If you (a) did not receive a Ballot and believe you are entitled to one;
(b) received a damaged Ballot; (c) lost your Ballot; (d) have any questions
concerning this Disclosure Statement, the Plan, or the procedures for voting on
the Plan, or the solicitation packet of materials you received; or (e) if you
wish to obtain a paper copy of the Plan, this Disclosure Statement or any
exhibits to such documents, please contact KCC by (i) regular mail, delivery, or
courier at Eagle Bulk Shipping Ballot Processing Center, c/o Kurtzman Carson
Consultants LLC, 2335 Alaska Avenue, El Segundo, CA 90245; (ii) toll-free
telephone for U.S. callers at (877) 709-4746 and for international callers at
(424) 236-7227; or (iii) email at EagleBulkInfo@kccllc.com.

 

 

2.

Voting Deadline.

 

To be counted, your Ballot(s) must be actually received by KCC no later than
August 12, 2014 at 5:00 p.m. (prevailing Eastern Time).

 

 

3.

Voting Instructions.

 

If you are entitled to vote to accept or reject the Plan, a Ballot is enclosed
for the purpose of voting on the Plan. Except as provided below, holders of
Claims are required to vote all of their Claims within a Class either to accept
or reject the Plan and may not split their votes. Any Ballot received that does
not indicate either an acceptance or rejection of the Plan or that indicates
both acceptance and rejection of the Plan will not be counted. Any Ballot
received that is not signed or that contains insufficient information to permit
the identification of the holder will be an invalid Ballot and will not be
counted.1

 

If you are the record holder of Claims that are beneficially owned by another
party, you may submit a separate Ballot with respect to such portion of Claims
that are beneficially owned by such third party, and the vote indicated on such
separate Ballot may differ from the vote indicated on Ballots submitted with
respect to Claims that you beneficially own yourself or that are beneficially
owned by other parties. In no event may you submit Ballots with respect to
Claims in excess of the amount of Claims for which you are the record holder as
of the Voting Record Date.

 

In accordance with Bankruptcy Rule 3018(c), the Ballots are based on Official
Form No. 14, but have been modified to meet the particular needs of this
Chapter 11 Case.

 

Please sign and complete a separate Ballot with respect to each Claim, and
return your Ballot(s) directly the Debtor’s voting agent, Kurtzman Carson
Consultants (“KCC”) by one of the following methods:

 

 

●

by hand delivery, overnight courier, or first class mail to: Eagle Bulk Shipping
Ballot Processing Center, c/o Kurtzman Carson Consultants LLC, 2335 Alaska
Avenue El Segundo, CA 90245; or

 

--------------------------------------------------------------------------------

1

Although the Debtor’s direct and indirect subsidiaries are not presently
contemplated to be debtors in the Chapter 11 Case, one or more of the Non-Debtor
Subsidiaries may commence a chapter 11 case in order to effectuate the
restructuring contemplated by the Restructuring Support Agreement.  To that end,
the Ballot instructs each holder of a Class 3 Prepetition Credit Facility Claim
to vote to accept or reject the Plan as it may be modified by the Debtor to
include the Non-Debtor Subsidiaries as co-proponents of the Plan, provided that
such modifications do not materially alter the treatment of holders of Claims
and Equity Interests as currently provided in the Plan.

 

 
7 

--------------------------------------------------------------------------------

 

 

 

●

by e-mail to: EagleBulkInfo@kccllc.com.

 

Only Ballots with a signature will be counted. Email submission of ballots is
preferred. Only Ballots received by KCC by the applicable voting deadline will
be counted.

 

If delivery of a Ballot is by mail, it is recommended that voters use an air
courier with guaranteed next day delivery or registered mail, properly insured,
with return receipt requested. In all cases, sufficient time should be allowed
to ensure timely delivery. The method of such delivery is at the election and
risk of the voter.

 

A Ballot may be withdrawn by delivering a written notice of withdrawal to KCC,
so that KCC receives the notice before the Voting Deadline. In order to be
valid, a notice of withdrawal must (a) specify the name of the creditor who
submitted the Ballot to be withdrawn, (b) contain a description of the Claim(s)
to which it relates, and (c) be signed by the creditor in the same manner as on
the Ballot. EBS expressly reserves the right to contest the validity of any
withdrawals of votes on the Plan.

 

After the Voting Deadline, any creditor who has timely submitted a
properly-completed Ballot to KCC may change or withdraw its vote only with the
approval of the Court. If more than one timely, properly-completed Ballot is
received with respect to the same Claim and no order of the Court allowing the
creditor to change its vote has been entered before the Voting Deadline, the
Ballot that will be counted for purposes of determining whether sufficient
acceptances required to confirm the Plan have been received will be the timely,
properly-completed Ballot determined by KCC to have been received last.

 

CREDITORS WHO VOTE TO REJECT THE PLAN AND DO NOT ELECT TO OPT OUT OF THE RELEASE
PROVISIONS CONTAINED IN ARTICLE VI.J.2 OF THE PLAN SHALL BE DEEMED TO HAVE
CONCLUSIVELY, ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY, AND FOREVER RELEASED AND
DISCHARGED ALL CLAIMS AND CAUSES OF ACTION AGAINST THE RELEASED PARTIES IN
ACCORDANCE WITH THE PLAN.

 

CREDITORS WHO VOTE TO ACCEPT THE PLAN SHALL BE DEEMED TO HAVE CONCLUSIVELY,
ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY, AND FOREVER RELEASED AND DISCHARGED
ALL CLAIMS AND CAUSES OF ACTION AGAINST THE RELEASED PARTIES IN ACCORDANCE WITH
THE PLAN.

 

CREDITORS WHO FAIL TO RETURN A BALLOT VOTING EITHER TO ACCEPT OR REJECT THE PLAN
SHALL BE DEEMED TO HAVE CONCLUSIVELY, ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY,
AND FOREVER RELEASED AND DISCHARGED ALL CLAIMS AND CAUSES OF ACTION AGAINST THE
RELEASED PARTIES IN ACCORDANCE WITH THE PLAN.

 

NON-VOTING CLASSES INCLUDE UNIMPAIRED CLAIMS AND EQUITY INTERESTS. HOLDERS OF
UNIMPAIRED CLAIMS ARE DEEMED TO HAVE CONCLUSIVELY, ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY, AND FOREVER RELEASED AND DISCHARGED ALL CLAIMS AND CAUSES OF
ACTIONS AGAINST THE RELEASED PARTIES IN ACCORDANCE WITH THE PLAN TO THE FULLEST
EXTENT PERMISSIBLE UNDER APPLICABLE LAW.

 

HOLDERS OF EQUITY INTERESTS WHO DO NOT ELECT TO OPT OUT OF THE RELEASE
PROVISIONS CONTAINED IN ARTICLE VI.J.2 OF THE PLAN IN ACCORDANCE WITH THE
PROCEDURES SET FORTH IN THE COMBINED NOTICE SHALL BE DEEMED TO HAVE
CONCLUSIVELY, ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY, AND FOREVER RELEASED AND
DISCHARGED ALL CLAIMS AND CAUSES OF ACTION AGAINST THE RELEASED PARTIES IN
ACCORDANCE WITH THE PLAN.

 

 
8 

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E.

The Confirmation Hearing.

 

EBS intends to file a voluntary petition to commence the Chapter 11 Case and
will request that the Court schedule a hearing to consider confirmation of the
Plan (the “Confirmation Hearing”), as soon as possible, at the United States
Bankruptcy Court for the Southern District of New York, One Bowling Green, New
York, New York 10004-1408. EBS will request confirmation of the Plan, as it may
be modified from time to time, under section 1129(b) of the Bankruptcy Code and
consistent with the terms, conditions, and consent and consultation rights set
forth in the Restructuring Support Agreement, and has reserved the right to
modify the Plan to the extent, if any, that confirmation pursuant to
section 1129(b) of the Bankruptcy Code requires modification.

 

 

 

 

 

 

 

 

 

 

 

 

 

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9 

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II.     SUMMARY OF TREATMENT OF CLAIMS AND
EQUITY INTERESTS UNDER THE PLAN

 

The following table summarizes the classification and treatment of Claims and
Equity Interests under the Plan and the estimated distributions to be received
by the holders of Allowed Claims and Allowed Equity Interests thereunder. The
summaries in this table are qualified in their entirety by the description of
the treatment of such Claims in Article III of the Plan. In accordance with
section 1123(a)(1) of the Bankruptcy Code, Administrative Expense Claims, DIP
Claims, U.S. Trustee Fees, Fee Claims, and Priority Tax Claims have not been
classified.

 

Class

Claims and Equity Interests

Treatment of
Allowed Claims and Allowed Equity Interests

Status

Voting
Rights

Estimated Allowed Amount2

Projected
Recovery3

Class 1

Other
Priority
Claims

Except to the extent that a holder of an Allowed Other Priority Claim agrees in
writing to less favorable treatment, in full and final satisfaction, settlement,
release, and discharge of, and in exchange for, each Allowed Other Priority
Claim, each holder of an Allowed Other Priority Claim shall receive payment in
Cash in an amount equal to such Allowed Other Priority Claim as soon as
practicable after the later of (i) the Effective Date and (ii) thirty (30) days
after the date when such Other Priority Claim becomes an Allowed Other Priority
Claim.

Unimpaired

Deemed
to
Accept

De Minimis/None

100%

Class 2

Other
Secured
Claims

Except to the extent that a holder of an Allowed Other Secured Claim agrees in
writing to less favorable treatment, at the option of the Debtor, in full and
final satisfaction, settlement, release and discharge of and in exchange for
such Other Secured Claim, each holder of an Allowed Other Secured Claim shall:
(i) have its Allowed Other Secured Claim Reinstated and rendered Unimpaired,
(ii) receive Cash in an amount equal to such Allowed Other Secured Claim,
including any interest on such Allowed Other Secured Claim, if such interest is
required to be paid pursuant to sections 506(b) and/or 1129(a)(9) of the
Bankruptcy Code, as soon as practicable after the later of (a) the Effective
Date, and (b) thirty (30) days after the date such Other Secured Claim becomes
an Allowed Other Secured Claim, or (iii) receive the Collateral securing its
Allowed Other Secured Claim as soon as practicable after the later of (a) the
Effective Date and (b) thirty (30) days after the date such Other Secured Claim
becomes an Allowed Other Secured Claim.

Unimpaired

Deemed
to
Accept

De Minimis/None

100%

 

 

 

 

--------------------------------------------------------------------------------

2

Figures are as of August 4, 2014.

 

3

The projected recoveries described herein account for dilution from the New
Eagle Equity Warrants but are prior to dilution from the warrants issued under
the Management Incentive Program.

 

 
10 

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Class Claims and Equity Interests Treatment of
Allowed Claims and Allowed Equity Interests Status Voting
Rights Estimated Allowed Amount2 Projected
Recovery3

Class 3

Prepetition Credit Facility Claims

Except to the extent that a holder of an Allowed Prepetition Credit Facility
Claim agrees in writing to such other treatment, and the Debtor and the Majority
Consenting Lenders, each in their sole discretion, agree in writing to such
other treatment, in full and final satisfaction, settlement, release, and
discharge of, and in exchange for, the Prepetition Credit Facility Claims, on or
as soon as practicable after the Effective Date, each holder of an Allowed
Prepetition Credit Facility Claim shall receive its Pro Rata share of: (i) the
Prepetition Credit Facility Cash Distribution; and (ii) the Prepetition Credit
Facility Equity Distribution. Each holder of an Allowed Prepetition Credit
Facility Claim shall only receive one recovery in full and complete satisfaction
of all Prepetition Credit Facility Claims and Guarantee Claims held by such
claimant, which recovery is specified in Article III.D.3(c) of the Plan.

Impaired

Entitled to Vote

$1,188,847,632.094 

64% - 71%

Class 4

General
Unsecured
Claims

In full and final satisfaction, settlement, release, and discharge of, and in
exchange for, each Allowed General Unsecured Claim, on the Effective Date, each
holder of an Allowed General Unsecured Claim shall, at the discretion of the
Debtor, and only to the extent such holder’s Allowed General Unsecured Claim was
not previously paid, pursuant to an order of the Court or otherwise: (i) have
its Allowed General Unsecured Claim Reinstated as an obligation of the
Reorganized Debtor, and be paid in accordance with the ordinary course terms,
(ii) receive such other treatment as may be agreed between such holder and the
Reorganized Debtor, or (iii) receive such other treatment that will render it
Unimpaired pursuant to section 1124 of the Bankruptcy Code.

Unimpaired

Deemed
to
Accept

De Minimis/None

100%

Class 5

Intercompany Claims

On the Effective Date, Intercompany Claims, if any, will be Reinstated in full.
On and after the Effective Date, the Reorganized Debtor and the Non-Debtor
Subsidiaries will be permitted to transfer funds between and among themselves as
they determine to be necessary or appropriate to enable the Reorganized Debtor
to satisfy its obligations under the Plan. Except as set forth herein, any
changes to intercompany account balances resulting from such transfers will be
accounted for and settled in accordance with the Debtor’s historical
intercompany account settlement practices.

Unimpaired

Deemed
to
Accept

N/A

100%

 

 

 

 

 

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4

This figure excludes accrued and unpaid interest on the outstanding principal
amount as of August 4, 2014, plus other unpaid fees and costs.

 

 
11 

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Class Claims and Equity Interests Treatment of
Allowed Claims and Allowed Equity Interests Status Voting
Rights Estimated Allowed Amount2 Projected
Recovery3

Class 6

Equity Interests

On the Effective Date, Equity Interests shall be cancelled and discharged and
shall be of no further force or effect, whether surrendered for cancellation or
otherwise, and holders of Equity Interests shall not receive or retain any
property under the Plan on account of such Equity Interests. Notwithstanding the
foregoing, on or as soon as practicable after the Effective Date, holders of
Equity Interests (other than Consenting Lenders who hold either Amended Lender
Warrants or Equity Interests based upon the exercise of Amended Lender Warrants)
shall receive, in exchange for the surrender or cancellation of their Equity
Interests and for the releases by such holders of the Released Parties, their
Pro Rata share of the Shareholder Equity Distribution and their Pro Rata share
of the New Eagle Equity Warrants, each of which shall come from amounts which
holders of Prepetition Credit Facility Claims would otherwise be entitled to
under the Plan; provided, however, that, notwithstanding Article VII.B.9 of the
Plan, the Debtor may, in consultation with the Majority Consenting Lenders,
(i) provide any holder of an Equity Interest that would otherwise be entitled to
a distribution of less than one (1) share of New Eagle Common Stock under
Article III.D.6.(b) of the Plan with a distribution of one (1) share of New
Eagle Common Stock or (ii) provide any holder of an Equity Interest that would
otherwise be entitled to a distribution of less than one hundred (100) shares of
New Eagle Common Stock under Article III.D.6.(b) of the Plan with a Cash payment
equal to the value of such New Eagle Common Stock. Notwithstanding anything
contained herein to the contrary, Consenting Lenders who hold either Amended
Lender Warrants or Equity Interests based upon the exercise of Amended Lender
Warrants shall not receive or retain any property under the Plan on account of
such Amended Lender Warrants or Equity Interests.

Impaired

Deemed
to
Reject

18,315,213
Outstanding Shares5

$21.9 million - $27.5 million

 

 

 

--------------------------------------------------------------------------------

5

This amount is subject to increase based on the exercise of outstanding warrants
to acquire approximately 852,000 additional shares.

 

 
12 

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III.      COMPANY BACKGROUND

 

 

A.

Eagle’s Business.

 

EBS, incorporated under the laws of the Republic of the Marshall Islands (the
“Marshall Islands”) on March 23, 2005, is engaged primarily in the ocean
transportation of a broad range of major and minor dry bulk cargoes, including
iron ore, coal, grain, cement, and fertilizer, along worldwide shipping routes.
As of the date hereof, EBS, through its sixty-three (63) wholly-owned
subsidiaries, owns and operates a fleet of forty-five (45) vessels (each a
“Vessel”),6 consisting of forty-three (43) Supramax Vessels and two (2) Handymax
Vessels.7 Eagle owns one of the largest fleets of Supramax dry bulk vessels in
the world and operates in over 418 ports of call located in over 88 countries.

 

Eagle’s Vessels are contracted (the industry term is “chartered”) by third-party
customers to earn revenue through: (a) “time charters” – which are charters
under which the shipowner is paid charter hire rate on a per day basis for a
certain period of time and is responsible for providing the crew and paying
operating costs, while the charterer is responsible for paying the voyage costs;
(b) “voyage charters” – which are charters under which a shipowner is paid
freight on the basis of moving cargo from a loading port to a discharge port and
is responsible for paying both operating costs and voyage costs, while the
charterer may be responsible for any delay at the loading or discharging ports;
(c) “spot market charters” – which are charters for specific time periods at
rates that fluctuate based on the spot market; and (d) “pool charters” – whereby
the Vessels participate in a charter pool with other vessels managed by pool
managers.

 

Eagle’s principal place of business is, and it conducts its business out of, its
headquarters located in New York, New York. The principal function of Eagle’s
New York headquarters is to (i) administer financial and accounting aspects of
Eagle’s business and (ii) provide commercial operation and technical management
services. Eagle also maintains a corporate office in Singapore, from which it
provides commercial operations, technical management, and accounting services.
Eagle’s dual-office structure provides a unique, global footprint that allows
Eagle to monitor the global shipping market continuously. In addition, because
of the seamless integration between the New York and Singapore offices, Eagle
can, in real time, (i) react and respond to the needs of its charterers,
(ii) interface with its suppliers and service providers, and (iii) assess and
respond to any technical or commercial issues that may arise in the course of
the operation of Eagle’s Vessels, regardless of where such Vessels may be
located.

 

As of the date hereof, Eagle employed approximately sixty-five (65) office
personnel, who manage Eagle’s financial, technical, commercial, operational, and
administrative functions. The day-to-day technical management of Eagle’s fleet
is provided either in-house, through Eagle Ship Management LLC, or by V Ships
Management Ltd., an unaffiliated third party manager, which is one of the
world’s largest providers of independent ship management and related services.

 

 

B.

Eagle’s Prepetition Capital Structure.

 

As of the date hereof, the substantial majority of Eagle’s liabilities – in
excess of $1.2 billion – consisted of funded debt (i.e., not trade debt,
derivative liability, or warrants) comprised of the Prepetition Credit Facility.

 

 

--------------------------------------------------------------------------------

6

A corporate organizational chart is annexed as Exhibit B.

 

7

Supramax dry bulk vessels range in size from approximately 50,000 to 60,000
deadweight tons, while Handymax dry bulk vessels range in size from
approximately 35,000 to 60,000 deadweight tons.

 

 
13 

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On June 20, 2012, EBS, as borrower, and the subsidiaries of EBS, as guarantors,8
entered into that certain Fourth Amended and Restated Credit Agreement (the
“Prepetition Credit Agreement”) with The Royal Bank of Scotland plc (“RBS”), as
original Agent and Security Trustee, and certain other lenders party thereto
(collectively, the “Prepetition Credit Facility Lenders”). On June 6, 2014,
Wilmington Trust (London) Limited (“Wilmington Trust”), RBS, EBS, the Non-Debtor
Subsidiaries, and a majority of lenders under the Prepetition Credit Agreement
executed a Successor Agent and Security Trustee Agreement providing for
Wilmington Trust to become the successor Agent and successor Security Trustee
for the Prepetition Credit Facility.

 

The Prepetition Credit Agreement amended EBS’ Third Amended and Restated Credit
Agreement dated as of October 19, 2007 (as amended by an Amendatory Agreement
dated as of July 3, 2008, a Second Amendatory Agreement dated as of December 17,
2008, a Third Amendatory Agreement dated as of August 4, 2009, a Fourth
Amendatory Agreement dated as of August 4, 2010, a Sixth Amendatory and
Commercial Framework Implementation Agreement dated as of September 26, 2011,
and a Supplement to Sixth Amendatory and Commercial Framework Implementation
Agreement dated as of December 31, 2011, the “Original Credit Facility”), to,
among other things, (a) convert the $1,129,478,742 then outstanding under a
revolving credit facility to term loans and (b) provide for a new revolving
credit facility in the aggregate amount of $20,000,000 for Eagle’s working
capital purposes. The Prepetition Credit Agreement also set the maturity date as
December 31, 2015, and, subject to Eagle’s satisfaction of certain conditions,
provided Eagle an option to further extend the maturity date by a further 18
months to June 30, 2017.9 Currently, the non-default rate of interest on
borrowings under the Prepetition Credit Facility is LIBOR (as that term is
defined in the Prepetition Credit Agreement) plus (i) the Cash Pay Margin (as
that term is defined in the Prepetition Credit Agreement), which is currently
3.50%, (ii) the Capitalized Margin (as that term is defined in the Prepetition
Credit Agreement), which is currently 2.50%, and (iii) the Mandatory Cost (as
that term is defined in the Prepetition Credit Agreement), if any.

 

The obligations under the Prepetition Credit Facility are secured by (a) a valid
first “preferred mortgage” within the meaning of Chapter 3 of the Marshall
Islands Maritime Act, 1990, as amended, on each of the Vessels owned by the
forty-five (45) Vessel-Owning Subsidiaries,10 (b) substantially all of the
personal property of EBS and each Non-Debtor Subsidiary, and (c) a pledge by EBS
and Eagle Shipping International (USA) LLC (“ESI”) of their respective equity
interests in the Non-Debtor Subsidiaries.  As of the date hereof, an aggregate
amount of not less than $1,188,847,632 was outstanding under the Prepetition
Credit Facility, comprised of (i) $1,129,478,742 in outstanding principal amount
of term loans and (ii) $59,368,890 of PIK loans, plus accrued but unpaid
interest, plus the costs and expenses payable under the Prepetition Finance
Documents.11

 

 

--------------------------------------------------------------------------------

8

Currently, all of the Non-Debtor Subsidiaries guarantee the Prepetition Credit
Facility.

 

9

On August 4, 2010, a Fifth Amendatory Agreement in relation to the Original
Credit Facility was entered into, but the amendments to the terms of the
Original Credit Facility contemplated therein did not come into effect.

 

10

The “Vessel-Owning Subsidiaries” are: Avocet Shipping LLC; Bittern Shipping LLC;
Canary Shipping LLC; Cardinal Shipping LLC; Condor Shipping LLC; Crane Shipping
LLC; Crested Eagle Shipping LLC; Crowned Eagle Shipping LLC; Egret Shipping LLC;
Falcon Shipping LLC; Gannet Shipping LLC; Golden Eagle Shipping LLC; Goldeneye
Shipping LLC; Grebe Shipping LLC; Harrier Shipping LLC; Hawk Shipping LLC; Ibis
Shipping LLC; Imperial Eagle Shipping LLC; Jaeger Shipping LLC; Jay Shipping
LLC; Kestrel Shipping LLC; Kingfisher Shipping LLC; Kite Shipping LLC; Kittiwake
Shipping LLC; Martin Shipping LLC; Merlin Shipping LLC; Nighthawk Shipping LLC;
Oriole Shipping LLC; Osprey Shipping LLC; Owl Shipping LLC; Peregrine Shipping
LLC; Petrel Shipping LLC; Puffin Shipping LLC; Redwing Shipping LLC; Roadrunner
Shipping LLC; Sandpiper Shipping LLC; Shrike Shipping LLC; Skua Shipping LLC;
Sparrow Shipping LLC; Stellar Eagle Shipping LLC; Tern Shipping LLC; Thrasher
Shipping LLC; Thrush Shipping LLC; Woodstar Shipping LLC; and Wren Shipping LLC.

 

11

As of the Petition Date, Eagle had not drawn on, and thus no amount was
outstanding in respect of, the revolving loans under the Prepetition Credit
Agreement.

 

 
14 

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In connection with the Prepetition Credit Agreement, EBS entered into a Warrant
Agreement, dated June 20, 2012, pursuant to which EBS issued to the lenders
under the Prepetition Credit agreement warrants (the “Lender Warrants”)
convertible on a cashless basis into shares of EBS’ common stock, par value
$0.01, equal to an aggregate of 19.99% of EBS’ outstanding common stock on June
20, 2012 at an exercise price of $0.01 per share of common stock. One-third of
the Lender Warrants were exercisable immediately on the issue date thereof, the
next third of the Lender Warrants were exercisable when the price of EBS’ common
stock reached $10.00 per share (subject to certain customary adjustments in the
event of stock splits, reverse stock splits and certain distributions to all
holders of common stock) or certain other events occurred (the “Trigger Price B
Warrants”), and the last third of the Lender Warrants were exercisable when the
price of EBS’ common stock reached $12.00 per share (subject to the
aforementioned adjustments) or certain other events occurred (the “Trigger Price
C Warrants”). Unexercised Lender Warrants will expire on June 20, 2022.

 

As discussed in further detail below, on July 2, 2014, EBS and certain of the
lenders under the Prepetition Credit Agreement entered into the Warrant
Agreement Amendment (as defined herein), which, among other things, eliminated
the conditions restricting the exercise of the Trigger Price B Warrants and the
Trigger Price C Warrants held by lenders under the Prepetition Credit Agreement.

 

 

C.

Eagle’s Equity Holders.

 

As of the date hereof, EBS had authorized 100,000,000 shares of its common
stock, of which approximately 18,315,21312 shares were issued and outstanding.

 

IV.     EVENTS LEADING TO THE
COMMENCEMENT OF THE CHAPTER 11 CASE

 

 

A.

The International Dry Bulk Shipping Market.

 

The dry bulk shipping industry is cyclical with high volatility in charter hire
rates and profitability. Charter rates for dry bulk vessels have declined
significantly since 2008. The Baltic Dry Index (the “BDI”), a daily index that
tracks 20 key shipping routes published by the Baltic Exchange, which has long
been viewed as the main benchmark to monitor the movements of the dry bulk
vessel charter market and the performance of the entire dry bulk shipping
market, declined 94% in 2008 from a peak of 11,793 in May 2008 to a low of 663
in December 2008 and has remained volatile since then. The BDI recorded a record
low of 647 in 2012, and reached highs and lows of 2,337 and 698, respectively,
in 2013. During 2014, the BDI reached its year-to-date high of 2,113 in the
first quarter, and a low of 723 on July 22, 2014.

 

--------------------------------------------------------------------------------

12

This amount is subject to increase based on the exercise of outstanding warrants
to acquire approximately 852,000 additional shares.

 

 
15 

--------------------------------------------------------------------------------

 

 

Eagle’s results of operations depend primarily on the charter hire rates that
they are able to realize. Fluctuations in charter rates result from changes in
the supply of and demand for vessel capacity and changes in the supply of and
demand for the major commodities carried by water internationally.

 

Factors that may influence the demand for dry bulk vessel capacity include:
(a) supply of and demand for energy resources, commodities and industrial
products; (b) changes in the exploration or production of energy resources,
commodities, consumer and industrial products; (c) the location of regional and
global exploration, production and manufacturing facilities; (d) the location of
consuming regions for energy resources, commodities, semi-finished and finished
consumer and industrial products; (e) the globalization of production and
manufacturing; (f) global and regional economic and political conditions,
including armed conflicts and terrorist activities; embargoes and strikes;
(g) developments in international trade; (f) changes in seaborne and other
transportation patterns, including the distance cargo is transported by sea;
(g) environmental and other regulatory developments; (h) currency exchange
rates; and (i) weather.

 

Factors that influence the supply for dry bulk vessel capacity include: (a) the
number of newbuilding deliveries; (b) port and canal congestion; (c) rate of
vessel disposals, known as “scrapping,” as they reach the end of their useful
life; (d) vessel casualties; and (e) the number of vessels that are out of
service, namely those that are laid-up, drydocked, awaiting repairs, or
otherwise not available for hire.

 

 

B.

Industry Instability in 2012 Led to Prepetition Credit Facility Amendments.

 

In 2012, faced with reduced dry bulk charter rates, Eagle determined and
disclosed in its Annual Report on Form 10-K for the year ended December 31,
2011, dated as of March 15, 2012, that it would not be able to meet certain
covenant requirements under its Original Credit Facility commencing in January
2013. To that end, in June 2012, Eagle negotiated amendments and waivers with
its lenders to obtain relief under its Original Credit Facility. As reflected in
the Prepetition Credit Agreement, these amendments, among other things:

 

 

●

permanently waived any purported defaults or events of defaults that were the
subject of a temporary waiver in connection with the Original Credit Facility,
including any alleged events of default arising from any purported breach of the
minimum adjusted net worth covenant that occurred as a result of any failure to
maintain the required adjusted net worth;

 

 
16 

--------------------------------------------------------------------------------

 

 

 

●

converted the $1,129,478,741 outstanding under the revolving credit facility
into a term loan;

 

 

●

set the maturity date as December 31, 2015, and, subject to EBS’ satisfaction of
certain conditions, including a collateral coverage ratio at December 31, 2015
of less than 80%, provided EBS an option to further extend the maturity date by
an additional 18 months to June 30, 2017 (the “Termination Date”);

 

 

●

required no mandatory repayments of principal until the Termination Date, other
than a quarterly sweep of cash on hand in excess of $20,000,000 and upon the
sale of vessels, additional financings or future equity raises by EBS;

 

 

●

provided that all amounts outstanding under the term loan would bear interest at
LIBOR plus a margin that included a PIK component, and that the initial cash
margin of 3.50% and PIK margin of 2.50% could be reduced on the basis of reduced
leverage and proceeds from future equity raises by EBS; and

 

 

●

provided for a new liquidity facility in the aggregate amount of $20,000,000,
which permits the purchase or sale of vessels within certain parameters, permits
the management of third party vessels, and provides that all capitalized
interest would be evidenced in the form of PIK loans, which would mature on the
Termination Date.

 

In addition, the Prepetition Credit Agreement replaced the previously existing
financial covenants and substituted them with new covenants, which require EBS
to, among other things:

 

 

●

maintain a maximum leverage ratio of the term loan indebtedness, excluding the
PIK loans, to EBITDA (as defined in the Prepetition Credit Agreement) on a
trailing four quarter basis, commencing in the quarterly period ending September
30, 2013, of 13.9:1, declining in intervals to 7.3:1 for the quarterly period
ending December 31, 2015 and, should the Termination Date be extended under EBS’
option, further declining in intervals to 6.2:1 for the quarterly period ending
March 31, 2017;

 

 

●

maintain a minimum interest coverage ratio of EBITDA to cash interest expenses
on a trailing four quarter basis, expressed as a percentage, commencing in the
quarterly period ending June 30, 2013, of 130%, escalating in intervals to 220%
for the quarterly period ending December 31, 2015 and, should the Termination
Date be extended, further escalating in intervals to 230% for the quarterly
period ending March 31, 2017;

 

 

●

maintain free cash with the Prepetition Credit Facility Agent in one or more
accounts in an amount equal to $500,000 per vessel owned directly or indirectly
by EBS, provided that the unutilized amount of the liquidity facility shall be
deemed to constitute free cash for these purposes; and

 

 

●

maintain a maximum collateral coverage ratio, commencing in the quarterly period
ending September 30, 2014, of 100% of the term loan indebtedness and any related
swap exposure, declining in intervals to 80% for the quarterly period ending
December 31, 2015 and, should the Termination Date be extended, further
declining in intervals to 70% for the quarterly period ending March 31, 2017.

 

 
17 

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C.

2013’s Events Set Stage for the Present 2014 Financial Restructuring.

 

As discussed above, the Prepetition Credit Agreement contains financial
covenants that were implemented in 2013 and became increasingly tighter with
each progressive quarter. Such covenants are primarily driven off a trailing
twelve month EBITDA calculation, which, in turn, is primarily based on charter
hire rates. In order to remain in compliance with the covenants, charter hire
rates, the primary driver of Eagle’s EBITDA, must increase over time.

 

The charter hire rates, which were driven down during the recession, remained
relatively low in 2013. To that end, in its Annual Report on Form 10-K for the
year ended December 31, 2012, dated as of April 1, 2013, Eagle disclosed that
(i) if the charter hire rates did not improve for the remainder of 2013 and in
the first quarter of 2014, EBS would not be in compliance with the maximum
leverage ratio and the minimum interest coverage ratio covenants under the
Prepetition Credit Agreement at or after March 31, 2014, and (ii) if charter
rates deteriorated significantly or if Eagle was unable to achieve certain cost
cutting measures, Eagle may not be in compliance with the maximum leverage ratio
or the minimum interest coverage ratio covenants in 2013.

 

Moreover, by way of background, on January 25, 2011, Korea Line Corporation
(“KLC”), one of Eagle’s charterers, had filed for protective receivership in
Seoul, South Korea. Thereafter, Eagle took back the employment of all affected
chartered vessels and re-chartered them out on the spot and short-term time
charter markets, pursuant to terms approved by the Korean court. In connection
with the receivership, 538,751 common shares of KLC stock were issued to Eagle
in the second quarter of 2013.

 

The KLC stock is designated as available for sale and is reported at fair value,
with unrealized gains and losses recorded in shareholders’ equity as a component
of accumulated other comprehensive income. During the third and fourth quarters
of 2013, the value of the KLC stock declined. The resulting change in the fair
value of the KLC investment was considered as other than temporary, and
therefore Eagle recorded an impairment loss of $7.3 million and $8.2 million on
Eagle’s shares of KLC in the third and fourth quarters of 2013, respectively. To
that end, in its Quarterly Report on Form 10-Q for the period ended June 30,
2013, dated as of August 12, 2013, Eagle disclosed that, if Eagle realized
losses on its KLC available for sale investment, Eagle may not be in compliance
with the maximum leverage ratio covenant in 2013. In addition, in its Quarterly
Report on Form 10-Q for the period ended September 30, 2013, dated as of
November 14, 2013, Eagle disclosed that, if Eagle realized additional losses on
its KLC investment, Eagle would not be in compliance with the maximum leverage
ratio covenant in the fourth quarter of 2013.

 

Despite relatively low charter hire rates in 2013, Eagle met all of its
covenants in 2013, other than the maximum leverage ratio at December 31, 2013.
That ratio was exceeded primarily due to a recognized loss of $8.2 million on
Eagle’s shares of KLC during the fourth quarter. Eagle also believed that it
would fail to meet both the maximum leverage ratio covenant and the minimum
interest coverage ratio covenant at their respective compliance measurement
dates beginning on March 31, 2014 and continuing throughout each measurement
date in 2014.

 

 
18 

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D.

Prepetition Restructuring Initiatives.

 

In light of looming potential defaults under the Prepetition Credit Agreement,
in December 2013, Eagle retained Milbank, Tweed, Hadley & McCloy LLP as its
restructuring counsel and Moelis & Company LLC (“Moelis”) as its financial
advisor and investment banker to advise Eagle on a potential restructuring.
Shortly thereafter, an ad hoc group of holders of loans under the Prepetition
Credit Facility (the “Ad Hoc Group”) was formed in connection with a potential
restructuring of Eagle’s capital structure. The Ad Hoc Group hired Paul, Weiss,
Rifkind, Wharton & Garrison LLP as its counsel and Houlihan Lokey Capital, Inc.
as its financial advisor.

 

In January and February 2014, Eagle and its financial advisors considered and
explored various alternatives to the proposed restructuring, including
refinancing the obligations under the Prepetition Credit Agreement.  To that
end, Eagle and its advisors identified and approached 19 prominent potential
investors to gauge interest in investment and/or refinancing opportunities.
While most of those approached indicated that they were not interested in
proceeding, four of the prospective investors indicated preliminary interest and
executed non-disclosure agreements in order to receive detailed, non-public
information via a data room.  Only one of these prospective investors submitted
a preliminary, non-binding indication of interest, which attributed zero value
to Eagle’s equity capital and was subject to financing and due diligence
conditions. This investor ultimately notified Eagle that it was no longer
interested in pursuing a transaction.

 

In light of the foregoing, Eagle acknowledged that the only viable path forward
involved a standalone restructuring with the lenders under the Prepetition
Credit Agreement. Consequently, on February 27, 2014, Eagle delivered to the Ad
Hoc Group’s advisors an initial term sheet for a proposed restructuring of the
obligations outstanding under the Prepetition Credit Agreement.

 

To facilitate negotiations of the terms of the proposed restructuring, on March
19, 2014, Eagle and certain members of the Ad Hoc Group, representing a majority
of lenders under the Prepetition Credit Agreement, entered into that certain
Waiver and Forbearance Agreement (as amended, restated, supplemented, or
otherwise modified from time to time, the “Waiver and Forbearance Agreement”).
Pursuant to the Waiver and Forbearance Agreement, the lenders agreed, subject to
Eagle’s compliance with the terms, conditions, and milestones set forth in the
Waiver and Forbearance Agreement, to waive certain potential Events of Default
arising under the Prepetition Credit Agreement due to the failure to (i) supply
the agent with a consolidated balance sheet and related consolidated statements
of income, equity, and cash flows within 90 days of the end of each financial
year that does not include a “going concern” qualification or any qualification
or exception as to the scope of the audit performed by PricewaterhouseCoopers or
another independent certified public accountant, (ii) meet the maximum leverage
ratio covenant as of December 31, 2013 and each quarter thereafter, and
(iii) meet the minimum interest coverage ratio covenant as of March 31, 2014 and
each quarter thereafter. The Waiver and Forbearance Agreement required, among
other things, Eagle and the majority of lenders under the Credit Agreement to
agree on terms of a restructuring of the obligations outstanding under the
Prepetition Credit Agreement and execute a binding restructuring support
agreement or similar agreement documenting such agreed-upon terms on or before
April 15, 2014 (“RSA Milestone”).

 

 
19 

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Shortly thereafter, the members of the Ad Hoc Group entered into non-disclosure
agreements with Eagle to facilitate negotiating a consensual restructuring. In
connection with such negotiations, Eagle entered into several amendments to the
Waiver and Forbearance Agreement, each of which provided for further extensions
of the RSA Milestone, subject to Eagle’s compliance with the various terms and
conditions of the Waiver and Forbearance Agreement, as amended.   On June 5,
2014, Eagle entered into Amendment No. 5 to the Waiver and Forbearance Agreement
with certain members of the Ad Hoc Group (“Amendment No. 5”). As consideration
for the lenders’ agreement to enter into Amendment No. 5 and extend the RSA
Milestone to June 27, 2014, Eagle agreed to pay each lender that executed
Amendment No. 5 a one-time forbearance fee of 50 basis points on the principal
amount of the loans under the Prepetition Credit Agreement held by such lender
(the “Forbearance Fee”), the payment of which was deferred pursuant to the terms
of Amendment No. 5. Furthermore, Amendment No. 5 provided that, upon the request
of the Debtor or the majority holders of the Lender Warrants, the Debtor and
certain Prepetition Lenders would enter into the Warrant Agreement Amendment,
and, in exchange, each of the Prepetition Lenders party thereto would be deemed
to have forfeited its pro rata portion of the Forbearance Fee upon the
consummation of the Warrant Agreement Amendment.

 

Thereafter, the dry bulk market continued to worsen. Given its cash position,
EBS determined that it would be prudent not to make a scheduled interest payment
of approximately $10.7 million (the “Interest Payment”) under the Prepetition
Credit Agreement due on June 30, 2014. Accordingly, and in furtherance of the
restructuring discussions, on June 27, 2014, Eagle and certain members of the Ad
Hoc Group entered into Amendment No. 6 to the Waiver and Forbearance Agreement
(“Amendment No. 6”), whereby the lenders agreed, among other things, to (i)
forbear from exercising, and from instructing or directing the Prepetition
Credit Facility Agent to exercise, any rights or remedies with respect to the
Interest Payment until the termination of the forbearance period afforded by the
Waiver and Forbearance Agreement and (ii) extend the RSA Milestone to July 15,
2014. Pursuant to Amendment No. 6, Eagle agreed that, in the event it failed to
make the Interest Payment, default interest would accrue on such amount in
accordance with Section 8.3(a) of the Prepetition Credit Agreement. Amendment
No. 6 also provided that any restructuring support agreement subsequently
entered into by Eagle and certain Prepetition Lenders would provide for
continuation of the forbearance set forth in Amendment No. 6 until the
occurrence of a termination event or event of default thereunder.

 

On July 2, 2014, as contemplated by Amendment No. 5, EBS and certain of the
lenders under the Prepetition Credit Agreement entered into Amendment No. 1 to
Warrant Agreement (the “Warrant Agreement Amendment”). The Warrant Agreement
Amendment eliminated the conditions restricting the exercise of the Trigger
Price B Warrants and the Trigger Price C Warrants held by the Prepetition
Lenders (collectively, the “Amended Lender Warrants”), including the minimum
share price conditions, such that all Amended Lender Warrants were immediately
exercisable. The Warrant Agreement Amendment also included a prohibition on the
trade or transfer by any such lender of its Amended Lender Warrants, or shares
of common stock received upon exercise thereof, except in connection with a
transfer of such lender’s loans under the Prepetition Credit Agreement, for so
long as the Waiver and Forbearance Agreement is in effect. Contemporaneously
with the execution of the Warrant Agreement Amendment, each lender party to the
Waiver and Forbearance Agreement forfeited its pro rata portion of the
Forbearance Fee.

 

 
20 

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In order to finalize a consensual restructuring framework, on July 15, 2014,
Eagle and certain members of the Ad Hoc Group entered into a final amendment to
the Waiver and Forbearance Agreement that would expire on August 5, 2014 unless
the parties agreed on terms of a restructuring of the obligations outstanding
under the Prepetition Credit Agreement and executed a binding restructuring
support agreement or similar agreement documenting such agreed-upon terms.

 

 

E.

The Restructuring Support Agreement.

 

On August 6, 2014, after months of intensive negotiations, Eagle and a majority
of holders of loans under the Prepetition Credit Facility, who hold
substantially in excess of two-thirds of the principal amounts outstanding
thereunder, entered into the Restructuring Support Agreement.

 

The Restructuring Support Agreement bound the Consenting Lenders to support a
restructuring, to be consummated through a prepackaged chapter 11 plan of
reorganization, which would substantially reduce Eagle’s debt burden and
solidify Eagle’s long-term growth and operating performance. Specifically, the
parties agreed to support the Plan that embodied the terms set forth in a term
sheet annexed to the Restructuring Support Agreement. These terms provided for
the following:

 

 

●

The Prepetition Credit Facility Lenders will receive 99.5% of the New Eagle
Common Stock (subject to dilution) and the Prepetition Credit Facility Cash
Distribution.

 

 

●

Unimpairment of all General Unsecured Claims under section 1124 of the
Bankruptcy Code.

 

 

●

Equity Interests will be cancelled as of the Effective Date and holders of such
Equity Interests will receive the Shareholder Equity Distribution, representing
0.5% of the New Eagle Common Stock (or, if applicable, the Shareholder Cash
Distribution), and the New Eagle Equity Warrants, representing 7.5% of the New
Eagle Common Stock (each, subject to dilution), which are being provided to
holders of Equity Interests in exchange for the surrender or cancellation of
their Equity Interests and for the releases by such holders of the Released
Parties. This value is being provided to holders of Equity Interests solely from
amounts that would otherwise be distributable to the Prepetition Credit Facility
Lenders.

 

 
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●

Establishment of a Management Incentive Program that provides senior management
and certain other employees with 2.0% of the shares of the New Eagle Common
Stock and two tiers of stock options with staggered strike prices based on
increasing equity values (each, on a fully diluted basis). Pursuant to the
Management Incentive Program, no less than 2.5% of the shares of New Eagle
Common Stock (on a fully diluted basis), subject to upward adjustment as may be
agreed by the Debtor and the Majority Consenting Lenders prior to the Effective
Date, will also be reserved for future issuances by the Reorganized Debtor to
senior management and certain other employees of the Reorganized Debtor at the
direction of the New Board.

 

 

●

Entry into the Exit Financing Facility, the proceeds of which will be used to
pay (i) the DIP Claims, the Prepetition Credit Facility Cash Distribution, the
Outstanding Trade Obligations, the Shareholder Cash Distribution, and the
Restructuring Expenses and (ii) following the payment, or reserving for the
payment, of each the foregoing, such amount as necessary to provide Eagle with
$72.5 million in total liquidity (inclusive of any minimum liquidity
requirements under the Exit Financing Facility) upon the Effective Date
(including cash and unfunded revolver commitments).

 

After good faith negotiations, the parties to the Restructuring Support
Agreement agreed to embody these terms in definitive documentation, including
the Plan, the Disclosure Statement, and the solicitation procedures. Subject to
the terms and conditions of the Restructuring Support Agreement, the Consenting
Lenders are obligated to the support the Plan and other elements of the Chapter
11 Case.

 

Under the Restructuring Support Agreement, Eagle is obligated to comply with the
following milestones, unless agreed otherwise with the requisite number of
Consenting Lenders:

 

 

●

on or before August 6, 2014, the Debtor shall commence a solicitation of the
Prepetition Credit Facility Lenders seeking the approval and acceptance of the
Plan;

 

 

●

on or before August 6, 2014, EBS shall receive the approval and acceptance of
the Plan by Prepetition Credit Facility Lenders collectively constituting at
least 50% of the Prepetition Credit Facility Lenders and holding not less than
66 2/3% of the total loans outstanding under the Prepetition Credit Agreement as
of such date (the “Lender Class Acceptance”);

 

 

●

upon the occurrence of the Lender Class Acceptance, EBS shall commence the
Chapter 11 Case on or before August 6, 2014;

 

 

●

no later than the Petition Date, EBS shall file with the Court the Plan, the
Disclosure Statement, a motion seeking approval of the DIP Facility, and a
motion seeking a joint hearing to consider the adequacy of the Disclosure
Statement, approval of EBS’ prepetition solicitation of the Prepetition Credit
Facility Lenders, and confirmation of the Plan (the “Joint Disclosure Statement
and Plan Confirmation Hearing”);

 

 
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●

no later than 5 business days after the Petition Date, the Court shall enter a
final order scheduling the Joint Disclosure Statement and Plan Confirmation
Hearing;

 

 

●

no later than 5 business days after the Petition Date, the Court shall enter the
Interim DIP Order in the form annexed to the Restructuring Support Agreement or
in such other form as is reasonably acceptable to EBS and the Majority
Consenting Lenders;

 

 

●

no later than 37 days after the Petition Date, the Court shall enter the Final
DIP Order in a form reasonably acceptable to EBS and the Majority Consenting
Lenders;

 

 

●

no later than 37 days after the Petition Date, the Court shall commence the
Joint Disclosure Statement and Plan Confirmation Hearing;

 

 

●

no later than 45 days after the Petition Date, the Court shall enter an order
(1) approving the adequacy of the Disclosure Statement and the Debtor’s
prepetition solicitation of the Prepetition Credit Facility Lenders and
(2) confirming the Plan; and

 

 

●

no later than 60 days after the Petition Date, the Effective Date shall occur.

 

Notably, in addition to other customary termination rights, Eagle, the Debtor’s
board of directors, and/or Eagle’s officers may terminate the Restructuring
Support Agreement in order to comply with their fiduciary obligations –
otherwise known as a “fiduciary out.” Importantly, although the Debtor cannot
solicit alternative proposals, it may respond to any proposed or offer for an
Alternative Transaction (as defined in the Restructuring Support Agreement) to
the extent that the board of directors determines in good faith, and consistent
with its fiduciary duties, that such a response is necessary, without breaching
or terminating the Restructuring Support Agreement, provided that Eagle must
promptly provide copies of all such documentation and materials received by
Eagle concerning such an Alternative Transaction to the advisors to the
Consenting Lenders. If the Restructuring Support Agreement is terminated (other
than pursuant to a breach by a Consenting Lender or consummation of the Plan),
each Consenting Lender would receive a termination fee of 3.0% of the total
outstanding principal amount of Loans (as defined in the Prepetition Credit
Agreement) owed to such Consenting Lender (the “RSA Fee”), which, at the
Debtor’s option, may be paid in cash or in additional “PIK Loans” under the
Prepetition Credit Agreement; provided, that if the Restructuring Support
Agreement is terminated by virtue of the Debtor’s entry into and consummation of
an Alternative Transaction, then the Consenting Lenders would receive the RSA
Fee in cash upon the substantial consummation of such Alternative Transaction.

 

Given the overwhelming consensus among lenders as set forth in the Restructuring
Support Agreement, EBS believes it will emerge from chapter 11 expeditiously,
and with an optimized balance sheet that will allow the Reorganized Debtor to
succeed in a competitive industry. This outcome would be in the best interests
of the Debtor and its stakeholders.

 

 
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V.     THE ANTICIPATED CHAPTER 11 CASE

 

Under the terms of the Restructuring Support Agreement and the milestones set
forth therein, the Debtor anticipates filing a voluntary petition for relief
under chapter 11 of the Bankruptcy Code on or before August 6, 2014.

 

The filing of a petition will commence the Chapter 11 Case. At that time, all
actions and proceedings against the Debtor and all acts to obtain property from
the Debtor will be stayed under section 362 of the Bankruptcy Code. The Debtor
will continue to operate its business and manage its property as a debtor in
possession under sections 1107(a) and 1108 of the Bankruptcy Code.

 

The Debtor expects to proceed expeditiously through the Chapter 11 Case. To
facilitate the Chapter 11 Case and to minimize disruption to its operations, the
Debtor will file motions seeking from the Court, among other relief, the relief
detailed below. These requests will include, but are not limited to, orders
permitting the Debtor to pay employee obligations, pay allowed unsecured claims
in the ordinary course of business, and to maintain its cash management system,
including authorizing Eagle to transfer funds among the Debtor and the
Non-Debtor Subsidiaries, consistent with Eagle’s customary practices, for the
purpose of satisfying or paying Eagle’s ordinary course operating expenses. Such
relief, if granted, will assist in the administration of the Chapter 11 Case.
There can be no assurance, however, that the Court will grant any or all of the
relief sought.

 

Commencing the Chapter 11 Case will enable EBS to implement a financial
restructuring with little to no disruption of Eagle’s global dry bulk shipping
business. The Debtor believes that the transactions contemplated by the Plan
will deleverage its balance sheet, improve go-forward liquidity, and position
Eagle for flexibility and future growth in the industry.

 

 

A.

Expected Timetable of the Chapter 11 Case.

 

Pursuant to the Restructuring Support Agreement and the DIP Facility (as defined
herein), the Debtor is required to proceed expeditiously through chapter 11,
obtain confirmation of the Plan within 45 days of the Petition Date, and
consummate the Plan within 60 days of the Petition Date.

 

While the Debtor will request that the Court approve the timetable set forth in
the Solicitation Procedures Motion (as defined herein) on the Petition Date, no
assurances can be made that such relief will be granted. The failure to meet the
milestones and deadlines set forth in the Restructuring Support Agreement or the
DIP Facility could derail the orderly restructuring of the Debtor’s significant
financial obligations.

 

 
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B.

Significant First Day Motions and Retention of Professionals.

 

On the Petition Date, the Debtor intends to file several motions requesting that
the Court enter orders authorizing the Debtor to continue operating its business
in the ordinary course (the “First Day Motions”). These First Day Motions are
designed to facilitate a smooth transition into chapter 11 and ease the strain
on Eagle’s business as a consequence of the filing of the Chapter 11 Case. There
is no guarantee that the Court will grant any or all of the requested relief.
The following summary highlights certain of the First Day Motions that are
presently expected to be filed.

 

 

1.

Approval of Solicitation Procedures and Scheduling of Confirmation Hearing.

 

The Debtor will be seeking confirmation of the Plan and emergence from
chapter 11 as soon as possible. To that end, the Debtor intends to file a motion
(the “Solicitation Procedures Motion”) on the Petition Date requesting that the
Court set a date and time for the Combined Hearing to, among other things:
(a) approve the adequacy of the Disclosure Statement, (b) approve retroactively
the procedures for the solicitation of the votes on the Plan, and (c) confirm
the Plan. The Debtor will seek the earliest possible date permitted by the
applicable rules and the Court’s calendar for such Combined Hearing.

 

In general, a debtor’s Schedules of Assets and Liabilities and Statement of
Financial Affairs (the “Schedules and Statements”) permit parties in interest to
understand and assess a debtor’s assets and liabilities and, thereafter,
negotiate and confirm a plan of reorganization. When, as in the case of the
Debtor, the debtor has already negotiated a prepackaged plan of reorganization
that lacks any need for proofs of claim to be filed, the Schedules and
Statements will also lack the central benefit of assisting creditors with
determining whether they should filed a proof of claim. As such, requiring the
Schedules and Statements to be filed notwithstanding confirmation of the Plan
would only impose an additional administrative burden on and expense to the
Debtor’s estates, without any corresponding benefit to parties in interest. To
that end, as part of the Solicitation Procedures Motion, the Debtor expects to
seek entry of an order (i) extending the deadlines to file Schedules and SOFAs
by ninety (90) days and (ii) permanently waiving the requirement to file
Schedules and SOFAs if the Plan is confirmed before such extension expires.

 

 

2.

DIP/Cash Collateral.

 

Following arms’ length negotiations with the Debtor, certain of the Consenting
Lenders agreed to provide a senior secured superpriority debtor-in-possession
term loan facility in an aggregate principal amount of up to $50 million (the
“DIP Facility”), which will contain terms and conditions as are customary for a
debtor-in-possession financing facility, provided that $25 million of the DIP
Facility will be made available to the Debtor as a delayed draw occurring after
the entry of an order approving the DIP Facility on a final basis if Eagle’s
cash balance level falls below $15 million. The Debtor will be the borrower
under the DIP Facility, which will be guaranteed by each of the Non-Debtor
Subsidiaries. Subject to approval by the Court, the proceeds of the DIP Facility
will be used, among other things, for working capital and general corporate
purposes, to provide liquidity to the Non-Debtor Subsidiaries, and to fund the
administration costs incurred in connection with the Chapter 11 Case, in
accordance with the terms of the DIP Orders and a debtor-in-possession credit
and guaranty agreement (the “DIP Credit Agreement”) and subject to a budget.
Under the DIP Facility, the Debtor is required to, among other things, obtain
entry of the Interim DIP Order within 5 business days of the Petition Date,
obtain entry of the Final DIP Order within 37 days of the Petition Date, obtain
entry of the Confirmation Order within 45 days of the Petition Date, and
consummate the Plan within 60 days of the Petition Date. Moreover, under the DIP
Facility, the Court must commence the Joint Disclosure Statement and Plan
Confirmation Hearing within 37 days of the Petition Date.

 

 
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The Debtor intends to file a motion on the Petition Date seeking entry of two
orders (collectively, the “DIP Orders”), approving, on an interim basis and a
final basis, respectively, (i) the Debtor’s entry into the DIP Facility and (ii)
the Debtor’s use of the cash collateral of the Prepetition Credit Facility
Lenders during the pendency of the Chapter 11 Case. In addition, by this motion,
the Debtor will seek approval of certain superpriority liens and claims to be
granted to the DIP Agent pursuant to the DIP Orders, as well as certain adequate
protection liens and claims for the benefit of the Prepetition Credit Facility
Lenders, whose prepetition liens will be “primed” by those granted to the DIP
Agent in connection with the DIP Facility. The motion will also seek the
scheduling of a hearing to consider approval of the DIP Facility on a final
basis.

 

 

3.

Stabilizing Operations.

 

Recognizing that any interruption of Eagle’s business, even for a short period,
could negatively impact customer and vendor relationships and Eagle’s goodwill,
revenue, and profits, which would be detrimental to the value of the Debtor’s
estate, the Debtor intends to file certain First Day Motions to ensure
stabilization of its operations. These First Day Motions are identified below.
Although the Non-Debtor Subsidiaries are not presently contemplated to be
debtors in the Chapter 11 Case, out of an abundance of caution, the Debtor will
request entry of orders authorizing the Debtor to pay directly, or indirectly
through its Non-Debtor Subsidiaries, as applicable, specific unpaid obligations
of the Non-Debtor Subsidiaries related to the operation of Eagle’s business that
arose prior to the Petition Date, subject to the Aggregate Non-Debtor Subsidiary
Cap (as defined herein).

 

 

(a)

Cash Management System.

 

Eagle maintains a centralized cash management system designed to collect, track,
aggregate, and disburse cash on a daily basis between the Debtor and the
Non-Debtor Subsidiaries. To facilitate a smooth transition into the Chapter 11
Case, the Debtor intends to seek authority to continue using its existing cash
management system, bank accounts, and business forms and to continue
intercompany transactions. In connection with this relief, the Debtor will also
seek authority to make transfers to, or on behalf of, the Non-Debtor
Subsidiaries in order to satisfy operating expenses. As part of that request,
the Debtor will agree that its aggregate transfers to, or on behalf of, the
Non-Debtor Subsidiaries during the period between the Petition Date and
September 12, 2014 shall not exceed $23.1 million absent further order of the
Court (the “Aggregate Non-Debtor Subsidiary Cap”).

 

 
26 

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(b)

Wages Motion.

 

Eagle’s ability to manage its international shipping business requires the
continued focus and commitment of its employees, crew members, and independent
contractors. These individuals rely on their compensation and benefits to pay
their daily living expenses, absent which they would be exposed to significant
financial difficulties. Although none of these individuals is employed by the
Debtor, the Debtor will need the sole focus of Eagle’s employees, crew members,
and independent contractors during the Chapter 11 Case and cannot afford for
these individuals to be distracted by unnecessary concern over the payment of
their wages and other benefits in the ordinary course of operations.
Accordingly, the Debtor intends to seek authority to (a) pay all prepetition
wages, salaries, and other compensation to Eagle’s employees, crew members, and
independent contractors; (b) continue all benefit programs and policies,
consistent with the ordinary course of business and past practices, on a
postpetition basis, whether arising before or after the Petition Date; and
(c) alter, modify, or discontinue employee benefit programs as the Debtor deems
necessary.

 

 

(c)

Trade Motion.

 

In the ordinary course of its business, Eagle relies on a variety of vendors and
service providers (many of which are not located in the United States). Although
the Debtor expects to pay all of its obligations in full pursuant to the Plan,
some of Eagle’s vendors and service providers may nonetheless seek to terminate
their relationship with the Eagle or alter payment terms, to the detriment of
Eagle as a whole, in the event that Eagle fails to timely honor outstanding
obligations as they become due. To avoid the potentially detrimental effects of
any such party’s efforts to terminate its relationship with Eagle and to ensure
uninterrupted operations and a seamless transition through the Chapter 11 Case,
the Debtor intends to seek authority to pay directly, or indirectly through its
Non-Debtor Subsidiaries, in the ordinary course of business, the amounts owed to
Eagle’s vendors and service providers.

 

 

(d)

Automatic Stay.

 

Given the global nature of Eagle’s shipping business, it regularly transacts
with vendors and suppliers of goods and services located outside the United
States. These foreign creditors and counterparties are not likely to be familiar
with the Bankruptcy Code, particularly with respect to the various protections
it affords to chapter 11 debtors, including the automatic stay. As such, the
Debtor believes there is risk that certain foreign creditors and counterparties
will not adhere to, or respect, the automatic stay or the orders of a court in
the United States. Any such act by a foreign creditor or counterparty in
contravention of the Bankruptcy Code could cause a severe disruption to Eagle’s
ability to operate its businesses, which depends on the ability to travel
without hindrance or delay through international waters and transact in hundreds
of foreign ports of call. Accordingly, the Debtor intends to seek entry of an
order enforcing and restating the automatic stay and ipso facto provisions of
the Bankruptcy Code.

 

In addition, in order to alleviate confusion that may arise concerning the
Non-Debtor Subsidiaries, the Debtor intends to seek approval from the Court of a
form of notice to the Non-Debtor Subsidiaries’ customers, suppliers, and other
stakeholders confirming that (i) the Non-Debtor Subsidiaries are not debtors in
the Chapter 11 Case and (ii) any third party’s business conducted with a
Non-Debtor Subsidiary will not be impacted by the commencement of the Chapter 11
Case.

 

 
27 

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(e)

Taxes.

 

Although the Debtor expects to pay all taxes and regulatory obligations in full
pursuant to the Plan, in order to minimize the potential disruption to Eagle’s
business during the Chapter 11 Case, the Debtor intends to seek authority to pay
directly, or indirectly through the Non-Debtor Subsidiaries, Eagle’s fees and
other similar charges and assessments, as well as certain taxes, whether arising
prior, or subsequent, to the Petition Date, to the appropriate taxing,
licensing, and other governmental authorities.

 

 

(f)

Utilities.

 

Eagle incurs utility expenses for electricity, telephone, and other essential
services in the ordinary course of its business at its global headquarters
located in New York, New York, and its office in Singapore. These utility
services generally are procured on behalf of Eagle by, and are the direct
obligations of and paid by, ESI. Accordingly, the Debtor is not aware of (i) any
utility service providers with which the Debtor directly transacts or which
provide utility service directly to the Debtor or (ii) any utility costs
relating to the prepetition period that are the direct obligations of the
Debtor. Nevertheless, out of an abundance of caution, the Debtor intends to seek
approval of adequate assurance procedures in the event that any utility provider
makes a demand for adequate assurance or otherwise threatens to alter, refuse,
or discontinue utility service to the Debtor

 

 

(g)

Insurance.

 

In connection with the operation of its business, Eagle maintains comprehensive
insurance programs that include a variety of policies through several different
insurance carriers. The insurance programs are essential to preserve Eagle’s
business operations, property, and assets. Moreover, Eagle is required to
maintain the various insurance programs by various regulations, laws, loan
agreements, and contracts that govern Eagle’s maritime and commercial activity.
In the event any obligations arising under the insurance programs may be
attributed to prepetition insurance coverage, the Debtor believes that payment
of the obligations is necessary to ensure continued coverage. Similarly,
continued payment of such obligations as they come due in the ordinary course of
business is necessary in order to maintain relationships with Eagle’s insurance
carriers and ensure the continued availability and pricing of insurance
coverage. Accordingly, the Debtor intends to seek authority to pay directly, or
indirectly through the Non-Debtor Subsidiaries, any obligations on account of
insurance programs, including premiums, deductibles, taxes, and fees, whether
arising prior or subsequent to the Petition Date.

 

 

4.

Operational Initiatives Regarding Executory Contracts.

 

The Debtor will continue to review all of its unexpired leases and executory
contracts following the commencement of the Chapter 11 Case and may seek
rejection of leases and contracts, in accordance with the procedures described
in the Plan, that the Debtor determines no longer provides benefits to its
estate. Nevertheless, subject to certain amendments that are reasonably
satisfactory to the Debtor and the Majority Consenting Lenders, the Delphin
Management Agreement shall be assumed as of the Effective Date.

 

 
28 

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5.

Procedural Motions and Professional Retention Applications.

 

Eagle intends to file several procedural motions that are standard in chapter 11
cases of similar size and complexity, as well as applications to retain the
various professionals who will be assisting Eagle during the Chapter 11 Case.

 

 

C.

Value of the New Eagle Equity Warrants.

 

As set forth herein, the Plan provides for holders of Equity Interests to
receive the New Eagle Equity Warrants for 7.5% of the New Eagle Common Stock.
Using the Black-Scholes model, the New Eagle Equity Warrants are valued, in the
aggregate, between approximately $19 million and $24 million, pre dilution for
the New Eagle MIP Primary Equity, the New Eagle MIP Reserved Equity, and the New
Eagle MIP Options. Black-Scholes inputs include: (a) warrant term of 7 years;
(b) volatility of 50%; (c) current equity value of $625 million to $725 million;
and (d) strike price reflecting a total implied equity value of approximately
$1.029 billion.

 

 

D.

Exit Financing Facility.

 

The Debtor’s exit financing will be provided through the Exit Financing
Facility. The proceeds of the Exit Financing Facility shall be used to pay (i)
the DIP Claims, the Prepetition Credit Facility Cash Distribution, the
Outstanding Trade Obligations, the Shareholder Cash Distribution, and the
Restructuring Expenses and (ii) following the payment, or reserving for the
payment, of each the foregoing, such amount as necessary to provide Eagle with
$72.5 million in total liquidity (inclusive of any minimum liquidity
requirements under the Exit Financing Facility) upon the Effective Date
(including cash and unfunded revolver commitments).

  

VI.      SUMMARY OF THE PREPACKAGED PLAN

 

THE FOLLOWING IS A SUMMARY OF SOME OF THE SIGNIFICANT ELEMENTS OF THE PLAN. THIS
DISCLOSURE STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE
DETAILED INFORMATION SET FORTH IN THE PLAN. THE TERMS OF THE PLAN GOVERN IN THE
EVENT OF ANY INCONSISTENCY BETWEEN THE PLAN AND THIS DISCLOSURE STATEMENT. ALL
EXHIBITS TO THIS DISCLOSURE STATEMENT ARE INCORPORATED INTO AND ARE A PART OF
THIS DISCLOSURE STATEMENT AS IF SET FORTH IN FULL IN THE PLAN.

 

 

A.

Classification and Treatment of Unclassified Claims, Claims, and Equity
Interests Under the Plan.

 

In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative
Claims, DIP Claims, Fee Claims, and Priority Tax Claims, as described below,
have not been classified and thus are excluded from the classes of Claims and
Equity Interests set forth in Article III of the Plan.

 

 
29 

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1.

Description and Treatment of Unclassified Claims.

 

 

(a)

Administrative Claims (Other Than Fee Claims).

 

Each holder of an Allowed Administrative Claim (other than an Administrative
Claim that is a Fee Claim or a DIP Claim) as of the Effective Date will receive
(i) Cash in an amount equal to the amount of such Allowed Administrative Claim
as soon as practicable after the later of (a) the Effective Date, if such
Administrative Claim is Allowed as of the Effective Date, (b) thirty (30) days
after the date such Administrative Claim becomes an Allowed Administrative
Claim, if such Administrative Claim is Disputed as of, or following, the
Effective Date, or (c) the date such Allowed Administrative Claim becomes due
and payable by its terms, or as soon thereafter as is practicable, or (ii) such
other treatment as the Debtor and such holder will have agreed in writing;
provided, however, that Allowed Administrative Claims (other than Fee Claims and
DIP Claims) that arise in the ordinary course of the Debtor’s business will be
paid in the ordinary course of business in accordance with the terms, and
subject to the conditions, of any agreements governing, instruments evidencing,
or other documents relating to, such transactions.

 

 

(b)

DIP Claims.

 

On the Effective Date, except to the extent that a Holder of an Allowed DIP
Claim agrees to less favorable treatment, in full and final satisfaction,
settlement, release, and discharge of, each Allowed DIP Claim, each such Holder
will receive payment in full in Cash on the Effective Date.

 

 

(c)

Fee Claims.

 

All requests for compensation or reimbursement of Fee Claims will be filed and
served on the Reorganized Debtor, counsel to the Reorganized Debtor, the
U.S. Trustee, counsel to the Prepetition Credit Facility Agent, and such other
entities who are designated by the Bankruptcy Rules, the Confirmation Order, or
other order of the Court, no later than sixty (60) days after the Effective
Date, unless otherwise agreed by the Debtor. Holders of Fee Claims that are
required to file and serve applications for final allowance of their Fee Claims
that do not file and serve such applications by the required deadline will be
forever barred from asserting such Claims against the Debtor, Reorganized
Debtor, or their respective properties, and such Fee Claims will be deemed
discharged as of the Effective Date. Objections to any Fee Claims must be filed
and served on the Reorganized Debtor, counsel to the Reorganized Debtor, counsel
to the Prepetition Credit Facility Agent, and the requesting party no later than
thirty (30) days after the filing of the final applications for compensation or
reimbursement (unless otherwise agreed by the party requesting compensation of a
Fee Claim).

 

The Reorganized Debtor will pay in Cash the reasonable legal, professional, or
other fees and expenses incurred by the Debtor’s Professionals on and after the
Effective Date, in the ordinary course of business, and without any further
notice to or action, order, or approval of the Court. Upon the Effective Date,
any requirement that Professionals comply with sections 327 through 331 of the
Bankruptcy Code in seeking retention or compensation for services rendered after
such date will terminate, and Professionals may be employed and paid in the
ordinary course of business without any further notice to, or action, order, or
approval of, the Court.

 

 
30 

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(d)

Priority Tax Claims.

 

Each holder of an Allowed Priority Tax Claim due and payable on or before the
Effective Date will receive, at the option of the Debtor, in full satisfaction,
settlement, release, and discharge of, and in exchange for, such Priority Tax
Claim, one of the following treatments: (i) payment in full in Cash as soon as
practicable after the Effective Date in the amount of such Allowed Priority Tax
Claim, plus statutory interest on any outstanding balance from the Effective
Date, calculated at the prevailing rate under applicable nonbankruptcy law for
each taxing authority and to the extent provided for by section 511 of the
Bankruptcy Code, and in a manner not less favorable than the most favored
nonpriority General Unsecured Claim provided for by the Plan (other than cash
payments made to a class of creditors pursuant to section 1122(b) of the
Bankruptcy Code); (ii) payment in full in Cash, payable in equal Cash
installments made on a quarterly basis in accordance with section 1129(a)(9)(C)
of the Bankruptcy Code, over a period not to exceed five (5) years following the
Petition Date, plus statutory interest on any outstanding balance from the
Effective Date, calculated at the prevailing rate under applicable nonbankruptcy
law for each taxing authority and to the extent provided for by section 511 of
the Bankruptcy Code, and in a manner not less favorable than the most favored
nonpriority General Unsecured Claim provided for by the Plan (other than cash
payments made to a class of creditors pursuant to section 1122(b) of the
Bankruptcy Code); or (iii) such other treatment as may be agreed upon by such
holder and the Debtor or otherwise determined upon a Final Order of the Court.

 

 

(e)

U.S. Trustee Fees.

 

Notwithstanding anything to the contrary contained herein, on the Effective
Date, the Debtor will pay, in full, in Cash, any fees due and owing to the
U.S. Trustee at the time of Confirmation. On and after the Effective Date, the
Reorganized Debtor will be responsible for filing required post-confirmation
reports and paying quarterly fees due to the U.S. Trustee for the Reorganized
Debtor until the entry of a final decree in the Chapter 11 Case or until the
Chapter 11 Case is converted or dismissed.

 

 

2.

Classification and Treatment of Claims and Equity Interests.

 

 

(a)

Classification of Claims and Equity Interests.

 

Except for those Claims addressed above, all Claims and Equity Interests are
placed in the Classes set forth below. A Claim or Equity Interest is placed in a
particular Class solely to the extent that the Claim or Equity Interest falls
within the description of that Class, and the portion of a Claim or Equity
Interest which does not fall within such description will be classified in
another Class or Classes to the extent that such portion falls within the
description of such other Class or Classes. A Claim is also placed in a
particular Class for the purpose of receiving distributions pursuant to the Plan
solely to the extent that such Claim is an Allowed Claim in that Class and such
Claim has not been paid, released, or otherwise settled before the Effective
Date.

 

 
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(b)

Record Date.

 

As of the close of business on the Record Date, the claims register (for Claims)
and transfer ledger (for Equity Interests) will be closed, and there will be no
further changes in the record holders of any Claims or Equity Interests. The
Reorganized Debtor will have no obligation to, but may, in consultation with the
Majority Consenting Lenders, recognize any transfer of any Claims or Equity
Interests occurring after the Record Date. The Reorganized Debtor will instead
be entitled to recognize and deal for purposes under the Plan with only those
record holders stated on the claims register (for Claims) and transfer ledgers
(for Equity Interests) as of the close of business on the Record Date.

 

 

(c)

Summary of Classification and Class Identification.

 

Below is a chart identifying Classes of Claims and Equity Interests, a
description of whether each Class is Impaired, and each Class’s voting rights
with respect to the Plan.

 

Class

Claim or Equity Interest

Status

Voting Rights

1

Other Priority Claims

Unimpaired

Deemed to Accept

2

Other Secured Claims

Unimpaired

Deemed to Accept

3

Prepetition Credit Facility Claims

Impaired

Entitled to Vote

4

General Unsecured Claims

Unimpaired

Deemed to Accept

5

Intercompany Claims

Unimpaired

Deemed to Accept

6

Equity Interests in EBS

Impaired

Deemed to Reject

 

Section 1129(a)(10) of the Bankruptcy Code will be satisfied, for the purposes
of Confirmation, by acceptance of the Plan by an Impaired Class of Claims;
provided, however, that in the event no holder of a Claim with respect to a
specific voting Class timely submits a Ballot indicating acceptance or rejection
of the Plan, such Class will be deemed to have accepted the Plan. The Debtor
hereby requests that the Court confirm the Plan pursuant to section 1129(b) of
the Bankruptcy Code with respect to any rejecting Class of Claims or Equity
Interests. The Debtor reserves the right to modify the Plan in accordance with
its provisions, including the right to withdraw the Plan at any time before the
Effective Date.

 

 

(d)

Treatment of Classified Claims and Equity Interests.

 

(i)     Class 1 – Other Priority Claims.

 

Except to the extent that a holder of an Allowed Other Priority Claim agrees in
writing to less favorable treatment, in full and final satisfaction, settlement,
release, and discharge of, and in exchange for, each Allowed Other Priority
Claim, each holder of an Allowed Other Priority Claim will receive payment in
Cash in an amount equal to such Allowed Other Priority Claim as soon as
practicable after the later of (i) the Effective Date and (ii) thirty (30) days
after the date when such Other Priority Claim becomes an Allowed Other Priority
Claim.

 

 
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Class 1 is Unimpaired by the Plan, and each holder of a Class 1 Other Priority
Claim is conclusively presumed to have accepted the Plan pursuant to
section 1126(f) of the Bankruptcy Code. Therefore, holders of Class 1 Other
Priority Claims are not entitled to vote to accept or reject the Plan.

 

(ii)     Class 2 – Other Secured Claims.

 

Except to the extent that a holder of an Allowed Other Secured Claim agrees in
writing to less favorable treatment, at the option of the Debtor, in full and
final satisfaction, settlement, release and discharge of and in exchange for
such Other Secured Claim, each holder of an Allowed Other Secured Claim will:
(i) have its Allowed Other Secured Claim Reinstated and rendered Unimpaired,
(ii) receive Cash in an amount equal to such Allowed Other Secured Claim,
including any interest on such Allowed Other Secured Claim, if such interest is
required to be paid pursuant to sections 506(b) and/or 1129(a)(9) of the
Bankruptcy Code, as soon as practicable after the later of (a) the Effective
Date, and (b) thirty (30) days after the date such Other Secured Claim becomes
an Allowed Other Secured Claim, or (iii) receive the Collateral securing its
Allowed Other Secured Claim as soon as practicable after the later of (a) the
Effective Date and (b) thirty (30) days after the date such Other Secured Claim
becomes an Allowed Other Secured Claim.

 

Class 2 is Unimpaired by the Plan, and each holder of a Class 2 Other Secured
Claim is conclusively presumed to have accepted the Plan pursuant to
section 1126(f) of the Bankruptcy Code. Therefore, holders of Class 2 Other
Secured Claims are not entitled to vote to accept or reject the Plan.

 

(iii)     Class 3 – Prepetition Credit Facility Claims.

 

Except to the extent that a holder of an Allowed Prepetition Credit Facility
Claim agrees in writing to such other treatment, and the Debtor and the Majority
Consenting Lenders, each in their sole discretion, agree in writing to such
other treatment, in full and final satisfaction, settlement, release, and
discharge of, and in exchange for, the Prepetition Credit Facility Claims, on or
as soon as practicable after the Effective Date, each holder of an Allowed
Prepetition Credit Facility Claim will receive its Pro Rata share of: (i) the
Prepetition Credit Facility Cash Distribution; and (ii) the Prepetition Credit
Facility Equity Distribution. Although each holder of an Allowed Prepetition
Credit Facility Claim possesses an Allowed Prepetition Credit Facility Claim
against each of the Debtor and the Non-Debtor Subsidiaries due to the Guarantees
of the Prepetition Credit Agreement, each holder of a Prepetition Credit
Facility Claim will only receive one recovery in full and complete satisfaction
of all Prepetition Credit Facility Claims and Guarantee Claims held by such
claimant, which recovery is specified in Article III.D.3(c) of the Plan.

 

Class 3 is Impaired. Therefore, holders of Class 3 Prepetition Credit Facility
Claims are entitled to vote to accept or reject the Plan.

 

 
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(iv)     Class 4 – General Unsecured Claims.

 

In full and final satisfaction, settlement, release, and discharge of, and in
exchange for, each Allowed General Unsecured Claim, on the Effective Date, each
holder of an Allowed General Unsecured Claim will, at the discretion of the
Debtor, and only to the extent such holder’s Allowed General Unsecured Claim was
not previously paid, pursuant to an order of the Court or otherwise: (i) have
its Allowed General Unsecured Claim Reinstated as an obligation of the
Reorganized Debtor, and be paid in accordance with the ordinary course terms,
(ii) receive such other treatment as may be agreed between such holder and the
Reorganized Debtor, or (iii) receive such other treatment that will render it
Unimpaired pursuant to section 1124 of the Bankruptcy Code.

 

Class 4 is Unimpaired. Therefore, holders of Class 4 General Unsecured Claims
are not entitled to vote to accept or reject the Plan.

 

(v)     Class 5 – Intercompany Claims.

 

On the Effective Date, Intercompany Claims, if any, will be Reinstated in full.
On and after the Effective Date, the Reorganized Debtor and the Non-Debtor
Subsidiaries will be permitted to transfer funds between and among themselves as
they determine to be necessary or appropriate to enable the Reorganized Debtor
to satisfy its obligations under the Plan. Except as set forth herein, any
changes to intercompany account balances resulting from such transfers will be
accounted for and settled in accordance with the Debtor’s historical
intercompany account settlement practices.

 

Class 5 is Unimpaired. Holders of Class 5 Intercompany Claims are conclusively
presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy
Code. Therefore, holders of Class 5 Intercompany Claims are not entitled to vote
to accept or reject the Plan.

 

(vi)     Class 6 – Equity Interests in EBS.

 

On the Effective Date, Equity Interests will be cancelled and discharged and
will be of no further force or effect, whether surrendered for cancellation or
otherwise, and holders of Equity Interests will not receive or retain any
property under the Plan on account of such Equity Interests. Notwithstanding the
foregoing, on or as soon as practicable after the Effective Date, holders of
Equity Interests (other than Consenting Lenders who hold either Amended Lender
Warrants or Equity Interests based upon the exercise of Amended Lender Warrants)
will receive, in exchange for the surrender or cancellation of their Equity
Interests and for the releases by such holders of the Released Parties, their
Pro Rata share of the Shareholder Equity Distribution and their Pro Rata share
of the New Eagle Equity Warrants, each of which will come from amounts which
holders of Prepetition Credit Facility Claims would otherwise be entitled to
under the Plan; provided, however, that, notwithstanding Article VII.B.9 of the
Plan, the Debtor may, in consultation with the Majority Consenting Lenders,
(i) provide any holder of an Equity Interest that would otherwise be entitled to
a distribution of less than one (1) share of New Eagle Common Stock under
Article III.D.6.(b) of the Plan with a distribution of one (1) share of New
Eagle Common Stock or (ii) provide any holder of an Equity Interest that would
otherwise be entitled to a distribution of less than one hundred (100) shares of
New Eagle Common Stock under Article III.D.6.(b) of the Plan with a Cash payment
equal to the value of such New Eagle Common Stock. Notwithstanding anything
contained herein to the contrary, Consenting Lenders who hold either Amended
Lender Warrants or Equity Interests based upon the exercise of Amended Lender
Warrants will not receive or retain any property under the Plan on account of
such Amended Lender Warrants or Equity Interests.

 

 
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Class 6 is Impaired. Holders of Class 6 Equity Interests in EBS are conclusively
presumed to have rejected the Plan pursuant to section 1126(g) of the Bankruptcy
Code. Therefore, holders of Class 6 Equity Interests in EBS are not entitled to
vote to accept or reject the Plan.

 

 

(e)

Special Provision Regarding Unimpaired and Reinstated Claims.

 

Except as otherwise specifically provided in the Plan, nothing in the Plan will
be deemed to affect, diminish, or impair the Debtor’s or the Reorganized
Debtor’s rights and defenses, both legal and equitable, with respect to any
Reinstated Claim or Unimpaired Claim, including, but not limited to, legal and
equitable defenses to setoffs or recoupment against Reinstated Claims or
Unimpaired Claims. Except as otherwise specifically provided in the Plan,
nothing in the Plan will be deemed to be a waiver or relinquishment of any
Claim, Cause of Action, right of setoff, or other legal or equitable defense
which the Debtor had immediately prior to the Petition Date against, or with
respect to, any Claim left Unimpaired by the Plan. Except as otherwise
specifically provided in the Plan, the Reorganized Debtor shall have, retain,
reserve, and be entitled to assert, all such Claims, Causes of Action, rights of
setoff, and other legal or equitable defenses which they had immediately prior
to the Petition Date fully as if the Chapter 11 Case had not been commenced, and
all of the Debtor’s legal and equitable rights with respect to any Reinstated
Claim or Claim left Unimpaired by the Plan may be asserted by the Reorganized
Debtor after the Confirmation Date and the Effective Date to the same extent as
if the Chapter 11 Case had not been commenced.

 

 

B.

Means for Implementation of the Plan.

 

 

1.

General Settlement of Claims and Interests.

 

The provisions of the Plan will, upon consummation, constitute a good faith
compromise and settlement, pursuant to Bankruptcy Rule 9019 and section 1123 of
the Bankruptcy Code, among the Debtor and the Consenting Lenders of all disputes
among the parties, including those arising from, or related to, (i) the
Prepetition Credit Facility Claims and the Guarantee Claims, (ii) the
Guarantees, (iii) the total enterprise value of the Debtor’s estate and the
Reorganized Debtor for allocation purposes under the Plan, (iv) the treatment
and distribution to holders of Equity Interests, and (v) the Existing Management
Incentive Programs. In the event that, for any reason, the Confirmation Order is
not entered or the Effective Date does not occur, the Debtor and the Consenting
Lenders reserve all of their respective rights with respect to any and all
disputes resolved and settled under the Plan. The entry of the Confirmation
Order will constitute the Court’s approval of each of the compromises and
settlements embodied in the Plan, and the Court’s findings will constitute its
determination that such compromises and settlements are in the best interests of
the Debtor, its estate, creditors, and other parties-in-interest, and are fair,
equitable, and within the range of reasonableness. The Plan and the Confirmation
Order will have res judicata, collateral estoppel, and estoppel (judicial,
equitable, or otherwise) effect with respect to all matters provided for, or
resolved pursuant to, the Plan and/or the Confirmation Order, including, without
limitation, the release, injunction, exculpation, discharge, and compromise
provisions contained in the Plan and/or the Confirmation Order.

 

 
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2.

Exit Financing.

 

On or before the Effective Date, the Debtor will be authorized, without the need
for any further corporate action or without any further action by the Debtor or
the Reorganized Debtor, as applicable, to enter into the Exit Financing Facility
Credit Agreement and any ancillary documents necessary or appropriate to satisfy
the conditions to effectiveness of the Exit Financing Facility. The proceeds of
the Exit Financing Facility shall be used to pay (i) the DIP Claims, the
Prepetition Credit Facility Cash Distribution, the Outstanding Trade
Obligations, the Shareholder Cash Distribution, and the Restructuring Expenses
and (ii) following the payment, or reserving for the payment, of each the
foregoing, such amount as necessary to provide Eagle with $72.5 million in total
liquidity (inclusive of any minimum liquidity requirements under the Exit
Financing Facility) upon the Effective Date (including cash and unfunded
revolver commitments). The Exit Financing Facility will be Secured by some or
all of the collateral securing the Prepetition Credit Facility.

 

 

3.

Voting of Claims.

 

Each holder of an Allowed Claim as of the Voting Deadline in an Impaired Class
of Claims that is not (a) deemed to have rejected the Plan or (b) conclusively
presumed to have accepted the Plan, and that held such Claim as of the Voting
Record Date, will be entitled to vote to accept or reject the Plan. The
instructions for completion of the Ballots are set forth in the instructions
accompanying each Ballot. Approval for the Solicitation Procedures will be
sought in the Plan Scheduling Motion and are described in this Disclosure
Statement.

 

 

4.

Nonconsensual Confirmation.

 

The Debtor intends to request confirmation of the Plan under section 1129(b) of
the Bankruptcy Code with respect to any impaired Class that has not accepted or
is deemed to have rejected the Plan pursuant to section 1126 of the Bankruptcy
Code, including Class 6 (Equity Interests in EBS).

 

 

5.

Issuance of New Eagle Common Stock and New Eagle Equity Warrants and Entry into
the Registration Rights Agreement.

 

 

(a)

Issuance of Securities.

 

Shares of New Eagle Common Stock will be authorized under the New Eagle Charter,
and shares of New Eagle Common Stock will be issued on the Effective Date and
distributed as soon as practicable thereafter in accordance with the Plan. The
number of shares of New Eagle Common Stock to be distributed as set forth in the
Plan, and the number of shares of New Eagle Common Stock issuable upon exercise
of New Eagle Equity Warrants and New Eagle MIP Options and corresponding strike
prices, are subject to adjustment by the Debtor in a manner that does not alter
the respective percentages of the outstanding New Eagle Common Stock allocated
to any Class or Claim holder, except for immaterial changes resulting from the
treatment of fractional shares. To the extent that Cash is distributed to any
holder of Equity Interests pursuant to the Shareholder Cash Distribution, any
shares or fractional shares of New Eagle Common Stock that would otherwise be
distributed to such holder will be allocated to Class 6 Equity Interests. All of
the New Eagle Common Stock, issuable in accordance with the Plan, when so
issued, will be duly authorized, validly issued, fully paid, and non-assessable.
The issuance of the New Eagle Common Stock, the New Eagle Equity Warrants, the
New Eagle MIP Primary Equity, and the New Eagle MIP Options by the Reorganized
Debtor, and the issuance of shares pursuant to the exercise of New Eagle Equity
Warrants and New Eagle MIP Options, is authorized without the need for any
further corporate action and without any further action by any holder of a Claim
or Equity Interest.

 

 
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Except as provided in the Plan, the New Eagle Common Stock distributed under the
Plan will be issued in book-entry form, and DTC or its nominee will be the
holder of record of such New Eagle Common Stock. One or more global certificates
representing such New Eagle Common Stock will be registered with an agent for
the New Eagle Common Stock, in the name of, and will be deposited with, DTC or
its nominee. The ownership interest of each holder of such New Eagle Common
Stock, and transfers of ownership interests therein, will be recorded on the
records of the direct and indirect participants in DTC. To receive distributions
of New Eagle Common Stock, holders of Prepetition Credit Facility Claims will be
required to designate a direct or indirect participant in DTC with whom such
holder has an account into which such New Eagle Common Stock may be deposited.
The New Eagle Common Stock issuable to holders of Equity Interests will, with
respect to Equity Interests held through DTC, be delivered by the Reorganized
Debtor to the holders of Equity Interests through DTC, and holders that do not
hold their Equity Interests in DTC will be required to designate a direct or
indirect participant in DTC with whom such holder has an account into which such
New Eagle Common Stock may be deposited.

 

 

(b)

Entry into the Registration Rights Agreement.

 

On or as soon as practicable after the Effective Date, the Reorganized Debtor
and the Registration Rights Parties will enter into the Registration Rights
Agreement. The Registration Rights Agreement will provide the Registration
Rights Parties with (i) subject to the percentage ownership threshold specified
in the Registration Rights Agreement, the right to require the Reorganized
Debtor to register, under the Securities Act, the sale of the shares of New
Eagle Common Stock, the New Eagle Equity Warrants (including the shares issuable
upon exercise thereof), the New Eagle MIP Primary Equity, and the New Eagle MIP
Options (including the shares issuable upon exercise thereof), in each case
issued under the Plan to the Registration Rights Parties exercising such rights,
and (ii) for all Registration Rights Parties, piggyback registration rights,
with customary cutbacks, with respect to such securities.

 

 

(c)

Exemption from Registration.

 

The offering of the New Eagle Common Stock under Article III of the Plan will be
exempt from the registration requirements of section 5 of the Securities Act and
other applicable law under section 4(a)(2) of the Securities Act. The issuance
and distribution of the New Eagle Common Stock and the New Eagle Equity Warrants
under Article III of the Plan, and the New Eagle Common Stock issuable upon
exercise of the New Eagle Equity Warrants will be exempt from the registration
requirements of section 5 of the Securities Act and any other applicable law
requiring registration of an offer or sale of securities under section 1145(a)
of the Bankruptcy Code, except with respect to any person that is deemed an
“underwriter” under section 1145(b) of the Bankruptcy Code, in which case the
New Eagle Common Stock and the New Eagle Equity Warrants will be issued pursuant
to another available exemption from registration under the Securities Act and
other applicable law. The New Eagle Common Stock underlying the Management
Incentive Program, the New Eagle MIP Options, and the New Eagle Common Stock
issuable upon exercise of the New Eagle MIP Options will be issued pursuant to
another available exemption from registration under the Securities Act and other
applicable law.

 

 
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The New Eagle Common Stock distributed or issued under the Plan to persons who
may be deemed underwriters under section 1145(b) of the Bankruptcy Code will, at
the option of the recipient thereof, be issued either (i) in the form of
registered stock certificates bearing a legend indicating that transfer may be
restricted under federal and state securities laws or (ii) in book-entry form
and included in a ledger identified as “restricted” and indicating in such
ledger that transfer may be restricted under federal and state securities laws.

 

 

(d)

SEC Reporting Requirements and Listing of New Eagle Common Stock.

 

As of the Effective Date, the Reorganized Debtor will be a reporting company
under the Securities Exchange Act of 1934, 15 U.S.C. §§ 78(a) -78(pp). EBS
intends to remain listed following the Petition Date on the Nasdaq Global Select
Market (“NASDAQ”), the Reorganized Debtor intends to continue such NASDAQ
listing in respect of the New Eagle Common Stock, and the Consenting Lenders
have agreed to provide EBS with sufficient time and cooperation to take the
necessary steps to comply with all applicable NASDAQ requirements, as shall be
reasonably agreed between EBS and the Consenting Lenders, in order for EBS to
maintain such NASDAQ listing and for the Reorganized Debtor to be able to
continue such listing upon the Effective Date. In the event EBS loses its NASDAQ
listing prior to the Effective Date, the Consenting Lenders have agreed to
support EBS’ good faith efforts to become relisted on NASDAQ, and EBS will use
commercially reasonable efforts to comply with the NASDAQ listing requirements
while delisted, subject to the terms and conditions of the Plan.

 

 

6.

The New Eagle Equity Warrants.

 

 

(a)

Issuance.

 

The New Eagle Equity Warrants will be issued pursuant to the terms of the New
Eagle Equity Warrant Agreement. Each New Eagle Equity Warrant will, subject to
the anti-dilution adjustments described below, be exercisable for one (1) share
of New Eagle Common Stock.

 

 

(b)

Anti-Dilution Protection.

 

The New Eagle Equity Warrant Agreement will provide the New Eagle Equity
Warrants with customary anti-dilution protection in the event of any stock
split, reverse stock split, stock dividend, reclassification, dividend, or other
distributions (including, but not limited to, cash dividends), or business
combination transaction. The New Eagle Equity Warrants will be subject to
dilution from the New Eagle MIP Primary Equity, the New Eagle MIP Reserved
Equity, and the New Eagle MIP Options.

 

 
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(c)

Form.

 

Except as provided below, all New Eagle Equity Warrants distributed under the
Plan will be issued in book-entry form and DTC or its nominee will be the holder
of record of New Eagle Equity Warrants. One or more global warrant certificates
representing such New Eagle Equity Warrants will be registered with a warrant
agent for the New Eagle Equity Warrants, in the name of, and will be deposited
with, DTC or its nominee. The ownership interest of each holder of such New
Eagle Equity Warrants, and transfers of ownership interests therein, will be
recorded on the records of the direct and indirect participants in DTC. Holders
of Equity Interests that hold such Equity Interests in DTC will receive their
New Eagle Equity Warrants by deposit to the account of a direct or indirect
participant in DTC in which such Equity Interests are held. Holders that do not
hold their Equity Interests in DTC will be required to designate a direct or
indirect participant in DTC with whom such holder has an account into which such
New Eagle Equity Warrants may be deposited. Beneficial owners of the New Eagle
Equity Warrants will be required to follow the procedures that DTC or its direct
or indirect participants may establish for exercising their rights in respect of
the New Eagle Equity Warrants, including exercise and transfer thereof. New
Eagle Common Stock issuable upon exercise of such New Eagle Equity Warrants will
be issued in book-entry form and held through DTC.

 

The New Eagle Equity Warrants distributed under the Plan to any persons who may
be deemed underwriters under section 1145(b) of the Bankruptcy Code will be
issued in the form of registered warrant certificates and will bear a legend
indicating that transfer may be restricted under federal and state securities
laws.

 

 

7.

Continued Corporate Existence and Vesting of Assets.

 

Except as otherwise provided in the Plan: (i) the Debtor will, as Reorganized
Debtor, continue to exist after the Effective Date as a separate legal entity,
with all of the powers of such a legal entity under applicable law and without
prejudice to any right to alter or terminate such existence (whether by merger,
dissolution or otherwise) under applicable law; and (ii) on the Effective Date,
all property of the Debtor’s Estate, and any property acquired by the Debtor or
the Reorganized Debtor under the Plan, will vest in such Reorganized Debtor free
and clear of all Claims, Liens, charges, other encumbrances, Equity Interests,
and other interests, except for the Liens and Claims established under the Plan
(including in respect of the Exit Financing Facility).

 

On and after the Effective Date, the Reorganized Debtor may operate its business
and may use, acquire, and dispose of property and compromise or settle any
claims without supervision or approval by the Court and free of any restrictions
of the Bankruptcy Code or Bankruptcy Rules, subject only to those restrictions
expressly imposed by the Plan or the Confirmation Order as well as the documents
and instruments executed and delivered in connection therewith, including the
documents, exhibits, instruments, and other materials comprising the Plan
Supplement. Without limiting the foregoing, the Reorganized Debtor may pay the
charges that they incur from and after the Effective Date for Fee Claims,
disbursements, expenses, or related support services (including fees relating to
the preparation of Professional fee applications) without application to, or the
approval of, the Court.

 

 
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8.

Fee Claims Escrow Account.

 

On the Effective Date, the Reorganized Debtor will establish the Fee Claim
Escrow Account in an amount equal to all asserted Fee Claims of Professionals
outstanding as of the Effective Date (including, for the avoidance of doubt, any
reasonable estimates for unbilled amounts payable by the Debtor or the
Reorganized Debtor). Amounts held in the Fee Claims Escrow Account will not
constitute property of the Reorganized Debtor. The Fee Claims Escrow Account may
be an interest-bearing account. In the event there is a remaining balance in the
Fee Claims Escrow Account following payment to all holders of Fee Claims under
the Plan, any such amounts will be returned to the Reorganized Debtor.

 

 

9.

Claims Against Non-Debtor Subsidiaries.

 

Any claim (as such term is defined in section 101(5) of the Bankruptcy Code),
Cause of Action, or remedy asserted against a Non-Debtor Subsidiary by the
Debtor will be reinstated, adjusted (including by contribution, distribution in
exchange for new debt or equity, or otherwise), paid, continued, cancelled, or
discharged to the extent determined appropriate by the Reorganized Debtor. Any
such transaction may be effectuated on the Effective Date or subsequent to the
Effective Date without any further action by the Court or by the stockholders of
the Reorganized Debtor.

 

 

10.

Subsidiary Equity Interests.

 

The Subsidiary Equity Interests will be retained and the legal, equitable, and
contractual rights to which the holder of such Allowed Subsidiary Equity
Interests is entitled will remain unaltered.

 

 

C.

Provisions Regarding Corporate Governance of the Reorganized Debtor.

 

 

1.

Organizational Documents.

 

The New Eagle Charter will be filed on or immediately before the Effective Date
with the applicable authority in the jurisdiction of incorporation in accordance
with the corporate laws of its jurisdiction of incorporation or as soon
thereafter as is practicable. The New Eagle By-Laws will be deemed to have been
adopted and will become effective on the Effective Date. The New Eagle Charter
will prohibit the issuance of nonvoting equity securities only so long as, and
to the extent that, the issuance of nonvoting equity securities is prohibited by
the Bankruptcy Code. The New Eagle Charter and the New Eagle By-Laws will
include certain rights and protections for minority shareholders as are
customary for a listed public company, as well as the maximum protections
available with respect to transactions for public companies involving an
affiliate, including, but not limited to, any merger, consolidation or
reorganization of the Reorganized Debtor, any sale, transfer, or other
disposition of all or substantially all of the assets of the Reorganized Debtor,
or any other change in control of the Reorganized Debtor or all or substantially
all of its assets.

 

 
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2.

Appointment of Officers and Directors.

 

As of the Effective Date, the term of the current members of the board of
directors of EBS will expire without further action by any Person. The initial
directors of the New Board will consist of Sophocles Zoullas (who will remain as
Chairman on the Effective Date ) and six (6) other directors selected by the
Majority Consenting Lenders in their sole discretion and to be disclosed in the
Plan Supplement; provided, however, that the Consenting Lenders will consult in
good faith with management and the independent board committee concerning the
individuals selected; provided, further, that the Consenting Lenders will
designate sufficient independent directors to comply with NASDAQ listing
requirements.

 

The existing officers of Eagle as of the Petition Date will remain in their
current capacities as officers of Eagle.

 

 

3.

Powers of Officers.

 

Subject to approval of the New Board, the officers of the Debtor, the
Reorganized Debtor, and the Non-Debtor Subsidiaries, as the case may be, will
have the power to enter into or execute any documents or agreements that they
deem reasonable and appropriate to effectuate the terms of the Plan.

 

 

4.

New CEO Employment Agreement, Existing Benefits Agreements, and Retiree
Benefits.

 

From and after the Effective Date, Sophocles Zoullas will be employed and serve
as the Chief Executive Officer of the Reorganized Debtor in accordance with the
New CEO Employment Agreement. Except as set forth in the Rejection Schedule (or
as such benefits may be otherwise terminated by the Debtor in a manner
permissible under applicable law), and except as amended by the New CEO
Employment Agreement, all Existing Benefits Agreements will be deemed assumed as
of the Effective Date. Notwithstanding anything to the contrary contained in the
Plan, pursuant to section 1129(a)(13) of the Bankruptcy Code, on and after the
Effective Date, all retiree benefits (as such term is defined in section 1114 of
the Bankruptcy Code), if any, will continue to be paid in accordance with
applicable law.

 

 

5.

Management Incentive Program.

 

On the Effective Date, the Reorganized Debtor will adopt the Management
Incentive Program, which will supersede the Existing Management Incentive
Programs in their entirety and will provide for the distribution, and the
reservation for future issuance, as applicable, of the New Eagle MIP Primary
Equity, the New Eagle MIP Reserved Equity, and the New Eagle MIP Options to the
Reorganized Debtor’s senior management and certain other employees.

 

 
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The Management Incentive Plan will be structured as an omnibus incentive plan
and will contain adjustment provisions to reflect any transaction involving
shares of New Eagle Common Stock, including as a result of any dividend,
recapitalization, or stock split, so as to prevent any diminution or enlargement
of the holder’s rights under the award.  In addition, awards that expire or are
forfeited or cancelled will again be available for issuance under the Management
Incentive Plan and awards may not be materially amended in an adverse manner
without the consent of any holder who is senior management. The New Eagle MIP
Primary Equity will have the right to receive dividends or other distributions
at the same time and in the same form as a holder of New Eagle Common Stock;
provided, however, that dividends or other distributions in respect of unvested
New Eagle MIP Primary Equity will be paid at the same time as underlying New
Eagle MIP Primary Equity are settled. The Reorganized Debtor’s senior management
will also have the right to elect a net settlement (e.g., on a cashless basis)
with respect to both the New Eagle MIP Primary Equity and the New Eagle MIP
Options.

 

Allocation of the New Eagle MIP Primary Equity, the New Eagle MIP Reserved
Equity, and the New Eagle MIP Options to the Reorganized Debtor’s senior
management and certain other employees will be determined by the New Board;
provided, however, that Sophocles Zoullas, as Chief Executive Officer of the
Reorganized Debtor, will receive not less than 60% of the total compensation to
be awarded under the Management Incentive Plan.

 

On the Effective Date, the Existing Management Incentive Programs will be deemed
to have been terminated, cancelled, and of no further force and effect, and the
participants thereunder will have no further rights thereunder. To the extent
that any Existing Management Incentive Program is an executory contract, each
such Existing Management Incentive Program will be deemed rejected as of the
Effective Date.

 

 

6.

Indemnification of Directors, Officers, and Employees.

 

Notwithstanding any other provisions of the Plan, from and after the Effective
Date, indemnification obligations owed by the Debtor or the Reorganized Debtor
to directors, officers, or employees of the Debtor who served or were employed
by the Debtor on or after the Petition Date, to the extent provided in the
articles or certificates of incorporation, by-laws or similar constituent
documents, by statutory law or by written agreement, policies or procedures of
the Debtor, will be deemed to be, and treated as though they are, executory
contracts that are assumed pursuant to the Plan and section 365 of the
Bankruptcy Code. All such indemnification obligations will survive confirmation
of the Plan, remain unaffected thereby, and not be discharged, irrespective of
whether indemnification, defense, reimbursement or limitation is owed in
connection with an event occurring before, on, or after the Petition Date.

 

Indemnification obligations owed to any Professionals retained pursuant to
sections 327 or 328 of the Bankruptcy Code and by order of the Court, to the
extent such indemnification obligations relate to the period after the Petition
Date, will be deemed to be, and will be treated as though they are, executory
contracts that are assumed pursuant to the Plan and section 365 of the
Bankruptcy Code, as and to the extent such indemnification was approved by order
of the Court.

 

 
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D.

Effect of Confirmation of the Plan.

 

 

1.

Discharge of the Debtor.

 

Pursuant to section 1141(d) of the Bankruptcy Code, and except as otherwise
specifically provided in the Plan or in any contract, instrument, or other
agreement or document created pursuant to the Plan, the distributions, rights,
and treatment that are provided in the Plan will be in complete satisfaction,
discharge, and release of Claims (including any Intercompany Claims resolved or
compromised after the Effective Date by the Reorganized Debtor), Equity
Interests, the RSA Fee, and Causes of Action of any nature whatsoever, including
any interest accrued on Claims or Equity Interests from and after the Petition
Date, whether known or unknown, against, liabilities of, Liens on, obligations
of, rights against and Equity Interests in, the Debtor or any of its assets or
properties, regardless of whether any property will have been distributed or
retained pursuant to the Plan on account of such Claims and Equity Interests,
including demands, liabilities and Causes of Action that arose before the
Effective Date, any liability (including withdrawal liability) to the extent
such Claims or Equity Interests relate to services performed by employees of the
Debtor before the Effective Date and that arise from a termination of
employment, 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: (i) a proof of Claim or Equity
Interest based upon such debt, right, or Equity Interest is filed or deemed
filed pursuant to section 501 of the Bankruptcy Code; (ii) a Claim or Equity
Interest based upon such debt, right or Equity Interest is Allowed; or (iii) the
holder of such a Claim or Equity Interest has accepted the Plan or is entitled
to receive a distribution hereunder. Any default by the Debtor with respect to
any Claim or Equity Interest that existed immediately before or on account of
the filing of the Chapter 11 Case will be deemed cured on the Effective Date.
The Confirmation Order will be a judicial determination of the discharge of all
Claims and Equity Interests subject to the Effective Date occurring.

 

 

2.

Injunction.

 

FROM AND AFTER THE EFFECTIVE DATE, ALL PERSONS ARE PERMANENTLY ENJOINED FROM
COMMENCING OR CONTINUING IN ANY MANNER, ANY CAUSE OF ACTION RELEASED OR TO BE
RELEASED PURSUANT TO THE PLAN OR THE CONFIRMATION ORDER.

 

FROM AND AFTER THE EFFECTIVE DATE, TO THE EXTENT OF THE RELEASES AND EXCULPATION
GRANTED IN ARTICLE VI OF THE PLAN, THE RELEASING PARTIES WILL BE PERMANENTLY
ENJOINED FROM COMMENCING OR CONTINUING IN ANY MANNER AGAINST THE RELEASED
PARTIES AND THEIR ASSETS AND PROPERTIES, AS THE CASE MAY BE, ANY SUIT, CAUSE OF
ACTION, OR OTHER PROCEEDING, ON ACCOUNT OF OR RESPECTING ANY CLAIM, DEMAND,
LIABILITY, OBLIGATION, DEBT, RIGHT, CAUSE OF ACTION, EQUITY INTEREST, OR REMEDY
RELEASED OR TO BE RELEASED PURSUANT TO ARTICLE VI OF THE PLAN OR THE
CONFIRMATION ORDER.

 

 
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EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THE PLAN, THE PLAN SUPPLEMENT OR
RELATED DOCUMENTS, OR FOR OBLIGATIONS ISSUED PURSUANT TO THE PLAN, ALL PERSONS
WHO HAVE HELD, HOLD, OR MAY HOLD CLAIMS, GUARANTEE CLAIMS, OR EQUITY INTERESTS
THAT HAVE BEEN RELEASED OR DISCHARGED PURSUANT TO ARTICLE VI OF THE PLAN OR ARE
SUBJECT TO EXCULPATION PURSUANT TO ARTICLE VI OF THE PLAN ARE PERMANENTLY
ENJOINED, FROM AND AFTER THE EFFECTIVE DATE, FROM TAKING ANY OF THE FOLLOWING
ACTIONS: (1) COMMENCING OR CONTINUING IN ANY MANNER ANY ACTION OR OTHER
PROCEEDING OF ANY KIND ON ACCOUNT OF OR IN CONNECTION WITH OR WITH RESPECT TO
ANY SUCH CLAIMS, GUARANTEE CLAIMS, OR EQUITY INTERESTS; (2) ENFORCING,
ATTACHING, COLLECTING, OR RECOVERING BY ANY MANNER OR MEANS ANY JUDGMENT, AWARD,
DECREE, OR ORDER AGAINST SUCH RELEASED PARTIES ON ACCOUNT OF OR IN CONNECTION
WITH OR WITH RESPECT TO ANY SUCH CLAIMS, GUARANTEE CLAIMS, OR EQUITY INTERESTS;
(3) CREATING, PERFECTING, OR ENFORCING ANY ENCUMBRANCE OF ANY KIND AGAINST SUCH
RELEASED PARTIES OR AGAINST THE PROPERTY OR ESTATES OF SUCH RELEASED PARTIES ON
ACCOUNT OF OR IN CONNECTION WITH OR WITH RESPECT TO ANY SUCH CLAIMS, GUARANTEE
CLAIMS, OR EQUITY INTERESTS; (4) ASSERTING ANY RIGHT OF SETOFF, SUBROGATION, OR
RECOUPMENT OF ANY KIND AGAINST ANY OBLIGATION DUE FROM THE DEBTOR, THE
REORGANIZED DEBTOR, OR ANY NON-DEBTOR SUBSIDIARY OR AGAINST THE PROPERTY OR
INTERESTS IN PROPERTY OF THE DEBTOR, THE REORGANIZED DEBTOR, OR ANY NON-DEBTOR
SUBSIDIARY ON ACCOUNT OF OR IN CONNECTION WITH OR WITH RESPECT TO ANY SUCH
CLAIMS, GUARANTEE CLAIMS, OR EQUITY INTERESTS; AND (5) COMMENCING OR CONTINUING
IN ANY MANNER ANY ACTION OR OTHER PROCEEDING OF ANY KIND ON ACCOUNT OF OR IN
CONNECTION WITH OR WITH RESPECT TO ANY SUCH CLAIMS, GUARANTEE CLAIMS, OR EQUITY
INTERESTS RELEASED, SETTLED, OR DISCHARGED PURSUANT TO THE PLAN.

 

THE RIGHTS AFFORDED IN THE PLAN AND THE TREATMENT OF ALL CLAIMS, GUARANTEE
CLAIMS, AND EQUITY INTERESTS IN THE PLAN WILL BE IN EXCHANGE FOR AND IN COMPLETE
SATISFACTION OF ALL CLAIMS, GUARANTEE CLAIMS, AND EQUITY INTERESTS OF ANY NATURE
WHATSOEVER, INCLUDING ANY INTEREST ACCRUED ON CLAIMS OR GUARANTEE CLAIMS FROM
AND AFTER THE PETITION DATE, AGAINST THE DEBTOR AND THE NON-DEBTOR SUBSIDIARIES
OR ANY OF THEIR ASSETS, PROPERTIES, OR ESTATES. ON THE EFFECTIVE DATE, ALL SUCH
CLAIMS AND GUARANTEE CLAIMS WILL BE FULLY RELEASED AND DISCHARGED, AND THE
EQUITY INTERESTS WILL BE CANCELLED.

 

EXCEPT AS OTHERWISE EXPRESSLY PROVIDED FOR IN THE PLAN OR IN OBLIGATIONS ISSUED
PURSUANT TO THE PLAN FROM AND AFTER THE EFFECTIVE DATE, ALL CLAIMS AND GUARANTEE
CLAIMS WILL BE FULLY RELEASED AND DISCHARGED, AND ALL EQUITY INTERESTS WILL BE
CANCELLED, AND THE DEBTOR’S AND NON-DEBTOR SUBSIDIARIES’ LIABILITY WITH RESPECT
THERETO WILL BE EXTINGUISHED COMPLETELY, INCLUDING ANY LIABILITY OF THE KIND
SPECIFIED UNDER SECTION 502(G) OF THE BANKRUPTCY CODE.

 

EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THE PLAN, THE PLAN SUPPLEMENT OR
RELATED DOCUMENTS, OR FOR OBLIGATIONS ISSUED PURSUANT TO THE PLAN, ALL PERSONS
WILL BE PRECLUDED FROM ASSERTING AGAINST THE DEBTOR, ITS ESTATE, THE REORGANIZED
DEBTOR, EACH OF THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, AND EACH OF THEIR
ASSETS AND PROPERTIES, AND EACH OF THE RELEASED PARTIES, ANY OTHER CLAIMS OR
EQUITY INTERESTS BASED UPON ANY DOCUMENTS, INSTRUMENTS, OR ANY ACT OR OMISSION,
TRANSACTION, OR OTHER ACTIVITY OF ANY KIND OR NATURE THAT OCCURRED BEFORE THE
EFFECTIVE DATE.

 

 
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3.

Preservation of Causes of Action.

 

In accordance with section 1123(b) of the Bankruptcy Code, and except as
expressly provided in the Plan (including Article VI.J.1 of the Plan), the
Reorganized Debtor will retain all Causes of Action, including those Causes of
Action listed as retained Causes of Action on an exhibit to the Plan Supplement.
Nothing contained in the Plan, the Plan Supplement, or the Confirmation Order
will be deemed a waiver or relinquishment of any claim, Cause of Action, right
of setoff, or other legal or equitable defense of the Debtor that is not
specifically waived or relinquished by the Plan. The Reorganized Debtor will
have, retain, reserve, and be entitled to assert, all such claims, Causes of
Action, rights of setoff, and other legal or equitable defenses that the Debtor
had immediately before the Petition Date as fully as if the Chapter 11 Case had
not been commenced, and all of the Reorganized Debtor’s legal and equitable
rights respecting any claim that is not specifically waived or relinquished by
the Plan may be asserted after the Effective Date to the same extent as if the
Chapter 11 Case had not been commenced. No Person may rely on the absence of a
specific reference in the Plan or the Disclosure Statement to any Cause of
Action against them as any indication that the Debtor or the Reorganized Debtor,
as applicable, will not pursue any and all available Causes of Action against
such Person. The Debtor or the Reorganized Debtor, as applicable, expressly
reserve all rights to prosecute any and all Causes of Action against any Person,
in accordance with the Plan. From and after the Effective Date, the Debtor or
the Reorganized Debtor, as applicable, will have the exclusive right, authority,
and discretion to determine and to initiate, file, prosecute, enforce, abandon,
settle, compromise, release, withdraw, or litigate to judgment any Cause of
Action and to decline to do any of the foregoing without further notice to or
action, order, or approval of the Court. The Reorganized Debtor is deemed
representatives of the Estate for the purpose of prosecuting any Claim or Cause
of Action and any objections to Claims pursuant to 11 U.S.C. § 1123(b)(3)(B).

 

 

4.

Votes Solicited in Good Faith.

 

The Debtor has, and upon entry of the Confirmation Order will be deemed to have,
solicited acceptances of the Plan in good faith and in compliance with the
applicable provisions of the Bankruptcy Code. The Debtor, and its respective
affiliates, agents, directors, officers, members, employees, and Professionals,
have participated in good faith and in compliance with the applicable provisions
of the Bankruptcy Code in the offer and issuance of the securities offered and
sold under the Plan and therefore have not been, and on account of such offer
and issuance will 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 the offer or issuance of the securities offered and distributed
under the Plan.

 

 
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5.

Prepetition Credit Facility Agent and Consenting Lenders’ Fees and Expenses.

 

On the Effective Date, the Reorganized Debtor will pay, in full, in Cash, the
unpaid reasonable fees, expenses, costs, and other charges of the Prepetition
Credit Facility Agent and the Consenting Lenders (including the fees and
expenses of Paul, Weiss, Rifkind, Wharton & Garrison LLP, Houlihan Lokey
Capital, Inc., and maritime and appropriate foreign counsel engaged by Paul
Weiss), in each case in accordance with the DIP Orders and the Restructuring
Support Agreement, and as required by the underlying credit agreement,
indemnity, or fee letter.

 

 

6.

Cancellation of Certain Indebtedness, Agreements, and Existing Securities.

 

On the Effective Date, except as otherwise specifically provided for in the
Plan: the obligations of the Debtor and the Non-Debtor Subsidiaries under the
Restructuring Support Agreement, the Existing Management Incentive Programs, the
Guarantees, the Prepetition Finance Documents, and any other certificate, share,
note, bond, indenture, purchase right, option, warrant, or other instrument or
document directly or indirectly evidencing or creating any indebtedness or
obligation of or ownership interest in the Debtor or the Non-Debtor Subsidiaries
giving rise to any Claim or Equity Interest (except such certificates, notes, or
other instruments or documents evidencing indebtedness or obligations of the
Debtor or the Non-Debtor Subsidiaries that are specifically reinstated pursuant
to the Plan), will be cancelled as to the Debtor and the Non-Debtor
Subsidiaries, and the Reorganized Debtor and the Non-Debtor Subsidiaries will
not have any continuing obligations thereunder; and the obligations of the
Debtor and the Non-Debtor Subsidiaries pursuant, relating, or pertaining to any
agreements, indentures, certificates of designation, by-laws, or certificate or
articles of incorporation or similar documents governing the shares,
certificates, notes, bonds, purchase rights, options, warrants, or other
instruments or documents evidencing or creating any indebtedness or obligation
of the Debtor or the Non-Debtor Subsidiaries (except such agreements,
certificates, notes, or other instruments evidencing indebtedness or obligations
of the Debtor or the Non-Debtor Subsidiaries that are specifically reinstated
pursuant to the Plan or assumed by the Debtor) will be released and discharged;
provided, however, that, notwithstanding the occurrence of the Confirmation Date
or the Effective Date, any such indenture or agreement that governs the rights
of the holder of a Claim will continue in effect solely for purposes of
(a) allowing holders of such Claims to receive distributions under the Plan as
provided in the Plan, (b) allowing the Prepetition Credit Facility Agent to make
distributions under the Plan as provided in the Plan, and deduct therefrom such
reasonable compensation, fees, and expenses due thereunder or incurred in making
such distributions, to the extent not paid by the Debtor and authorized under
such agreement, and (c) allowing the Prepetition Credit Facility Agent to seek
compensation and/or reimbursement of fees and expenses in accordance with the
terms of the Plan. For the avoidance of doubt, nothing in Article VI.H of the
Plan will affect the discharge of or result in any obligation, liability, or
expense of the Debtor, the Reorganized Debtor, or the Non-Debtor Subsidiaries or
affect the discharge of Claims or Equity Interests pursuant to the Bankruptcy
Code, the Confirmation Order, or the Plan, or result in any additional
obligation, expense, or liability of the Debtor, the Reorganized Debtor, or the
Non-Debtor Subsidiaries. On and after the Effective Date, all duties and
responsibilities of the Prepetition Credit Facility Agent will be discharged
except to the extent required to effectuate the Plan. Notwithstanding anything
in this paragraph to the contrary, the DIP Credit Agreement will continue in
effect solely for the purpose of allowing the DIP Agent to receive distributions
from the Debtor under the Plan and to make further distributions to the Holders
of DIP Claims on account of such Claims, as set forth in Article VII of the
Plan.

 

 
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7.

Claims Incurred After the Effective Date.

 

Claims incurred by the Debtor after the Effective Date may be paid by the
Reorganized Debtor in the ordinary course of business and without application
for or Court approval, subject to any agreements with such holders of a Claim
and applicable law.

 

 

8.

Releases, Exculpations, and Injunctions of Released Parties.

 

 

(a)

Releases by the Debtor.

 

On the Effective Date, and notwithstanding any other provisions of the Plan, the
Debtor, the Reorganized Debtor, and the Non-Debtor Subsidiaries, on behalf of
themselves and the Estate, will be deemed to unconditionally release the
Released Parties from any and all claims, obligations, suits, judgments,
damages, rights, Causes of Action, and liabilities whatsoever, whether known or
unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity
or otherwise, assertable on behalf of or derivative from the Debtor or the
Non-Debtor Subsidiaries, based in whole or in part upon actions taken solely in
their respective capacities described in the Plan or any omission, transaction,
agreement, event, or other occurrence taking place on or before the Effective
Date in any way relating to the Debtor, the Non-Debtor Subsidiaries, the
Chapter 11 Case, the purchase, sale, or rescission of the purchase or sale of
any security of the Debtor, the Reorganized Debtor, or the Non-Debtor
Subsidiaries, the Disclosure Statement, the Restructuring Support Agreement, the
Plan Supplement or any of the documents included therein, the Plan, or any
related agreements, instruments, or other documents, provided, however, that
(a) no individual will be released from any act or omission that constitutes
gross negligence, willful misconduct, or fraud as determined by a Final Order,
(b) other than with respect to the Prepetition Credit Facility Claims, the
Reorganized Debtor will not relinquish or waive the right to assert any of the
foregoing as a legal or equitable defense or right of set-off or recoupment
against any Claims of any such persons asserted against the Debtor, and (c) the
foregoing release will not apply to obligations arising under the Exit Financing
Facility.

 

 
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(b)

Releases by Holders of Claims and Equity Interests.

 

On the Effective Date, and notwithstanding any other provisions of the Plan,
(i) each Releasing Party will be deemed to have forever released and covenanted
with the Released Parties not to sue or otherwise seek recovery from any
Released Party on account of any Claim or Guarantee Claim, including any Claim
or Cause of Action based upon tort, breach of contract, violations of federal or
state securities laws or otherwise, or any other legal or equitable theory,
based in whole or in part upon any act, occurrence, or failure to act from the
beginning of time through the Effective Date in any way related to the Debtor,
the Non-Debtor Subsidiaries, or their respective businesses and affairs and
(ii) each Releasing Party will be deemed to have forever released and covenanted
with the Released Parties not to assert against any Released Party any Claim,
Guarantee Claim, obligation, right, Cause of Action, or liability that any
holder of a Claim or Guarantee Claim may be entitled to assert, whether known or
unknown, foreseen or unforeseen, existing or hereafter arising, based in whole
or in part on any act or omission, transaction, or occurrence from the beginning
of time through the Effective Date in any way relating to the Debtor or the
Non-Debtor Subsidiaries, the purchase, sale, or rescission of the purchase or
sale of any security of the Debtor, the Reorganized Debtor, or the Non-Debtor
Subsidiaries, the subject matter of, or the transactions or events giving rise
to, any Claim, Guarantee Claim, or Equity Interest, the Debtor’s restructuring,
the Chapter 11 Case, the Restructuring Support Agreement, the Plan, the
Disclosure Statement, the Plan Supplement or any of the documents included
therein, the DIP Facility, the DIP Credit Agreement, or any agreements,
instruments, or other documents relating to any of the foregoing, or the
preparation and negotiation of the Exit Financing Facility, provided, however,
the foregoing release will not (i) apply to obligations arising under the Plan,
(ii) apply to obligations arising under the Exit Financing Facility, (iii) be
construed to prohibit a party in interest from seeking to enforce the terms of
the Plan, and (iv) apply to any act or omission that constitutes gross
negligence, willful misconduct, or fraud as determined by a Final Order.

 

Under the Plan, the “Released Parties” means each of: (a) the Debtor and
Reorganized Debtor; (b) the Non-Debtor Subsidiaries; (c) the Prepetition Credit
Facility Agent; (d) the Consenting Lenders; (e) the DIP Agent and the DIP
Lenders; and (f) with respect to each of the foregoing Entities in clauses (a)
through (e), such Entity’s predecessors, Professionals, successors and assigns,
affiliates, subsidiaries, funds, portfolio companies, management companies, and
each of their respective current and former (to the extent employed or serving
at any time during the Chapter 11 Case) directors, officers, members, employees,
partners, managers, independent contractors, agents, representatives,
principals, consultants, financial advisors, attorneys, accountants, investment
bankers, and other professional advisors (each solely in their capacity as
such).

 

The “Releasing Parties” are defined under the Plan as each of: (a) the
Prepetition Credit Facility Agent; (b) the Former Prepetition Credit Facility
Agent; (c) the DIP Agent and the DIP Lenders; (d) holders of Impaired Claims
other than those who voted to reject the Plan and checked the opt out box on the
Ballot, and returned it in accordance with the instructions set forth thereon,
indicating that they opt not to grant the releases provided in the Plan, (e) the
Consenting Lenders, (f) to the fullest extent permissible under applicable law
(i) holders of Unimpaired Claims, and (ii) holders of Equity Interests other
than those who have checked the opt out box on the Combined Notice, and returned
it in accordance with the instructions set forth thereon, indicating that they
opt not to grant the releases provided in the Plan, and (g) with respect to each
of the foregoing Entities in clauses (a) through (f), such Entity’s
predecessors, successors and assigns, affiliates, subsidiaries, funds, portfolio
companies, management companies (but excluding any predecessors, portfolio
companies, or management companies of any Consenting Lender), and each of their
respective current and former shareholders, directors, officers, members,
employees, partners, managers, independent contractors, agents, representatives,
principals, consultants, financial advisors, attorneys, accountants, investment
bankers, and other professional advisors (each solely in their capacity as
such).

 

 
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(c)

Release of Liens.

 

Except as otherwise expressly 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, and
other security interests against any property of the Debtor’s Estate will be
fully released and discharged, and all of the right, title, and interest of any
holder of such mortgages, deeds of trust, Liens, pledges, and other security
interests will revert to the Reorganized Debtor and each of its successors and
assigns.

 

 

(d)

Release and Discharge of Non-Debtor Subsidiaries.

 

On the Effective Date, the Prepetition Credit Facility Agent, any future agent
or security trustee under the Prepetition Credit Agreement, and the holders of
the Prepetition Credit Facility Claims will be deemed to have forever waived,
released, and discharged all Liens granted by the Non-Debtor Subsidiaries
pursuant to any of the Prepetition Finance Documents, Guarantees, Guarantee
Claims, and Causes of Action, rights, and liabilities arising from the
Guarantees. In addition, the Confirmation Order will authorize and direct the
Prepetition Credit Facility Agent and any future agent or security trustee under
the Prepetition Credit Agreement to take, or refrain from taking, whatever
action may be necessary or appropriate to effectuate the foregoing, including,
without limitation, providing a release of all Liens granted by the Non-Debtor
Subsidiaries pursuant to any of the Prepetition Finance Documents, Guarantees,
Guarantee Claims, and Causes of Action, rights, and liabilities arising from the
Guarantees.

 

 

(e)

Exculpation and Injunction.

 

The Debtor, the Reorganized Debtor, and the other Released Parties (i) will have
no liability whatsoever to any holder or purported holder of an Administrative
Claim, Claim, or Equity Interest for any act or omission that occurred during
and in connection with the Chapter 11 Case or in connection with or arising out
of the preparation and filing of the Chapter 11 Case, the preparation and
negotiation of the Restructuring Support Agreement, the preparation,
negotiation, and filing of the Plan, the Disclosure Statement, the negotiation
of the documents included in the Plan Supplement, the preparation and
negotiation of the Exit Financing Facility, the pursuit of approval of the
Disclosure Statement or the solicitation of votes for confirmation of the Plan,
the Chapter 11 Case, the consummation of the Plan or the Exit Financing
Facility, the administration of the Plan or the property to be distributed under
the Plan, or any transaction contemplated by the Plan or Disclosure Statement or
in furtherance thereof except for any act or omission that constitutes willful
misconduct, gross negligence, or fraud as determined by a Final Order, and
(ii) in all respects, will be entitled to rely upon the advice of counsel with
respect to their duties and responsibilities under the Plan. This exculpation
will be in addition to, and not in limitation of, all other releases,
indemnities, exculpations, and any other applicable law or rules protecting such
Released Parties from liability. Without limiting the generality of the
foregoing, the Released Parties will be entitled to and granted the protections
and benefits of section 1125(e) of the Bankruptcy Code. Pursuant to section 105
of the Bankruptcy Code, no holder or purported holder of an Administrative
Claim, Claim, or Equity Interest will be permitted to commence or continue any
Cause of Action, employment of process, or any act to collect, offset, or
recover any Claim against a Released Party that accrued on or before the
Effective Date and that has been released or waived pursuant to the Plan.

 

 
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(f)

Liabilities to, and Rights of, Governmental Units.

 

As to the United States of America, its agencies, departments, or agents
(collectively, the “United States”), nothing in the Plan or Confirmation Order
will limit or expand the scope of discharge, release, or injunction to which the
Debtor or the Reorganized Debtor are entitled to under the Bankruptcy Code. The
discharge, release, and injunction provisions contained in the Plan and
Confirmation Order are not intended and will not be construed to bar the United
States from, subsequent to the Confirmation Order, pursuing any police or
regulatory action, except to the extent those discharge and injunctive
provisions bar a Governmental Unit from pursuing Claims.

 

Notwithstanding anything contained in the Plan or Confirmation Order to the
contrary, nothing in the Plan or Confirmation Order will discharge, release,
impair, or otherwise preclude: (1) any liability to a Governmental Unit that is
not a Claim; (2) any Claim of a Governmental Unit arising on or after the
Confirmation Date; (3) any valid right of setoff or recoupment of the United
States against the Debtor; or (4) any liability of the Debtor or the Reorganized
Debtor under environmental law to any Governmental Unit as the owner or operator
of property that such entity owns or operates after the Confirmation Date,
except those obligations to reimburse costs expended or paid by a Governmental
Unit before the Petition Date or to pay penalties owing to a Governmental Unit
for violations of environmental laws or regulations that occurred before the
Petition Date. Nor will anything in the Plan or Confirmation Order: (i) enjoin
or otherwise bar the United States or any Governmental Unit from asserting or
enforcing, outside the Court, any liability described as not discharged in the
preceding sentence; or (ii) divest any court of jurisdiction to determine
whether any liabilities asserted by the United States or any Governmental Unit
are discharged or otherwise barred by the Plan, Confirmation Order, or the
Bankruptcy Code.

 

Moreover, nothing in the Plan or Confirmation Order will release or exculpate
any non-Debtor, including any Released Parties, from any liability to the United
States, including but not limited to any liabilities arising under the Internal
Revenue Code, the environmental laws, or the criminal laws against the Released
Parties, nor will anything in the Plan or Confirmation Order enjoin the United
States from bringing any claim, suit, action, or other proceeding against the
Released Parties for any liability whatsoever; provided, however, that the
foregoing sentence will not limit the scope of discharge granted to the Debtor
under sections 524 and 1141 of the Bankruptcy Code.

 

 
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(g)

Preservation of Insurance.

 

The Debtor’s discharge and release from all claims, including all Claims and
Guarantee Claims, as provided in the Plan, will not, except as necessary to be
consistent with the Plan, diminish or impair the enforceability of any insurance
policy that may provide coverage for claims, including Claims and Guarantee
Claims, against the Debtor, the Reorganized Debtor, the Non-Debtor Subsidiaries,
their current and former directors and officers, or any other Person.

 

 

E.

Distributions Under the Plan.

 

 

1.

Procedures for Treating Disputed Claims.

 

 

(a)

Filing Proofs of Claim.

 

Except as required by the Bar Date Order, holders of Claims need not file proofs
of Claim with the Court. In the event that a holder of a Claim elects to file a
proof of Claim with the Court, it will be deemed to have consented to the
exclusive jurisdiction of the Court for all purposes with respect to the
determination, liquidation, allowance, or disallowance of such Claim.

 

 

(b)

Disputed Claims.

 

If the Debtor disputes any Claim as to which no proof of Claim has been filed,
such dispute will be determined, resolved, or adjudicated, as the case may be,
in a manner as if the Chapter 11 Case had not been commenced, provided, however,
that the Reorganized Debtor may elect, at its sole option, to object under
section 502 of the Bankruptcy Code to any Claim or proof of Claim filed by or on
behalf of a holder of a Claim.

 

 

(c)

Objections to Claims.

 

Except insofar as a Claim is Allowed under the Plan, the Debtor, the Reorganized
Debtor, and any other party in interest will be entitled to object to Claims.
Any objections to Claims will be filed and served by the Claims Objection
Deadline.

 

 

(d)

Disallowance of Claims.

 

With respect to each Claim not subject to the Bar Date Order, except as provided
in the Plan or otherwise agreed, any and all proofs of Claim will be deemed
expunged from the claims register on the Effective Date without any further
notice to or action, order, or approval of the Court and the Claim on which such
proof of Claim was filed will be determined, resolved, or adjudicated, as the
case may be, in the manner as if the Chapter 11 Case had not been commenced and
will survive the Effective Date as if the Chapter 11 Case had not been
commenced.

 

With respect to each General Unsecured Claim and Claim subordinated pursuant to
section 510(b) of the Bankruptcy Code subject to the Bar Date Order, except as
provided in the Plan or otherwise agreed, any and all proofs of Claim filed
after the Bar Date will be deemed disallowed and expunged as of the Effective
Date without any further notice to or action, order, or approval of the Court,
and holders of such Claims may not receive any distributions on account of such
Claims.

 

 
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2.

Allowed Claims and Equity Interests.

 

 

(a)

Delivery of Distributions in General.

 

Except as otherwise provided in the Plan, distributions under the Plan will be
made by the Reorganized Debtor (or its agent or designee) to the holders of
Allowed Claims and Allowed Equity Interests in all Classes for which a
distribution is provided in the Plan at the addresses set forth on the Schedules
(if filed) or in the Debtor’s books and records, as applicable, unless such
addresses are superseded by proofs of Claim or Equity Interests or transfers of
Claim filed pursuant to Bankruptcy Rule 3001 by the Record Date (or at the last
known addresses of such holders if the Debtor or the Reorganized Debtor have
been notified in writing of a change of address).

 

 

(b)

Delivery of Distributions to Prepetition Credit Facility Claims.

 

The Prepetition Credit Facility Agent will be deemed to be the holder of all
Prepetition Credit Facility Claims for purposes of distributions to be made
hereunder, and all distributions on account of the Prepetition Credit Facility
Claims will be made to the Prepetition Credit Facility Agent. As soon as
practicable following compliance with the requirements set forth in Article VII
of the Plan, the Prepetition Credit Facility Agent will arrange to deliver or
direct the delivery of such distributions to or on behalf of the holders of
Allowed Prepetition Credit Facility Claims in accordance with the terms of the
Prepetition 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 Prepetition Credit Facility Agent will not have any liability to
any person with respect to distributions made or directed to be made by the
Prepetition Credit Facility Agent.

 

 

(c)

Delivery of Distributions on DIP Claims.

 

The DIP Agent will be deemed to be the holder of all DIP Claims for purposes of
distributions to be made under the Plan, and all distributions on account of
such DIP Claims will be made to the DIP Agent. As soon as practicable following
compliance with the requirements set forth in Article VII of the Plan, the DIP
Agent will arrange to deliver or direct the delivery of such distributions to or
on behalf of the Holders of DIP Claims in accordance with the terms of the 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
Agent will not have any liability to any person with respect to distributions
made or directed to be made by the DIP Agent.

 

 

(d)

Distribution of Cash.

 

Any payment of Cash by the Reorganized Debtor pursuant to the Plan will be made
at the option and in the sole discretion of the Reorganized Debtor by (i) a
check drawn on, or (ii) wire transfer from, a domestic bank selected by the
Reorganized Debtor.

 

 
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(e)

Unclaimed Distributions of Cash.

 

Any distribution of Cash under the Plan that is unclaimed after six (6) months
after it has been delivered (or attempted to be delivered) will, pursuant to
section 347(b) of the Bankruptcy Code, become the property of the Reorganized
Debtor notwithstanding any state or other escheat or similar laws to the
contrary, and the entitlement by the holder of such unclaimed Allowed Claim or
Allowed Equity Interest to such distribution or any subsequent distribution on
account of such Allowed Claim or Allowed Equity Interest will be extinguished
and forever barred.

 

 

(f)

Distributions of New Eagle Common Stock and New Eagle Equity Warrants.

 

On the Effective Date, the Reorganized Debtor (or its agent or designee) will
distribute (i) the Prepetition Credit Facility Equity Distribution to the
holders of the Prepetition Credit Facility Claims, (ii) the Shareholder Equity
Distribution to the holders of Equity Interests, and (iii) the New Eagle Equity
Warrants to the holders of Equity Interests.

 

 

(g)

Unclaimed Distributions of New Eagle Common Stock and New Eagle Equity Warrants.

 

Any distribution of New Eagle Common Stock and New Eagle Equity Warrants under
the Plan that is unclaimed after six (6) months after it has been delivered (or
attempted to be delivered) will be retained by the Reorganized Debtor,
notwithstanding any state or other escheat or similar laws to the contrary, and
the entitlement by the holder of such Allowed Claim or Allowed Equity Interest
to such distribution or any subsequent distribution on account of such Allowed
Claim or Allowed Equity Interest will be extinguished and forever barred.

 

 

(h)

Saturdays, Sundays, or Legal Holidays.

 

If any payment, distribution 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, and will be deemed to have been completed as of the required date.

 

 

(i)

Fractional New Eagle Common Stock and New Eagle Equity Warrants and De Minimis
Distributions.

 

Notwithstanding any other provision in the Plan to the contrary, no fractional
shares of New Eagle Common Stock or fractional New Eagle Equity Warrants will be
issued or distributed pursuant to the Plan. Subject to Article III.D.6.(b) of
the Plan, whenever any distribution of a fraction of a share of New Eagle Common
Stock or a fractional New Eagle Equity Warrant would otherwise be required under
the Plan, the actual distribution made will reflect a rounding of such fraction
to the nearest whole share or warrant (up or down), with half shares or warrants
or less being rounded down and fractions in excess of a half of a share or
warrant being rounded up. No consideration will be provided in lieu of
fractional shares that are rounded down. Fractional shares of New Eagle Common
Stock or New Eagle Equity Warrants, as applicable, that are not distributed in
accordance with Article VII.B.9 of the Plan will be cancelled. The Reorganized
Debtor will not be required to, but may in its sole and absolute discretion,
make any payment on account of any Claim or Equity Interest in the event that
the costs of making such payment exceeds the amount of such payment.

 

 
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(j)

Distributions to Holders of Claims.

 

(i)     Initial Distribution to Claims Allowed as of the Effective Date. On or
as soon as reasonably practicable after the Effective Date, or as otherwise
expressly set forth in the Plan, the Reorganized Debtor (or its agent or
designee) will distribute Cash or Collateral, as the case may be, to the holders
of Allowed Claims as contemplated by the Plan.

 

(ii)     Claims Allowed after the Effective Date. Each holder of a Claim that
becomes an Allowed Claim subsequent to the Effective Date will receive the
distribution to which such holder of an Allowed Claim is entitled as set forth
in Article III of the Plan, and distributions to such holder will be made in
accordance with the provisions of the Plan. As soon as practicable after the
date that the Claim becomes an Allowed Claim, the Reorganized Debtor will
provide to the holder of such Claim 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.

 

 

(k)

Special Rules for Distributions to Holders of Disputed Claims and Disputed
Equity Interests.

 

Notwithstanding any provision otherwise in the Plan and except as otherwise
agreed to by the relevant parties, no partial payments and no partial
distributions will be made with respect to a Disputed Claim or Disputed Equity
Interest until all such disputes in connection with such Disputed Claim or
Disputed Equity Interest, respectively, have been resolved by settlement or
Final Order. In the event that there are Disputed Claims or Disputed Equity
Interests requiring adjudication and resolution, the Reorganized Debtor will
establish appropriate reserves for potential payment of such Claims or Equity
Interests.

 

 

(l)

Interest on Claims and Equity Interests.

 

Except as specifically provided for in the Plan, no Claims or Equity Interests,
Allowed or otherwise (including Administrative Claims), will be entitled, under
any circumstances, to receive any interest on a Claim or Equity Interests.

 

 

3.

Allocation of Consideration.

 

The aggregate consideration to be distributed to the holders of Allowed Claims
in each Class under the Plan will be treated as first satisfying an amount equal
to the principal amount of the Allowed Claim for such holders, and any remaining
consideration as satisfying accrued, but unpaid and interest, as applicable.

 

 
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4.

Estimation.

 

Before or after the Effective Date, the Debtor or the Reorganized Debtor, as
applicable, may (but is not required to), at any time, request that the Court
estimate (i) any Disputed Claim or Disputed Equity Interest pursuant to
section 502(c) of the Bankruptcy Code or (ii) any contingent or unliquidated
Claim or Equity Interest pursuant to section 502(c) of the Bankruptcy Code, for
any reason, regardless of whether the Debtor or the Reorganized Debtor has
previously objected to such Claim or Equity Interest or whether the Court has
ruled on any such objection. The Court will retain jurisdiction to estimate any
Claim or Equity Interest at any time, including during proceedings concerning
any objection to such Claim or Equity Interest. In the event that the Court
estimates any Claim or Equity Interest, such estimated amount will constitute
either the Allowed amount of such Claim or Equity Interest or a maximum
limitation on such Claim or Equity Interest for all purposes under the Plan
(including for purposes of distributions), as determined by the Court. If the
estimated amount constitutes the maximum limitation on such Claim or Equity
Interest, the Debtor or the Reorganized Debtor, as the case may be, may elect to
pursue supplemental proceedings to object to any ultimate allowance of such
Claim or Equity Interest. All of the aforementioned objection, estimation, and
resolution procedures are cumulative and not necessarily exclusive of one
another.

 

 

5.

Insured Claims.

 

If any portion of an Allowed Claim is an Insured Claim, no distributions under
the Plan will be made on account of such Allowed Claim until the holder of such
Allowed Claim has exhausted all remedies with respect to any applicable
insurance policies. To the extent that the Debtor’s insurers agree to satisfy a
Claim in whole or in part, then immediately upon such agreement, the portion of
such Claim so satisfied may be expunged without an objection to such Claim
having to be filed and without any further notice to or action, order or
approval of the Court.

 

 

F.

Retention of Jurisdiction.

 

Notwithstanding the entry of the Confirmation Order and the occurrence of the
Effective Date, on and after the Effective Date, the Court will retain exclusive
jurisdiction over all matters arising out of, or related to, the Chapter 11 Case
and the Plan pursuant to sections 105(a) and 1142 of the Bankruptcy Code,
including jurisdiction:

 

(i)     to resolve any matters related to (a) the assumption, assumption and
assignment, or rejection of any Executory Contract or Unexpired Lease to which
the Debtor or the Reorganized Debtor is party or with respect to which the
Debtor or the Reorganized Debtor may be liable and to hear, determine, and, if
necessary, liquidate, any Claims arising therefrom, including Cure Claims
pursuant to section 365 of the Bankruptcy Code; (b) the Reorganized Debtor
amending, modifying, or supplementing, after the Effective Date, pursuant to the
Plan, any Executory Contracts or Unexpired Leases to the Rejection Schedule or
otherwise; and (c) any dispute regarding whether a contract or lease is or was
executory or expired;

 

(ii)     to determine, adjudicate, or decide any other applications, adversary
proceedings, contested matters, and any other matters pending on the Effective
Date;

 

(iii)     to ensure that distributions to holders of Allowed Claims and Equity
Interests are accomplished as provided in the Plan;

 

(iv)     to resolve disputes as to the ownership of any Claim or Equity
Interest;

 

 
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(v)     to allow, disallow, determine, liquidate, classify, estimate, or
establish the priority, secured or unsecured status, or amount of any Claim or
Equity 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 Equity
Interests;

 

(vi)     to enter and implement such orders as may be appropriate in the event
the Confirmation Order is for any reason stayed, revoked, reversed, modified, or
vacated;

 

(vii)     to issue such orders in aid of execution of the Plan, to the extent
authorized by section 1142 of the Bankruptcy Code;

 

(viii)     to consider any modifications of the Plan, to cure any defect or
omission, or to reconcile any inconsistency in any order of the Court, including
the Confirmation Order;

 

(ix)     to hear and determine all applications for compensation and
reimbursement of expenses of professionals under sections 330, 331, and 503(b)
of the Bankruptcy Code;

 

(x)     to hear and determine disputes arising in connection with the
interpretation, implementation, consummation, or enforcement of the Plan,
including the release of the Guarantee Claims;

 

(xi)     to hear and determine any issue for which the Plan requires a Final
Order of the Court;

 

(xii)     to hear and determine matters concerning state, local, and federal
taxes in accordance with sections 346, 505, and 1146 of the Bankruptcy Code;

 

(xiii)     to hear and determine disputes arising in connection with
compensation and reimbursement of expenses of professionals for services
rendered during the period commencing on the Petition Date through and including
the Effective Date;

 

(xiv)     to hear and determine any Causes of Action preserved under the Plan;

 

(xv)     to hear and determine any matter regarding the existence, nature, and
scope of the Debtor’s discharge;

 

(xvi)     to hear and determine any matter, case, controversy, suit, dispute, or
Cause of Action (i) regarding the existence, nature, and scope of the discharge,
releases, injunctions, and exculpation provided under the Plan, and (ii) enter
such orders as may be necessary or appropriate to implement such discharge,
releases, injunctions, exculpations, and other provisions;

 

(xvii)     to enter a final decree closing the Chapter 11 Case;

 

 
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(xviii)     to 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 consummation or enforcement of the Plan;

 

(xix)     to adjudicate any and all disputes arising from or relating to
distributions under the Plan;

 

(xx)     to enforce all orders previously entered by the Court; and

 

(xxi)     to hear any other matter not inconsistent with the Bankruptcy Code.

 

For the avoidance of doubt, the Court will not retain exclusive jurisdiction
with respect to the following documents entered into by the Reorganized Debtor
on or after the Effective Date: (i) the Exit Financing Facility Credit
Agreement, (ii) the Registration Rights Agreement, (iii) the New Eagle By-Laws,
(iv) the New Eagle Charter, (v) the New Eagle Equity Warrant Agreement, (vi) the
New Eagle MIP Option Agreements, and (vii) the New Eagle MIP Primary Equity
Agreements.

 

 

G.

Executory Contracts and Unexpired Leases.

 

 

1.

Assumption of Executory Contracts and Unexpired Leases.

 

Except as otherwise provided in the Plan, each Executory Contract and Unexpired
Lease not previously assumed, assumed and assigned, or rejected will be deemed
automatically assumed pursuant to sections 365 and 1123 of the Bankruptcy Code
as of the Effective Date, unless any such executory contract or unexpired lease:
(i) is expressly identified on the Rejection Schedule; (ii) has been previously
rejected by the Debtor by Final Order or has been rejected by the Debtor by
order of the Court as of the Effective Date, which order becomes a Final Order
after the Effective Date; (iii) is the subject of a motion to reject pending as
of the Effective Date; or (iv) is otherwise rejected pursuant to the terms
herein.

 

Subject to certain amendments that are reasonably satisfactory to the Debtor and
the Majority Consenting Lenders, the Delphin Management Agreement will be
assumed pursuant to sections 365 and 1123 of the Bankruptcy Code as of the
Effective Date.

 

The Confirmation Order will constitute an order of the Court approving such
assumptions pursuant to sections 365 and 1123 of the Bankruptcy Code as of the
Effective Date or as otherwise set forth in the Plan Supplement.

 

 

2.

Cure Claims.

 

At the election of the Debtor or the Reorganized Debtor, as applicable, any
monetary defaults under each Executory Contract and Unexpired Lease to be
assumed under the Plan will be satisfied pursuant to section 365(b)(1) of the
Bankruptcy Code in one of the following ways: (i) payment of the Cure Claim in
Cash on or as soon as reasonably practicable following the occurrence of
(A) thirty (30) days after the determination of the Cure Claim, and (B) the
Effective Date or such other date as may be set by the Court; or (ii) on such
other terms as agreed to by the Debtor or the Reorganized Debtor and the
non-Debtor counterparty to such Executory Contract or Unexpired Lease. In the
event of a dispute pertaining to assumption or assignment, the Cure Claim
payments required by section 365(b)(1) of the Bankruptcy Code will be made
following the entry of a Final Order or orders resolving the dispute and
approving the assumption. No later than the Plan Supplement Filing Date, to the
extent not previously filed with the Court and served on affected
counterparties, the Debtor will provide for notices of proposed assumption and
proposed cure amounts to be sent to applicable contract and lease
counterparties, together with procedures for objecting thereto and resolution of
disputes by the Court. Any objection by a contract or lease counterparty to a
proposed assumption or related cure amount must be filed, served, and actually
received by the Debtor by the date on which objections to Confirmation are due
(or such other date as may be provided in the applicable assumption notice). Any
counterparty to an Executory Contract or Unexpired Lease that fails to object
timely to the proposed assumption or cure amount will be deemed to have assented
to such assumption or cure amount.

 

 
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The only adequate assurance of future performance will be the promise of the
Reorganized Debtor to perform all obligations under any executory contract or
unexpired lease under the Plan.

 

ASSUMPTION OF ANY EXECUTORY CONTRACT OR UNEXPIRED LEASE PURSUANT TO THE PLAN OR
OTHERWISE WILL 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 BEFORE THE DATE THE DEBTOR OR THE REORGANIZED DEBTOR
ASSUMES SUCH EXECUTORY CONTRACT OR UNEXPIRED LEASE. ANY PROOFS OF CLAIM FILED
WITH RESPECT TO AN EXECUTORY CONTRACT OR UNEXPIRED LEASE THAT HAS BEEN ASSUMED
WILL BE DEEMED DISALLOWED AND EXPUNGED, WITHOUT FURTHER NOTICE TO OR ACTION,
ORDER OR APPROVAL OF THE COURT.

 

Obligations arising under insurance policies assumed by the Debtor before the
Effective Date will be adequately protected in accordance with any order
authorizing such assumption.

 

 

3.

Reservation of Rights.

 

Neither the exclusion nor inclusion of any contract or lease in the Plan
Supplement, as applicable, nor anything contained in the Plan, will constitute
an admission by the Debtor that any such contract or lease is in fact an
Executory Contract or Unexpired Lease or that any Reorganized Debtor has any
liability thereunder. In the event a written objection is filed with the Court
as to whether a contract or lease is executory or unexpired, the right of the
Debtor or the Reorganized Debtor to move to assume or reject such contract or
lease will be extended until the date that is thirty (30) days after the entry
of a Final Order by the Court determining that the contract or lease is
executory or unexpired, in which case the deemed assumptions and rejections
provided for in the Plan will not apply to such contract or lease.

 

 
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4.

Rejection of Executory Contracts and Unexpired Leases.

 

 

(a)

Rejection Schedule.

 

The Debtor will file the Rejection Schedule with the Court no later than five
(5) Business Days before the deadline to object to the Plan. The Rejection
Schedule will include (a) the name of the non-Debtor counterparty, (b) the legal
description of the contract or lease to be rejected, and (c) the proposed
effective date of rejection (if not the Effective Date). On or as soon as
practicable thereafter, the Debtor will serve a Rejection Notice as well as
notice of filing of the Rejection Schedule upon each non-Debtor counterparty
listed thereon that will describe the procedures by which such parties may
object to the proposed rejection of their respective Executory Contract or
Unexpired Lease and explain how such disputes will be resolved by the Court if
the parties are not able to resolve a dispute consensually.

 

The Confirmation Order will constitute an order of the Court approving such
rejections pursuant to sections 365 and 1123 of the Bankruptcy Code as of the
Effective Date or as otherwise set forth in the Plan Supplement.

 

 

(b)

Rejection Damage Claims.

 

If the rejection by the Debtor, pursuant to the Plan or otherwise, of an
Executory Contract or Unexpired Lease gives rise to a Rejection Damage Claim, a
proof of Claim must be filed with the Court within (i) thirty (30) days after
the date of entry of an order of the Court approving such rejection, or (ii) if
the Executory Contract or Unexpired Lease is listed on the Rejection Schedule,
within thirty (30) days after the date of entry of the Confirmation Order. For
the avoidance of doubt, all Allowed Rejection Damage Claims will be treated as
General Unsecured Claims.

 

 

(c)

Requirement to File a Proof of Claim for Rejection Damage Claims.

 

ANY REJECTION DAMAGE CLAIMS THAT ARE NOT TIMELY FILED WILL BE DISALLOWED
AUTOMATICALLY, FOREVER BARRED FROM ASSERTION, AND WILL NOT BE ENFORCEABLE
AGAINST ANY REORGANIZED DEBTOR WITHOUT THE NEED FOR ANY OBJECTION BY THE
REORGANIZED DEBTOR OR FURTHER NOTICE TO OR ACTION, ORDER, OR APPROVAL OF THE
COURT, AND ANY REJECTION DAMAGE CLAIM WILL BE DEEMED FULLY SATISFIED, RELEASED
AND DISCHARGED, NOTWITHSTANDING ANYTHING IN THE SCHEDULES OR A PROOF OF CLAIM TO
THE CONTRARY.

 

 

5.

Assignment.

 

Any Executory Contract or Unexpired Lease to be held by the Debtor or the
Reorganized Debtor and assumed hereunder or otherwise in the Chapter 11 Case, if
not expressly assigned to a third party previously in the Chapter 11 Case, will
be deemed assigned to the Reorganized Debtor pursuant to section 365 of the
Bankruptcy Code. If an objection to a proposed assumption, assumption and
assignment, or Cure Claim is not resolved in favor of the Debtor before the
Effective Date, the applicable Executory Contract or Unexpired Lease may be
designated by the Debtor or the Reorganized Debtor for rejection within five
(5) Business Days of the entry of the order of the Court resolving the matter
against the Debtor. Such rejection will be deemed effective as of the Effective
Date.

 

 
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6.

Insurance Policies.

 

Notwithstanding anything in the Plan to the contrary, all of the Debtor’s
insurance policies and any agreements, documents or instruments relating
thereto, are treated as and deemed to be Executory Contracts under the Plan. On
the Effective Date, the Debtor will be deemed to have assumed all insurance
policies and any agreements, documents, and instruments related thereto.

 

 

7.

Post-Petition Contracts and Leases.

 

All contracts, agreements, and leases that were entered into by the Debtor or
assumed by the Debtor after the Petition Date will be deemed assigned by that
Debtor to the Reorganized Debtor on the Effective Date.

 

 

H.

Miscellaneous Provisions.

 

 

1.

Immediate Binding Effect.

 

Notwithstanding Bankruptcy Rules 3020(e), 6004(h), 7062, or otherwise, upon the
occurrence of the Effective Date, the terms of the Plan will be immediately
effective and enforceable and deemed binding upon the Debtor, the Reorganized
Debtor, and any and all holders of Claims or Equity Interests (irrespective of
whether such Claims or Equity 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 with the Debtor.

 

 

2.

Governing Law.

 

Unless a rule of law or procedure is supplied by federal law (including the
Bankruptcy Code and Bankruptcy Rules), the laws of the State of New York
(without reference to the conflicts of laws provisions thereof that would
require or permit the application of the law of another jurisdiction) will
govern the construction and implementation of the Plan and any agreements,
documents, and instruments executed in connection with the Plan, unless
otherwise specified.

 

 

3.

Filing or Execution of Additional Documents.

 

On or before the Effective Date or as soon thereafter as is practicable, the
Debtor or the Reorganized Debtor will (on terms materially consistent with the
Plan) file with the Court or execute, as appropriate, such agreements and other
documents as may be necessary or appropriate to effectuate and further evidence
the terms and conditions of the Plan, which will be in form and substance
reasonably acceptable to the Majority Consenting Lenders.

 

 
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4.

Term of Injunctions or Stays.

 

All injunctions or stays provided for in the Chapter 11 Case under sections 105
or 362 of the Bankruptcy Code, or otherwise, and in existence on the
Confirmation Date, will remain in full force and effect until the Effective
Date.

 

 

5.

Withholding and Reporting Requirements.

 

In connection with the Plan and all instruments issued in connection therewith
and distributions thereon, the Reorganized Debtor will comply with all
withholding and reporting requirements imposed by any United States federal,
state, local, or non-U.S. taxing authority and all distributions hereunder will
be subject to any such withholding and reporting requirements. Notwithstanding
any provision in the Plan to the contrary, the Reorganized Debtor will 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 distribution pending receipt of
information necessary or appropriate to facilitate such distributions, or
establishing any other mechanisms they believe are reasonable and appropriate.

 

 

6.

Exemption From Transfer Taxes.

 

Pursuant to, and to the fullest extent permitted by, section 1146(a) of the
Bankruptcy Code, all transfers of property pursuant to the Plan, including
(i) the issuance, transfer, or exchange under the Plan of New Eagle Common
Stock, the New Eagle Equity Warrants, the New Eagle MIP Primary Equity, the New
Eagle MIP Reserved Equity, the New Eagle MIP Options, and the security interests
in favor of the lenders under the Exit Financing Facility, (ii) the making or
assignment of any lease or sublease, or (iii) the making or delivery of any
other instrument whatsoever, in furtherance of or in connection with the Plan,
will not be subject to any stamp, conveyance, mortgage, sales or use, real
estate transfer, recording, or other similar tax or governmental assessment, and
upon entry of the Confirmation Order, the appropriate state or local
governmental officials or agents will forgo the collection of any such tax or
governmental assessment and accept for filing and recordation any of the
foregoing instruments or other documents without the payment of any such tax,
recordation fee, or governmental assessment.

 

 

7.

Plan Supplement.

 

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. The documents
contained in the Plan Supplement will be available online at www.pacer.gov and
www.eaglebulkrestructuring.com. Holders of Claims or Equity Interests may obtain
a copy of the Plan Supplement upon written request to counsel to the Debtor. The
Debtor reserves the right, in accordance with the terms hereof, to modify,
amend, supplement, restate, or withdraw any part of the Plan Supplement after
they are filed and will promptly make such changes available online at
www.pacer.gov and www.eaglebulkrestructuring.com.

 

 
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8.

Conflicts.

 

The terms of the Plan will govern in the event of any inconsistency between the
Plan and the Disclosure Statement. In the event of any inconsistency with the
Plan and the Confirmation Order, the Confirmation Order will govern with respect
to such inconsistency.

 

VII.     CONFIRMATION AND EFFECTIVENESS OF THE PLAN

 

 

A.

Conditions to Confirmation.

 

The following are conditions to the entry of the Confirmation Order, unless such
conditions, or any of them, have been satisfied or duly waived in accordance
with Article VI.B of the Plan:

 

 

1.

The Court will have approved the Disclosure Statement, which will be in form and
substance reasonably acceptable to the Debtor and the Majority Consenting
Lenders.

 

 

2.

The Confirmation Order will be in form and substance reasonably acceptable to
the Debtor and the Majority Consenting Lenders.

 

 

3.

The Plan (which, for purposes of Article VI.A.3 of the Plan will exclude the
Plan Supplement), will be in form and substance mutually acceptable to the
Debtor and the Majority Consenting Lenders.

 

 

4.

The Plan Supplement will be in form and substance reasonably acceptable to the
Debtor and the Majority Consenting Lenders.

 

 

B.

Waiver of Conditions Precedent to Confirmation.

 

The Debtor, with the consent of the Majority Consenting Lenders (which consent
will not be unreasonably withheld, conditioned or delayed), may waive the
conditions set forth in Article VI.A of the Plan at any time without leave or
order of the Court and without any formal action.

 

 

C.

Conditions Precedent to Effectiveness.

 

The Plan will not become effective unless and until the Confirmation Date has
occurred and the following conditions have been satisfied in full or waived in
accordance with Article X.B of the Plan:

 

 

1.

the Confirmation Order entered by the Court will be in form and substance
reasonably acceptable to the Debtor and the Majority Consenting Lenders;

 

 

2.

the Confirmation Order will not have been stayed, modified, or vacated on
appeal;

 

 
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3.

the Definitive Documentation (as such term is defined in the Restructuring
Support Agreement) will be in form and substance reasonably acceptable to the
Debtor and the Majority Consenting Lenders;

 

 

4.

all actions, documents, certificates, and agreements necessary to implement the
Plan will 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 authorizations, consents, and regulatory approvals required (if any) for the
Plan’s effectiveness will have been obtained;

 

 

6.

the Reorganized Debtor will have executed the Exit Financing Facility Credit
Agreement, and all conditions precedent to effectiveness of the Exit Financing
Facility will have been satisfied or waived;

 

 

7.

the Fee Claims Escrow Account will be established and will have been funded in
full, in Cash in accordance with, and in the amounts required by, the Plan; and

 

 

8.

the Reorganized Debtor, Eagle Shipping International (USA) LLC, and Sophocles
Zoullas each will have executed the New CEO Employment Agreement.

 

 

D.

Waiver of Conditions Precedent to Effectiveness.

 

The Debtor, with the consent of the Majority Consenting Lenders (which consent
will not be unreasonably withheld, conditioned, or delayed), may waive
conditions set forth in Article X.A of the Plan at any time without leave of or
order of the Court and without any formal action.

 

 

E.

Effect of Failure of Conditions.

 

In the event that the Effective Date does not occur on or before sixty (60) days
after the Confirmation Date, upon notification submitted by the Debtor to the
Court: (i) the Confirmation Order may be vacated, (ii) no distributions under
the Plan will be made; (iii) the Debtor and all holders of Claims and Equity
Interests will be restored to the status quo ante as of the day immediately
preceding the Confirmation Date as though the Confirmation Date had never
occurred; and (iv) the Debtor’s obligations with respect to the Claims and
Equity Interests will remain unchanged and nothing contained in the Plan will
constitute or be deemed a waiver, release, or discharge of any Claims or Equity
Interests by or against the Debtor or any other person or to prejudice in any
manner the rights of the Debtor or any person in any further proceedings
involving the Debtor unless extended by Court order.

 

 
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F.

Vacatur of Confirmation Order.

 

If a Final Order denying confirmation of the Plan is entered, or if the
Confirmation Order is vacated, then the Plan will be null and void in all
respects, and nothing contained in the Plan will: (i) constitute a waiver,
release, or discharge of any Claims, Guarantee Claims, or Equity Interests;
(ii) prejudice in any manner the rights of the holder of any Claim, Guarantee
Claim, or Equity Interest; (iii) prejudice in any manner any right, remedy, or
claim of the Debtor or the Non-Debtor Subsidiaries; or (iv) be deemed an
admission against interest by the Debtor or the Non-Debtor Subsidiaries.

 

 

G.

Modification of the Plan.

 

Subject to the limitations contained in the Plan, and subject to the terms of
the Restructuring Support Agreement, (i) the Debtor reserves the right, in
accordance with the Bankruptcy Code and the Bankruptcy Rules, 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 (ii) after
entry of the Confirmation Order, the Debtor or the Reorganized Debtor, as the
case may be, may, upon order of the Court, amend or modify the Plan, in
accordance with section 1127(b) of the Bankruptcy Code. Notwithstanding the
foregoing, the Confirmation Order will authorize the Debtor or the Reorganized
Debtor, as the case may be, to make appropriate technical adjustments, remedy
any defect or omission, or reconcile any inconsistencies in the Plan, the
documents included in the Plan Supplement, any and all exhibits to the Plan,
and/or the Confirmation Order, as may be necessary to carry out the purposes and
effects of the Plan, provided, however, that such action does not materially and
adversely affect the treatment of holders of Allowed Claims or Equity Interests
pursuant to the Plan.

 

 

H.

Revocation, Withdrawal, or Non-Consummation.

 

 

1.

Right to Revoke or Withdraw.

 

The Debtor reserves the right to revoke or withdraw the Plan at any time before
the Effective Date; provided, however, that Article X.F.1 of the Plan will have
no impact on the rights of the Consenting Lenders, as set forth in the
Restructuring Support Agreement, in respect of any such revocation or
withdrawal.

 

 

2.

Effect of Withdrawal, Revocation, or Non-Consummation.

 

If the Debtor revokes or withdraws the Plan prior to the Effective Date, or if
the Confirmation Date or the Effective Date does not occur, the Plan, any
settlement or compromise embodied in the Plan (including the fixing or limiting
to an amount certain any Claim or Equity Interest or Class of Claims or Equity
Interests), the assumption or rejection of Executory Contracts, Unexpired Leases
or benefit plans effected by the Plan, any release, exculpation, or
indemnification provided for in the Plan, and any document or agreement executed
pursuant to the Plan will be null and void. In such event, nothing contained in
the Plan, and no acts taken in preparation for consummation of the Plan will be
deemed to constitute a waiver or release of any Claims by or against or Equity
Interests in the Debtor or any other Person, to prejudice in any manner the
rights of the Debtor or any Person in any further proceedings involving the
Debtor, or to constitute an admission of any sort by the Debtor or any other
Person.

 

 
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VIII.     CONFIRMATION PROCEDURES

 

 

A.

Combined Disclosure Statement and Confirmation Hearing.

 

Section 1129(a) of the Bankruptcy Code requires a bankruptcy court, after
notice, to hold a hearing on confirmation of a chapter 11 plan and
section 1129(b) provides that any party in interest may object to the
confirmation of the chapter 11 plan. When the Debtor commences its Chapter 11
Case, it will contemporaneously file a motion on the Petition Date to schedule a
hearing on the adequacy of the Disclosure Statement, the sufficiency of the
solicitation procedures, and confirmation of the Plan (“Combined Hearing”).
Notice of the Combined Hearing will be provided to holders of Claims and Equity
Interests or their agents or representatives as established in the order
establishing the schedule for the Combined Hearing and related objections
(“Notice of Combined Hearing”). Objections to the Disclosure Statement and
confirmation of the Plan must be filed with the Court by the date set forth in
the Notice of Combined Hearing and will be governed by Bankruptcy Rules 3020(b)
and 9014 and the local rules of the Court. UNLESS AN OBJECTION IS TIMELY FILED
AND SERVED, IT MAY NOT BE CONSIDERED BY THE COURT.

 

 

B.

Confirmation of the Plan.

 

At the Confirmation Hearing, the Court will confirm the Plan only if all of the
requirements of section 1129 of the Bankruptcy Code are met. Among the
requirements for confirmation of a plan are that the plan is (i) accepted by all
Impaired classes of Claims and Equity Interests or, if rejected by an Impaired
class, that the plan “does not discriminate unfairly” and is “fair and
equitable” as to such class, (ii) feasible, and (iii) in the “best interests” of
creditors and equity interest holders that are Impaired under the Plan.

 

 

1.

Acceptance.

 

Under section 1126(f) of the Bankruptcy Code, holders of unimpaired claims or
interests are conclusively deemed to have accepted a plan and their votes are
not solicited. Holders of impaired claims and interests are entitled to vote on
a plan (unless such claims or interests are in a class that is deemed to have
rejected the plan pursuant to section 1126(g) of the Bankruptcy Code) and,
therefore, must accept a plan for it to be confirmed without application of the
“unfair discrimination” and “fair and equitable” tests to such classes. An
impaired class of claims is deemed to have accepted a plan if, not counting any
holder designated pursuant to section 1126(e) of the Bankruptcy Code, (i)
holders of at least two-thirds in amount of the allowed claims held by holders
who actually voted in such class have voted to accept the plan and (ii) holders
of more than one-half in number of the allowed claims held by holders who
actually voted in such class have voted to accept the plan. An impaired class of
interests shall be deemed to have accepted the plan if, not counting any holder
designated pursuant to section 1126(e) of the Bankruptcy Code, holders of at
least two-thirds in amount of the allowed interests held by holders who actually
voted in such class have voted to accept the plan.

 

Classes 1, 2, 4, and 5 of the Plan are Unimpaired and, therefore, are
conclusively presumed to have voted to accept the Plan.

 

 
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Classes 3 and 6 of the Plan are Impaired under the Plan and Class 6 is deemed to
reject the Plan. Thus, only Class 3 is entitled to vote on the Plan. The Debtor
will seek nonconsensual confirmation of the Plan under section 1129(b) of the
Bankruptcy Code with respect to Class 6. Finally, the Debtor reserves its right
to amend the Plan in accordance with Article X.E of the Plan with respect to any
rejecting Class.

 

 

2.

Standards for Confirmation.

 

 

(a)

Requirements of Section 1129(a) of the Bankruptcy Code.

 

The following requirements must be satisfied pursuant to section 1129(a) of the
Bankruptcy Code before the Court may confirm a chapter 11 plan of
reorganization:

 

(i)     The plan complies with the applicable provisions of the Bankruptcy Code.

 

(ii)     The proponent of the plan complies with the applicable provisions of
the Bankruptcy Code.

 

(iii)     The plan has been proposed in good faith and not by any means
forbidden by law.

 

(iv)     Any payment made or to be made by the proponent, by the debtor, or by a
person issuing securities or acquiring property under a plan, for services or
for costs and expenses in or in connection with the case, or in connection with
the plan and incident to the case, has been approved by, or is subject to the
approval of, the Court as reasonable.

 

(v)     The proponent of a plan has disclosed (A) the identity and affiliations
of any individual proposed to serve, after confirmation of the plan, as a
director, officer, or voting trustee of the debtor, an affiliate of the debtor
participating in a joint plan with the debtor, or a successor to the debtor
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, and (B) the identity of any insider (as defined
in section 101 of the Bankruptcy Code) that will be employed or retained by the
reorganized debtor, and the nature of any compensation for such insider.

 

(vi)     Any governmental regulatory commission with jurisdiction, after
confirmation of the plan, over the rates of the debtor has approved any rate
change provided for in the plan, or such rate change is expressly conditioned on
such approval.

 

(vii)     With respect to each impaired class of claims or interests, (x) each
holder of a claim or interest of such class (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 of the plan, that is not less than
the amount that such holder would so receive or retain if the debtor were
liquidated under chapter 7 of the Bankruptcy Code on such date; or (y) if
section 1111(b)(2) of the Bankruptcy Code applies to the claims of such class,
each holder of a claim of such class will receive or retain under the plan on
account of such claim, property of a value, as of the effective date of the
plan, that is not less than the value of such holder’s interest in the estate’s
interest in the property that secures such claims.

 

 
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(viii)     With respect to each class of claims or interests, (a) such class has
accepted the plan; or (b) such class is not Impaired under the plan (subject to
the “cramdown” provisions discussed below; see “Requirements of Section 1129(b)
of the Bankruptcy Code”).

 

(ix)     Except to the extent that the holder of a particular claim has agreed
to a different treatment of such claim, the plan provides that:

 

(a)     with respect to a claim of a kind specified in sections 507(a)(2)
or 507(a)(3) of the Bankruptcy Code, on the effective date of the plan, the
holder of such claim will receive on account of such claim cash equal to the
allowed amount of such claim;

 

(b)     with respect to a class of claims of the kind specified in
sections 507(a)(1), 507(a)(4), 507(a)(5), 507(a)(6), or 507(a)(7) of the
Bankruptcy Code, each holder of a claim of such class will receive (a) if such
class has accepted the plan, deferred cash payments of a value, on the effective
date of the plan, equal to the allowed amount of such claim; or (b) if such
class has not accepted the plan, cash on the effective date of the plan equal to
the allowed amount of such claim; and

 

(c)     with respect to a claim of a kind specified in section 507(a)(8) of the
Bankruptcy Code, the holder of such claim will receive on account of such claim,
regular installment payments in cash:

 

(i)     of a total value, as of the effective date of the plan, equal to the
allowed amount of such claim;

 

(ii)     over a period ending not later than five (5) years after the date of
the order for relief under sections 301, 302, or 303 of the Bankruptcy Code; and

 

(iii)     in a manner not less favorable than the most favored nonpriority
unsecured claim provided for by the plan (other than cash payments made to a
class of creditors under section 1122(b) of the Bankruptcy Code); and

 

(d)     with respect to a secured claim which would otherwise meet the
description of an unsecured claim of a governmental unit under section 507(a)(8)
of the Bankruptcy Code, but for the secured status of that claim, the holder of
that claim will receive on account of that claim, cash payments, in the same
manner and over the same period, as prescribed in subparagraph (c) above.

 

(x)     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 (as defined in section 101
of the Bankruptcy Code).

 

 
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(xi)     Confirmation of the plan is not likely to be followed by the
liquidation, or the need for further financial reorganization, of the debtor or
any successor to the debtor under the plan, unless such liquidation or
reorganization is proposed in the plan.

 

(xii)     All fees payable under section 1930 of title 28 of the United States
Code, as determined by the Court at the hearing on confirmation of the plan,
have been paid or the plan provides for the payment of all such fees on the
effective date of the plan.

 

(xiii)     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 of
the plan, for the duration of the period the debtor has obligated itself to
provide such benefits.

 

The Debtor believes that the Plan meets all the applicable requirements of
section 1129(a) of the Bankruptcy Code including those pertaining to voting as
the Debtor expects to obtain acceptance from Class 3 (determined without
including any acceptance of the Plan by any insiders) prior to commencing the
Chapter 11 Case.

 

 

(b)

Requirements of Section 1129(b) of the Bankruptcy Code.

 

If Class 3 accepts the Plan, the Debtor will seek to have the Court confirm the
Plan under section 1129(b) of the Bankruptcy Code with respect to Class 6.

 

Section 1129(b) of the Bankruptcy Code sets forth the so-called “cramdown”
provisions for 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.

 

(i)     Fair and Equitable.

 

The Bankruptcy Code establishes different “cramdown” tests for determining
whether a plan is “fair and equitable” to dissenting Impaired classes of secured
creditors, unsecured creditors, and equity interest holders, as follows:

 

(a)     Secured Creditors. A plan is fair and equitable to a class of secured
claims that rejects the plan if the plan provides: (i) that each of the holders
of the secured claims included in the rejecting class (A) retains the liens
securing its claim to the extent of the allowed amount of such claim, whether
the property subject to those liens is retained by the debtor or transferred to
another entity, and (B) receives on account of its secured claim deferred cash
payments having a present value, as of the effective date of the plan, at least
equal to such holder’s interest in the estate’s interest in such property;
(ii) that each of the holders of the secured claims included in the rejecting
class realizes the “indubitable equivalent” of its allowed secured claim; or
(iii) for the sale, subject to section 363(k) of the Bankruptcy Code, of any
property that is subject to the liens securing the claims included in the
rejecting class, free and clear of such liens with such liens to attach to the
proceeds of the sale, and the treatment of such liens on proceeds in accordance
with clause (i) or (ii) hereof.

 

 
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(b)     Unsecured Creditors. A plan is fair and equitable as to a class of
unsecured claims that rejects the plan if the plan provides that: (i) each
holder of a claim included in the rejecting class receives or retains on account
of such claim property of a value, as of the effective date of the plan, equal
to the amount of its allowed claim; or (ii) the holders of claims and interests
that are junior to the claims of the rejecting class will not receive or retain
under the plan on account of such junior claims or interests any property.

 

(c)     Holders of Equity Interests. A plan is fair and equitable as to a class
of equity interests that rejects the plan if the plan provides that: (i) each
holder of an equity interest included in the rejecting class receives or retains
on account of such equity interest property of a value, as of the effective date
of the plan, equal to the greatest of the allowed amount of (A) any fixed
liquidation preference to which such holder is entitled, (B) any fixed
redemption price to which such holder is entitled, or (C) the value of the
interest; or (ii) the holder of any interest that is junior to the interests of
the rejecting class will not receive or retain under the plan on account of such
junior interest any property.

 

The Debtor believes the Plan is fair and equitable with respect to each Class of
Claims and Equity Interests that is Impaired under, and has not accepted, the
Plan.

 

(ii)     Unfair Discrimination.

 

A plan of reorganization does not “discriminate unfairly” if a dissenting class
is treated substantially equally with respect to other classes similarly
situated, and no class receives more than it is legally entitled to receive for
its Claims or Equity Interests. The Debtor believes that the Plan does not
discriminate unfairly against any Class of Claims or Equity Interests that is
Impaired under, and has not accepted, the Plan.

 

The Debtor believes that the Plan and the treatment of all Classes of Claims and
Equity Interests under the Plan satisfy the foregoing requirements for
nonconsensual confirmation of the Plan.

 

 

3.

Feasibility.

 

Section 1129(a)(11) of the Bankruptcy Code permits a plan to be confirmed if it
is not likely to be followed by liquidation or the need for further financial
reorganization of the debtor. For purposes of determining whether the Plan meets
this requirement, the Debtor analyzed its ability to meet its obligations under
the Plan. Based upon the Debtor’s Financial Projections annexed hereto and the
assumptions set forth therein, the Debtor believes that it will be able to make
all distributions required under the Plan and to fund its operations going
forward and, therefore, that confirmation of the Plan is not likely to be
followed by liquidation or the need for further reorganization.

 

The Plan substantially deleverages the Debtor’s balance sheet by converting over
80% of its approximately $1.2 billion of debt into equity of the Reorganized
Debtor and repaying the balance of such debt in cash from the proceeds of the
Exit Financing Facility. This refinancing and conversion of debt-to-equity will
generate approximately $37.5 million of cash flow annually due to the reduced
interest expense.

 

 
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4.

Valuation of the Debtor.

 

In conjunction with formulating the Plan, the Debtor determined it was necessary
to estimate the going concern value of the Reorganized Debtor (the “Valuation
Analysis”). The Valuation Analysis, performed by Moelis, the Debtor’s proposed
investment banker, is set forth in Exhibit E.

 

THE VALUATION ANALYSIS SET FORTH IN EXHIBIT E REPRESENTS A HYPOTHETICAL
VALUATION OF THE REORGANIZED DEBTOR, WHICH ASSUMES THAT SUCH REORGANIZED DEBTOR
CONTINUES AS AN OPERATING BUSINESS. 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 DEBTOR, ITS SECURITIES, OR ITS ASSETS, WHICH MAY
BE MATERIALLY DIFFERENT THAN THE ESTIMATE SET FORTH IN THE VALUATION ANALYSIS.
ACCORDINGLY, SUCH ESTIMATED VALUE IS NOT NECESSARILY INDICATIVE OF THE PRICES AT
WHICH ANY SECURITIES OF THE REORGANIZED DEBTOR MAY TRADE AFTER GIVING EFFECT TO
THE TRANSACTIONS SET FORTH IN THE PLAN. ANY SUCH PRICES MAY BE MATERIALLY
DIFFERENT THAN INDICATED BY THE VALUATION ANALYSIS.

 

 

5.

Best Interests Test.

 

With respect to each Impaired Class of Claims and Equity Interests, Confirmation
of the Plan requires that each holder of an Allowed Claim or Allowed Equity
Interest either (i) accept the Plan or (ii) 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 or retain if the Debtor were liquidated under
chapter 7 of the Bankruptcy Code. To determine what holders of Claims and Equity
Interests in each Impaired Class would receive if the Debtor were liquidated
under chapter 7 of the Bankruptcy Code, the Court must determine the dollar
amount that would be generated from the liquidation of the Debtor’s assets and
properties in the context of a chapter 7 liquidation case. The Cash amount that
would be available for satisfaction of Claims and Equity Interests would consist
of the proceeds resulting from the disposition of the Debtor’s unencumbered
assets and properties, augmented by the unencumbered Cash, if any, held by the
Debtor at the time of the commencement of the liquidation case. Such Cash amount
would be reduced by the amount of the costs and expenses of the liquidation and
by such additional administrative and priority claims that might result from the
termination of the Debtor’s business and the use of chapter 7 for the purposes
of liquidation.

 

The Debtor’s costs of liquidation under chapter 7 of the Bankruptcy Code would
include the fees payable to a chapter 7 trustee, as well as those fees that
might be payable to attorneys and other professionals that a trustee might
engage. In addition, claims would arise by reason of the breach or rejection of
obligations incurred and leases and executory contracts assumed or entered into
by the Debtor during the pendency of the Chapter 11 Case. The foregoing types of
claims and other claims that might arise in a liquidation case or result from
the pending Chapter 11 Case, including any unpaid expenses incurred by the
Debtor during the Chapter 11 Case such as compensation for attorneys, financial
advisors and accountants, would be paid in full from the liquidation proceeds
before the balance of those proceeds would be made available to pay prepetition
Allowed General Unsecured Claims and, if applicable, Equity Interests.

 

 
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To determine if the Plan is in the best interests of each Impaired Class, the
value of the distributions from the proceeds of a liquidation of the Debtor’s
unencumbered assets and properties, after subtracting the amounts attributable
to the foregoing claims, are then compared with the value of the property
offered to such Classes of Claims and Equity Interests under the Plan.

 

After considering the effects that a chapter 7 liquidation would have on the
ultimate proceeds available for distribution to creditors and Interest holders
in the Chapter 11 Case, including (i) the increased costs and expenses of a
liquidation under chapter 7 of the Bankruptcy Code arising from fees payable to
a trustee in bankruptcy and professional advisors to such trustee, (ii) the
likely erosion in value of assets and vessels in a chapter 7 case in the context
of an expeditious liquidation and the “forced sale” atmosphere that would
prevail under a chapter 7 liquidation, and (iii) the substantial increases in
Claims which would be satisfied on a priority basis or on parity with creditors
in the Chapter 11 Case, the Debtor has determined that confirmation of the Plan
will provide each holder of an Allowed Claim or Allowed Equity Interest with a
recovery that is not less than such holder would receive pursuant to a
hypothetical liquidation of the Debtor under chapter 7 of the Bankruptcy Code.

 

In fact, in every instance, the Plan distributions exceed what any Claim or
Equity Interest holder would receive in a chapter 7. For example, the Plan and
the Liquidation Analysis demonstrate that (a) each holder of a
Prepetition Credit Facility Claim will receive value in a range between 64% and
71% of its Claim under the Plan compared to recoveries ranging from 45% to 62%
in a hypothetical chapter 7 liquidation; (b) General Unsecured Claims will
receive 100% of their claims, compared to the zero recovery that they would be
entitled to in a chapter 7; and (c) Equity Interests will receive $21.9 million
to $27.5 million compared to the zero recovery that they would be entitled to in
a chapter 7.

 

The Liquidation Analysis is annexed hereto as Exhibit D. The information set
forth in Exhibit D provides a summary of the liquidation values of the Debtor’s
assets, assuming a chapter 7 liquidation in which a trustee appointed by the
Court would liquidate the assets of the Debtor’s estates.

 

Underlying the Liquidation Analysis is a number of estimates and assumptions
that, although developed and considered reasonable by management, are inherently
subject to significant economic and competitive uncertainties and contingencies
beyond the control of the Debtor and its management. The Liquidation Analysis is
also based on assumptions with regard to liquidation decisions that are subject
to change. Accordingly, the values reflected might not be realized if the Debtor
was, in fact, to undergo such a liquidation. The chapter 7 liquidation period is
assumed to be a period of 6 months, allowing for, among other things, the
(i) discontinuation of the Debtor’s operations, (ii) sale of assets, and
(iii) collection of receivables.

 

 
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THE LIQUIDATION ANALYSIS IS AN ESTIMATE OF THE PROCEEDS THAT MAY BE GENERATED AS
A RESULT OF A HYPOTHETICAL CHAPTER 7 LIQUIDATION OF THE DEBTOR’S ASSETS.
NUMEROUS ESTIMATES AND ASSUMPTIONS UNDERLIE THE LIQUIDATION ANALYSIS REGARDING
PROCEEDS THAT, ALTHOUGH DEVELOPED AND CONSIDERED REASONABLE BY THE DEBTOR’S
MANAGEMENT AND ADVISORS, ARE INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC,
COMPETITIVE, AND OPERATIONAL UNCERTAINTIES BEYOND THE CONTROL OF THE DEBTOR OR A
CHAPTER 7 TRUSTEE. ADDITIONALLY, VARIOUS LIQUIDATION DECISIONS UPON WHICH
CERTAIN ASSUMPTIONS ARE BASED ARE SUBJECT TO CHANGE. THERE CAN BE NO ASSURANCE
THAT THE ASSUMPTIONS AND ESTIMATES EMPLOYED IN DETERMINING THE LIQUIDATION
VALUES OF THE DEBTOR’S ASSETS WILL RESULT IN AN ACCURATE ESTIMATE OF THE
PROCEEDS THAT WOULD BE REALIZED IF THE DEBTOR UNDERWENT AN ACTUAL LIQUIDATION.

 

NEITHER THE DEBTOR NOR ITS ADVISORS MAKE ANY REPRESENTATION OR WARRANTY THAT THE
ACTUAL RESULTS WOULD OR WOULD NOT APPROXIMATE THE ESTIMATES AND ASSUMPTIONS
REPRESENTED IN THE LIQUIDATION ANALYSIS. THE ACTUAL AMOUNT OF CLAIMS OR EQUITY
INTERESTS AGAINST THE DEBTOR OR ITS ESTATE COULD VARY SIGNIFICANTLY FROM THE
ESTIMATES SET FORTH HEREIN, DEPENDING ON THE CLAIMS ASSERTED DURING THE PENDENCY
OF THE HYPOTHETICAL CHAPTER 7 CASE. ACCORDINGLY, THE DEBTOR’S ACTUAL LIQUIDATION
VALUE IS SPECULATIVE IN NATURE AND COULD VARY MATERIALLY FROM THE ESTIMATES
PROVIDED HEREIN.

 

IX.      FINANCIAL PROJECTIONS AND VALUATION

 

The Debtor, with the assistance of its advisors, developed a set of financial
projections (as summarized in Exhibit C, the “Financial Projections”) for the
purposes set forth below. The Financial Projections reflect the Debtor’s most
recent estimates of the financial position, results of operations and cash flows
after confirmation of the Plan, based upon the Debtor’s assumptions and
judgments as to future market and business conditions, expected future operating
performance, and the occurrence or nonoccurrence of certain future events, all
of which are subject to change. Actual operating results and values may vary.

 

 

A.

Financial Projections.

 

As a condition to confirmation of a plan, the Bankruptcy Code requires, among
other things, that the Court determine that confirmation is not likely to be
followed by the liquidation or the need for further financial reorganization of
the debtor. In connection with the development of the Plan, and for purposes of
determining whether the Plan satisfies this feasibility standard, the Debtor’s
management has, through the development of the Financial Projections, analyzed
the Debtor’s ability to meet its obligations under the Plan and to maintain
sufficient liquidity and capital resources to conduct its business subsequent to
its emergence from this Chapter 11 Case. The Financial Projections were also
prepared to assist those holders of Allowed Claims entitled to vote on the Plan
in determining whether to accept or reject the Plan.

 

 
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For the purpose of demonstrating Plan feasibility, the Debtor prepared the
Financial Projections with the assistance of its professional advisors. The
Financial Projections present, to the best of the Debtor’s knowledge, the
Reorganized Debtor’s projected financial position, results of operations, and
cash flows from the fourth quarter of 2014 through fiscal year 2018, and reflect
the Debtor’s assumptions and judgments as of July 31, 2014

 

THE FINANCIAL PROJECTIONS WERE NOT PREPARED WITH A VIEW TOWARDS COMPLYING WITH
THE GUIDELINES FOR PROSPECTIVE FINANCIAL STATEMENTS PUBLISHED BY THE AMERICAN
INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS. THE DEBTOR’S INDEPENDENT ACCOUNTANT
HAS NEITHER COMPILED NOR EXAMINED THE ACCOMPANYING PROSPECTIVE FINANCIAL
INFORMATION TO DETERMINE THE REASONABLENESS THEREOF AND, ACCORDINGLY, HAS NOT
EXPRESSED AN OPINION OR ANY OTHER FORM OF ASSURANCE WITH RESPECT THERETO.

 

THE DEBTOR DOES NOT INTEND TO, AND DISCLAIMS ANY OBLIGATION TO, (A) FURNISH
UPDATED FINANCIAL PROJECTIONS TO HOLDERS OF CLAIMS OR EQUITY INTERESTS PRIOR TO
THE EFFECTIVE DATE OR TO HOLDERS OF NEW EAGLE COMMON STOCK OR ANY OTHER PARTY
AFTER THE EFFECTIVE DATE, (B) INCLUDE SUCH UPDATED INFORMATION IN ANY DOCUMENTS
THAT MAY BE REQUIRED TO BE FILED WITH THE SEC, OR (C) OTHERWISE MAKE SUCH
UPDATED INFORMATION PUBLICLY AVAILABLE.

 

THESE FINANCIAL PROJECTIONS, WHILE PRESENTED WITH NUMERICAL SPECIFICITY, ARE
NECESSARILY BASED ON A VARIETY OF ESTIMATES AND ASSUMPTIONS WHICH, THOUGH
CONSIDERED REASONABLE BY THE DEBTOR’S MANAGEMENT, MAY NOT BE REALIZED, AND ARE
INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC, AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE DEBTOR’S CONTROL.
THE DEBTOR CAUTIONS THAT NO REPRESENTATIONS CAN BE MADE AS TO THE ACCURACY OF
THESE FINANCIAL PROJECTIONS OR TO THE DEBTOR’S ABILITY TO ACHIEVE THE PROJECTED
RESULTS. SOME ASSUMPTIONS INEVITABLY WILL NOT MATERIALIZE. FURTHER, EVENTS AND
CIRCUMSTANCES OCCURRING SUBSEQUENT TO THE DATE ON WHICH THESE FINANCIAL
PROJECTIONS WERE PREPARED MAY BE DIFFERENT FROM THOSE ASSUMED OR, ALTERNATIVELY,
MAY HAVE BEEN UNANTICIPATED AND, THUS, THE OCCURRENCE OF THESE EVENTS MAY AFFECT
FINANCIAL RESULTS IN A MATERIAL AND POSSIBLY ADVERSE MANNER.

 

 
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1.

Scope of Financial Projections.

 

The Financial Projections are based on the assumption that the Effective Date
will occur on or about September 30, 2014. If the Effective Date is
significantly delayed, additional expenses, including professional fees, may be
incurred and operating results may be negatively impacted. It is also assumed
that the Reorganized Debtor (and Eagle generally) will conduct operations
substantially similar to its current business.

 

The Financial Projections do not fully reflect the application of fresh start
accounting, which, if required pursuant to U.S. GAAP, is not anticipated to have
a material impact on the underlying economics of the Plan. Any formal
fresh-start reporting adjustments that may be required in accordance with
Statement of Position 90-7 Financial Reporting by Entities in Reorganization
under the Bankruptcy Code, including any allocation of the Debtor’s
reorganization value to the Debtor’s assets in accordance with the procedures
specified in Financial Accounting Standards Board Statement 141, will be made
after the Debtor emerges from bankruptcy.

 

A Chapter 11 proceeding is viewed as a significant threat to the continuing
operations of Eagle’s international business. Eagle has recently experienced
dislocation in its business operations caused by the uncertainty of its
financial restructuring process and the potential of a bankruptcy filing.
Furthermore, the dry bulk industry has historically been and continues to be
subject to significant volatility due to continuously evolving dynamics as they
relate to the supply of vessels and demand for shipping services. The
unpredictable nature of factors, such as weather, seasonal demand for resources,
and asymmetrical timing of vessel deliveries results in significant freight rate
volatility and could cause actual results to differ.

 

The Financial Projections include the (i) Projected Consolidated Balance Sheet
of Reorganized Debtor, (ii) Projected Consolidated Cash Income Statement of
Reorganized Debtor, and (iii) Projected Consolidated Cash Flow Statement of
Reorganized Debtor.

 

The Financial Projections are “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995. Factors that could cause
actual results to differ materially include, but are not limited to: the ability
of the Reorganized Debtor to operate its business consistent with its
projections generally, including the ability to maintain or increase revenue and
cash flow to satisfy its liquidity needs, service its indebtedness, and finance
the ongoing obligations of its business, and to manage its future operating
expenses and make necessary capital expenditures; the ability of the Reorganized
Debtor to comply with the covenants and conditions under its credit facility and
its ability to borrower thereunder; the loss or reduction in business from the
Debtor’s significant customers or the failure of the Debtor’s significant
customers to perform their obligations to the Debtor; the loss or material
downtime of major suppliers; material declines in demand for dry bulk shipping
services or the rates in the dry bulk shipping market; changes in production of,
or demand for, iron ore, coal, steel, grain, or other dry bulk, either generally
or in particular regions; greater than anticipated levels of vessel new building
orders or lower than anticipated rates of vessel scrapping; changes in the
typical seasonal variations in dry bulk charter rates; changes in the
itineraries of the Debtor’s Vessels; increases in costs including, without
limitation, crew wages, insurance, provisions, repairs, and maintenance; changes
in rules and regulations applicable to the dry bulk industry, including, without
limitation, legislation adopted by international organizations such as the IMO
and the European Union or by individual countries; actions by the courts, the
United States Coast Guard, the U.S. Department of Justice, or other governmental
or regulatory authorities, and the results of the legal proceedings to which the
Reorganized Debtor or any of its affiliated vessels may be subject; changes in
the condition of the Debtor’s Vessels or applicable maintenance or regulatory
standards (which may affect, among other things, the Debtor’s anticipated
drydocking or maintenance and repair costs); the Reorganized Debtor’s ability to
attract and maintain key executives, managers, and employees; changes in general
domestic and international political conditions; and adverse changes in foreign
currency exchange rates affecting the Debtor’s expenses. See also Section X
(“Certain Risk Factors to be Considered,” generally and in particular
“Additional Factors to be Considered--Forward-Looking Statements are not
Assured, and Actual Results May Vary”).

 

 
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B.

Valuation of the Reorganized Debtor as of July 15, 2014.

 

The Debtor’s financial advisor, Moelis, has estimated the post-confirmation
enterprise value of the Reorganized Debtor to be in a range between $850 million
and $950 million. In developing this estimate, Moelis considered, among other
things, vessel appraisals and other valuation methodologies. Given the
approximately $225 million of debt projected to be on the balance sheet of the
Reorganized Debtor, the implied equity value of the Reorganized Debtor is
approximately $625 million to $725 million.

 

Under the Plan, Holders of Equity Interests would receive New Eagle Equity
Warrants to purchase shares of New Eagle Common Stock, representing an aggregate
total of 7.5% of the total number of shares of New Eagle Common Stock issuable
pursuant to the Plan (subject to dilution from the New Eagle MIP Primary Equity,
the New Eagle MIP Reserved Equity, and the New Eagle MIP Options), exercisable
at any time for a period of seven (7) years from the Effective Date, at a strike
price per share equal to the amount derived by dividing (a) (1) the principal
amount of the outstanding Term Loans and PIK Loans (each, as defined in the
Prepetition Credit Agreement), immediately prior to the Effective Date, plus (2)
any accrued but unpaid interest under the Prepetition Credit Agreement
immediately prior to the Effective Date, minus (3) the Prepetition Credit
Facility Cash Distribution by (b) the aggregate number of shares issued under
the Plan pursuant to the Prepetition Credit Facility Equity Distribution and the
Shareholder Equity Distribution, which warrants will be issued by the
Reorganized Debtor pursuant to the terms of the New Eagle Equity Warrant
Agreement. The estimated value of the New Eagle Equity Warrants is approximately
$19 million to $24 million based on the Black-Scholes pricing model.

 

The foregoing estimates of the post-confirmation equity value of the Reorganized
Debtor and the share price of New Eagle Common Stock are based on a number of
assumptions, including no material adverse changes in the spot rate market, no
ship arrests, no material disruptions to the Reorganized Debtor’s business and
operations, the continuing employment of the Debtor’s Vessels, and the Plan
becoming effective in accordance with the estimates and other assumptions
discussed herein.

 

The valuation assumptions herein are not a prediction or reflection of
post-confirmation trading prices of the Reorganized Debtor’s common stock. Such
securities may trade at substantially lower or higher prices because of a number
of factors. The trading prices of securities issued under a plan of
reorganization are subject to many unforeseen circumstances and therefore cannot
be predicted.

 

 
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X.     CERTAIN RISK FACTORS TO BE CONSIDERED

 

HOLDERS OF CLAIMS AGAINST THE DEBTOR SHOULD READ AND CONSIDER CAREFULLY THE RISK
FACTORS SET FORTH BELOW, AS WELL AS THE OTHER INFORMATION SET FORTH IN THIS
DISCLOSURE STATEMENT (AND THE DOCUMENTS DELIVERED TOGETHER HEREWITH AND/OR
INCORPORATED HEREIN BY REFERENCE) PRIOR TO VOTING TO ACCEPT OR REJECT THE PLAN.
THESE RISK FACTORS SHOULD NOT, HOWEVER, BE REGARDED AS CONSTITUTING THE ONLY
RISKS INVOLVED IN CONNECTION WITH THE PLAN AND ITS IMPLEMENTATION.

 

 

A.

Certain Bankruptcy Law Considerations.

 

 

1.

Parties in Interest May Object to the Debtor’s Classification of Claims and
Interests.

 

Section 1122 of the Bankruptcy Code provides that a debtor may place a claim or
an equity interest in a particular class under a plan of reorganization only if
such claim or equity interest is substantially similar to the other claims or
equity interests in such class. The Debtor believes that the classification of
Claims and Equity Interests in the Plan complies with the Bankruptcy Code
requirements because the Debtor classified Claims and Equity Interests, each
encompassing Claims or Equity Interests, as applicable, that are substantially
similar to the other Claims and Equity Interests in each such Class.
Nevertheless, there can be no assurance that the Court will reach the same
conclusion.

 

 

2.

Contingencies Not to Affect Votes of Impaired Classes to Accept or Reject the
Plan.

 

The distributions available to holders of Allowed Claims under the Plan can be
affected by a variety of contingencies, including, without limitation, whether
or not the Court enters an order subordinating certain Allowed Claims to other
Allowed Claims. The occurrence of any and all such contingencies, which could
affect the distributions available to holders of Allowed Claims under the Plan,
will not affect the validity of the vote taken by the Impaired Class to accept
or reject the Plan or require any sort of revote by the Impaired Class.

 

 

3.

The Debtor May Fail to Satisfy the Solicitation Requirements Requiring a
Re-Solicitation.

 

Section 1126(b) of the Bankruptcy Code provides that the holder of a claim
against, or equity interest in, a debtor who accepts or rejects a plan of
reorganization before the commencement of a chapter 11 is deemed to have
accepted or rejected such plan under the Bankruptcy Code so long as the
solicitation of votes was made in accordance with applicable non-bankruptcy law
governing the adequacy of disclosure in connection with such solicitation or, if
such laws do not exist, such acceptance was solicited after disclosure of
“adequate information” as defined in section 1125 of the Bankruptcy Code.

 

 
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Additionally, Bankruptcy Rule 3018(b) states that a holder of a claim or equity
interest who has accepted or rejected a plan before commencement of the case
under the Bankruptcy Code will not be deemed to have accepted or rejected the
plan if the Court finds that the plan was not transmitted to substantially all
creditors and equity security holders of the same class, that an unreasonably
short time was prescribed for solicitation of creditors or equity security
holders to accept or reject the plan, or that the solicitation was not in
compliance with section 1126(b) of the Bankruptcy Code.

 

To satisfy the requirements of Bankruptcy Code section 1126(b) and Bankruptcy
Rule 3018(b), the Debtor will be delivering the solicitation materials to all
holders of Claims as of the Voting Record Date in the Classes entitled to vote.
Accordingly, the Debtor believes that the solicitation is proper under
section 1125 of the Bankruptcy Code. The Debtor cannot be certain, however, that
the solicitation of acceptances or rejections will be approved by the Court, and
if such approval is not obtained, Confirmation of the Plan could be denied. If
the Court were to conclude that the Debtor did not satisfy the solicitation
requirements, then the Debtor may seek to re-solicit votes to accept or reject
the Plan or solicit votes from one or more Classes not previously solicited. The
Debtor cannot provide any assurances that such a re-solicitation would be
successful. Re-solicitation could delay or jeopardize Confirmation of the Plan
and result in termination of the Restructuring Support Agreement.
Non-confirmation of the Plan and loss of the enormous benefits under the
Restructuring Support Agreement could result in a protracted Chapter 11 Case or
cases, which could significantly and detrimentally impact relationships with
vendors, suppliers, employees, and major customers and erode value.

 

 

4.

Risk of Non-Confirmation, Non-Occurrence, or Delay of the Plan.

 

Because the Plan is proposed as a prepackaged plan, the Debtor will begin
soliciting votes before the commencement of Chapter 11 Case. If votes are
received from holders of Prepetition Credit Facility Claims in number and amount
sufficient to satisfy the requirements to confirm a chapter 11 plan, then the
Debtor will commence the Chapter 11 Case and seek Confirmation of the Plan as
soon as reasonably practicable. If insufficient votes are received, the Debtor
may seek to accomplish an alternative to the Plan. There can be no assurance
that the terms of an alternative plan would be similar, or as favorable, to the
Holders of Allowed Claims or Allowed Equity Interests as those proposed by the
Plan. Additionally, if the Plan is not accepted prior to the Petition Date by
the requisite number of votes from the holders of Prepetition Credit Facility
Claims, then the Debtor may commence the Chapter 11 Case or cases without the
benefit of a pre-negotiated plan of reorganization or could pursue other
out-of-court restructuring alternatives.

 

For the Debtor to emerge successfully from the Chapter 11 Case as a viable
entity, the Debtor, like any other chapter 11 debtor, must obtain approval of
the Plan from its creditors and confirmation of the Plan through the Court, and
then successfully implement the Plan. The foregoing process requires the Debtor
to (i) meet certain statutory requirements with respect to the adequacy of this
Disclosure Statement, (ii) solicit and obtain creditor acceptances of the Plan,
and (iii) fulfill other statutory conditions with respect to the confirmation of
the Plan.

 

 
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Although the Debtor believes that the Plan satisfies all of the requirements
necessary for confirmation by the Court, there can be no assurance that the
Court will reach the same conclusion. Moreover, there can be no assurance that
modifications to the Plan will not be required for Confirmation, or that such
modifications would not necessitate the re-solicitation of votes to accept the
Plan, as modified. Additionally, by its terms, the Plan will not become
effective unless, among other things, the conditions precedent described in
Section VII.D of this Disclosure Statement have been satisfied or waived in
accordance with Article X.B of the Plan.

 

 

5.

Risk of Non-Occurrence of the Effective Date.

 

Although the milestones in the Restructuring Support Agreement require that the
Effective Date occur by November 30, 2014, there can be no assurance as to such
timing or that the conditions to the Effective Date contained in the Plan will
ever occur. The impact that a prolonging of the Chapter 11 Case may have on
Eagle’s operations cannot be accurately predicted or quantified. The
continuation of the Chapter 11 Case, particularly if the Plan is not approved,
confirmed, or implemented within the time frame currently contemplated, could
adversely affect operations and relationships between Eagle and its customers
and charterers, suppliers, vendors, service providers, and other creditors and
result in increased professional fees and similar expenses. Failure to confirm
the Plan could further weaken Eagle’s liquidity position, which could jeopardize
Eagle’s exit from chapter 11.

 

 

6.

The DIP Facility and Cash Collateral May Be Insufficient to Fund the Debtor’s
Business Operations, or May Be Unavailable if the Debtor Does Not Comply with
Its Terms.

 

On or shortly after the Petition Date, as set forth above, the Debtor intends to
ask the Court for authorization to implement the DIP Facility in order to
provide liquidity to Eagle during the pendency of the Chapter 11 Case. There can
be no assurance that the Court will approve the DIP Facility on the terms
requested by the Debtor. Moreover, in the event available borrowings under the
DIP Facility and the use of cash collateral are not sufficient to meet the
Debtor’s liquidity requirements, the Debtor may be required to seek additional
financing. Similarly, in the event the Debtor fails to comply with any of the
terms or conditions of the DIP Facility, the outstanding principal balance under
the DIP Facility (including accrued interest thereon) may become due and payable
and the Debtor may need to obtain additional financing to repay the amount due
under the DIP Facility. There can be no assurance that such additional financing
would be available or, if available, offered on terms acceptable to the Debtor
or the Court. If, for one or more reasons, the Debtor is unable to obtain such
additional financing, the Debtor’s business and assets could be subject to
liquidation under chapter 7 of the Bankruptcy Code and the Debtor may cease to
continue as a going concern.

 

The DIP Credit Agreement and the DIP Orders provide for affirmative and negative
covenants applicable to EBS and its Non-Debtor Subsidiaries, including negative
covenants restricting the ability of EBS and its Non-Debtor Subsidiaries to
incur additional indebtedness, grant liens, dispose of or purchase assets, pay
dividends, or take certain other actions, as well as financial covenants
applicable to the Debtor, including compliance with a cash flow variance,
maximum capital expenditures, and minimum liquidity. There can be no assurance
that the Debtor will be able to comply with these covenants and meet its
obligations as they become due or to comply with the other terms and conditions
of the DIP Credit Agreement. Should business activity levels be below
expectations, the Debtor could default on its DIP Facility obligations or
violate the terms of the DIP Orders. Any default of the Debtor’s obligations
under the DIP Credit Agreement or violation of the DIP Orders could result in a
default of the Debtor’s obligations under the Restructuring Support Agreement,
which could imperil the Debtor’s ability to confirm the Plan and threaten its
ability to continue to operate as a going concern.

 

 
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7.

Impact of the Chapter 11 Case on the Debtor.

 

The Chapter 11 Case may affect the Debtor’s relationships with, and its ability
to negotiate favorable terms with, creditors, customers, charterers, suppliers,
vendors, employees, and other personnel and counterparties. While the Debtor
expects to continue normal operations, public perception of its continued
viability may affect, among other things, the desire of new and existing
charterers and customers to enter into, or continue, charters or other
agreements or arrangements with the Debtor. The failure to maintain any of these
important relationships could adversely affect the Debtor’s business, financial
condition, and results of operations. Because of the public disclosure of the
Chapter 11 Case and concerns foreign vendors may have about liquidity, the
Debtor’s ability to maintain normal credit terms with vendors may be impaired.
Also, the Debtor’s transactions that are outside of the ordinary course of
business are generally subject to the approval of the Court, which may limit the
Debtor’s ability to respond on a timely basis to certain events or take
advantage of certain opportunities. As a result, the effect that the Chapter 11
Case will have on the Debtor’s business, financial conditions, and results of
operations cannot be accurately predicted or quantified at this time.
Additionally, the terms of the DIP Credit Agreement limit Eagle’s ability to
undertake certain business initiatives. These limitations include, among other
things, Eagle’s ability to: (a) sell assets outside the normal course of
business; (b) consolidate, merge, sell, or otherwise dispose of all or
substantially all of its assets; (c) grant liens; and (d) finance its
operations, investments, or other capital needs.

 

 

8.

The Plan is Based Upon Assumptions the Debtor Developed Which May Prove
Incorrect and Could Render the Plan Unsuccessful.

 

The Plan affects both the Debtor’s capital structure and the ownership,
structure, and operation of its business and reflects assumptions and analyses
based on the Debtor’s experience and perception of historical trends, current
conditions, and expected future developments, as well as other factors that the
Debtor considers appropriate under the circumstances. Whether actual future
results and developments will be consistent with the Debtor’s expectations and
assumptions depends on a number of factors, including but not limited to the
Debtor’s: (i) ability to implement the substantial changes to the capital
structure; (ii) ability to obtain adequate liquidity and financing sources,
including the Exit Financing Facility; (iii) ability to maintain customers’
confidence in Eagle’s viability as a continuing entity and to attract and retain
sufficient business from them; and (iv) ability to retain key employees, as well
as the overall strength and stability of general economic conditions of the
financial and shipping industries, both in the United States and in global
markets. The failure of any of these factors could materially adversely affect
the successful reorganization of the Debtor’s business.

 

 
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In addition, the Plan relies upon financial projections, including with respect
to revenues, EBITDA, debt service, and cash flow. Financial forecasts are
necessarily speculative, and it is likely that one or more of the assumptions
and estimates that are the basis of these financial forecasts will not be
accurate. In Eagle’s case, the forecasts are even more speculative than normal,
because they involve fundamental changes in the nature of Eagle’s capital
structure. Accordingly, Eagle acknowledges that its actual financial condition
and results of operations may differ, perhaps materially, from what was
anticipated. Consequently, there can be no assurance that the results or
developments contemplated by any plan of reorganization implemented will occur
or, even if they do occur, that they will have the anticipated effects on the
Debtor and its subsidiaries or their businesses or operations. The failure of
any such results or developments to materialize as anticipated could materially
adversely affect the successful execution of any plan of reorganization.

 

 

B.

Certain Risks Related to the Exit Financing Facility.

 

 

1.

Ability to Maintain Sufficient Liquidity.

 

Although the Debtor expects to incur exit financing comprised of a $225 million
term loan and a $50 million revolver on the Effective Date, there can be no
assurance that the Debtor will be able to obtain the Exit Financing Facility. 
Moreover, consistent with the terms of the Restructuring Support Agreement, the
final terms of the Exit Financing Facility must be in form and substance
reasonably acceptable to the Majority Consenting Lenders (as such term is
defined in the Restructuring Support Agreement).  Furthermore, under the
Restructuring Support Agreement, if the final terms of the Exit Financing
Facility differ in a meaningful way from the terms set forth in that certain
exit financing proposal referenced in the Restructuring Support Agreement, then
each Consenting Lender shall have the option to terminate its obligations under
the Restructuring Support Agreement and seek to change its vote on the Plan. 
There can be no assurance that the final terms of the Exit Financing Facility
will satisfy these requirements. Notwithstanding the foregoing, the Debtor does
not intend to re-solicit votes on the Plan if the terms of the Exit Financing
Facility differ from those presently contemplated, or if the Debtor is unable to
or does not obtain Exit Financing in connection with its emergence from chapter
11, unless, in either case, a sufficient number of Consenting Lenders exercise
their option to withdraw their support for the Plan and change their votes, such
that the Plan no longer is supported by the requisite holders of, and amounts
of, Claims in Class 3.

 

Moreover, the Reorganized Debtor’s substantial indebtedness and interest expense
under the Exit Financing Facility could have important consequences, including
limiting the Debtor’s ability to use a substantial portion of its cash flow from
operations in other areas of its business, including for working capital,
capital expenditures, and other general business activities, because a
substantial portion of these funds will be dedicated to servicing its debt. The
Reorganized Debtor’s ability to maintain adequate liquidity could depend on its
ability to successfully implement the Plan, the successful operation of its
business, the appropriate management of operating expenses and capital spending,
and its ability to complete asset sales on favorable terms.

 

 
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2.

Restrictive Covenants in the Exit Financing Facility.

 

The Exit Financing Facility could require the Reorganized Debtor to have
restrictive covenants which could restrict the Reorganized Debtor’s business
operations. Restrictive covenants can limit a borrower’s ability to, among other
things, incur additional debt and provide additional guarantees, pay dividends
or make other restricted payments, create or permit certain liens, sell vessels
or other assets, make certain investments, engage in certain transactions with
affiliates, and consolidate or merge with, or into, other companies, or transfer
all or substantially all of the Reorganized Debtor’s assets. 

 

In addition, the Exit Financing Facility could require the Reorganized Debtor to
maintain (1) certain financial ratios, (2) a minimum amount of liquidity, and
(3) a set level of consolidated net worth with respect to its fleet.  If the
Exit Financing Facility contains these or similar financial covenants, the
Reorganized Debtor may be limited in the manner in which it can conduct its
business, and may be unable to engage in favorable business activities or
finance future operations or capital needs. Furthermore, there can be no
assurance that the Reorganized Debtor will be able to satisfy the covenants that
could be included in the Exit Financing Facility.

 

 

C.

Certain Risks Related to the Debtor’s Business and Operations.

 

 

1.

The Continuing Global Economic Downturn May Continue to Negatively Impact the
Debtor’s Business.

 

In the current global economy, operating businesses have recently faced
tightening credit, weakening demand for goods and services, weak international
liquidity conditions, and declining markets. Lower demand for dry bulk cargoes
as well as diminished trade credit available for the delivery of such cargoes
have led to decreased demand for dry bulk carriers, creating downward pressure
on charter rates and vessel values. The continuing economic downturn has had,
and may continue to have, during 2014 a number of adverse consequences for dry
bulk and other shipping sectors, including, among other things: (a) an absence
of financing for vessels; (b) a further decrease in the market value of Eagle’s
Vessels and no active second-hand market for the sale of vessels; (c) low
charter rates, particularly for vessels employed on short-term time charters or
in the spot market; (d) widespread loan covenant defaults; and (e) declaration
of bankruptcy by some operators and shipowners, as well as charterers. The
continued occurrence of one or more of these events could have a material
adverse effect on the Debtor’s business, results of operations, cash flows, and
financial condition.

 

 
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2.

Dependence on Spot Charters.

 

As set forth above, Eagle currently operates a fleet of forty-five (45) owned
Vessels, of which 44 are employed for less than one year as of December 31,
2013, exposing it to fluctuations in spot market charter rates. Historically,
the dry bulk market has been volatile as a result of the many conditions and
factors that can affect the price, supply, and demand for dry bulk capacity. The
continuing global economic crisis may further reduce demand for transportation
of dry bulk cargoes over longer distances and supply of dry bulk vessels to
carry such dry bulk cargoes, which may materially affect the Debtor’s revenues,
profitability, and cash flows. The spot charter market may fluctuate
significantly based upon supply of, and demand for, vessels and cargoes. The
successful operation of Eagle’s Vessels in the competitive spot charter market
depends upon, among other things, obtaining profitable spot charters and
minimizing, to the extent possible, time spent waiting for charters and time
spent traveling unladen to pick up cargo. The spot market is very volatile, and,
in the past, there have been periods when spot rates have declined below the
operating cost of vessels. If future spot charter rates decline, then Eagle may
be unable to operate its Vessels trading in the spot market profitably, meet its
obligations, including payments on indebtedness, or to pay dividends, if any, in
the future. Furthermore, as charter rates for spot charters are fixed for a
single voyage, which may last up to several weeks, during periods in which spot
charter rates are rising, Eagle will generally experience delays in realizing
the benefits from such increases.

 

As of the date hereof, all forty-five (45) of Eagle’s Vessels are currently on
charter. Thirty-seven (37) of the charters are scheduled to expire during 2014
and the remaining eight (8) are scheduled to expire during the first quarter of
2015. Eagle’s ability to renew the charters, and the charter rates payable under
any such replacement charters, will depend upon, among other things, economic
conditions in the sectors in which Eagle’s Vessels operate at that time, changes
in the supply of and demand for vessel capacity, and changes in the supply of
and demand for the seaborne transportation of energy resources.

 

 

3.

Reliance on a Limited Number of Charterers.

 

Eagle derives a significant part of its revenues from a small number of
charterers. In 2013, two customers individually accounted for more than 10% of
Eagle’s time and voyage charter revenue, accounting for approximately 15.8% and
13.8% of Eagle’s time and voyage charter revenue, respectively. The charterers’
payments to Eagle under their charters are Eagle’s sole source of revenue. Some
of Eagle’s charterers are privately owned companies for which limited credit and
financial information was available to Eagle in making its assessment of
counterparty risk when Eagle entered into its charter. In addition, the ability
of each of Eagle’s charterers to perform its obligations under a charter will
depend on a number of factors that are beyond Eagle’s control. These factors may
include general economic conditions, the condition of the dry bulk shipping
industry, the charter rates received for specific types of vessels, and various
operating expenses. If one or more of these charterers terminates its charter or
chooses not to re-charter Eagle’s Vessel or is unable to perform under its
charter with Eagle and Eagle is not able to find a replacement charter, Eagle
could suffer a loss of revenues that could adversely affect its financial
condition, results of operations, and cash available for distribution as
dividends to its shareholders. In addition, Eagle may be required to change the
flagging or registration of the related Vessel and may incur additional costs,
including maintenance and crew costs if a charterer were to default on its
obligations. The Debtor’s shareholders do not have any recourse against its
charterers.

 

 

4.

Increased Operating Costs Could Adversely Affect Cash Flows and Financial
Condition.

 

Purchasing and operating secondhand vessels may result in increased operating
costs and reduced fleet utilization. While Eagle has the right to inspect
previously owned vessels prior to purchase, such an inspection does not provide
it with the same knowledge about their condition that Eagle would have if these
vessels had been built for and operated exclusively by it. A secondhand vessel
may have conditions or defects that Eagle was not aware of when it bought the
vessel and which may require it to incur costly repairs to the vessel. These
repairs may require Eagle to put a vessel into dry dock, which would reduce
Eagle’s fleet utilization. Furthermore, Eagle usually does not receive the
benefit of warranties on secondhand vessels.

 

 
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The aging of Eagle’s fleet may result in increased operating costs in the
future, which could adversely affect its earnings. In general, the cost of
maintaining a vessel in good operating condition increases with the age of the
vessel. Although the average age of the forty-five (45) dry bulk Vessels in
Eagle’s operating fleet as of July 31, 2014 is approximately 7.2 years, as
Eagle’s fleet ages, it will incur increased costs. Older vessels are typically
less fuel efficient and more costly to maintain than more recently constructed
vessels due to improvements in engine technology. Cargo insurance rates increase
with the age of a vessel, making older vessels less desirable to charterers.
Governmental regulations and safety or other equipment standards related to the
age of vessels may also require expenditures for alterations or the addition of
new equipment to Eagle’s Vessels and may restrict the type of activities in
which its vessels may engage. There can be no assurance that, as Eagle’s Vessels
age, market conditions will justify those expenditures or enable Eagle to
operate its Vessels profitably during the remainder of their useful lives.

 

 

5.

Highly Competitive International Shipping Industry and Ability to Effectively
Compete.

 

Eagle’s Vessels are employed in a highly competitive market that is capital
intensive and highly fragmented. Competition arises primarily from other vessel
owners, some of whom have substantially greater resources than Eagle.
Competition for the transportation of dry bulk cargo by sea is intense and
depends on price, location, size, age, condition, and the acceptability of the
vessel and its operators to the charterers. Due in part to the highly fragmented
market, competitors with greater resources could enter the dry bulk shipping
industry and operate larger fleets through consolidations or acquisitions and
may be able to offer lower charter rates and higher quality vessels than Eagle
is able to offer. If Eagle is unable to successfully compete with other dry bulk
shipping companies, its results of operations would be adversely impacted.

 

 

6.

Inadequate Liquidity Could Materially Adversely Affect Eagle’s Future Business
Operations.

 

Given the current business environment, Eagle’s liquidity needs could be
significantly higher than currently anticipated. Eagle’s ability to maintain
adequate liquidity through 2014 and beyond could depend on its ability to
successfully implement the Plan or otherwise restructure its indebtedness,
successful operation of its business, appropriate management of operating
expenses and capital spending and its ability to complete asset sales on
favorable terms if necessary. Eagle’s expected liquidity needs are highly
sensitive to changes in each of these and other factors.

 

 
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7.

Potential for Vessel Arrests.

 

Crew members, suppliers of goods and services to a vessel, shippers of cargo and
other parties may be entitled to a maritime lien against a vessel for
unsatisfied debts, claims or damages. In many jurisdictions, a claimant may seek
to obtain security for its claim by arresting a vessel through foreclosure
proceedings. The arrest or attachment of one or more of Eagle’s Vessels could
interrupt its cash flow and require Eagle to pay large sums of money to have the
arrest or attachment lifted. In addition, in some jurisdictions, such as South
Africa, under the “sister ship” theory of liability, a claimant may arrest both
the vessel which is subject to the claimant’s maritime lien and any “associated”
vessel, which is any vessel owned or controlled by the same owner. Claimants
could attempt to assert “sister ship” liability against one Vessel in Eagle’s
fleet for claims relating to another of its Vessels.

 

 

8.

Operational Hazards and Adequacy of Insurance.

 

The operation of Eagle’s business has certain unique risks. With a dry bulk
carrier, the cargo itself and its interaction with the vessel can be an
operational risk. By their nature, dry bulk cargoes are often heavy, dense,
easily shifted, and react badly to water exposure. In addition, dry bulk
carriers are often subjected to battering treatment during unloading operations
with grabs, jackhammers (to pry encrusted cargoes out of the hold), and small
bulldozers. This treatment may cause damage to the vessel. Vessels damaged due
to treatment during unloading procedures may be more susceptible to breach to
the sea. Hull breaches in dry bulk carriers may lead to the flooding of the
vessels’ holds. If a dry bulk carrier suffers flooding in its forward holds, the
bulk cargo may become so dense and waterlogged that its pressure may buckle the
vessel’s bulkheads leading to the loss of a vessel. If Eagle is unable to
adequately maintain its Vessels, Eagle may be unable to prevent these events.
Any of these circumstances or events could negatively impact Eagle’s business,
financial condition, results of operations, and ability to pay dividends, if
any, in the future. In addition, the loss of any of Eagle’s Vessels could harm
its reputation as a safe and reliable vessel owner and operator.

 

Eagle’s Vessels and their cargoes are at risk of being damaged or lost because
of events such as marine disasters, bad weather, mechanical failures, human
error, environmental accidents, war, terrorism, piracy, and other circumstances
or events. In addition, transporting cargoes across a wide variety of
international jurisdictions creates a risk of business interruptions due to
political circumstances in foreign countries, hostilities, labor strikes and
boycotts, the potential for changes in tax rates or policies, and the potential
for government expropriation of Eagle’s Vessels. Any of these events may result
in loss of revenues, increased costs and decreased cash flows to Eagle’s
customers, which could impair their ability to make payments to Eagle under its
charters.

 

In the event of a casualty to a Vessel or other catastrophic event, Eagle will
rely on its insurance to pay the insured value of the Vessel or the damages
incurred. Through Eagle’s management agreements with its technical managers, it
procures insurance for the Vessels in its fleet employed under time charters
against those risks that Eagle believes the shipping industry commonly insures
against. These insurances include marine hull and machinery insurance,
protection and indemnity insurance, which include pollution risks and crew
insurances, and war risk insurance. Currently, the amount of coverage for
liability for pollution, spillage, and leakage available to Eagle on
commercially reasonable terms through protection and indemnity associations and
providers of excess coverage is $1 billion per Vessel per occurrence.

 

 
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Eagle has procured hull and machinery insurance, protection and indemnity
insurance, which includes environmental damage and pollution insurance coverage
and war risk insurance for Eagle’s fleet. Eagle does not maintain, for its
Vessels, insurance against loss of hire, which covers business interruptions
that result from the loss of use of a vessel. Eagle may not be adequately
insured against all risks. Eagle may not be able to obtain adequate insurance
coverage for its fleet in the future, and Eagle may not be able to obtain
certain insurance coverages, including insurance against charter party defaults,
that it has obtained in the past on terms that are acceptable to Eagle or at
all. The insurers may not pay particular claims. Eagle’s insurance policies may
contain deductibles for which it will be responsible and limitations and
exclusions which may increase its costs or lower its revenue. Moreover, insurers
may default on claims they are required to pay.

 

The Reorganized Debtor intends to carry insurance against those risks it
believes the shipping industry commonly insures against. However, there can be
no assurance that the Reorganized Debtor will be adequately insured against all
risks or that it will be able to obtain adequate insurance coverage at
reasonable rates for its Vessels in the future. For example, in the past more
stringent environmental regulations have led to increased costs for, and in the
future may result in the lack of availability of, insurance against risks of
environmental damage or pollution. Additionally, the insurers of Eagle or the
Reorganized Debtor may refuse to pay particular claims. Any significant loss or
liability for which Eagle or the Reorganized Debtor is not insured could have a
material adverse effect on its financial condition.

 

 

9.

Laws and Regulations.

 

Eagle’s operations are subject to numerous laws and regulations in the form of
international conventions and treaties, national, state, and local laws, and
national and international regulations in force in the jurisdictions in which
Eagle’s Vessels operate or are registered, which can significantly affect the
ownership and operation of Eagle’s Vessels. These regulations include, but are
not limited to, the U.S. Oil Pollution Act of 1990 (“OPA”), the Comprehensive
Environmental Response, Compensation and Liability Act, or CERCLA, the U.S.
Clean Air Act, the U.S. Clean Water Act, and the Maritime Transportation
Security Act of 2002, or MTSA, requirements of the U.S. Coast Guard and the U.S.
Environmental Protection Agency, and regulations of the United Nations’
International Maritime Organization (the “IMO”), including the International
Convention for the Prevention of Pollution from Ships of 1973, as from time to
time amended and generally referred to as MARPOL including designation of
Emission Control Areas thereunder, the IMO International Convention for the
Safety of Life at Sea of 1974, the International Convention on Civil Liability
for Bunker Oil Pollution Damage, and the International Convention on Load Lines
of 1966. Compliance with such laws, regulations, and standards, where
applicable, may require installation of costly equipment or operational changes
and may affect the resale value or useful lives of Eagle’s Vessels.

 

 
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Eagle may also incur additional costs in order to comply with other existing and
future regulatory obligations, including, but not limited to, costs relating to
air emissions, the management of ballast and bilge waters, elimination of
tin-based paint, maintenance and inspection, development and implementation of
emergency procedures and insurance coverage or other financial assurance of
Eagle’s ability to address pollution incidents. These costs could have a
material adverse effect on Eagle’s business, results of operations, cash flows,
and financial condition. A failure to comply with applicable laws and
regulations may result in administrative and civil penalties, criminal
sanctions, or the suspension or termination of Eagle’s operations. Environmental
laws often impose strict liability for remediation of spills and releases of oil
and hazardous substances, which could subject Eagle to liability without regard
to whether Eagle was negligent or at fault. Under OPA, for example, owners,
operators, and bareboat charterers are jointly and severally strictly liable for
the discharge of oil within the 200-mile exclusive economic zone around the
United States.

 

Furthermore, the 2010 explosion of the Deepwater Horizon and the subsequent
release of oil into the Gulf of Mexico, or other events, may result in further
regulation of the shipping industry, and modifications to statutory liability
schemes, which could have a material adverse effect on Eagle’s business,
financial condition, results of operations, and cash flows. An oil spill could
result in significant liability, including fines, penalties, and criminal
liability and remediation costs for natural resource damages under other
federal, state, and local laws, as well as third-party damages. Eagle is
required to satisfy insurance and financial responsibility requirements for
potential oil (including marine fuel) spills and other pollution incidents.
Although Eagle has arranged insurance to cover certain environmental risks,
there can be no assurance that such insurance will be sufficient to cover all
such risks or that any claims will not have a material adverse effect on Eagle’s
business, results of operations, cash flows, financial condition, and ability to
pay dividends, if any, in the future.

 

 

10.

Ability to Attract and Retain Key Management Personnel and other Employees in
the Shipping Industry.

 

Eagle’s success depends, to a significant extent, upon the abilities and efforts
of its management team. The Reorganized Debtor’s success will depend on its
ability to retain key members of its management team and to hire new members as
may be necessary. The loss of any of these individuals could adversely affect
Eagle’s business prospects and financial condition. In particular, during the
pendency of the Chapter 11 Case, Eagle could experience increased levels of
employee attrition, and its employees are potentially facing considerable
distraction and uncertainty. The ability of Eagle to engage, motivate, and
retain key employees or take other measures intended to motivate and incentivize
key employees to remain through the pendency of the Chapter 11 Case is limited
during the Chapter 11 Case by restrictions on implementation of retention
programs. The loss of any of these key individuals could adversely affect
Eagle’s business prospects and financial condition. Difficulty in hiring and
retaining replacement personnel could have a similar effect. Eagle does not
maintain “key man” life insurance on any of Eagle’s officers. The restructuring
has consumed, and will continue to consume, a substantial portion of
management’s time and attention, leaving them with less time to devote to the
business operations. This diversion may materially adversely affect the conduct
of Eagle’s business and, as a result, Eagle’s financial condition and results of
operations, particularly if the Chapter 11 Case is protracted.

 

 
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11.

Failure to Qualify Under IRC Section 883.

 

Under the United States Internal Revenue Code of 1986, as amended (the “Tax
Code”), 50% of the gross shipping income of a vessel owning or chartering
corporation, such as Eagle, that is attributable to transportation that begins
or ends, but that does not both begin and end, in the United States is
characterized as United States source shipping income and such income is subject
to a 4% United States federal income tax without allowance for any deductions,
unless that corporation qualifies for exemption from tax under Section 883 of
the Tax Code (“Section 883”) and the Treasury regulations promulgated
thereunder.

 

Eagle believes that, historically, it has qualified for an exemption pursuant to
Section 883, and has taken that position for United States federal income tax
return reporting purposes. However, there are factual circumstances beyond
Eagle’s control that could cause Eagle to lose the benefit of this tax exemption
after the Effective Date and thereby cause Eagle to become subject to United
States federal income tax on its United States source shipping income. Due to
the factual nature of the issues involved, there can be no assurance as to
Eagle’s tax-exempt status or that of any of its subsidiaries.

 

In addition, changes in the Code, the Treasury regulations, or the
interpretation thereof by the Internal Revenue Service or the courts could
adversely affect the Reorganized Debtor’s ability to take advantage of the
exemption under Section 883.

 

If the Reorganized Debtor is not entitled to this exemption under Section 883
for any taxable year, it would be subject for such taxable year to a 4% United
States federal income tax on its United States source shipping income. The
imposition of this taxation could have a negative effect on its business and
would result in decreased earnings.

 

For more information, please refer to Article XIII.B.1. “Exemption of Operating
Income from United States Federal Income Taxation” and XIII.B.2. “Taxation in
the Absence of Section 883 Exemption.”

 

 

12.

Treatment by United States Tax Authorities as a “Passive Foreign Investment
Company.”

 

A foreign corporation will be treated as a “passive foreign investment company”
(“PFIC”) for United States federal income tax purposes if either (1) at least
75% of its gross income for any taxable year consists of certain types of
“passive income” or (2) at least 50% of the average value of the corporation’s
assets produce or are held for the production of those types of “passive
income.” For purposes of these tests, “passive income” includes dividends,
interest, and gains from the sale or exchange of investment property and rents
and royalties other than rents and royalties which are received from unrelated
parties in connection with the active conduct of a trade or business. For
purposes of these tests, income derived from the performance of services does
not constitute “passive income.” United States stockholders of a PFIC are
subject to a disadvantageous United States federal income tax regime with
respect to the income derived by the PFIC, the distributions they receive from
the PFIC and the gain, if any, they derive from the sale or other disposition of
their shares in the PFIC.

 

 
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Based on Eagle’s current method of operation, Eagle does not believe that Eagle
has been, is, or that the Reorganized Debtor will be, a PFIC with respect to any
taxable year. In this regard, Eagle has treated, and the Reorganized Debtor
intends to treat, the gross income it derives or is deemed to derive from its
time chartering activities as services income, rather than rental income.
Accordingly, Eagle believes that the income from Eagle’s time chartering
activities does not, and, as of the Effective Date, the income from the
Reorganized Debtor’s time chartering activities will not, constitute “passive
income,” and the assets that Eagle owns and operates, and, as of the Effective
Date, that the Reorganized Debtor will own and operate, in connection with the
production of that income do not, and will not, constitute passive assets.

 

There is, however, no direct legal authority under the PFIC rules addressing the
Reorganized Debtor’s method of operation. Accordingly, no assurance can be given
that the United States Internal Revenue Service (the “IRS”) or a court of law
will accept the Reorganized Debtor’s position, and there is a risk that the IRS
or a court of law could determine that the Reorganized Debtor is a PFIC.
Moreover, no assurance can be given that the Reorganized Debtor would not
constitute a PFIC for any future taxable year if there were to be changes in the
nature and extent of its operations.

 

If the IRS were to find that the Reorganized Debtor is, or Eagle has been, a
PFIC for any taxable year, the Reorganized Debtor’s United States stockholders
would face adverse United States tax consequences and information reporting
obligations. Under the PFIC rules, unless those stockholders made an election
available under the Code (which election could itself have adverse consequences
for such stockholders), such stockholders would be liable to pay United States
federal income tax upon excess distributions and upon any gain from the
disposition of the Reorganized Debtor’s common stock at the then prevailing
income tax rates applicable to ordinary income plus interest as if the excess
distribution or gain had been recognized ratably over the stockholder's holding
period of the Reorganized Debtor’s common stock.

 

 

13.

Treatment by United States Tax Authorities as a “Controlled Foreign
Corporation.”

 

If more than 50% of the Reorganized Debtor common stock is owned, directly,
indirectly or constructively, by United States holders, each of whom own, after
applying attribution rules, 10% or more of the total combined voting power of
all classes of the Reorganized Debtor’s common stock (a “10% U.S. Holder”), the
Reorganized Debtor would be treated as a “controlled foreign corporation” (a
“CFC”). This classification would result in the application of many complex
rules, including the required inclusion in income by 10% U.S. Holders of their
pro rata share of any “Subpart F income” and any investments in “U.S. property”
(each as defined by the Tax Code) of the Reorganized Debtor. In addition, under
Section 1248 of the Tax Code, if the Reorganized Debtor were to be considered a
CFC at any time during the five-year period ending with the sale or exchange of
the Reorganized Debtor’s common stock by a 10% U.S. Holder, gain from such sale
or exchange would generally be treated as dividend income to the extent of the
Reorganized Debtor’s earnings and profits attributable to the shares sold or
exchanged. If the Reorganized Debtor were to become a CFC, the PFIC rules
discussed above would generally not apply with regard to any 10% U.S. Holder.
For more information, please refer to Section XIII.E.5, Controlled Foreign
Corporation Status.

 

 
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14.

Discharge of Prepetition Claims and Related Legal Proceedings.

 

The Debtor may be subject to Claims in various legal proceedings and may become
subject to other legal proceedings in the future. Although any such Claims will
be generally stayed while the Chapter 11 Case is pending, the Debtor may not be
successful in ultimately discharging or satisfying such Claims. The ultimate
outcome of each of these matters, including the Debtor’s ability to have these
matters satisfied and discharged in the bankruptcy proceeding, cannot presently
be determined, nor can the liability that may potentially result from a negative
outcome be reasonably estimated presently for every case. The liability the
Debtor may ultimately incur with respect to any one of these matters in the
event of a negative outcome may be in excess of amounts currently accrued with
respect to such matters and, as a result, these matters may potentially be
material to the Debtor’s business, financial condition, and/or results of
operations.

 

 

D.

Certain Risks Relating to the Shares of New Eagle Common Stock and the New Eagle
Equity Warrants Under the Plan.

 

 

1.

Significant Holders.

 

As set forth above, after the Effective Date, the Prepetition Credit Facility
Lenders will receive 99.5% of the New Eagle Common Stock under the Plan (subject
to dilution by the New Eagle Equity Warrants, the New Eagle MIP Primary Equity,
the New Eagle MIP Reserved Equity, and the New Eagle MIP Options). If such
holders of New Eagle Common Stock were to act as a group, such holders would be
in a position to control the outcome of all actions requiring stockholder
approval, including the election of directors, without the approval of other
stockholders. This concentration of ownership could also facilitate or hinder a
negotiated change of control of the Reorganized Debtor and, consequently, have
an impact upon the value of the New Eagle Equity Warrants and New Eagle Common
Stock.

 

 

2.

Restrictions on Transfer of New Eagle Common Stock.

 

The recipients of securities issued under the Plan who are deemed to be
“underwriters” as defined in section 1145(b) of the Bankruptcy Code will be
restricted in their ability to transfer or sell their securities. In addition,
securities issued under the Plan to affiliates of the Reorganized Debtor will be
subject to restrictions on resale. These persons will be permitted to transfer
or sell such securities only pursuant to the provisions of Rule 144 under the
Securities Act, if available, or another available exemption from the
registration requirements of the Securities Act. These restrictions may
adversely impact the value of the shares of New Eagle Common Stock and make it
more difficult for such shareholders to dispose of their shares, or to realize
value on the shares, at a time when they may wish to do so. See Section XI
“Securities Law Matters” for additional information regarding restrictions on
resales of the New Eagle Common Stock.

 

 

3.

Lack of Established Market for New Eagle Common Stock and the New Eagle Equity
Warrants.

 

A liquid trading market for the New Eagle Common Stock and the New Eagle Equity
Warrants issued under the Plan does not exist. The future liquidity of the
trading markets for New Eagle Common Stock and the New Eagle Equity Warrants
will depend, among other things, upon the number of holders of such securities
and whether such securities become listed for trading on an exchange or trading
system at some future time.

 

 
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The shares of common stock of EBS are currently listed on NASDAQ. EBS intends to
remain listed following the Petition Date on NASDAQ, the Reorganized Debtor
intends to continue such NASDAQ listing in respect of the New Eagle Common
Stock, and the Consenting Lenders have agreed to provide EBS with sufficient
time and cooperation to take the necessary steps to comply with all applicable
NASDAQ requirements, as shall be reasonably agreed between EBS and the
Consenting Lenders, in order for EBS to maintain such NASDAQ listing and for the
Reorganized Debtor to be able to continue such listing upon the Effective Date.
There can be no assurance, however, that EBS will be able to maintain such
listing, or that the New Eagle Common Stock will be approved for listing on
NASDAQ. In addition, in the event EBS loses its NASDAQ listing prior to the
Effective Date, although the Consenting Lenders have agreed to support EBS’ good
faith efforts to become relisted on NASDAQ, and EBS intends to use commercially
reasonable efforts to comply with the NASDAQ listing requirements while delisted
(subject to the terms and conditions of the Plan), there can be no assurance
that EBS will be able to regain its listing on NASDAQ, or, if it were to regain
such listing, that the New Eagle Common Stock would be approved for listing on
NASDAQ. The Reorganized Debtor is under no obligation to list the New Eagle
Equity Warrants on any securities exchange. While a liquid trading market may
develop in the future for the New Eagle Common Stock, this is uncertain to be
the case with respect to the New Eagle Equity Warrants.

 

 

4.

The Anti-Dilution Protection for the New Eagle Equity Warrants Does Not Cover
All Transactions that Could Adversely Affect Such Warrants.

 

The terms of the New Eagle Equity Warrants will provide for anti-dilution
protection in the event of a stock split, reverse stock split, stock dividend,
reclassification, dividend or distribution (other than ordinary cash dividends),
and business combination transaction. However, there could be other transactions
that adversely affect the New Eagle Equity Warrants, such as the issuance of
common stock at a price below the exercise price for the New Eagle Equity
Warrants or below the market price for the New Eagle Common Stock, that could
adversely affect the value of the New Eagle Equity Warrants for which there will
be no anti-dilution adjustment. Also, if the Reorganized Debtor were to engage
in a business combination transaction for cash at a time when the market value
of the New Eagle Equity Warrants was below the applicable exercise price,
holders of the New Eagle Equity Warrants would receive no value.

 

 

5.

Historical Financial Information of the Debtor May Not Be Comparable to the
Financial Information of the Reorganized Debtor.

 

As a result of the consummation of the Plan and the transactions contemplated
thereby, the financial condition and results of operations of the Reorganized
Debtor from and after the Effective Date may not be comparable to the financial
condition or results of operations reflected in the Debtor’s historical
financial statements.

 

 
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6.

The Financial Projections Set forth in this Disclosure Statement May Not Be
Achieved.

 

The Financial Projections cover the operations of the Reorganized Debtor through
2018. The Financial Projections are based on numerous assumptions that are an
integral part thereof, including, but not limited to, Confirmation and
consummation of the Plan in accordance with its terms, the anticipated future
performance of the Reorganized Debtor, industry performance, general business
and economic conditions, competition, adequate financing, absence of material
claims, the ability to make necessary capital expenditures, the ability to
establish strength in new markets and to maintain, improve, and strengthen
existing markets, customer purchasing trends and preferences, the ability to
increase gross margins and control future operating expenses, and other matters,
many of which are beyond the control of the Reorganized Debtor. In addition,
unanticipated events and circumstances occurring subsequent to the date of this
Disclosure Statement may affect the actual financial results of the operations
of the Reorganized Debtor. These variations may be material and adverse. Because
the actual results achieved throughout the periods covered by the Financial
Projections will vary from the projected results, the Financial Projections
should not be relied upon as a guaranty, representation, or other assurance of
the actual results that will occur.

 

 

7.

Incorporation under the Laws of the Republic of the Marshall Islands and
Enforcement of United States Judgments by Investors.

 

The Reorganized Debtor will be incorporated in the Republic of the Marshall
Islands. The corporate affairs of the Reorganized Debtor will be governed by its
amended and restated articles of incorporation and by-laws (as described herein)
and by the Republic of the Marshall Islands Business Corporations Act (the
“BCA”). The provisions of the BCA resemble provisions of the corporation laws of
a number of states in the United States. There have been few judicial cases in
the Marshall Islands, however, interpreting the BCA. The rights and fiduciary
responsibilities of directors under the laws of the Marshall Islands are not as
clearly established as the rights and fiduciary responsibilities of directors
under statutes or judicial precedent in existence in the United States.

 

The rights of stockholders of companies incorporated in the Marshall Islands may
differ from the rights of stockholders of companies incorporated in the United
States. While the BCA provides that it is to be interpreted according to the
laws of the State of Delaware and other states with substantially similar
legislative provisions, there have been few, if any, court cases interpreting
the BCA in the Marshall Islands and Eagle cannot predict whether Marshall
Islands courts would reach the same conclusions as United States courts. Thus,
stockholders of companies incorporated in the Marshall Islands may have more
difficulty in protecting their interests in the face of actions by the
management, directors, or controlling stockholders than would stockholders of a
corporation incorporated in a United States jurisdiction which has developed a
relatively more substantial body of case law.

 

 
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E.

Additional Factors to Be Considered.

 

 

1.

The Debtor Has No Duty to Update.

 

The statements contained in this Disclosure Statement are made by the Debtor 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 been no
change in the information set forth herein since that date. The Debtor has no
duty to update this Disclosure Statement unless otherwise ordered to do so by
the Court.

 

 

2.

No Representations Outside this Disclosure Statement Are Authorized.

 

No representations concerning or related to Eagle, the Chapter 11 Case, once
commenced, or the Plan are authorized by the Court or the Bankruptcy Code, other
than as set forth in this Disclosure Statement. 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 should
not be relied upon by you in arriving at your decision.

 

 

3.

Forward-Looking Statements Are Not Assured, and Actual Results May Vary.

 

This Disclosure Statement contains forward-looking statements. These
forward-looking statements are based on the current expectations and
observations of the Debtor’s management, and include factors that could cause
actual results to differ materially, such as: those factors described in
Section IX of this Disclosure Statement; Eagle’s ability to meet current
operating needs, including its ability to maintain contracts that are critical
to its operation, to obtain and maintain acceptable terms with its vendors,
customers, and service providers and to retain key executives, managers, and
employees; the Debtor’s ability to obtain Court approval with respect to motions
in the Chapter 11 Case, once commenced; the effects of the Court rulings in the
Chapter 11 Case and the outcome of the case in general; the length of time the
Debtor will operate under the Chapter 11 Case; the pursuit by the Debtor’s
various creditors, equity holders, and other constituents of their interests in
the Chapter 11 Case; risks associated with third party motions in the Chapter 11
Case, which may interfere with the ability to consummate the Plan; the adverse
effects of the Chapter 11 proceedings on Eagle’s liquidity or results of
operations generally; the increased administrative and restructuring costs
related to the Chapter 11 Case; the Debtor’s ability to maintain adequate
liquidity to fund operations during the Chapter 11 Case and thereafter; the
sufficiency of the “exit” financing contemplated by the Plan; Eagle’s ability in
the future to arrange and consummate financing or sale transactions or to access
capital; the effects of changes in the Debtor’s credit ratings; the timing and
realization of the recoveries of assets and the payments of Claims and the
amount of expenses projected to recognize such recoveries and reconcile such
Claims; the occurrence of any event, change, or other circumstance that could
give rise to the termination of the Restructuring Support Agreement; the effects
of actions taken by NASDAQ against the Debtor during the pendency of the Chapter
11 Case, including the possibility of delisting; and the other factors described
in this Section X.

 

 
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4.

No Legal or Tax Advice Is Provided to You by This Disclosure Statement.

 

The contents of this Disclosure Statement should not be construed as legal,
business, or tax advice. Each holder of Claims against Eagle should consult his,
her, or its own legal counsel and accountants as to legal, tax, and other
matters concerning such holder’s Claims. This Disclosure Statement is not legal
advice to you and may not be relied upon for any purpose other than to determine
how to vote on the Plan or object to confirmation of the Plan.

 

See “Risk Factors” in EBS’ Annual Report on Form 10-K for the year ended
December 31, 2013 for a list of other risk factors that could have a significant
impact on Eagle’s operating performance.

 

XI.         ALTERNATIVES TO CONFIRMATION AND
CONSUMMATION OF THE PLAN

 

If the Plan is not confirmed and consummated, the alternatives to the Plan
include (i) liquidation of the Debtor under chapter 7 of the Bankruptcy Code and
(ii) an alternative plan of reorganization or a plan of liquidation.

 

 

A.

Alternative Plan of Reorganization or Plan of Liquidation.

 

The Court could confirm a plan different from the Plan. While the Plan provides
for the reorganization of the Debtor’s business as a going concern, a different
plan might involve either a reorganization and continuation of the Debtor’s
business or, in the alternative, a sale or liquidation of the Debtor’s assets.
The Debtor believes that any reorganization of its business would require a
substantial investment of capital by a third party in an amount at least as
large as the Prepetition Credit Facility. In the event the Plan is not
confirmed, there is no guaranty the Debtor will be able to obtain any investment
at all, let alone one that would provide recoveries as favorable to its
stakeholders as those provided pursuant to the Plan. The Debtor likely cannot
impose (e.g., cram down) the significant conversion of secured debt into new
equity upon the Prepetition Credit Facility Lenders and, as such, any
alternative plan would need to either (i) provide for treatment acceptable to
the Prepetition Credit Facility Lenders or (ii) repayment in full of the Allowed
Secured Claim under the Prepetition Credit Agreement. As an alternative to a
going concern reorganization, a sale or liquidation of Eagle’s assets would, in
Eagle’s view, likely result in the termination of all of its employees and
commercial agreements, and would be unlikely to provide returns equal or greater
to the returns provided by the Plan.

 

The Debtor believes that any alternative to the Plan would provide far less
certainty and could involve a larger Claims pool, diminished recoveries,
significant delay, and larger administrative costs. The Debtor believes that the
Plan, as described herein, enables creditors to realize the highest and best
value under the circumstances as compared to any foreseeable alternative.

 

 
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B.

Liquidation Under Chapter 7.

 

If no plan is confirmed, the Chapter 11 Case may be converted to a case under
chapter 7 of the Bankruptcy Code, pursuant to which a trustee would be appointed
or elected to liquidate the Debtor’s assets for distribution in accordance with
the priorities established by chapter 7 of the Bankruptcy Code. A discussion of
the effects that a chapter 7 liquidation would have on the recoveries of holders
of Claims and Equity Interests is set forth in the Liquidation Analysis annexed
as Exhibit D to this Disclosure Statement. For the reasons above, the Debtor
believes that liquidation under chapter 7 of the Bankruptcy Code would result in
smaller distributions being made to creditors than those provided for in the
Plan.

 

XII.     SECURITIES LAW MATTERS

 

No registration statement will be filed under the Securities Act of 1933, as
amended (the “Securities Act”), or pursuant to any state securities laws with
respect to the offer and distribution of securities under the Plan. Prior to the
filing of the Chapter 11 Case, the Debtor will rely on the exemption provided by
section 4(a)(2) of the Securities Act and applicable exemptions from Blue Sky
Laws. The Debtor believes that the provisions of section 1145(a)(1) of the
Bankruptcy Code will exempt the issuance and distribution of securities issued
under the Plan (the “1145 Securities”) from federal and state securities
registration requirements. The 1145 Securities issued to affiliates of the
Reorganized Debtor will be treated as issued pursuant to section 1145(a)(1), but
will be subject to the restrictions on resale of securities held by affiliates
of an issuer.

 

 

A.

Bankruptcy Code Exemptions from Registration Requirements.

 

 

1.

Securities Issued in Reliance on Section 1145 of the Bankruptcy Code.

 

Section 1145(a)(1) of the Bankruptcy Code exempts the offer and sale of
securities under a plan of reorganization from registration under the Securities
Act and state laws if three principal requirements are satisfied: (i) the
securities must be offered and sold under a plan of reorganization and must be
securities of the debtor, of an affiliate participating in a joint plan with the
debtor, or of a successor to the debtor under the plan; (ii) the recipients of
the securities must each hold a prepetition or administrative expense claim
against the debtor or an interest in the debtor; and (iii) the securities must
be issued in exchange for the recipient’s claim against, or interest, in the
debtor, or principally in such exchange and partly for cash or property.

 

The exemptions provided for in section 1145 do not apply to an entity that is
deemed an “underwriter” as such term is defined in section 1145(b) of the
Bankruptcy Code. Section 1145(b) 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, an interest in, or a claim for administrative expense
against, the debtor, with a view to distributing any security received in
exchange for such a claim or interest (“accumulators”);

 

 

(b)

offers to sell securities offered or sold under a plan for the holders of such
securities (“distributors”);

 

 

(c)

offers to buy securities offered or sold under a plan from the holders of such
securities, if the offer to buy is (i) with a view to distributing 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; and

 

 

(d)

is an “issuer” with respect to the securities, as the term “issuer” is defined
in section 2(a)(11) of the Securities Act, which includes affiliates of the
issuer, defined as persons who are in a relationship of “control” with the
issuer.

 

 
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Persons who are not deemed “underwriters” may generally resell the securities
they receive that comply with the requirements of Section 1145(a)(1) without
registration under the Securities Act or other applicable law. Persons deemed
“underwriters” may sell such securities without registration only pursuant to
exemptions from registration under the Securities Act and other applicable law.

 

 

2.

Subsequent Transfers of 1145 Securities.

 

Section 1145(c) of the Bankruptcy Code provides that securities issued pursuant
to section 1145(a)(1) are deemed to have been issued in a public offering. In
general, therefore, resales of and subsequent transactions in the 1145
Securities will be exempt from registration under the Securities Act pursuant to
section 4(a)(1) of the Securities Act, unless the holder thereof is deemed to be
an “issuer,” an “underwriter,” or a “dealer” with respect to such securities.
For these purposes, an “issuer” includes any “affiliate” of the issuer, defined
as a person directly or indirectly controlling, controlled by, or under common
control with the issuer. “Control,” as defined in Rule 405 of the Securities
Act, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a person, whether through
the ownership of voting securities, by contract or otherwise. A “dealer,” as
defined in section 2(a)(12) of the Securities Act, is any person who engages
either for all or part of his or her time, directly or indirectly, as agent,
broker, or principal, in the business of offering, buying, selling, or otherwise
dealing or trading in securities issued by another person. Whether or not any
particular person would be deemed to be an “affiliate” of the Reorganized Debtor
or an “underwriter” or a “dealer” with respect to any 1145 Securities will
depend upon various facts and circumstances applicable to that person.

 

Notwithstanding the provisions of section 1145(b) of the Bankruptcy Code
regarding accumulators and distributors, the staff of the SEC has taken the
position that resales of securities distributed under a plan of reorganization
by accumulators and distributors of securities who are not affiliates of the
issuer of such securities are exempt from registration under the Securities Act
if effected in “ordinary trading transactions.” The staff of the SEC has
indicated in this context that a transaction by such non-affiliates may be
considered an “ordinary trading transaction” if it is made on a national
securities exchange or in the over-the-counter market and does not involve any
of the following factors:

 

 

(a)

(i) concerted action by the recipients of securities issued under a plan in
connection with the sale of such securities or (ii) concerted action by
distributors on behalf of one or more such recipients in connection with such
sales;

 

 
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(b)

the use of informational documents concerning the offering of the securities
prepared or used to assist in the resale of such securities, other than a
bankruptcy court-approved disclosure statement and supplements thereto, and
documents filed with the SEC pursuant to the Exchange Act; or

 

 

(c)

the payment of special compensation to brokers and dealers in connection with
the sale of such securities designed as a special incentive to the resale of
such securities (other than the compensation that would be paid pursuant to
arm’s-length negotiations between a seller and a broker or dealer, each acting
unilaterally, not greater than the compensation that would be paid for a routine
similar-sized sale of similar securities of a similar issuer).

 

The staff of the SEC has not provided any guidance for privately arranged
trades. The views of the staff of the SEC on these matters have not been sought
by the Debtor and, therefore, no assurance can be given regarding the proper
application of the “ordinary trading transaction” exemption described above. Any
person intending to rely on such exemption is urged to consult their counsel as
to the applicability thereof to their circumstances.

 

The 1145 Securities generally may be resold without registration under state
securities laws pursuant to various exemptions provided by the respective laws
of those states. The availability of such state exemptions, however, depends on
the securities laws of each state, and holders of Claims may wish to consult
with their own legal advisors regarding the availability of these exemptions in
their particular circumstances.

 

 

3.

Subsequent Transfers of the New Eagle Common Stock and New Eagle Equity Warrants
Issued to Affiliates.

 

Securities issued under the Plan to affiliates of the Reorganized Debtor will be
subject to restrictions on resale. Affiliates of the Reorganized Debtor for
these purposes will generally include its directors and officers and its
controlling stockholders. While there is no precise definition of a
“controlling” stockholder, the legislative history of section 1145 of the
Bankruptcy Code suggests that a creditor who owns 10% or more of a class of
securities of a reorganized debtor may be presumed to be a “controlling person”
of the debtor.

 

Affiliates of the Reorganized Debtor who receive securities under the Plan may
resell such securities pursuant to the limited safe harbor resale provision
under Rule 144 of the Securities Act. Generally, Rule 144 would permit the
public sale of securities received by such Person if, at the time of the sale,
certain current public information regarding the issuer is available and only if
such Person also complies with the volume, manner of sale, and notice
requirements of Rule 144 (as described further below). If the issuer is not
subject to the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the “Exchange Act”), adequate current public information
as specified under Rule 144 is available if certain company information is made
publicly available, as specified in Section (c)(2) of Rule 144. The Reorganized
Debtor will not be subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act. However, the Debtor currently expects that the Reorganized
Debtor will be a voluntary filer and that current public information will be
available to allow resales in accordance with Rule 144.

 

 
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A non-affiliate of an issuer that is not subject to the reporting requirements
of Section 13 or 15(d) of the Exchange Act and who has not been an affiliate of
the issuer during the 90 days preceding such sale may resell restricted
securities after a one-year holding period whether or not there is current
public information regarding the issuer.

 

An affiliate of an issuer that is not subject to the reporting requirements of
Section 13 or 15(d) of the Securities Exchange Act may resell restricted
securities after the one-year holding period if at the time of the sale certain
current public information regarding the issuer is available. As noted above,
the Debtor currently expects that this information requirement will be
satisfied. An affiliate must also comply with the volume, manner of sale, and
notice requirements of Rule 144. First, the rule limits the number of restricted
securities (plus any unrestricted securities) sold for the account of an
affiliate (and related persons) in any three-month period to the greater of 1%
of the outstanding securities of the same class being sold, or, if the class is
listed on a stock exchange, the average weekly reported volume of trading in
such securities during the four weeks preceding the filing of a notice of
proposed sale on Form 144 or if no notice is required, the date of receipt of
the order to execute the transaction by the broker or the date of execution of
the transaction directly with a market maker. Second, the manner of sale
requirement provides that the restricted securities must be sold in a broker’s
transaction, directly with a market maker, or in a riskless principal
transaction (as defined in Rule 144). Third, if the amount of securities sold
under Rule 144 in any three month period exceeds 5,000 shares or has an
aggregate sale price greater than $50,000, an affiliate must file or cause to be
filed with the SEC three copies of a notice of proposed sale on Form 144, and
provide a copy to any exchange on which the securities are traded.

 

GIVEN THE COMPLEX NATURE OF THE QUESTION OF WHETHER A PARTICULAR PERSON MAY BE
AN UNDERWRITER, AFFILIATE, OR DEALER, THE DEBTOR MAKES NO REPRESENTATIONS
CONCERNING THE RIGHT OF ANY PERSON TO TRADE IN SECURITIES TO BE DISTRIBUTED
PURSUANT TO THE PLAN. THE DEBTOR RECOMMENDS THAT HOLDERS OF CLAIMS CONSULT THEIR
OWN COUNSEL CONCERNING WHETHER THEY MAY FREELY TRADE SUCH SECURITIES.

 

 

4.

New Eagle MIP Primary Equity and New Eagle MIP Options.

 

The New Eagle MIP Primary Equity, the New Eagle MIP Options, and the New Eagle
Common Stock issuable upon exercise of the New Eagle MIP Options are being
offered and issued pursuant to available exemptions from registration under the
Securities Act and applicable state securities laws. Such securities may be
deemed restricted securities, and may only be resold pursuant to applicable
exemptions from registration. Holders of such securities should consult their
own counsel concerning resale.

 

 
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XIII.     CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES OF THE PLAN

 

 

A.

Introduction.

 

The following discussion summarizes certain United States federal income tax
consequences of the Plan to the Debtor, and holders of Prepetition Credit
Facility Claims and Equity Interests in the Debtor. The summary is provided for
informational purposes only and is based on the Tax Code, the Treasury
Regulations promulgated thereunder, judicial authority and current
administrative rulings and practice, all as in effect as of the date hereof, and
all of which are subject to change, possibly with retroactive effect. This
summary does not address (1) all aspects of United States federal income
taxation that may be relevant to a particular holder of a Prepetition Credit
Facility Claim or an Equity Interest in the Debtor in light of its particular
facts and circumstances or to particular types of holders of such Claims or
Equity Interests in the Debtor subject to special treatment under the Tax Code
(for example, non-United States persons, financial institutions, broker-dealers,
insurance companies, tax-exempt organizations, retirement plans or other
tax-deferred accounts, mutual funds, real estate investment trusts, traders in
securities that elect mark-to-market treatment, certain former United States
citizens or long-term residents, persons who hold such a Claim or an Equity
Interest in the Debtor as part of a hedge, straddle, constructive sale,
conversion, or other integrated transaction, persons that have a functional
currency other than the United States dollar, investors in pass-through entities
that hold such Claims or Equity Interests in the Debtor and persons who received
their Claim or Equity Interests in the Debtor upon exercise of employee stock
options or otherwise as compensation), (2) the consequences to a holder of a
Prepetition Credit Facility Claim or an Equity Interest in the Debtor of the
potential application of the United States alternative minimum tax, (3) the
Medicare tax on unearned income, (4) any United States taxes that are not income
taxes, or (5) state, local, and non-U.S. taxation (other than Marshall Islands
taxation). In addition, a substantial amount of time may elapse between the date
of this Disclosure Statement and the receipt of a final distribution under the
Plan. Events subsequent to the date of this Disclosure Statement, such as the
enactment of additional tax legislation, court decisions, or administrative
changes, could affect the United States federal income tax consequences of the
Plan and the transactions contemplated thereunder. No ruling will be sought from
the IRS with respect to any of the tax aspects of the Plan and no opinion of
counsel has heretofore been obtained by the Debtor with respect thereto.
Accordingly, each holder of a Claim or Equity Interest in the Debtor is strongly
urged to consult with its own tax advisor regarding the federal, state, local,
and foreign tax consequences of the Plan.

 

If a partnership (including any entity treated as a partnership for United
States federal income tax purposes) is a beneficial owner of a Prepetition
Credit Facility Claim or an Equity Interest in the Debtor, the treatment of a
partner in the partnership will generally depend upon the status of the partner
and the activities of the partnership. Partnerships and their partners should
consult their tax advisors about the United States federal income tax
consequences of participating in the Plan, as to ownership and disposition of
New Eagle Common Stock and New Eagle Equity Warrants received under the Plan.

 

 
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B.

Certain United States Federal Income Tax Consequences to Eagle.

 

 

1.

Exemption of Operating Income from United States Federal Income Taxation.

 

The Debtor has taken the position that its shipping income is not subject to
United States federal income tax pursuant to an exemption from United States
income taxation for income from the international operation of ships under Tax
Code Section 883 (“Section 883”) and applicable Treasury Regulations promulgated
thereunder. It is uncertain whether, after the Effective Date, the Reorganized
Debtor will be entitled to claim an equivalent United States income tax
exemption for future taxable years.

 

Under Section 883 and the Treasury Regulations thereunder, a foreign corporation
will be exempt from United States federal income taxation on its United
States-source shipping income if:

 

(1) it is organized in a “qualified foreign country,” which is one that grants
an “equivalent exemption” from tax to corporations organized in the United
States in respect of each category of shipping income for which exemption is
being claimed under Section 883 (the “Country of Organization Test”); and

 

(2) either:

 

(a) more than 50% of the value of its stock is beneficially owned, directly or
indirectly, by qualified shareholders, which include individuals who are
“residents” of a qualified foreign country (the “50% Ownership Test”);

 

(b) its stock is “primarily and regularly traded on an established securities
market” in a qualified foreign country or in the United States (the “Publicly
Traded Test”); or

 

(c) it is a “controlled foreign corporation,” or CFC, and it satisfies certain
other requirements (collectively, the “CFC Test”).

 

The Marshall Islands, the jurisdiction where the Debtor is, and the Reorganized
Debtor will be, incorporated, has been officially recognized by the IRS as a
qualified foreign country that currently grants the requisite equivalent
exemption from tax in respect of each category of shipping income the
Reorganized Debtor expects to earn in the future. Therefore, the Reorganized
Debtor will satisfy the Country of Organization Test and will be exempt from
United States federal income taxation with respect to its United States-source
shipping income if it satisfies any one of the 50% Ownership Test, the Publicly
Traded Test, or the CFC Test.

 

Prior to the date hereof, the Debtor believes that it has satisfied the Publicly
Traded Test. Following the Effective Date, it is not entirely clear whether the
Reorganized Debtor will satisfy the Publicly Traded Test because, among other
things, there is uncertainty as to whether its shares will be traded on an
established securities market and whether such shares will satisfy the regularly
traded requirement. It is also not clear whether the Reorganized Debtor will be
able to satisfy either the 50% Ownership Test or the CFC Test.

 

 
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2.

Taxation in the Absence of Section 883 Exemption.

 

If the exemption under Section 883 does not apply, the Reorganized Debtor’s
gross United States-source shipping income will be subject to a 4% tax, without
allowance for deductions, unless such income is effectively connected with the
conduct of a United States trade or business (“effectively connected income”),
as described below. Under applicable sourcing rules and certain restrictions on
the Debtor’s ability to both begin and end voyages in the United States under
the Merchant Marine Act of 1920, no more than 50% of the Reorganized Debtor’s
shipping income would be treated as United States-source shipping income. As a
result, the maximum effective rate of United States federal gross income tax on
the Reorganized Debtor’s non-effectively connected shipping income should not
exceed 2%.

 

To the extent the Reorganized Debtor’s United States-source shipping income (or
any non-shipping income the Reorganized Debtor may have) is considered to be
effectively connected income, as described below, any such income, net of
applicable deductions, would be subject to the United States federal corporate
income tax, currently imposed at rates of up to 35%. In addition, the
Reorganized Debtor may be subject to a 30% “branch profits” tax on such income,
and on certain interest paid or deemed paid that is attributable to the conduct
of a United States trade or business.

 

The Reorganized Debtor’s United States-source non-shipping income would be
considered “effectively connected” with the conduct of a United States trade or
business under normal United States federal income tax rules. The Reorganized
Debtor’s United States-source shipping income would be considered “effectively
connected” with the conduct of a United States trade or business only if:

 

 

●

The Reorganized Debtor has, or is considered to have, a fixed place of business
in the United States involved in the earning of United States-source shipping
income; and

 

 

●

Substantially all of the Reorganized Debtor’s United States-source shipping
income is attributable to regularly scheduled transportation such as the
operation of a vessel that follows a published schedule with repeated sailings
at regular intervals between the same points for voyages that begin or end in
the United States (or, in the case of income from bareboat charters, is
attributable to a fixed place of business in the United States).

 

The Debtor has not had any Vessel sailing to or from the United States on a
regularly scheduled basis (and does not charter out Vessels on a bareboat
basis). If future shipping operations and other activities are consistent with
past practices, none of the Reorganized Debtor’s United States-source shipping
income should be “effectively connected” with the conduct of a United States
trade or business, and any such United States-source shipping income could be
subject to the 4% tax described above. In addition, the Reorganized Debtor may
from time to time generate non-shipping income, such as income from the sale of
Vessels, that may be treated as effectively connected income, in which case such
non-shipping income would be subject to the 35% tax and the 30% tax described
above.

 

 
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3.

Cancellation of Indebtedness.

 

Under the Tax Code, a United States taxpayer generally must include in gross
income the amount of any discharged indebtedness (cancellation of debt or “COD”)
realized during the taxable year. COD income is the amount by which the
indebtedness of the debtor discharged exceeds any consideration given in
exchange therefor. COD income generally equals the difference between (A) the
“adjusted issue price” of the indebtedness discharged and (B) the sum of (i) the
amount of Cash, (ii) the “issue price” of any new debt instrument, and (iii) the
fair market value of any other property (such as New Eagle Common Stock and New
Eagle Equity Warrants) transferred in satisfaction of such discharged
indebtedness.

 

In general, the Tax Code provides that a debtor in a bankruptcy case is not
required to recognize COD income. In lieu thereof, the debtor must reduce
certain of its tax attributes – such as net operating loss
(“NOL”) carryforwards, tax credits, tax basis in assets, and the attributes and
tax basis of its subsidiaries – by the amount of the excluded COD. Certain
statutory or judicial exceptions can apply to limit the amount of COD and
attribute reduction (such as where the payment of the cancelled debt would have
given rise to a tax deduction). In addition, in general, to the extent the
amount of COD exceeds the tax attributes available for reduction, the remaining
COD is simply forgiven. As a result of the implementation of the Plan, it is
likely that the Debtor will have COD, and potential attribute reduction.
However, because any reduction in tax attributes does not effectively occur
until the first day of the taxable year following the taxable year in which the
COD is incurred, the resulting COD will not impair the Debtor’s ability to use
its tax attributes (to the extent otherwise available) to reduce its tax
liability in the year of discharge, if any, otherwise resulting from the
implementation of the Plan. To the extent COD causes attribute reduction in the
basis of the Debtor’s assets, gain from future sales of such assets for United
States federal income tax purposes, may be increased (or losses from future
sales of such assets may be reduced).

 

 

C.

Certain United States Federal Income Tax Consequences to Holders of Claims and
Equity Interests.

 

The discussion hereinafter applies only to a holder that is a beneficial owner
of a Prepetition Credit Facility Claim, Equity Interest in EBS, New Eagle Common
Stock, or New Eagle Equity Warrants that is for United States federal income tax
purposes:

 

 

●

an individual who is a citizen or resident of the United States;

 

 

●

a corporation (or other entity taxable as a corporation for United States
federal income tax purposes) created or organized in or under the laws of the
United States, any state thereof, or the District of Columbia;

 

 

●

an estate the income of which is subject to United States federal income
taxation regardless of its source; or

 

 

●

a trust, if a court within the United States is able to exercise primary
jurisdiction over its administration and one or more United States persons have
authority to control all of its substantial decisions, or if the trust has a
valid election in effect under applicable Treasury Regulations to be treated as
a United States person.

 

 
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1.

Claims – In General.

 

A holder of a Prepetition Credit Facility Claim that is exchanged for Cash and
New Eagle Common Stock will recognize gain or loss measured by the difference
between (i) the sum of the amount of Cash and the aggregate fair market value of
the New Eagle Common Stock received, and (ii) such holder’s tax basis in the
Claim, unless such Claim constitutes a “security” for income tax purposes, as
discussed below.

 

To the extent that the Cash received by a holder of a Prepetition Credit
Facility Claim is attributable to accrued interest (instead of principal) on
such Claim, the Cash received will be deemed made in payment of such interest.
Conversely, a holder of a Prepetition Credit Facility Claim will recognize a
deductible loss to the extent any accrued interest previously included in its
gross income is not paid in full. The allocation for United States federal
income tax purposes between principal and interest of amounts received in
exchange for the discharge of a claim at a discount is unclear. As noted in the
Plan, however, the Debtor intends to treat any amount received as first
allocated to principal.

 

Where gain or loss is recognized by a holder in respect of its Prepetition
Credit Facility Claim, the character of such gain or loss as long-term or
short-term capital gain or loss, or as ordinary income or loss, will be
determined by a number of factors, including but not limited to: (a) whether the
Claim constitutes a capital asset in the hands of the holder and how long it has
been held; (b) whether the Claim was acquired at a market discount (discussed
below); and (c) whether and to what extent the holder had previously claimed a
bad debt deduction with respect to the Claim. Holders that recognize capital
losses as a result of the receipt of distributions under the Plan may be subject
to limitations on the utilization of such capital losses. Because the loans made
pursuant to the Prepetition Credit Agreement do not have a fixed interest rate,
rather the interest payable may vary depending on the Collateral Coverage Ratio
(as such term is defined in the Prepetition Credit Agreement), such loans may be
subject to the contingent payment debt instrument (“CPDI”) regulations. If the
loans are subject to the CPDI regulations, any gain from the taxable disposition
of the loans would be treated as ordinary income and not capital gain. Holders
should consult their tax advisors regarding the application of the CPDI
regulations to their Prepetition Credit Facility Claims.

 

A holder that purchased its Prepetition Credit Facility Claim from a prior
holder at a market discount (generally defined as the amount, if any, by which a
holder’s tax basis in a debt obligation immediately after its acquisition is
less than the adjusted issue price of the debt obligation at such time, subject
to a de minimis exception) may be subject to the market discount rules of the
Tax Code. Under those rules, assuming that the holder has made no election to
amortize the market discount into income on a current basis with respect to any
market discount instrument, any gain recognized on the exchange of such Claim
(subject to a de minimis rule) generally would be characterized as ordinary
income to the extent of the accrued market discount on such Claim as of the date
of the exchange.

 

 
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To the extent that a Claim, which is a Tax Security (as defined herein) and was
acquired with market discount, is exchanged for New Eagle Common Stock, any gain
recognized on the subsequent sale, exchange, redemption, or other disposition of
the New Eagle Common Stock may be treated as ordinary income to the extent of
the accrued but unrecognized market discount with respect to the exchanged
Claims as of the date of the exchange. In addition, any gain recognized by a
holder upon a subsequent taxable disposition of New Eagle Common Stock received
pursuant to the Plan in satisfaction of a Claim (or any stock or other property
received for them in a later tax-free exchange) may be treated as ordinary
income to the extent of any bad debt deductions (or additions to a bad debt
reserve) previously claimed with respect to its Claim and any ordinary loss
deduction incurred upon satisfaction of its Claim, less any income (other than
interest income) recognized by the holder upon satisfaction of its Claim.

 

Any Cash and/or property received by a holder of a Claim after the Effective
Date may be subject to the imputed interest provisions of the Tax Code pursuant
to which a portion of the amount received may be treated as interest.

 

The tax basis of New Eagle Common Stock received pursuant to the Plan (unless
received in exchange for a security, as discussed in section 2 below) will equal
its fair market value and the holding period of such property will begin on the
date following the Effective Date.

 

 

2.

Claims that Are Tax Securities.

 

Notwithstanding the foregoing discussion, if the Prepetition Credit Facility
constitutes a “security” for United States federal income tax purposes (a “Tax
Security”), no loss will be recognized upon the exchange, in whole or in part,
of a Prepetition Credit Facility Claim for New Eagle Common Stock (except to the
extent attributable to accrued interest, as discussed above), and gain (except
to the extent attributable to accrued interest, as discussed above) will only be
recognized upon such an exchange to the extent of the fair market value of the
Cash or property received other than New Eagle Common Stock. The term “security”
is not defined in the Tax Code. While the determination whether a particular
claim or debt constitutes a Tax Security depends upon an overall evaluation of
the nature of the claim, in general, debt instruments with an original term of
at least ten years qualify as securities, debt instruments with an original term
of less than five years do not qualify as securities, and debt instruments with
an original term of between five and ten years may qualify as securities. The
Debtor has not determined whether the Prepetition Credit Facility Claims are Tax
Securities. Each holder should consult its tax advisor regarding the tax status
of its Claim or Claims.

 

The tax basis of New Eagle Common Stock received pursuant to the Plan in
exchange for Claims that constitute Tax Securities (other than the portion, if
any, attributable to accrued interest) will equal the holder’s tax basis in the
Claims exchanged, decreased by the fair market value of any other property
received in exchange for such Claims and increased by any gain recognized. The
holding period for such New Eagle Common Stock shall include the holding period
of the Claims exchanged therefor.

 

 
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3.

Holders of Equity Interests.

 

Under the Plan, New Eagle Common Stock and New Eagle Equity Warrants will be
distributed to holders of Equity Interests in exchange for the surrender and
cancellation of their Equity Interests. Such exchange should be treated as a
tax-free exchange (except to the extent a holder of an Equity Interest that
would otherwise be entitled to a distribution of less than one hundred (100)
shares of New Eagle Common Stock receives Cash in lieu of New Eagle Common
Stock). An Equity Interest holder’s basis in New Eagle Common Stock and New
Eagle Equity Warrants will equal its basis in its Equity Interests (which,
generally, should be allocated between the New Eagle Common Stock and New Eagle
Equity Warrants based on their relative fair market values) and its holding
period for New Eagle Common Stock and New Eagle Equity Warrants will include its
holding period in its Equity Interests. Holders of Equity Interest should
consult their own tax advisors regarding the tax consequences of the receipt of
New Eagle Common Stock and New Eagle Equity Warrants under the Plan.

 

Each holder of an Equity Interest that would otherwise be entitled to a
distribution of less than one hundred (100) shares of New Eagle Common Stock
that receives Cash rather than New Eagle Common Stock should be treated as
receiving such Cash in exchange for its Equity Interest. Such exchange should
generally result in capital gain or loss, if any, measured by the difference
between the amount of Cash received and the holder’s tax basis in the Equity
Interest.

 

 

D.

Information Reporting and Backup Withholding.

 

All distributions to holders of Claims under the Plan are subject to any
applicable tax information reporting and withholding, including employment tax
withholding. Under United States federal income tax law, interest and other
reportable payments may, under certain circumstances, be subject to “backup
withholding” at the then applicable withholding rate (currently 28%). Backup
withholding generally applies if a non-exempt holder (a) fails to furnish its
social security number or other taxpayer identification number (“TIN”),
(b) furnishes an incorrect TIN, (c) fails to properly report interest or
dividends, or (d) fails to provide certain certifications signed under penalty
of perjury. Backup withholding is not an additional tax but merely an advance
payment, which may be refunded to the extent it results in an overpayment of
tax. Certain persons are exempt from backup withholding, including, generally,
corporations and financial institutions.

 

 

E.

Certain United States Federal Income Tax Consequences to Recipients of New Eagle
Common Stock and New Eagle Equity Warrants.

 

 

1.

Distributions.

 

Subject to the discussion of PFICs below, any distributions made by the
Reorganized Debtor with respect to New Eagle Common Stock will generally
constitute dividends to the extent of the Reorganized Debtor’s current or
accumulated earnings and profits, as determined under United States federal
income tax principles. Distributions in excess of those earnings and profits
will be treated first as a nontaxable return of capital to the extent of the
holder’s tax basis in his, her, or its New Eagle Common Stock, and thereafter as
capital gain. Because the Reorganized Debtor is not a United States corporation,
holders that are corporations will generally not be entitled to claim a
dividends-received deduction with respect to distributions they receive from the
Reorganized Debtor. In addition, dividends may not be eligible for a reduced
rate of United States income tax for individual United States holders.
Distributions taxable as dividends generally will be treated as foreign source
“passive category income” for United States foreign tax credit purposes.

 

 
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2.

Sale, Exchange, or Exercise of New Eagle Common Stock or New Eagle Equity
Warrants.

 

Except as discussed above with respect to market discount, and subject to the
discussion of PFICs below, gain or loss recognized on a sale, exchange, or other
taxable disposition of New Eagle Common Stock or New Eagle Equity Warrants will
generally equal the difference, if any, between the amount realized and the
holder’s adjusted tax basis in the New Eagle Common Stock or New Eagle Equity
Warrants, as applicable, at the time of such sale, exchange, or other taxable
disposition. Assuming such New Eagle Common Stock or New Eagle Equity Warrants
are held as capital assets, any such gain or loss will be long-term capital gain
or loss if the holding period for the New Eagle Common Stock or New Eagle Equity
Warrants, as applicable, exchanged is more than one year at that time (which, as
noted above, will include the holding period for the Claims exchanged for New
Eagle Common Stock if they are treated as Tax Securities). The deductibility of
capital losses is subject to limitations.

 

If a New Eagle Equity Warrant lapses unexercised, a holder generally would
recognize a capital loss equal to such holder’s basis in the New Eagle Equity
Warrant. Adjustment to the New Eagle Equity Warrants, including adjustments to
the number of shares of New Eagle Common Stock for which the New Eagle Equity
Warrant may be exercised or to the exercise price of the New Eagle Equity
Warrant, may under certain circumstances result in a constructive distribution
that could be taxable as a dividend to the holder of the New Eagle Equity
Warrants. Conversely, the absence of an appropriate adjustment may result in a
constructive distribution that could be taxable as a dividend to holders of the
New Eagle Common Stock.

 

 

3.

Passive Foreign Investment Company Status.

 

The Reorganized Debtor will be a PFIC if either:

 

 

●

75% or more of its gross income in a taxable year consists of “passive income”
(generally including dividends, interest, gains from the sale, or exchange of
investment property); or

 

 

●

at least 50% of its assets in a taxable year (averaged over the year and
generally determined based upon either value or tax basis depending on the
application of certain tests) produce or are held for the production of passive
income.

 

 
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For purposes of determining whether the Reorganized Debtor will be a PFIC, the
Reorganized Debtor will be treated as earning and owning a proportionate share
of the income and assets, respectively, of its subsidiaries that have made
special U.S. tax elections to be disregarded as separate entities as well as of
any other corporate subsidiary in which it owns at least 25% of the value of the
subsidiary’s stock. For purposes of these tests, income derived from the
performance of services does not constitute passive income. By contrast, rental
income would generally constitute passive income unless the Reorganized Debtor
were treated under specific rules as deriving its rental income in the active
conduct of a trade or business. Based on the Debtor’s past and anticipated
future operations, the Debtor does not believe that it has been a PFIC or that
the Reorganized Debtor will be a PFIC with respect to future taxable years. In
this regard, the Debtor has treated, and the Reorganized Debtor intends to
treat, its income from the charter of Vessels as services income, rather than
rental income. Accordingly, the Debtor believes that such income does not
constitute passive income, and that the assets that the Reorganized Debtor will
own and operate in connection with the production of that income, primarily its
Vessels, do not constitute passive assets for purposes of determining whether it
is a PFIC.

 

There is, however, no direct legal authority under the PFIC rules addressing the
Reorganized Debtor’s method of operation that characterizes certain charter
income as services income. Moreover, it should be noted that there is authority
which characterizes charter income as rental income rather than services income
for other tax purposes. Accordingly, no assurance can be given that the IRS or a
court of law will accept the Reorganized Debtor’s position, and there is a risk
that the IRS or a court of law could determine that the Reorganized Debtor will
be a PFIC. Moreover, there can be no assurance that the Reorganized Debtor will
not become a PFIC in any future taxable year because (i) there are uncertainties
in the application of the PFIC rules, (ii) the PFIC test is an annual test, and
(iii) although the Reorganized Debtor intends to manage its business so as to
avoid PFIC status to the extent consistent with its other business goals, there
could be changes in the nature and extent of operations in future years.

 

Subject to the QEF (as defined herein) and mark-to-market election discussions
below, if the Reorganized Debtor was to be treated as a PFIC for any taxable
year (and regardless of whether it remains a PFIC for subsequent taxable years),
(i) each holder who is treated as owning New Eagle Common Stock during such
taxable year for purposes of the PFIC rules would be required to allocate any
excess distributions received (i.e., the portion of any distributions received
by the holder on New Eagle Common Stock in a taxable year in excess
of 125 percent of the average annual distributions received by the holder in the
three preceding taxable years, or, if shorter, the holder’s holding period for
the New Eagle Common Stock) and any gain realized from the disposition of New
Eagle Common Stock ratably over the holder’s holding period of the New Eagle
Common Stock; (ii) the amount allocated to the current taxable year, and any
taxable year prior to the first taxable year in which the Reorganized Debtor was
a PFIC, would be treated as ordinary income; and (iii) the amount allocated to
each other taxable year will be subject to tax at the highest tax rate in effect
for that year and the interest charge generally applicable to underpayments of
tax will be imposed on the resulting tax attributable to each such taxable year.

 

A holder who holds New Eagle Common Stock during a period when the Reorganized
Debtor is a PFIC generally will be subject to the foregoing rules for that
taxable year and all subsequent taxable years with respect to that holder’s
ownership of New Eagle Common Stock, even if the Reorganized Debtor ceased to be
a PFIC, subject to certain exceptions for holders of New Eagle Common Stock who
make a QEF election or mark-to-market election discussed below. Holders are
urged to consult their tax advisors regarding the PFIC rules, including as to
the advisability of choosing to make a QEF election or mark-to-market election.

 

 
106 

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The application of the PFIC rules, including the QEF and mark-to-market
elections, to holders of New Eagle Equity Warrants is subject to significant
uncertainties because only limited guidance is available and much of it is in
the form of proposed Treasury Regulations where the binding effect is unclear.
Accordingly, each holder of New Eagle Equity Warrants should consult such
holder’s tax advisor concerning the consequences of holding such securities
acquired through the exercise of such securities if the Reorganized Debtor was a
PFIC.

 

The above rules relating to the taxation of excess distributions and
dispositions will not apply to a holder who has made a timely “qualified
electing fund” (“QEF”) election for all taxable years that the holder has held
its New Eagle Common Stock and the Reorganized Debtor was a PFIC. Instead, each
holder who has made a timely QEF election is required, for each taxable year
that the Reorganized Debtor is a PFIC, to include in income a pro rata share of
the Reorganized Debtor’s ordinary earnings as ordinary income and a pro rata
share of the Reorganized Debtor’s net capital gain as long-term capital gain,
regardless of whether the Reorganized Debtor has made any distributions of the
earnings or gain. The holder’s basis in its New Eagle Common Stock will be
increased to reflect taxed but undistributed income. Distributions of income
that had been previously taxed will result in a corresponding reduction in the
basis of the New Eagle Common Stock and will not be taxed again once
distributed. A holder making a QEF election would generally recognize capital
gain or loss on the sale, exchange or other disposition of New Eagle Common
Stock. If the Reorganized Debtor determines that it is a PFIC for any taxable
year, it may provide each holder with all necessary information in order to make
the QEF election described above. If the Reorganized Debtor does not provide
such information, then a QEF election would not be available.

 

As an alternative to the tax treatment discussed above, a holder of PFIC stock
which is “marketable stock” (i.e., “regularly traded” on a national securities
exchange which is registered with the SEC or a national market system
established under the 1934 Securities and Exchange Act) may in certain
circumstances elect to mark to market its PFIC stock. As a result of such
election, in any taxable year the Reorganized Debtor is a PFIC, the holder would
be required to recognize gain or loss to the extent of the difference between
the fair market value of the PFIC stock at the end of the taxable year and such
holder’s basis in the PFIC stock. The availability of the mark-to-market
election to a holder will be dependent on whether the New Eagle Common Stock is
listed on a qualified exchange and whether such stock is regularly traded.

 

 
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4.

Controlled Foreign Corporation Status.

 

If more than 50% of the total value or total combined voting power of all
classes of the Reorganized Debtor’s stock is owned, directly, indirectly, or
constructively by U.S. holders, each of whom own, after applying attribution
rules, 10% or more of the total combined voting power of all classes of the
Reorganized Debtor’s common stock (each such holder, a “10% U.S. Holder”), the
Reorganized Debtor would be treated as a “controlled foreign corporation” or
“CFC.” This classification would result in the application of many complex
rules, including the required inclusion in income by 10% U.S. Holders of their
pro rata share of any “Subpart F income” and any investments in “U.S. property”
(each as defined by the Tax Code) of the Reorganized Debtor. Shipping income
does not constitute Subpart F income provided that it is treated as services
income and not as rental income (see the discussion above in Section E.3 above).
In addition, under Section 1248 of the Tax Code, if the Reorganized Debtor was a
CFC at any time during the five-year period ending with the sale or exchange of
the Reorganized Debtor’s common stock by a 10% U.S. Holder, gain from such sale
or exchange would generally be treated as dividend income to the extent of the
Reorganized Debtor’s earnings and profits attributable to the shares sold or
exchanged. If the Reorganized Debtor was to become a CFC, the PFIC rules
discussed above would generally not apply with regard to any 10% U.S. Holder.
Because of the complexity of Subpart F, a more detailed review of these rules is
beyond the scope of this discussion and any holder that may become a 10% U.S.
Holder should consult its tax advisor.

 

XIV.     CERTAIN MARSHALL ISLANDS TAX CONSEQUENCES

 

The Reorganized Debtor will be incorporated under the laws of the Marshall
Islands. Under current Marshall Islands law and based on its contemplated
activities, the Reorganized Debtor will not be subject to Marshall Islands tax
on its income or capital gains. In addition, under current Marshall Islands law
and based on its contemplated activities, Marshall Islands withholding tax will
not be imposed upon payments of dividends by the Reorganized Debtor to its
stockholders or upon payments of interest by the Reorganized Debtor.

 

THE FOREGOING SUMMARY HAS BEEN PROVIDED FOR INFORMATIONAL PURPOSES ONLY. ALL
HOLDERS OF CLAIMS AND EQUITY INTERESTS ARE URGED TO CONSULT THEIR TAX ADVISORS
CONCERNING THE FEDERAL, STATE, LOCAL, AND NON-U.S. TAX CONSEQUENCES APPLICABLE
TO THEM UNDER THE PLAN.

 

XV.     RECOMMENDATION AND CONCLUSION

 

The Debtor believes that confirmation of the Plan is in the best interests of
all creditors and Equity Interest holders and urges all creditors in Class 3 to
vote in favor of the Plan.

 

 
108 

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EXHIBIT A TO THE DISCLOSURE STATEMENT

 

DEBTOR’S PREPACKAGED PLAN OF REORGANIZATION PURSUANT TO CHAPTER 11 OF THE
BANKRUPTCY CODE

 

 
 

--------------------------------------------------------------------------------

 

 

Paul S. Aronzon (pro hac vice pending)

Haig M. Maghakian (pro hac vice pending)

MILBANK, TWEED, HADLEY & MCCLOY LLP

601 S. Figueroa St., 30th Floor
Los Angeles, CA 90017

(213) 892-4000

 

- and –

 

Tyson M. Lomazow

Matthew Brod

MILBANK, TWEED, HADLEY & MCCLOY LLP

One Chase Manhattan Plaza

New York, NY 10005

(212) 530-5000

 

Proposed Counsel to Debtor and Debtor in Possession

 

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK

 

       

)

 

In re:

)

Chapter 11

 

)

 

EAGLE BULK SHIPPING INC. 

)

Case No. 14-                    (     )

 

)

 

Debtor.

)

   

)

   

)

 

 

DEBTOR’S PREPACKAGED PLAN OF REORGANIZATION
PURSUANT TO CHAPTER 11 OF THE BANKRUPTCY CODE

 

NO CHAPTER 11 CASE HAS BEEN COMMENCED AT THIS TIME. THE SOLICITATION MATERIALS
ACCOMPANYING THIS PREPACKAGED PLAN OF REORGANIZATION HAVE NOT BEEN APPROVED BY
THE COURT. FOLLOWING THE COMMENCEMENT OF THE CHAPTER 11 CASE, THE DEBTOR EXPECTS
TO PROMPTLY SEEK ENTRY OF AN ORDER SCHEDULING A COMBINED HEARING ON THE ADEQUACY
OF THE DISCLOSURE STATEMENT AND SOLICITATION PROCEDURES AND CONFIRMATION OF THE
PLAN.

 

 

Dated:

August 6, 2014
New York, New York

 

 
 

--------------------------------------------------------------------------------

 

 

TABLE OF CONTENTS

 

    Page      

INTRODUCTION

 

1      

ARTICLE I. DEFINITIONS AND CONSTRUCTION OF TERMS  

1      

A.

Definitions.

1

B.

Interpretation, Application of Definitions, and Rules of Construction.

14

C.

Computation of Time.

15

     

ARTICLE II. ADMINISTRATIVE Claims, DIP Claims, and PRIORITY CLAIMS  

15      

A.

Administrative Claims (Other Than Fee Claims).

15

B.

DIP Claims.

15

C.

Fee Claims.

16

D.

Priority Tax Claims.

16

E.

U.S. Trustee Fees.

17

     

ARTICLE III. CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS  

17      

A.

Classification of Claims and Equity Interests.

17

B.

Record Date.

17

C.

Summary of Classification and Class Identification.

18

D.

Treatment of Classified Claims and Equity Interests.

18

E.

Special Provision Regarding Unimpaired and Reinstated Claims.

21

     

ARTICLE IV. MEANS FOR IMPLEMENTATION OF THE PLAN  

21      

A.

General Settlement of Claims and Interests.

21

B.

Exit Financing.

22

C.

Voting of Claims.

22

D.

Nonconsensual Confirmation.

22

E.

Issuance of New Eagle Common Stock and New Eagle Equity Warrants and Entry into
the Registration Rights Agreement.

22

F.

The New Eagle Equity Warrants.

24

G.

Continued Corporate Existence and Vesting of Assets.

25

H.

Fee Claims Escrow Account.

25

I.

Claims Against Non-Debtor Subsidiaries.

26

J.

Subsidiary Equity Interests.

26

     

ARTICLE V. PROVISIONS REGARDING CORPORATE GOVERNANCE OF THE REORGANIZED DEBTOR  

26      

A.

Organizational Documents.

26

B.

Appointment of Officers and Directors.

26

 

 
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C.

Powers of Officers.

27

D.

New CEO Employment Agreement, Existing Benefits Agreements, and Retiree
Benefits.

27

E.

Management Incentive Program.

27

F.

Indemnification of Directors, Officers, and Employees.

28

     

ARTICLE VI. CONFIRMATION OF THE PLAN  

28      

A.

Conditions to Confirmation.

28

B.

Waiver of Conditions Precedent to Confirmation.

29

C.

Discharge of the Debtor.

29

D.

Injunction.

29

E.

Preservation of Causes of Action.

31

F.

Votes Solicited in Good Faith.

32

G.

Prepetition Credit Facility Agent and Consenting Lenders’ Fees and Expenses.

32

H.

Cancellation of Certain Indebtedness, Agreements, and Existing Securities.

32

I.

Claims Incurred After the Effective Date.

33

J.

Releases, Exculpations, and Injunctions of Released Parties.

33

K.

Preservation of Insurance.

36

     

ARTICLE VII. DISTRIBUTIONS UNDER THE PLAN  

36      

A.

Procedures for Treating Disputed Claims.

36

B.

Allowed Claims and Equity Interests.

37

C.

Allocation of Consideration.

39

D.

Estimation.

40

E.

Insured Claims.

40

     

ARTICLE VIII. RETENTION OF JURISDICTION  

40    

ARTICLE IX. EXECUTORY CONTRACTS AND UNEXPIRED LEASES  

42      

A.

Assumption of Executory Contracts and Unexpired Leases.

42

B.

Cure Claims.

43

C.

Reservation of Rights.

44

D.

Rejection of Executory Contracts and Unexpired Leases.

44

E.

Assignment.

45

F.

Insurance Policies.

45

G.

Post-Petition Contracts and Leases.

45

     

ARTICLE X. EFFECTIVENESS OF THE PLAN  

45      

A.

Conditions Precedent to Effectiveness.

45

B.

Waiver of Conditions Precedent to Effectiveness.

46

C.

Effect of Failure of Conditions.

46

 

 
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D.

Vacatur of Confirmation Order.

46

E.

Modification of the Plan.

47

F.

Revocation, Withdrawal, or Non-Consummation.

47

     

ARTICLE XI. MISCELLANEOUS PROVISIONS  

47      

A.

Immediate Binding Effect.

47

B.

Governing Law.

48

C.

Filing or Execution of Additional Documents.

48

D.

Term of Injunctions or Stays.

48

E.

Withholding and Reporting Requirements.

48

F.

Exemption From Transfer Taxes.

48

G.

Plan Supplement.

49

H.

Notices.

49

I.

Conflicts.

50

 

 
iii 

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INTRODUCTION

 

Eagle Bulk Shipping Inc. proposes the following prepackaged plan of
reorganization under section 1121(a) of chapter 11 of title 11 of the United
States Code.

 

Claims against, and Equity Interests in, the Debtor will be treated as set forth
herein. Reference is made to the Disclosure Statement accompanying the Plan,
including the exhibits thereto, for a discussion of the Debtor’s history,
business, results of operations, and projections for future operations and risk
factors, together with a summary and analysis of the Plan.

 

THIS PLAN SHOULD BE CONSIDERED ONLY IN CONJUNCTION WITH THE DISCLOSURE
STATEMENT AND RELATED MATERIALS TRANSMITTED HEREWITH. THE DISCLOSURE
STATEMENT IS INTENDED TO PROVIDE YOU WITH INFORMATION YOU NEED TO MAKE AN
INFORMED JUDGMENT WHETHER TO ACCEPT OR REJECT THIS PLAN.

 

ARTICLE I.
DEFINITIONS AND CONSTRUCTION OF TERMS

 

A.

Definitions.

 

Unless otherwise defined herein, the following terms shall have the respective
meanings set forth below:

 

1.     Accrued Professional Compensation: means, at any given time, and
regardless of whether such amounts are billed or unbilled, all accrued,
contingent, and/or unpaid fees and expenses (including success fees) for legal,
financial advisory, accounting, and other services, and reimbursement of
expenses by any Professional that the Court has not, as of the Effective Date,
denied by Final Order (i) all to the extent that any such fees and expenses have
not been previously paid (regardless of whether a fee application has been filed
for any such amount) and (ii) after applying the remaining balance of any
retainer that has been provided by the Debtor to such Professional; provided,
however, that Accrued Professional Compensation shall not include fees and
expenses that are reasonably incurred by the Prepetition Credit Facility Agent
or the DIP Agent or that are awardable and allowable under section 503 of the
Bankruptcy Code. To the extent the Court denies or reduces by a Final Order any
amount of a Professional’s fees or expenses, then those reduced or denied
amounts shall no longer constitute Accrued Professional Compensation.

 

2.     Administrative Claim: means any right to payment constituting a cost or
expense of administration of the Chapter 11 Case of a kind specified under
section 503(b) of the Bankruptcy Code and entitled to priority under
sections 507(a)(2), 507(b) or 1114(e)(2) of the Bankruptcy Code, including, but
not limited to, (i) any actual and necessary costs and expenses of preserving
the Estate, (ii) any actual and necessary costs and expenses of operating the
Debtor’s business, (iii) any indebtedness or obligations assumed by the Debtor
in connection with the conduct of its businesses, (iv) all compensation and
reimbursement of expenses of Professionals to the extent awarded by the Court
under sections 330, 331 or 503 of the Bankruptcy Code, (v) any fees or charges
assessed against the Estate under section 1930 of title 28 of the United States
Code, and (vi) any Claim for goods delivered to the Debtor within twenty
(20) days of the Petition Date and entitled to administrative priority pursuant
to section 503(b)(9) of the Bankruptcy Code.

 

 
 

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3.     Allowed: means, (i) with respect to any Claim, (a) following the Claims
Objection Deadline, any Claim as to which no objection or request for estimation
has been filed prior to the Claims Objection Deadline, (b) a Claim that has been
expressly allowed by Final Order, (c) a Claim as to which the Debtor or the
Reorganized Debtor agree to the amount and/or priority thereof in writing, (d) a
Claim that is expressly allowed pursuant to the terms of this Plan, or (e) a
Claim that is listed in the Schedules (to the extent the Debtor files Schedules
in the Chapter 11 Case) as liquidated, non-contingent, and undisputed and (ii)
with respect to any Equity Interest, such Equity Interest is reflected as
outstanding in the stock transfer ledger or similar register of the Debtor on
the Record Date and is not subject to any objection or challenge. If a Claim or
Equity Interest is Allowed only in part, any provisions hereunder with respect
to Allowed Claims or Allowed Equity Interests are applicable solely to the
Allowed portion of such Claim or Equity Interest.

 

4.     Amended Lender Warrants: means the warrants issued in respect of Exercise
Commencement Date B and Exercise Commencement Date C (each, as denoted on
Schedule 1 to the Warrant Agreement), as amended pursuant to the Warrant
Agreement Amendment.

 

5.     Ballots: means each of the ballots distributed with the Disclosure
Statement to each holder of an Impaired Claim that is entitled to vote to accept
or reject the Plan.

 

6.     Bankruptcy Code: means title 11 of the United States Code, 11 U.S.C. §§
101-1532, as in effect with respect to the Chapter 11 Case.

 

7.     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, and local rules of the Court, as the context may
require, as in effect with respect to the Chapter 11 Case.

 

8.     Bar Date: means the date or dates established by Order of the Court, by
which holders of Claims subordinated pursuant to section 510(b) of the
Bankruptcy Code must file proofs of Claim.

 

9.     Bar Date Order: means the order of the Court establishing the Bar Date.

 

10.     Business Day: means any day on which commercial banks are open for
business, and not authorized to close, in New York, New York, except any day
designated as a legal holiday by Bankruptcy Rule 9006(a).

 

11.     Cash: means legal tender of the United States of America.

 

 
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12.     Causes of Action: means any and all claims, causes of actions,
cross-claims, counterclaims, third-party claims, indemnity claims, reimbursement
claims, contribution claims, defenses, demands, rights, actions, debts, damages,
judgments, remedies, Liens, indemnities, guarantees, suits, obligations,
liabilities, accounts, offsets, recoupments, powers, privileges, licenses, and
franchises of any kind or character whatsoever, known or unknown, contingent or
noncontingent, matured or unmatured, suspected or unsuspected, disputed or
undisputed, foreseen or unforeseen, direct or indirect, choate or inchoate,
whether arising before, on, or after the Petition Date, including through the
Effective Date, in contract or in tort, in law or in equity, or pursuant to any
other theory of law. For the avoidance of doubt, the term “Causes of Action”
shall include: (i) all rights of setoff, counterclaim, or recoupment and claims
on contracts or for breaches of duties imposed by law or in equity; (ii) the
right to object to Claims; (iii) all claims pursuant to sections 362, 510, 542,
543, 544 through 550, 552 or 553 of the Bankruptcy Code; (iv) all claims and
defenses, including fraud, mistake, duress, and usury and any other defenses set
forth in section 558 of the Bankruptcy Code; and (v) any state law fraudulent
transfer claims.

 

13.     Chapter 11 Case: means the chapter 11 case commenced by the Debtor.

 

14.     Claim: means a “claim” against the Debtor, as such term is defined in
section 101(5) of the Bankruptcy Code.

 

15.     Claims Objection Deadline: means the first Business Day that is the
later of (i) one-hundred eighty (180) days after the Effective Date, (ii) ninety
(90) days from the date by which a holder of a Claim is required to file a proof
of Claim pursuant to an order of the Court, or (iii) such other later date the
Court may establish upon a motion by the Debtor or the Reorganized Debtor, which
motion may be approved without a hearing and without notice to any party.

 

16.     Class: means a group of Claims or Equity Interests classified under the
Plan.

 

17.     Collateral: means any property, or interest in property, of the Estate
subject to a Lien to secure the payment or performance of a Claim, which Lien
has not been avoided or is not subject to avoidance under the Bankruptcy Code or
is otherwise invalid under the Bankruptcy Code or applicable law.

 

18.     Combined Notice: has the meaning ascribed to such term in the
Solicitation Procedures Motion.

 

19.     Confirmation: means the entry of the Confirmation Order on the docket of
the Chapter 11 Case.

 

20.     Confirmation Date: means the date of Confirmation.

 

21.     Confirmation Hearing: means the hearing held by the Court pursuant to
Bankruptcy Rule 3020(b)(2) and section 1128 of the Bankruptcy Code, including
any adjournments thereof, at which the Court will consider confirmation of the
Plan.

 

22.     Confirmation Order: means the order entered by the Court confirming the
Plan pursuant to section 1129 of the Bankruptcy Code.

 

 
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23.     Consenting Lenders: has the meaning ascribed to such term in the
Restructuring Support Agreement.

 

24.     Court: means (i) the United States Bankruptcy Court for the Southern
District of New York, (ii) to the extent there is no reference pursuant to
section 157 of title 28 of the United States Code, the United States District
Court for the Southern District of New York, and (iii) any other court having
jurisdiction over the Chapter 11 Case or proceedings arising therein.

 

25.     Cure Claim: means a Claim in an amount equal to all unpaid monetary
obligations under an Executory Contract or Unexpired Lease assumed by the Debtor
pursuant to section 365 of the Bankruptcy Code, to the extent such obligations
are enforceable under the Bankruptcy Code and applicable non-bankruptcy law. Any
Cure Claim to which the holder thereof disagrees with the priority and/or amount
thereof as determined by the Debtor shall be deemed a Disputed Claim under this
Plan.

 

26.     Debtor: means EBS.

 

27.     Delphin Management Agreement: means that certain Management Agreement,
dated as of August 4, 2009, by and between Delphin Shipping LLC and EBS.

 

28.     DIP Agent: means Wilmington Trust (London) Limited, or its duly
appointed successor, in its capacity as agent and security trustee under the DIP
Facility.

 

29.     DIP Claims: means all Claims arising under, or related to, the DIP
Facility.

 

30.     DIP Credit Agreement: means that certain Superpriority
Debtor-in-Possession Credit Agreement, by and among the Debtor, as borrower, the
DIP Guarantors, and the DIP Lenders, approved by the DIP Orders.

 

31.     DIP Facility: means the debtor-in-possession financing facility approved
by the DIP Orders and established pursuant to the DIP Credit Agreement.

 

32.     DIP Guarantors: means the guarantors party to the DIP Credit Agreement.

 

33.     DIP Lenders: means the lenders party to the DIP Credit Agreement.

 

34.     DIP Orders: means the Interim DIP Order and the Final DIP Order.

 

35.     Disclosure Statement: means the Disclosure Statement for Debtor’s
Prepackaged Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy
Code, in furtherance of this Plan.

 

 
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36.     Disputed: means, with respect to any Claim or Equity Interest, other
than a Claim or Equity Interest that has been Allowed pursuant to the Plan or a
Final Order, a Claim or Equity Interest (i) that is listed in the Schedules (to
the extent the Debtor files Schedules in the Chapter 11 Case) as unliquidated,
contingent, or disputed, and as to which no request for payment or proof of
Claim or Equity Interest has been filed, (ii) as to which a proper and timely
request for payment or proof of Claim or Equity Interest has been filed, but
with respect to which an objection or request for estimation has been filed and
has not been withdrawn or determined by a Final Order, (iii) as to which a
request for payment was required to be filed but as to which a request for
payment was not properly filed, (iv) that is disputed in accordance with the
provisions of the Plan, or (v) that is otherwise disputed by the Debtor or the
Reorganized Debtor upon notice to the holder of such Claim or Equity Interest.

 

37.     DTC: means the Depository Trust Company.

 

38.     Eagle: means EBS and the Non-Debtor Subsidiaries.

 

39.     EBS: means Eagle Bulk Shipping Inc.

 

40.     Effective Date: means the date which is the first Business Day selected
by the Debtor, in consultation with the Majority Consenting Lenders, on which
(a) all of the conditions to the occurrence of the Effective Date specified in
Article X.A have been satisfied or waived in accordance with Article X.B and
(b) no stay of the Confirmation Order is in effect, provided that if the first
Business Day is a designated legal holiday in the United States or the United
Kingdom, then the Effective Date will be the next Business Day in the United
States and the United Kingdom.

 

41.     Entity: means an “entity” as such term is defined in section 101(15) of
the Bankruptcy Code.

 

42.     Equity Interest: means any “equity security” (as such term is defined in
section 101(16) of the Bankruptcy Code) in the Debtor, including any issued or
unissued share of common stock, preferred stock, or other instrument evidencing
an ownership interest in the Debtor, whether or not transferable, and any
option, warrant, or right, contractual or otherwise, to acquire any such
interest in the Debtor that existed immediately prior to the Effective Date, and
any Claim against the Debtor subordinated pursuant to section 510(b) of the
Bankruptcy Code.

 

43.     Estate: means the estate of the Debtor created in the Chapter 11 Case
pursuant to section 541 of the Bankruptcy Code.

 

44.     Exchange Act: means the Securities Exchange Act of 1934, as amended.

 

45.     Executory Contract: means a contract to which the Debtor is a party that
is subject to assumption or rejection under section 365 of the Bankruptcy Code.

 

46.     Existing Benefits Agreement: means all employment, retirement,
severance, indemnification, and similar or related agreements, arrangements, and
policies with the members of Eagle’s management team or directors as of the
Petition Date.

 

47.     Existing Management Incentive Programs: means all contracts, agreements,
policies, programs, and plans for incentive compensation for the officers and
employees of Eagle who served in such capacity at any time, in each case as in
effect immediately prior to the Effective Date.

 

 
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48.     Exit Facility Amount: means the amount of the indebtedness incurred, as
of the Effective Date, under the Exit Financing Facility.

 

49.     Exit Financing Facility: means the new credit facility entered into by
the Reorganized Debtor on the terms set forth in the Exit Financing Facility
Credit Agreement, which credit facility is anticipated to be in an amount of
$275 million (inclusive of a $50 million revolving credit facility).

 

50.     Exit Financing Facility Credit Agreement: means the credit agreement, to
be effective as of the Effective Date, that will govern the Exit Financing
Facility.

 

51.     Fee Claim: means a Claim for Accrued Professional Compensation.

 

52.     Fee Claims Escrow Account: means the account established on the
Effective Date pursuant to Article IV.H.

 

53.     Final DIP Order: means the order of the Court authorizing, among other
things, on a final basis, the Debtor to enter into the DIP Facility and incur
postpetition obligations thereunder and use cash collateral.

 

54.     Final Order: means an order or judgment of the Court which has not been
modified, amended, reversed, vacated, or stayed, and as to which (a) the time to
appeal, petition for certiorari, or move for a new trial, stay, reargument, or
rehearing has expired and as to which no appeal, petition for certiorari, or
motion for new trial, stay, reargument, or rehearing shall then be pending or
(b) if an appeal, writ of certiorari, new trial, stay, reargument, or rehearing
thereof has been sought, such order or judgment of the Court shall have been
affirmed by the highest court to which such order was appealed, or certiorari
shall have been denied, or a new trial, stay, reargument, or rehearing shall
have been denied or resulted in no modification of such order, and the time to
take any further appeal, petition for certiorari, or move for a new trial, stay,
reargument, or rehearing shall have expired, as a result of which such order
shall have become final in accordance with Bankruptcy Rule 8002; provided, that
the possibility that a motion under Rule 60 of the Federal Rules of Civil
Procedure, or any analogous rule under the Bankruptcy Rules, may be filed
relating to such order, shall not cause an order not to be a Final Order.

 

55.     Former Prepetition Credit Facility Agent: means The Royal Bank of
Scotland plc, in its capacity as former agent and former security trustee under
the Prepetition Credit Agreement.

 

56.     General Unsecured Claim: means any Claim that is not Secured or entitled
to priority under the Bankruptcy Code or an order of the Court, including any
Claim arising from the rejection of an Executory Contract or Unexpired Lease
under section 365 of the Bankruptcy Code.

 

57.     Governmental Unit: has the meaning set forth in section 101(27) of the
Bankruptcy Code.

 

 
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58.     Guarantee: means each guarantee of the Prepetition Credit Facility
Claims, including, but not limited to, the guarantees, indemnities, and other
credit support provided by any of the Non-Debtor Subsidiaries pursuant to the
Prepetition Finance Documents.

 

59.     Guarantee Claim: means a “claim,” as such term is defined in
section 101(5) of the Bankruptcy Code, arising from each Guarantee.

 

60.     Impaired: means, when used with respect to Claims or Equity Interests,
Claims or Equity Interests that are “impaired” within the meaning of
section 1124 of the Bankruptcy Code.

 

61.     Insured Claim: means any Claim or portion of a Claim that is, or may be,
insured under any of the Debtor’s insurance policies.

 

62.     Intercompany Claims: means any Claim held by a Non-Debtor Subsidiary
against the Debtor.

 

63.     Interim DIP Order: means the order of the Court authorizing, among other
things, on an interim basis, the Debtor to enter into the DIP Facility and incur
postpetition obligations thereunder and use cash collateral.

 

64.     Lien: has the meaning set forth in section 101(37) of the Bankruptcy
Code and includes, but is not limited to, any Lien, mortgage, deed of trust,
pledge, security interest, or other encumbrance granted by the Non-Debtor
Subsidiaries pursuant to any of the Prepetition Finance Documents.

 

65.     Majority Consenting Lenders: has the meaning ascribed to such term in
the Restructuring Support Agreement.

 

66.     Management Incentive Program: means the equity-based management
incentive program described in Article V.E to be implemented by the Reorganized
Debtor, which shall be included in the Plan Supplement.

 

67.     New Board: means the board of directors of the Reorganized Debtor to be
constituted as of the Effective Date pursuant to Article V.B, whose identity
shall be disclosed in the Plan Supplement.

 

68.     New CEO Employment Agreement: means the employment agreement between the
Reorganized Debtor, Eagle Shipping International (USA) LLC, and Sophocles
Zoullas, as Chief Executive Officer of the Reorganized Debtor, the form of which
shall be included as an exhibit to the Plan Supplement and in accordance with
Article V.D.

 

69.     New Eagle By-Laws: means the amended and restated by-laws of the
Reorganized Debtor, the form of which shall be included in the Plan Supplement.

 

70.     New Eagle Charter: means the amended and restated articles of
incorporation of the Reorganized Debtor, the form of which shall be included in
the Plan Supplement.

 

 
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71.     New Eagle Common Stock: means the shares of common stock of the
Reorganized Debtor authorized pursuant to the Plan and the New Eagle Charter and
issued pursuant to the Plan and the Management Incentive Plan (including,
without limitation, the shares issuable upon the exercise of the New Eagle
Equity Warrants and the New Eagle MIP Options).

 

72.     New Eagle Equity Warrants: means the warrants to purchase shares of New
Eagle Common Stock, representing an aggregate total of 7.5% of the total number
of shares of New Eagle Common Stock issuable pursuant to the Plan (subject to
dilution from the New Eagle MIP Primary Equity, the New Eagle MIP Reserved
Equity, and the New Eagle MIP Options), exercisable at any time for a period of
seven (7) years from the Effective Date, at a strike price per share equal to
the amount derived by dividing (a) (1) the principal amount of the outstanding
Term Loans and PIK Loans (each, as defined in the Prepetition Credit Agreement),
immediately prior to the Effective Date, plus (2) any accrued but unpaid
interest under the Prepetition Credit Agreement immediately prior to the
Effective Date, minus (3) the Prepetition Credit Facility Cash Distribution by
(b) the aggregate number of shares issued under the Plan pursuant to the
Prepetition Credit Facility Equity Distribution and the Shareholder Equity
Distribution, which warrants will be issued by the Reorganized Debtor pursuant
to the terms of the New Eagle Equity Warrant Agreement.

 

73.     New Eagle Equity Warrant Agreement: means the warrant agreement that
will govern the terms of the New Eagle Equity Warrants, the form of which shall
be included in the Plan Supplement.

 

74.     New Eagle MIP Option Agreements: means the option agreements that will
govern the terms of the New Eagle MIP Options, the forms of which shall be
included as an exhibit to the Plan Supplement.

 

75.     New Eagle MIP Options: means the following two tiers of options, which
will be issued by the Reorganized Debtor to senior management and certain other
employees of the Reorganized Debtor or the Non-Debtor Subsidiaries, and will
generally vest over four (4) years through annual installments, each in an
amount equal to 25% of such options, in accordance with the terms of the
Management Incentive Program:  (i) seven (7) year stock options to acquire
shares representing 2.5% of the total number of shares of New Eagle Common
Stock, on a fully diluted basis, based on a total implied equity value for the
Reorganized Debtor equal to the Plan Enterprise Value minus the Exit Facility
Amount; and (ii) seven (7) year stock options to acquire shares representing
3.0% of the total number of shares of New Eagle Common Stock, on a fully diluted
basis, based on a total implied equity value equal to (x) 130.2% times the Plan
Enterprise Value minus (y) the Exit Facility Amount.

 

76.     New Eagle MIP Primary Equity: means a number of shares of New Eagle
Common Stock equal to 2.0% of the total number of shares of New Eagle Common
Stock, on a fully diluted basis, which will be issued by the Reorganized Debtor
to senior management and certain other employees of the Reorganized Debtor or
the Non-Debtor Subsidiaries, and will generally vest over four (4) years through
annual installments, each in an amount equal to 25% of such shares, in
accordance with the terms of the Management Incentive Program.

 

 
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77.     New Eagle MIP Primary Equity Agreements: means the restricted stock
agreements that will govern the terms of the New Eagle MIP Primary Equity, the
forms of which shall be included as an exhibit to the Plan Supplement.

 

78.     New Eagle MIP Reserved Equity: means a number of shares of New Eagle
Common Stock equal to 2.5% of the total number of shares of New Eagle Common
Stock, on a fully diluted basis, subject to upward adjustment as may be agreed
by the Debtor and the Majority Consenting Lenders prior to the Effective Date,
which will be reserved for future issuances by the Reorganized Debtor to senior
management and certain other employees of the Reorganized Debtor at the
direction of the New Board.

 

79.     Non-Debtor Subsidiaries: means, collectively: Agali Shipping S.A.; Anemi
Maritime Services S.A.; Avocet Shipping LLC; Bittern Shipping LLC; Canary
Shipping LLC; Cardinal Shipping LLC; Condor Shipping LLC; Crane Shipping LLC;
Crested Eagle Shipping LLC; Crowned Eagle Shipping LLC; Eagle Bulk (Delaware)
LLC; Eagle Bulk Pte. Ltd.; Eagle Management Consultancy Pte. Ltd.; Eagle
Management Consultants LLC; Eagle Ship Management LLC; Eagle Shipping
International (USA) LLC; Egret Shipping LLC; Falcon Shipping LLC; Gannet
Shipping LLC; Golden Eagle Shipping LLC; Goldeneye Shipping LLC; Grebe Shipping
LLC; Griffon Shipping LLC; Harrier Shipping LLC; Hawk Shipping LLC; Heron
Shipping LLC; Ibis Shipping LLC; Imperial Eagle Shipping LLC; Jaeger Shipping
LLC; Jay Shipping LLC; Kampia Shipping S.A.; Kestrel Shipping LLC; Kingfisher
Shipping LLC; Kite Shipping LLC; Kittiwake Shipping LLC; Marmaro Shipping S.A.;
Martin Shipping LLC; Merlin Shipping LLC; Mesta Shipping S.A.; Mylos Shipping
S.A.; Nagos Shipping S.A.; Nighthawk Shipping LLC; Oriole Shipping LLC; Osprey
Shipping LLC; Owl Shipping LLC; Peregrine Shipping LLC; Petrel Shipping LLC;
Puffin Shipping LLC; Rahi Shipping S.A.; Redwing Shipping LLC; Roadrunner
Shipping LLC; Sandpiper Shipping LLC; Shrike Shipping LLC; Sirikari Shipping
S.A.; Skua Shipping LLC; Sparrow Shipping LLC; Spilia Shipping S.A.; Stellar
Eagle Shipping LLC; Tern Shipping LLC; Thrasher Shipping LLC; Thrush Shipping
LLC; Woodstar Shipping LLC; Wren Shipping LLC.

 

80.     Other Priority Claim: means a Claim entitled to priority pursuant to
section 507(a) of the Bankruptcy Code, other than (i) an Administrative Claim,
or (ii) a Priority Tax Claim.

 

81.     Other Secured Claim: means any Claim that is Secured, other than a
Prepetition Credit Facility Claim or a DIP Claim.

 

82.     Outstanding Trade Obligations: means up to $12 million in unsecured
obligations of Eagle (whether a direct obligation of the Debtor or a Non-Debtor
Subsidiary) outstanding on the Effective Date, which, subject to the consent of
the Majority Consenting Lenders, shall be paid from the proceeds of the Exit
Financing Facility.

 

83.     Person: means any individual, corporation, partnership, limited
liability company, association, indenture trustee, organization, joint stock
company, joint venture, estate, trust, Governmental Unit or any political
subdivision thereof, or any other Entity.

 

 
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84.     Petition Date: means the date on which the Debtor commenced the
Chapter 11 Case.

 

85.     Plan: means this Debtor’s Prepackaged Plan of Reorganization Pursuant to
Chapter 11 of the Bankruptcy Code, together with all addenda, exhibits,
schedules, or other attachments, if any, including the Plan Supplement, each of
which is incorporated herein by reference, and as may be amended, modified, or
supplemented from time to time in accordance with the terms herein and in the
Restructuring Support Agreement, as applicable.

 

86.     Plan Enterprise Value: means $900 million.

 

87.     Plan Scheduling Motion: means the motion filed by the Debtor,
substantially contemporaneously with the filing of the Chapter 11 Case, seeking
entry of an order scheduling an objection deadline and combined hearing on the
Debtor’s Disclosure Statement and Plan Confirmation, (b) approving the form and
notice of the Confirmation Hearing, (c) establishing procedures for objections
to the Disclosure Statement and the Plan, (d) approving Solicitation Procedures,
and (e) granting related relief.

 

88.     Plan Scheduling Order: means the order granting the Plan Scheduling
Motion.

 

89.     Plan Supplement: means the compilation of documents and forms of
documents, schedules, and exhibits to the Plan to be filed with the Court on
notice to parties-in-interest, including, but not limited to, the following,
each of which must be in form and substance reasonably satisfactory to the
Majority Consenting Lenders: (i) the Rejection Schedule; (ii) the New Eagle
Charter; (iii) the New Eagle By-Laws; (iv) the New Eagle MIP Option Agreements;
(v) the New Eagle MIP Primary Equity Agreements; (vi) the New Eagle Equity
Warrant Agreement; (vii) the identity and affiliations of the officers and
members of the New Board of the Reorganized Debtor; (viii) a list of retained
Causes of Action; (ix) the Management Incentive Program; (x) the New CEO
Employment Agreement; (xi) the Registration Rights Agreement; (xii) the Exit
Financing Facility documents; and (xiii) the Delphin Management Agreement, as
amended. The Debtor shall file forms of the materials comprising the Plan
Supplement no later than the Plan Supplement Filing Date.

 

90.     Plan Supplement Filing Date: means the date that is five (5) Business
Days before the deadline to object to the confirmation of the Plan.

 

91.     Prepetition Credit Agreement: means the Fourth Amended and Restated
Credit Agreement, dated as of June 20, 2012 (as amended, modified, or
supplemented from time to time), by and among EBS, as borrower, the Prepetition
Credit Facility Lenders, the Non-Debtor Subsidiaries, as guarantors, and the
Prepetition Credit Facility Agent.

 

92.     Prepetition Credit Facility: means the credit facility under the
Prepetition Credit Agreement.

 

93.     Prepetition Credit Facility Agent: means Wilmington Trust (London)
Limited, as successor agent and successor security trustee under the Prepetition
Credit Agreement.

 

 
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94.     Prepetition Credit Facility Cash Distribution: means a Cash distribution
to the Prepetition Credit Facility Lenders in an amount up to the Exit Facility
Amount, less (i) the DIP Claims, (ii) the amount of the Outstanding Trade
Obligations, (iii) the Shareholder Cash Distribution, (iv) the proceeds
necessary to pay the Restructuring Expenses, and (v) such amount as necessary to
provide Eagle with $72.5 million in total liquidity (inclusive of any minimum
liquidity requirements under the Exit Financing Facility) upon the Effective
Date (including cash and unfunded revolver commitments).

  

95.     Prepetition Credit Facility Claims: means the Claims evidenced by,
derived from, based upon, relating to, or arising from, the Prepetition Credit
Facility.

 

96.     Prepetition Credit Facility Equity Distribution: means a number of
shares of New Eagle Common Stock equal to 99.5% of the total number of shares of
New Eagle Common Stock issued and outstanding on the Effective Date. The
Prepetition Credit Facility Equity Distribution shall be subject to dilution
from the New Eagle Equity Warrants, the New Eagle MIP Primary Equity, the New
Eagle MIP Reserved Equity, and the New Eagle MIP Options.

 

97.     Prepetition Credit Facility Lenders: means the lenders under the
Prepetition Credit Agreement.

 

98.     Prepetition Finance Documents: means the “Finance Documents” (as such
term is defined in the Prepetition Credit Agreement), including all agreements,
instruments, and documents governing the Guarantees.

 

99.     Priority Tax Claim: means any Claim that is entitled to priority in
right of payment under sections 502(i) and 507(a)(8) of the Bankruptcy Code.

 

100.     Professional: means any professional employed or retained in the
Chapter 11 Case pursuant to sections 327 or 328 of the Bankruptcy Code.

 

101.     Pro Rata: means, with respect to any Claim, the proportion that the
amount of such Claim bears to the aggregate amount of all Claims (including
Disputed Claims) in the applicable Class or group of Classes, unless the Plan
provides otherwise.

 

102.     Record Date: means, for purposes of making distributions under the
Plan, the Confirmation Date.

 

103.     Registration Rights Agreement: means the Registration Rights Agreement
among the Reorganized Debtor and the Registration Rights Parties, having the
terms set forth in Article IV.E.2, the form of which shall be included in the
Plan Supplement.

 

104.     Registration Rights Parties: means any recipient of shares of New Eagle
Common Stock that (together with its affiliates and related funds) receives 10%
or more of the New Eagle Common Stock under the Plan or who otherwise reasonably
believes that it, together with its affiliated funds, may be an “affiliate” of
the Reorganized Debtor, who executes the Registration Rights Agreement.

 

105.     Registration Statement: means a registration statement on Form S-1 for
the registration of the sale on a delayed or continuous basis of the New Eagle
Common Stock received by the Registration Rights Parties under the Plan and
requested to be included therein by the Registration Rights Parties.

 

 
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106.     Reinstated: means, with respect to a Claim, (a) in accordance with
section 1124(1) of the Bankruptcy Code, being treated such that the legal,
equitable, and contractual rights to which such Claim entitles its holder are
left unaltered, or (b) if applicable under section 1124 of the Bankruptcy Code:
(i) having all prepetition and postpetition defaults with respect thereto other
than defaults relating to the insolvency or financial condition of the Debtor or
its status as debtor under the Bankruptcy Code cured, (ii) having its maturity
date reinstated, (iii) compensating the holder of such Claim for damages
incurred as a result of its reasonable reliance on a provision allowing the
Claim’s acceleration, and (iv) not otherwise altering the legal, equitable and
contractual rights to which the Claim entitles the holder thereof.

 

107.     Rejection Damage Claims: means Claims for damages arising from the
rejection of Executory Contracts or Unexpired Leases. Unless otherwise agreed to
in writing by the Debtor, all Rejection Damage Claims shall be deemed Disputed
Claims.

 

108.     Rejection Notice: means a notice of an Executory Contract or Unexpired
Lease to be rejected under the Plan pursuant to section 365 of the Bankruptcy
Code which notice shall include (i) the procedures for objection to proposed
rejection of Executory Contracts and Unexpired Leases, (ii) the procedures for
filing Rejection Damage Claims, and (iii) procedures for resolution by the Court
of any related disputes.

 

109.     Rejection Schedule: means the schedule of Executory Contracts and
Unexpired Leases to be rejected pursuant to the Plan and the effective date of
such rejection, which shall be included in the Plan Supplement.

 

110.     Released Parties: means each of: (a) the Debtor and Reorganized Debtor;
(b) the Non-Debtor Subsidiaries; (c) the Prepetition Credit Facility Agent; (d)
the Consenting Lenders; (e) the DIP Agent and the DIP Lenders; and (f) with
respect to each of the foregoing Entities in clauses (a) through (e), such
Entity’s predecessors, Professionals, successors and assigns, affiliates,
subsidiaries, funds, portfolio companies, management companies, and each of
their respective current and former (to the extent employed or serving at any
time during the Chapter 11 Case) directors, officers, members, employees,
partners, managers, independent contractors, agents, representatives,
principals, consultants, financial advisors, attorneys, accountants, investment
bankers, and other professional advisors (each solely in their capacity as
such).

 

111.     Releasing Parties: means each of:  (a) the Prepetition Credit Facility
Agent; (b) the Former Prepetition Credit Facility Agent; (c) the DIP Agent and
the DIP Lenders; (d) holders of Impaired Claims other than those who voted to
reject the Plan and checked the opt out box on the Ballot, and returned it in
accordance with the instructions set forth thereon, indicating that they opt not
to grant the releases provided in the Plan, (e) the Consenting Lenders, (f) to
the fullest extent permissible under applicable law (i) holders of Unimpaired
Claims, and (ii) holders of Equity Interests other than those who have checked
the opt out box on the Combined Notice, and returned it in accordance with the
instructions set forth thereon, indicating that they opt not to grant the
releases provided in the Plan, and (g) with respect to each of the foregoing
Entities in clauses (a) through (f), such Entity’s predecessors, successors and
assigns, affiliates, subsidiaries, funds, portfolio companies, management
companies (but excluding any predecessors, portfolio companies, or management
companies of any Consenting Lender), and each of their respective current and
former shareholders, directors, officers, members, employees, partners,
managers, independent contractors, agents, representatives, principals,
consultants, financial advisors, attorneys, accountants, investment bankers, and
other professional advisors (each solely in their capacity as such).

 

 
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112.     Reorganized Debtor: means the Debtor, or any successor thereto by
merger, consolidation, or otherwise, on and after the Effective Date.

 

113.     Restructuring Expenses: the fees and expenses incurred in connection
with the Chapter 11 Case, as well as the funding of obligations necessary to
implement the Plan, including, but not limited to, any costs or reserves
associated with the Exit Financing Facility, the fees due and owing to the
U.S. Trustee and the fees and expenses of Professionals, the Prepetition Credit
Facility Agent, the DIP Agent, and the Consenting Lenders.

 

114.     Restructuring Support Agreement: means the agreement, effective as of
August 6, 2014, among Eagle and certain holders of the Prepetition Credit
Facility Claims, as it may be amended, modified or supplemented by the parties
thereto in accordance with the terms of such agreement.

 

115.     RSA Fee: has the meaning ascribed to such term in the Restructuring
Support Agreement.

 

116.     Securities Act: means the Securities Act of 1933, as amended.

 

117.     Schedules: means, to the extent the Court has not waived the
requirement to file the Schedules, the schedules of assets and liabilities,
statements of financial affairs, and lists of holders of Claims and Equity
Interests, filed with the Court by the Debtor, including any amendments or
supplements thereto.

 

118.     Secured: means when referring to 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 reason of a Court order, or
that is subject to setoff pursuant to section 553 of the Bankruptcy Code, to the
extent of the value of the Claim holder’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 as a Claim that is Secured.

 

119.     Shareholder Cash Distribution: means the aggregate amount of Cash
payments, as determined by the Debtor in consultation with the Majority
Consenting Lenders, that may be distributed to holders of Equity Interests who
would otherwise be entitled to a distribution of less than one hundred (100)
shares of New Eagle Common Stock under the Plan, pursuant to Article
III.D.6.(b).

 

 
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120.     Shareholder Equity Distribution: means shares of New Eagle Common Stock
in an amount equal to 0.5% of the New Eagle Common Stock issued and outstanding
on the Effective Date. The Shareholder Equity Distribution shall be subject to
dilution from the New Eagle Equity Warrants, the New Eagle MIP Primary Equity,
the New Eagle MIP Reserved Equity, and the New Eagle MIP Options.

 

121.     Solicitation Procedures: means the procedures with respect to the
solicitation and tabulation of votes to accept or reject the Plan.

 

122.     Solicitation Procedures Motion: has the meaning ascribed to such term
in the Disclosure Statement.

 

123.     Subsidiary Equity Interests: means any “equity security” (as such term
is defined in section 101(16) of the Bankruptcy Code) in the Non-Debtor
Subsidiaries, including any issued or unissued share of common stock, preferred
stock, or other instrument evidencing an ownership interest in the Non-Debtor
Subsidiaries, whether or not transferable, and any option, warrant, or right,
contractual or otherwise, to acquire any such interest in the Non-Debtor
Subsidiaries that existed immediately prior to the Effective Date.

 

124.     Unexpired Lease: means a lease to which the Debtor is a party that is
subject to assumption or rejection under section 365 of the Bankruptcy Code.

 

125.     Unimpaired: means any Class of Claims or Equity Interests that is not
Impaired under the Plan within the meaning of section 1124 of the Bankruptcy
Code.

 

126.     U.S. Trustee: means the United States Trustee for the Southern District
of New York.

 

127.     Voting Deadline: means August 12, 2014 at 5:00 p.m. (prevailing Eastern
Time) or such other later date established by the Debtor or the Court, which is
the deadline for submitting Ballots to either accept or reject the Plan in
accordance with section 1126 of the Bankruptcy Code.

 

128.     Voting Record Date: means July 31, 2014.

 

129.     Warrant Agreement: means that certain Warrant Agreement, dated as of
June 20, 2012, among EBS and the financial institutions parties thereto, as
amended.

 

130.     Warrant Agreement Amendment: means that certain Amendment No. 1 to
Warrant Agreement, dated as of July 2, 2014, among EBS and the financial
institutions parties thereto.

 

B.

Interpretation, Application of Definitions, and Rules of Construction.

 

Except as expressly provided herein, each capitalized term used in the Plan
shall either have (i) the meaning ascribed to such term in Article I or (b) if
such term is not defined in Article I, but such term is defined in the
Bankruptcy Code or Bankruptcy Rules, the meaning ascribed to such term in the
Bankruptcy Code or the Bankruptcy Rules, as the case may be. Meanings of
capitalized terms shall be equally applicable to both the singular and plural
forms of such terms. The words “herein,” “hereof,” and “hereunder” and other
words of similar import refer to the Plan as a whole (and, for the avoidance of
doubt, the Plan Supplement) and not to any particular section or subsection in
the Plan unless expressly provided otherwise. The words “includes” and
“including” are not limiting and mean that the things specifically identified
are set forth for purposes of illustration, clarity or specificity and do not in
any respect qualify, characterize or limit the generality of the class within
which such things are included. Captions and headings to articles, sections and
exhibits are inserted for convenience of reference only, are not a part of this
Plan, and shall not be used to interpret this Plan. The rules of construction
set forth in section 102 of the Bankruptcy Code shall apply to this Plan.

 

 
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C.

Computation of Time.

 

Except as otherwise specifically provided in the Plan, in computing any period
of time prescribed or allowed by this Plan, the provisions of Bankruptcy
Rule 9006(a) shall apply.

 

ARTICLE II.
ADMINISTRATIVE CLAIMS, DIP CLAIMS, AND PRIORITY CLAIMS

 

In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative
Claims, DIP Claims, Fee Claims, and Priority Tax Claims, each as described
below, have not been classified and thus are excluded from the classes of Claims
and Equity Interests set forth in Article III.

 

A.

Administrative Claims (Other Than Fee Claims).

 

Each holder of an Allowed Administrative Claim (other than an Administrative
Claim that is a Fee Claim or a DIP Claim) as of the Effective Date shall receive
(i) Cash in an amount equal to the amount of such Allowed Administrative Claim
as soon as practicable after the later of (a) the Effective Date, if such
Administrative Claim is Allowed as of the Effective Date, (b) thirty (30) days
after the date such Administrative Claim becomes an Allowed Administrative
Claim, if such Administrative Claim is Disputed as of, or following, the
Effective Date, or (c) the date such Allowed Administrative Claim becomes due
and payable by its terms, or as soon thereafter as is practicable, or (ii) such
other treatment as the Debtor and such holder shall have agreed in writing;
provided, however, that Allowed Administrative Claims (other than Fee Claims and
DIP Claims) that arise in the ordinary course of the Debtor’s business shall be
paid in the ordinary course of business in accordance with the terms, and
subject to the conditions, of any agreements governing, instruments evidencing,
or other documents relating to, such transactions.

 

B.

DIP Claims.

 

On the Effective Date, except to the extent that a Holder of an Allowed DIP
Claim agrees to less favorable treatment, in full and final satisfaction,
settlement, release, and discharge of, each Allowed DIP Claim, each such Holder
shall receive payment in full in Cash on the Effective Date.

 

 
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C.

Fee Claims.

 

1.     Final Fee Applications.

 

All requests for compensation or reimbursement of Fee Claims shall be filed and
served on the Reorganized Debtor, counsel to the Reorganized Debtor, the
U.S. Trustee, counsel to the Prepetition Credit Facility Agent, and such other
entities who are designated by the Bankruptcy Rules, the Confirmation Order, or
other order of the Court, no later than sixty (60) days after the Effective
Date, unless otherwise agreed by the Debtor. Holders of Fee Claims that are
required to file and serve applications for final allowance of their Fee Claims
that do not file and serve such applications by the required deadline shall be
forever barred from asserting such Claims against the Debtor, Reorganized
Debtor, or their respective properties, and such Fee Claims shall be deemed
discharged as of the Effective Date. Objections to any Fee Claims must be filed
and served on the Reorganized Debtor, counsel to the Reorganized Debtor, counsel
to the Prepetition Credit Facility Agent, and the requesting party no later than
thirty (30) days after the filing of the final applications for compensation or
reimbursement (unless otherwise agreed by the party requesting compensation of a
Fee Claim).

 

2.     Post-Effective Date Fees and Expenses.

 

The Reorganized Debtor shall pay in Cash the reasonable legal, professional, or
other fees and expenses incurred by the Debtor’s Professionals on and after the
Effective Date, in the ordinary course of business, and without any further
notice to or action, order, or approval of the Court. Upon the Effective Date,
any requirement that Professionals comply with sections 327 through 331 of the
Bankruptcy Code in seeking retention or compensation for services rendered after
such date shall terminate, and Professionals may be employed and paid in the
ordinary course of business without any further notice to, or action, order, or
approval of, the Court.

 

D.

Priority Tax Claims.

 

Each holder of an Allowed Priority Tax Claim due and payable on or before the
Effective Date shall receive, at the option of the Debtor, in full satisfaction,
settlement, release, and discharge of, and in exchange for, such Priority Tax
Claim, one of the following treatments: (i) payment in full in Cash as soon as
practicable after the Effective Date in the amount of such Allowed Priority Tax
Claim, plus statutory interest on any outstanding balance from the Effective
Date, calculated at the prevailing rate under applicable nonbankruptcy law for
each taxing authority and to the extent provided for by section 511 of the
Bankruptcy Code, and in a manner not less favorable than the most favored
nonpriority General Unsecured Claim provided for by the Plan (other than cash
payments made to a class of creditors pursuant to section 1122(b) of the
Bankruptcy Code); (ii) payment in full in Cash, payable in equal Cash
installments made on a quarterly basis in accordance with section 1129(a)(9)(C)
of the Bankruptcy Code, over a period not to exceed five (5) years following the
Petition Date, plus statutory interest on any outstanding balance from the
Effective Date, calculated at the prevailing rate under applicable nonbankruptcy
law for each taxing authority and to the extent provided for by section 511 of
the Bankruptcy Code, and in a manner not less favorable than the most favored
nonpriority General Unsecured Claim provided for by the Plan (other than cash
payments made to a class of creditors pursuant to section 1122(b) of the
Bankruptcy Code); or (iii) such other treatment as may be agreed upon by such
holder and the Debtor or otherwise determined upon a Final Order of the Court.

 

 
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E.

U.S. Trustee Fees.

 

Notwithstanding anything to the contrary contained herein, on the Effective
Date, the Debtor shall pay, in full, in Cash, any fees due and owing to the
U.S. Trustee at the time of Confirmation. On and after the Effective Date, the
Reorganized Debtor shall be responsible for filing required post-confirmation
reports and paying quarterly fees due to the U.S. Trustee for the Reorganized
Debtor until the entry of a final decree in the Chapter 11 Case or until the
Chapter 11 Case is converted or dismissed.

 

ARTICLE III.
CLASSIFICATION AND TREATMENT OF
CLAIMS AND EQUITY INTERESTS

 

A.

Classification of Claims and Equity Interests.

 

Except for those Claims addressed in Article II, all Claims and Equity Interests
are placed in the Classes set forth below. A Claim or Equity Interest is placed
in a particular Class solely to the extent that the Claim or Equity Interest
falls within the description of that Class, and the portion of a Claim or Equity
Interest which does not fall within such description shall be classified in
another Class or Classes to the extent that such portion falls within the
description of such other Class or Classes. A Claim is also placed in a
particular Class for the purpose of receiving distributions pursuant to the Plan
solely to the extent that such Claim is an Allowed Claim in that Class and such
Claim has not been paid, released, or otherwise settled before the Effective
Date.

 

B.

Record Date.

 

As of the close of business on the Record Date, the claims register (for Claims)
and transfer ledger (for Equity Interests) shall be closed, and there shall be
no further changes in the record holders of any Claims or Equity Interests. The
Reorganized Debtor shall have no obligation to, but may, in consultation with
the Majority Consenting Lenders, recognize any transfer of any Claims or Equity
Interests occurring after the Record Date. The Reorganized Debtor shall instead
be entitled to recognize and deal for purposes under the Plan with only those
record holders stated on the claims register (for Claims) and transfer ledgers
(for Equity Interests) as of the close of business on the Record Date.

 

 
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C.

Summary of Classification and Class Identification.

 

Below is a chart identifying Classes of Claims and Equity Interests, a
description of whether each Class is Impaired, and each Class’s voting rights
with respect to the Plan.

 

Class

Claim or Equity Interest

Status

Voting Rights

1

Other Priority Claims

Unimpaired

Deemed to Accept

2

Other Secured Claims

Unimpaired

Deemed to Accept

3

Prepetition Credit Facility Claims

Impaired

Entitled to Vote

4

General Unsecured Claims

Unimpaired

Deemed to Accept

5

Intercompany Claims

Unimpaired

Deemed to Accept

6

Equity Interests in EBS

Impaired

Deemed to Reject

 

Section 1129(a)(10) of the Bankruptcy Code shall be satisfied, for the purposes
of Confirmation, by acceptance of the Plan by an Impaired Class of Claims;
provided, however, that in the event no holder of a Claim with respect to a
specific voting Class timely submits a Ballot indicating acceptance or rejection
of the Plan, such Class will be deemed to have accepted the Plan. The Debtor
hereby requests that the Court confirm the Plan pursuant to section 1129(b) of
the Bankruptcy Code with respect to any rejecting Class of Claims or Equity
Interests. The Debtor reserves the right to modify the Plan in accordance with
Article X.E hereof, including the right to withdraw the Plan at any time before
the Effective Date.

 

D.

Treatment of Classified Claims and Equity Interests.

 

1.     Class 1 - Other Priority Claims.

 

(a)     Classification: Class 1 consists of Other Priority Claims.

 

(b)     Treatment: Except to the extent that a holder of an Allowed Other
Priority Claim agrees in writing to less favorable treatment, in full and final
satisfaction, settlement, release, and discharge of, and in exchange for, each
Allowed Other Priority Claim, each holder of an Allowed Other Priority Claim
shall receive payment in Cash in an amount equal to such Allowed Other Priority
Claim as soon as practicable after the later of (i) the Effective Date and
(ii) thirty (30) days after the date when such Other Priority Claim becomes an
Allowed Other Priority Claim.

 

(c)     Voting: Class 1 is Unimpaired by the Plan, and each holder of a Class 1
Other Priority Claim is conclusively presumed to have accepted the Plan pursuant
to section 1126(f) of the Bankruptcy Code. Therefore, holders of Class 1 Other
Priority Claims are not entitled to vote to accept or reject the Plan.

 

2.     Class 2 - Other Secured Claims.

 

(a)     Classification: Class 2 consists of Other Secured Claims.

 

(b)     Treatment: Except to the extent that a holder of an Allowed Other
Secured Claim agrees in writing to less favorable treatment, at the option of
the Debtor, in full and final satisfaction, settlement, release and discharge of
and in exchange for such Other Secured Claim, each holder of an Allowed Other
Secured Claim shall: (i) have its Allowed Other Secured Claim Reinstated and
rendered Unimpaired, (ii) receive Cash in an amount equal to such Allowed Other
Secured Claim, including any interest on such Allowed Other Secured Claim, if
such interest is required to be paid pursuant to sections 506(b)
and/or 1129(a)(9) of the Bankruptcy Code, as soon as practicable after the later
of (a) the Effective Date, and (b) thirty (30) days after the date such Other
Secured Claim becomes an Allowed Other Secured Claim, or (iii) receive the
Collateral securing its Allowed Other Secured Claim as soon as practicable after
the later of (a) the Effective Date and (b) thirty (30) days after the date such
Other Secured Claim becomes an Allowed Other Secured Claim.

 

 
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(c)     Voting: Class 2 is Unimpaired by the Plan, and each holder of a Class 2
Other Secured Claim is conclusively presumed to have accepted the Plan pursuant
to section 1126(f) of the Bankruptcy Code. Therefore, holders of Class 2 Other
Secured Claims are not entitled to vote to accept or reject the Plan.

 

3.     Class 3 – Prepetition Credit Facility Claims.

 

(a)     Classification: Class 3 consists of Prepetition Credit Facility Claims.

 

(b)     Allowance: Prepetition Credit Facility Claims shall be Allowed on the
Effective Date for all purposes in an amount of no less than $1,188,847,632.09,
plus accrued but unpaid interest through the Effective Date to the extent
legally permissible, and shall not be subject to any avoidance, reductions,
setoff, offset, recoupment, 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.

 

(c)     Treatment: Except to the extent that a holder of an Allowed Prepetition
Credit Facility Claim agrees in writing to such other treatment, and the Debtor
and the Majority Consenting Lenders, each in their sole discretion, agree in
writing to such other treatment, in full and final satisfaction, settlement,
release, and discharge of, and in exchange for, the Prepetition Credit Facility
Claims, on or as soon as practicable after the Effective Date, each holder of an
Allowed Prepetition Credit Facility Claim shall receive its Pro Rata share of:
(i) the Prepetition Credit Facility Cash Distribution; and (ii) the Prepetition
Credit Facility Equity Distribution. Each holder of an Allowed Prepetition
Credit Facility Claim shall only receive one recovery in full and complete
satisfaction of all Prepetition Credit Facility Claims and Guarantee Claims held
by such claimant, which recovery is specified in this Article III.D.3(c).

 

(d)     Voting: Class 3 is Impaired. Therefore, holders of Class 3 Prepetition
Credit Facility Claims are entitled to vote to accept or reject the Plan.

 

4.     Class 4 – General Unsecured Claims.

 

(a)     Classification: Class 4 consists of General Unsecured Claims.

 

 
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(b)     Treatment: In full and final satisfaction, settlement, release, and
discharge of, and in exchange for, each Allowed General Unsecured Claim, on the
Effective Date, each holder of an Allowed General Unsecured Claim shall, at the
discretion of the Debtor, and only to the extent such holder’s Allowed General
Unsecured Claim was not previously paid, pursuant to an order of the Court or
otherwise: (i) have its Allowed General Unsecured Claim Reinstated as an
obligation of the Reorganized Debtor, and be paid in accordance with the
ordinary course terms, (ii) receive such other treatment as may be agreed
between such holder and the Reorganized Debtor, or (iii) receive such other
treatment that will render it Unimpaired pursuant to section 1124 of the
Bankruptcy Code.

 

(c)     Voting: Class 4 is Unimpaired. Therefore, holders of Class 4 General
Unsecured Claims are not entitled to vote to accept or reject the Plan.

 

5.     Class 5 – Intercompany Claims.

 

(a)     Classification: Class 5 consists of Intercompany Claims.

 

(b)     Treatment: On the Effective Date, Intercompany Claims, if any, will be
Reinstated in full. On and after the Effective Date, the Reorganized Debtor and
the Non-Debtor Subsidiaries will be permitted to transfer funds between and
among themselves as they determine to be necessary or appropriate to enable the
Reorganized Debtor to satisfy its obligations under the Plan. Except as set
forth herein, any changes to intercompany account balances resulting from such
transfers will be accounted for and settled in accordance with the Debtor’s
historical intercompany account settlement practices.

 

(c)     Voting: Class 5 is Unimpaired. Holders of Class 5 Intercompany Claims
are conclusively presumed to have accepted the Plan pursuant to section 1126(f)
of the Bankruptcy Code. Therefore, holders of Class 5 Intercompany Claims are
not entitled to vote to accept or reject the Plan.

 

6.     Class 6 – Equity Interests in EBS.

 

(a)     Classification: Class 6 consists of Equity Interests in EBS.

 

(b)     Treatment: On the Effective Date, Equity Interests shall be cancelled
and discharged and shall be of no further force or effect, whether surrendered
for cancellation or otherwise, and holders of Equity Interests shall not receive
or retain any property under the Plan on account of such Equity Interests.
Notwithstanding the foregoing, on or as soon as practicable after the Effective
Date, holders of Equity Interests (other than Consenting Lenders who hold either
Amended Lender Warrants or Equity Interests based upon the exercise of Amended
Lender Warrants) shall receive, in exchange for the surrender or cancellation of
their Equity Interests and for the releases by such holders of the Released
Parties, their Pro Rata share of the Shareholder Equity Distribution and their
Pro Rata share of the New Eagle Equity Warrants, each of which shall come from
amounts which holders of Prepetition Credit Facility Claims would otherwise be
entitled to under the Plan; provided, however, that, notwithstanding Article
VII.B.9, the Debtor may, in consultation with the Majority Consenting Lenders,
(i) provide any holder of an Equity Interest that would otherwise be entitled to
a distribution of less than one (1) share of New Eagle Common Stock under this
Article III.D.6.(b) with a distribution of one (1) share of New Eagle Common
Stock or (ii) provide any holder of an Equity Interest that would otherwise be
entitled to a distribution of less than one hundred (100) shares of New Eagle
Common Stock under this Article III.D.6.(b) with a Cash payment equal to the
value of such New Eagle Common Stock. Notwithstanding anything contained herein
to the contrary, Consenting Lenders who hold either Amended Lender Warrants or
Equity Interests based upon the exercise of Amended Lender Warrants shall not
receive or retain any property under the Plan on account of such Amended Lender
Warrants or Equity Interests.

 

 
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(c)     Voting: Class 6 is Impaired. Holders of Class 6 Equity Interests in EBS
are conclusively presumed to have rejected the Plan pursuant to section 1126(g)
of the Bankruptcy Code. Therefore, holders of Class 6 Equity Interests in EBS
are not entitled to vote to accept or reject the Plan.

 

E.

Special Provision Regarding Unimpaired and Reinstated Claims.

 

Except as otherwise specifically provided in this Plan, nothing herein shall be
deemed to affect, diminish, or impair the Debtor’s or the Reorganized Debtor’s
rights and defenses, both legal and equitable, with respect to any Reinstated
Claim or Unimpaired Claim, including, but not limited to, legal and equitable
defenses to setoffs or recoupment against Reinstated Claims or Unimpaired
Claims. Except as otherwise specifically provided in this Plan, nothing herein
shall be deemed to be a waiver or relinquishment of any Claim, Cause of Action,
right of setoff, or other legal or equitable defense which the Debtor had
immediately prior to the Petition Date against, or with respect to, any Claim
left Unimpaired by this Plan. Except as otherwise specifically provided in this
Plan, the Reorganized Debtor shall have, retain, reserve, and be entitled to
assert, all such Claims, Causes of Action, rights of setoff, and other legal or
equitable defenses which they had immediately prior to the Petition Date fully
as if the Chapter 11 Case had not been commenced, and all of the Debtor’s legal
and equitable rights with respect to any Reinstated Claim or Claim left
Unimpaired by this Plan may be asserted by the Reorganized Debtor after the
Confirmation Date and the Effective Date to the same extent as if the Chapter 11
Case had not been commenced.

 

ARTICLE IV.
MEANS FOR IMPLEMENTATION OF THE PLAN

 

A.

General Settlement of Claims and Interests.

 

As discussed in the Disclosure Statement, the provisions of the Plan shall, upon
consummation, constitute a good faith compromise and settlement, pursuant to
Bankruptcy Rule 9019 and section 1123 of the Bankruptcy Code, among the Debtor
and the Consenting Lenders of all disputes among the parties, including those
arising from, or related to, (i) the Prepetition Credit Facility Claims and the
Guarantee Claims, (ii) the Guarantees, (iii) the total enterprise value of the
Debtor’s estate and the Reorganized Debtor for allocation purposes under the
Plan, (iv) the treatment and distribution to holders of Equity Interests, and
(v) the Existing Management Incentive Programs. In the event that, for any
reason, the Confirmation Order is not entered or the Effective Date does not
occur, the Debtor and the Consenting Lenders reserve all of their respective
rights with respect to any and all disputes resolved and settled under the Plan.
The entry of the Confirmation Order shall constitute the Court’s approval of
each of the compromises and settlements embodied in the Plan, and the Court’s
findings shall constitute its determination that such compromises and
settlements are in the best interests of the Debtor, its estate, creditors, and
other parties-in-interest, and are fair, equitable, and within the range of
reasonableness. The Plan and the Confirmation Order shall have res judicata,
collateral estoppel, and estoppel (judicial, equitable, or otherwise) effect
with respect to all matters provided for, or resolved pursuant to, the Plan
and/or the Confirmation Order, including, without limitation, the release,
injunction, exculpation, discharge, and compromise provisions contained in the
Plan and/or the Confirmation Order.

 

 
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B.

Exit Financing.

 

On or before the Effective Date, the Debtor shall be authorized, without the
need for any further corporate action or without any further action by the
Debtor or the Reorganized Debtor, as applicable, to enter into the Exit
Financing Facility Credit Agreement and any ancillary documents necessary or
appropriate to satisfy the conditions to effectiveness of the Exit Financing
Facility. The proceeds of the Exit Financing Facility shall be used to pay (i)
the DIP Claims, the Prepetition Credit Facility Cash Distribution, the
Outstanding Trade Obligations, the Shareholder Cash Distribution, and the
Restructuring Expenses and (ii) following the payment, or reserving for the
payment, of each the foregoing, such amount as necessary to provide Eagle with
$72.5 million in total liquidity (inclusive of any minimum liquidity
requirements under the Exit Financing Facility) upon the Effective Date
(including cash and unfunded revolver commitments). The Exit Financing Facility
will be Secured by some or all of the collateral securing the Prepetition Credit
Facility.

  

C.

Voting of Claims.

 

Each holder of an Allowed Claim as of the Voting Deadline in an Impaired Class
of Claims that is not (a) deemed to have rejected the Plan or (b) conclusively
presumed to have accepted the Plan, and that held such Claim as of the Voting
Record Date, shall be entitled to vote to accept or reject the Plan. The
instructions for completion of the Ballots are set forth in the instructions
accompanying each Ballot. Approval for the Solicitation Procedures will be
sought in the Plan Scheduling Motion and are described in the Disclosure
Statement.

 

D.

Nonconsensual Confirmation.

 

The Debtor intends to request confirmation of the Plan under section 1129(b) of
the Bankruptcy Code with respect to any impaired Class that has not accepted or
is deemed to have rejected the Plan pursuant to section 1126 of the Bankruptcy
Code, including Class 6 (Equity Interests in EBS).

 

E.

Issuance of New Eagle Common Stock and New Eagle Equity Warrants and Entry into
the Registration Rights Agreement.

 

1.     Issuance of Securities. Shares of New Eagle Common Stock shall be
authorized under the New Eagle Charter, and shares of New Eagle Common Stock
shall be issued on the Effective Date and distributed as soon as practicable
thereafter in accordance with the Plan. The number of shares of New Eagle Common
Stock to be distributed as set forth in this Plan, and the number of shares of
New Eagle Common Stock issuable upon exercise of New Eagle Equity Warrants and
New Eagle MIP Options and corresponding strike prices, are subject to adjustment
by the Debtor in a manner that does not alter the respective percentages of the
outstanding New Eagle Common Stock allocated to any Class or Claim holder,
except for immaterial changes resulting from the treatment of fractional shares.
To the extent that Cash is distributed to any holder of Equity Interests
pursuant to the Shareholder Cash Distribution, any shares or fractional shares
of New Eagle Common Stock that would otherwise be distributed to such holder
shall be allocated to Class 6 Equity Interests. All of the New Eagle Common
Stock, issuable in accordance with the Plan, when so issued, shall be duly
authorized, validly issued, fully paid, and non-assessable. The issuance of the
New Eagle Common Stock, the New Eagle Equity Warrants, the New Eagle MIP Primary
Equity, and the New Eagle MIP Options by the Reorganized Debtor, and the
issuance of shares pursuant to the exercise of New Eagle Equity Warrants and New
Eagle MIP Options, is authorized without the need for any further corporate
action and without any further action by any holder of a Claim or Equity
Interest.

 

 
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Except as provided below, the New Eagle Common Stock distributed under the Plan
will be issued in book-entry form, and DTC or its nominee will be the holder of
record of such New Eagle Common Stock. One or more global certificates
representing such New Eagle Common Stock will be registered with an agent for
the New Eagle Common Stock, in the name of, and will be deposited with, DTC or
its nominee. The ownership interest of each holder of such New Eagle Common
Stock, and transfers of ownership interests therein, will be recorded on the
records of the direct and indirect participants in DTC. To receive distributions
of New Eagle Common Stock, holders of Prepetition Credit Facility Claims will be
required to designate a direct or indirect participant in DTC with whom such
holder has an account into which such New Eagle Common Stock may be deposited.
The New Eagle Common Stock issuable to holders of Equity Interests will, with
respect to Equity Interests held through DTC, be delivered by the Reorganized
Debtor to the holders of Equity Interests through DTC, and holders that do not
hold their Equity Interests in DTC will be required to designate a direct or
indirect participant in DTC with whom such holder has an account into which such
New Eagle Common Stock may be deposited.

 

2.     Entry into the Registration Rights Agreement. On or as soon as
practicable after the Effective Date, the Reorganized Debtor and the
Registration Rights Parties will enter into the Registration Rights Agreement.
The Registration Rights Agreement shall provide the Registration Rights Parties
with (i) subject to the percentage ownership threshold specified in the
Registration Rights Agreement, the right to require the Reorganized Debtor to
register, under the Securities Act, the sale of the shares of New Eagle Common
Stock, the New Eagle Equity Warrants (including the shares issuable upon
exercise thereof), the New Eagle MIP Primary Equity, and the New Eagle MIP
Options (including the shares issuable upon exercise thereof), in each case
issued under the Plan to the Registration Rights Parties exercising such rights,
and (ii) for all Registration Rights Parties, piggyback registration rights,
with customary cutbacks, with respect to such securities.

 

3.     Exemption from Registration. The offering of the New Eagle Common Stock
under Article III of the Plan shall be exempt from the registration requirements
of section 5 of the Securities Act and other applicable law under section
4(a)(2) of the Securities Act. The issuance and distribution of the New Eagle
Common Stock and the New Eagle Equity Warrants under Article III of the Plan,
and the New Eagle Common Stock issuable upon exercise of the New Eagle Equity
Warrants shall be exempt from the registration requirements of section 5 of the
Securities Act and any other applicable law requiring registration of an offer
or sale of securities under section 1145(a) of the Bankruptcy Code, except with
respect to any person that is deemed an “underwriter” under section 1145(b) of
the Bankruptcy Code, in which case the New Eagle Common Stock and the New Eagle
Equity Warrants shall be issued pursuant to another available exemption from
registration under the Securities Act and other applicable law. The New Eagle
Common Stock underlying the Management Incentive Program, the New Eagle MIP
Options, and the New Eagle Common Stock issuable upon exercise of the New Eagle
MIP Options will be issued pursuant to another available exemption from
registration under the Securities Act and other applicable law.

 

 
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The New Eagle Common Stock distributed or issued under the Plan to persons who
may be deemed underwriters under section 1145(b) of the Bankruptcy Code will, at
the option of the recipient thereof, be issued either (i) in the form of
registered stock certificates bearing a legend indicating that transfer may be
restricted under federal and state securities laws or (ii) in book-entry form
and included in a ledger identified as “restricted” and indicating in such
ledger that transfer may be restricted under federal and state securities laws.

 

4.     SEC Reporting Requirements and Listing of New Eagle Common Stock. As of
the Effective Date, the Reorganized Debtor will be a reporting company under the
Securities Exchange Act of 1934, 15 U.S.C. §§ 78(a) -78(pp). EBS intends to
remain listed following the Petition Date on the Nasdaq Global Select Market
(“NASDAQ”), the Reorganized Debtor intends to continue such NASDAQ listing in
respect of the New Eagle Common Stock, and the Consenting Lenders have agreed to
provide EBS with sufficient time and cooperation to take the necessary steps to
comply with all applicable NASDAQ requirements, as shall be reasonably agreed
between EBS and the Consenting Lenders, in order for EBS to maintain such NASDAQ
listing and for the Reorganized Debtor to be able to continue such listing upon
the Effective Date. In the event EBS loses its NASDAQ listing prior to the
Effective Date, the Consenting Lenders have agreed to support EBS’ good faith
efforts to become relisted on NASDAQ, and EBS will use commercially reasonable
efforts to comply with the NASDAQ listing requirements while delisted, subject
to the terms and conditions of the Plan.

 

F.

The New Eagle Equity Warrants.

 

1.     Issuance. The New Eagle Equity Warrants will be issued pursuant to the
terms of the New Eagle Equity Warrant Agreement. Each New Eagle Equity Warrant
will, subject to the anti-dilution adjustments described below, be exercisable
for one (1) share of New Eagle Common Stock.

 

2.     Anti-Dilution Protection. The New Eagle Equity Warrant Agreement shall
provide the New Eagle Equity Warrants with customary anti-dilution protection in
the event of any stock split, reverse stock split, stock dividend,
reclassification, dividend, or other distributions (including, but not limited
to, cash dividends), or business combination transaction. The New Eagle Equity
Warrants shall be subject to dilution from the New Eagle MIP Primary Equity, the
New Eagle MIP Reserved Equity, and the New Eagle MIP Options.

 

 
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3.     Form. Except as provided below, all New Eagle Equity Warrants distributed
under the Plan will be issued in book-entry form and DTC or its nominee will be
the holder of record of New Eagle Equity Warrants. One or more global warrant
certificates representing such New Eagle Equity Warrants will be registered with
a warrant agent for the New Eagle Equity Warrants, in the name of, and will be
deposited with, DTC or its nominee. The ownership interest of each holder of
such New Eagle Equity Warrants, and transfers of ownership interests therein,
will be recorded on the records of the direct and indirect participants in DTC.
Holders of Equity Interests that hold such Equity Interests in DTC will receive
their New Eagle Equity Warrants by deposit to the account of a direct or
indirect participant in DTC in which such Equity Interests are held. Holders
that do not hold their Equity Interests in DTC will be required to designate a
direct or indirect participant in DTC with whom such holder has an account into
which such New Eagle Equity Warrants may be deposited. Beneficial owners of the
New Eagle Equity Warrants will be required to follow the procedures that DTC or
its direct or indirect participants may establish for exercising their rights in
respect of the New Eagle Equity Warrants, including exercise and transfer
thereof. New Eagle Common Stock issuable upon exercise of such New Eagle Equity
Warrants will be issued in book-entry form and held through DTC.

 

The New Eagle Equity Warrants distributed under the Plan to any persons who may
be deemed underwriters under section 1145(b) of the Bankruptcy Code will be
issued in the form of registered warrant certificates and will bear a legend
indicating that transfer may be restricted under federal and state securities
laws.

 

G.

Continued Corporate Existence and Vesting of Assets.

 

Except as otherwise provided herein: (i) the Debtor will, as Reorganized Debtor,
continue to exist after the Effective Date as a separate legal entity, with all
of the powers of such a legal entity under applicable law and without prejudice
to any right to alter or terminate such existence (whether by merger,
dissolution or otherwise) under applicable law; and (ii) on the Effective Date,
all property of the Debtor’s Estate, and any property acquired by the Debtor or
the Reorganized Debtor under the Plan, will vest in such Reorganized Debtor free
and clear of all Claims, Liens, charges, other encumbrances, Equity Interests,
and other interests, except for the Liens and Claims established under the Plan
(including in respect of the Exit Financing Facility).

 

On and after the Effective Date, the Reorganized Debtor may operate its business
and may use, acquire, and dispose of property and compromise or settle any
claims without supervision or approval by the Court and free of any restrictions
of the Bankruptcy Code or Bankruptcy Rules, subject only to those restrictions
expressly imposed by the Plan or the Confirmation Order as well as the documents
and instruments executed and delivered in connection therewith, including the
documents, exhibits, instruments, and other materials comprising the Plan
Supplement. Without limiting the foregoing, the Reorganized Debtor may pay the
charges that they incur from and after the Effective Date for Fee Claims,
disbursements, expenses, or related support services (including fees relating to
the preparation of Professional fee applications) without application to, or the
approval of, the Court.

 

H.

Fee Claims Escrow Account.

 

On the Effective Date, the Reorganized Debtor shall establish the Fee Claim
Escrow Account in an amount equal to all asserted Fee Claims of Professionals
outstanding as of the Effective Date (including, for the avoidance of doubt, any
reasonable estimates for unbilled amounts payable by the Debtor or the
Reorganized Debtor). Amounts held in the Fee Claims Escrow Account shall not
constitute property of the Reorganized Debtor. The Fee Claims Escrow Account may
be an interest-bearing account. In the event there is a remaining balance in the
Fee Claims Escrow Account following payment to all holders of Fee Claims under
the Plan, any such amounts shall be returned to the Reorganized Debtor.

 

 
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I.

Claims Against Non-Debtor Subsidiaries.

 

Any claim (as such term is defined in section 101(5) of the Bankruptcy Code),
Cause of Action, or remedy asserted against a Non-Debtor Subsidiary by the
Debtor will be reinstated, adjusted (including by contribution, distribution in
exchange for new debt or equity, or otherwise), paid, continued, cancelled, or
discharged to the extent determined appropriate by the Reorganized Debtor. Any
such transaction may be effectuated on the Effective Date or subsequent to the
Effective Date without any further action by the Court or by the stockholders of
the Reorganized Debtor.

 

J.

Subsidiary Equity Interests.

 

The Subsidiary Equity Interests shall be retained and the legal, equitable, and
contractual rights to which the holder of such Allowed Subsidiary Equity
Interests is entitled shall remain unaltered.

 

ARTICLE V.
PROVISIONS REGARDING CORPORATE GOVERNANCE
OF THE REORGANIZED DEBTOR

 

A.

Organizational Documents.

 

The New Eagle Charter will be filed on or immediately before the Effective Date
with the applicable authority in the jurisdiction of incorporation in accordance
with the corporate laws of its jurisdiction of incorporation or as soon
thereafter as is practicable. The New Eagle By-Laws will be deemed to have been
adopted and will become effective on the Effective Date. The New Eagle Charter
shall prohibit the issuance of nonvoting equity securities only so long as, and
to the extent that, the issuance of nonvoting equity securities is prohibited by
the Bankruptcy Code. The New Eagle Charter and the New Eagle By-Laws will
include certain rights and protections for minority shareholders as are
customary for a listed public company, as well as the maximum protections
available with respect to transactions for public companies involving an
affiliate, including, but not limited to, any merger, consolidation or
reorganization of the Reorganized Debtor, any sale, transfer, or other
disposition of all or substantially all of the assets of the Reorganized Debtor,
or any other change in control of the Reorganized Debtor or all or substantially
all of its assets.

 

B.

Appointment of Officers and Directors.

 

As of the Effective Date, the term of the current members of the board of
directors of EBS shall expire without further action by any Person. The initial
directors of the New Board shall consist of Sophocles Zoullas (who shall remain
as Chairman on the Effective Date ) and six (6) other directors selected by the
Majority Consenting Lenders in their sole discretion and to be disclosed in the
Plan Supplement; provided, however, that the Consenting Lenders shall consult in
good faith with management and the independent board committee concerning the
individuals selected; provided, further, that the Consenting Lenders shall
designate sufficient independent directors to comply with NASDAQ listing
requirements.

 

 
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The existing officers of Eagle as of the Petition Date shall remain in their
current capacities as officers of Eagle.

 

C.

Powers of Officers.

 

Subject to approval of the New Board, the officers of the Debtor, the
Reorganized Debtor, and the Non-Debtor Subsidiaries, as the case may be, shall
have the power to enter into or execute any documents or agreements that they
deem reasonable and appropriate to effectuate the terms of the Plan.

 

D.

New CEO Employment Agreement, Existing Benefits Agreements, and Retiree
Benefits.

 

From and after the Effective Date, Sophocles Zoullas shall be employed and serve
as the Chief Executive Officer of the Reorganized Debtor in accordance with the
New CEO Employment Agreement. Except as set forth in the Rejection Schedule (or
as such benefits may be otherwise terminated by the Debtor in a manner
permissible under applicable law), and except as amended by the New CEO
Employment Agreement, all Existing Benefits Agreements shall be deemed assumed
as of the Effective Date. Notwithstanding anything to the contrary contained
herein, pursuant to section 1129(a)(13) of the Bankruptcy Code, on and after the
Effective Date, all retiree benefits (as such term is defined in section 1114 of
the Bankruptcy Code), if any, shall continue to be paid in accordance with
applicable law.

 

E.

Management Incentive Program.

 

On the Effective Date, the Reorganized Debtor shall adopt the Management
Incentive Program, which shall supersede the Existing Management Incentive
Programs in their entirety and shall provide for the distribution, and the
reservation for future issuance, as applicable, of the New Eagle MIP Primary
Equity, the New Eagle MIP Reserved Equity, and the New Eagle MIP Options to the
Reorganized Debtor’s senior management and certain other employees.

 

The Management Incentive Plan will be structured as an omnibus incentive plan
and will contain adjustment provisions to reflect any transaction involving
shares of New Eagle Common Stock, including as a result of any dividend,
recapitalization, or stock split, so as to prevent any diminution or enlargement
of the holder’s rights under the award.  In addition, awards that expire or are
forfeited or cancelled will again be available for issuance under the Management
Incentive Plan and awards may not be materially amended in an adverse manner
without the consent of any holder who is senior management. The New Eagle MIP
Primary Equity will have the right to receive dividends or other distributions
at the same time and in the same form as a holder of New Eagle Common Stock;
provided, however, that dividends or other distributions in respect of unvested
New Eagle MIP Primary Equity will be paid at the same time as underlying New
Eagle MIP Primary Equity are settled. The Reorganized Debtor’s senior management
will also have the right to elect a net settlement (e.g., on a cashless basis)
with respect to both the New Eagle MIP Primary Equity and the New Eagle MIP
Options.

 

 
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Allocation of the New Eagle MIP Primary Equity, the New Eagle MIP Reserved
Equity, and the New Eagle MIP Options to the Reorganized Debtor’s senior
management and certain other employees shall be determined by the New Board;
provided, however, that Sophocles Zoullas, as Chief Executive Officer of the
Reorganized Debtor, shall receive not less than 60% of the total compensation to
be awarded under the Management Incentive Plan.

 

On the Effective Date, the Existing Management Incentive Programs will be deemed
to have been terminated, cancelled, and of no further force and effect, and the
participants thereunder shall have no further rights thereunder. To the extent
that any Existing Management Incentive Program is an executory contract, each
such Existing Management Incentive Program shall be deemed rejected as of the
Effective Date.

 

F.

Indemnification of Directors, Officers, and Employees.

 

Notwithstanding any other provisions of the Plan, from and after the Effective
Date, indemnification obligations owed by the Debtor or the Reorganized Debtor
to directors, officers, or employees of the Debtor who served or were employed
by the Debtor on or after the Petition Date, to the extent provided in the
articles or certificates of incorporation, by-laws or similar constituent
documents, by statutory law or by written agreement, policies or procedures of
the Debtor, will be deemed to be, and treated as though they are, executory
contracts that are assumed pursuant to the Plan and section 365 of the
Bankruptcy Code. All such indemnification obligations shall survive confirmation
of the Plan, remain unaffected thereby, and not be discharged, irrespective of
whether indemnification, defense, reimbursement or limitation is owed in
connection with an event occurring before, on, or after the Petition Date.

 

Indemnification obligations owed to any Professionals retained pursuant to
sections 327 or 328 of the Bankruptcy Code and by order of the Court, to the
extent such indemnification obligations relate to the period after the Petition
Date, shall be deemed to be, and shall be treated as though they are, executory
contracts that are assumed pursuant to the Plan and section 365 of the
Bankruptcy Code, as and to the extent such indemnification was approved by order
of the Court.

 

ARTICLE VI.
CONFIRMATION OF THE PLAN

 

A.

Conditions to Confirmation.

 

The following are conditions to the entry of the Confirmation Order, unless such
conditions, or any of them, have been satisfied or duly waived in accordance
with Article VI.B:

 

1.     The Court shall have approved the Disclosure Statement, which shall be in
form and substance reasonably acceptable to the Debtor and the Majority
Consenting Lenders.

 

2.     The Confirmation Order shall be in form and substance reasonably
acceptable to the Debtor and the Majority Consenting Lenders.

 

 
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3.     The Plan (which, for purposes of this Article VI.A.3 shall exclude the
Plan Supplement), shall be in form and substance mutually acceptable to the
Debtor and the Majority Consenting Lenders.

 

4.     The Plan Supplement shall be in form and substance reasonably acceptable
to the Debtor and the Majority Consenting Lenders.

 

B.

Waiver of Conditions Precedent to Confirmation.

 

The Debtor, with the consent of the Majority Consenting Lenders (which consent
shall not be unreasonably withheld, conditioned or delayed), may waive the
conditions set forth in Article VI.A above at any time without leave or order of
the Court and without any formal action.

 

C.

Discharge of the Debtor.

 

Pursuant to section 1141(d) of the Bankruptcy Code, and except as otherwise
specifically provided in the Plan or in any contract, instrument, or other
agreement or document created pursuant to the Plan, the distributions, rights,
and treatment that are provided in the Plan shall be in complete satisfaction,
discharge, and release of Claims (including any Intercompany Claims resolved or
compromised after the Effective Date by the Reorganized Debtor), Equity
Interests, the RSA Fee, and Causes of Action of any nature whatsoever, including
any interest accrued on Claims or Equity Interests from and after the Petition
Date, whether known or unknown, against, liabilities of, Liens on, obligations
of, rights against and Equity Interests in, the Debtor or any of its assets or
properties, regardless of whether any property shall have been distributed or
retained pursuant to the Plan on account of such Claims and Equity Interests,
including demands, liabilities and Causes of Action that arose before the
Effective Date, any liability (including withdrawal liability) to the extent
such Claims or Equity Interests relate to services performed by employees of the
Debtor before the Effective Date and that arise from a termination of
employment, 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: (i) a proof of Claim or Equity
Interest based upon such debt, right, or Equity Interest is filed or deemed
filed pursuant to section 501 of the Bankruptcy Code; (ii) a Claim or Equity
Interest based upon such debt, right or Equity Interest is Allowed; or (iii) the
holder of such a Claim or Equity Interest has accepted the Plan or is entitled
to receive a distribution hereunder. Any default by the Debtor with respect to
any Claim or Equity Interest that existed immediately before or on account of
the filing of the Chapter 11 Case shall be deemed cured on the Effective Date.
The Confirmation Order shall be a judicial determination of the discharge of all
Claims and Equity Interests subject to the Effective Date occurring.

 

D.

Injunction.

 

FROM AND AFTER THE EFFECTIVE DATE, ALL PERSONS ARE PERMANENTLY ENJOINED FROM
COMMENCING OR CONTINUING IN ANY MANNER, ANY CAUSE OF ACTION RELEASED OR TO BE
RELEASED PURSUANT TO THE PLAN OR THE CONFIRMATION ORDER.

 

 
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FROM AND AFTER THE EFFECTIVE DATE, TO THE EXTENT OF THE RELEASES AND EXCULPATION
GRANTED IN THIS ARTICLE VI, THE RELEASING PARTIES SHALL BE PERMANENTLY ENJOINED
FROM COMMENCING OR CONTINUING IN ANY MANNER AGAINST THE RELEASED PARTIES AND
THEIR ASSETS AND PROPERTIES, AS THE CASE MAY BE, ANY SUIT, CAUSE OF ACTION, OR
OTHER PROCEEDING, ON ACCOUNT OF OR RESPECTING ANY CLAIM, DEMAND, LIABILITY,
OBLIGATION, DEBT, RIGHT, CAUSE OF ACTION, EQUITY INTEREST, OR REMEDY RELEASED OR
TO BE RELEASED PURSUANT TO THIS ARTICLE VI OR THE CONFIRMATION ORDER.

 

EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THE PLAN, THE PLAN SUPPLEMENT OR
RELATED DOCUMENTS, OR FOR OBLIGATIONS ISSUED PURSUANT TO THE PLAN, ALL PERSONS
WHO HAVE HELD, HOLD, OR MAY HOLD CLAIMS, GUARANTEE CLAIMS, OR EQUITY INTERESTS
THAT HAVE BEEN RELEASED OR DISCHARGED PURSUANT TO THIS ARTICLE VI OR ARE SUBJECT
TO EXCULPATION PURSUANT TO THIS ARTICLE VI ARE PERMANENTLY ENJOINED, FROM AND
AFTER THE EFFECTIVE DATE, FROM TAKING ANY OF THE FOLLOWING ACTIONS:
(1) COMMENCING OR CONTINUING IN ANY MANNER ANY ACTION OR OTHER PROCEEDING OF ANY
KIND ON ACCOUNT OF OR IN CONNECTION WITH OR WITH RESPECT TO ANY SUCH CLAIMS,
GUARANTEE CLAIMS, OR EQUITY INTERESTS; (2) ENFORCING, ATTACHING, COLLECTING, OR
RECOVERING BY ANY MANNER OR MEANS ANY JUDGMENT, AWARD, DECREE, OR ORDER AGAINST
SUCH RELEASED PARTIES ON ACCOUNT OF OR IN CONNECTION WITH OR WITH RESPECT TO ANY
SUCH CLAIMS, GUARANTEE CLAIMS, OR EQUITY INTERESTS; (3) CREATING, PERFECTING, OR
ENFORCING ANY ENCUMBRANCE OF ANY KIND AGAINST SUCH RELEASED PARTIES OR AGAINST
THE PROPERTY OR ESTATES OF SUCH RELEASED PARTIES ON ACCOUNT OF OR IN CONNECTION
WITH OR WITH RESPECT TO ANY SUCH CLAIMS, GUARANTEE CLAIMS, OR EQUITY INTERESTS;
(4) ASSERTING ANY RIGHT OF SETOFF, SUBROGATION, OR RECOUPMENT OF ANY KIND
AGAINST ANY OBLIGATION DUE FROM THE DEBTOR, THE REORGANIZED DEBTOR, OR ANY
NON-DEBTOR SUBSIDIARY OR AGAINST THE PROPERTY OR INTERESTS IN PROPERTY OF THE
DEBTOR, THE REORGANIZED DEBTOR, OR ANY NON-DEBTOR SUBSIDIARY ON ACCOUNT OF OR IN
CONNECTION WITH OR WITH RESPECT TO ANY SUCH CLAIMS, GUARANTEE CLAIMS, OR EQUITY
INTERESTS; AND (5) COMMENCING OR CONTINUING IN ANY MANNER ANY ACTION OR OTHER
PROCEEDING OF ANY KIND ON ACCOUNT OF OR IN CONNECTION WITH OR WITH RESPECT TO
ANY SUCH CLAIMS, GUARANTEE CLAIMS, OR EQUITY INTERESTS RELEASED, SETTLED, OR
DISCHARGED PURSUANT TO THE PLAN.

 

THE RIGHTS AFFORDED IN THE PLAN AND THE TREATMENT OF ALL CLAIMS, GUARANTEE
CLAIMS, AND EQUITY INTERESTS HEREIN SHALL BE IN EXCHANGE FOR AND IN COMPLETE
SATISFACTION OF ALL CLAIMS, GUARANTEE CLAIMS, AND EQUITY INTERESTS OF ANY NATURE
WHATSOEVER, INCLUDING ANY INTEREST ACCRUED ON CLAIMS OR GUARANTEE CLAIMS FROM
AND AFTER THE PETITION DATE, AGAINST THE DEBTOR AND THE NON-DEBTOR SUBSIDIARIES
OR ANY OF THEIR ASSETS, PROPERTIES, OR ESTATES. ON THE EFFECTIVE DATE, ALL SUCH
CLAIMS AND GUARANTEE CLAIMS SHALL BE FULLY RELEASED AND DISCHARGED, AND THE
EQUITY INTERESTS SHALL BE CANCELLED.

 

 
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EXCEPT AS OTHERWISE EXPRESSLY PROVIDED FOR HEREIN OR IN OBLIGATIONS ISSUED
PURSUANT HERETO FROM AND AFTER THE EFFECTIVE DATE, ALL CLAIMS AND GUARANTEE
CLAIMS SHALL BE FULLY RELEASED AND DISCHARGED, AND ALL EQUITY INTERESTS SHALL BE
CANCELLED, AND THE DEBTOR’S AND NON-DEBTOR SUBSIDIARIES’ LIABILITY WITH RESPECT
THERETO SHALL BE EXTINGUISHED COMPLETELY, INCLUDING ANY LIABILITY OF THE KIND
SPECIFIED UNDER SECTION 502(G) OF THE BANKRUPTCY CODE.

 

EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THE PLAN, THE PLAN SUPPLEMENT OR
RELATED DOCUMENTS, OR FOR OBLIGATIONS ISSUED PURSUANT TO THE PLAN, ALL PERSONS
SHALL BE PRECLUDED FROM ASSERTING AGAINST THE DEBTOR, ITS ESTATE, THE
REORGANIZED DEBTOR, EACH OF THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, AND EACH OF
THEIR ASSETS AND PROPERTIES, AND EACH OF THE RELEASED PARTIES, ANY OTHER CLAIMS
OR EQUITY INTERESTS BASED UPON ANY DOCUMENTS, INSTRUMENTS, OR ANY ACT OR
OMISSION, TRANSACTION, OR OTHER ACTIVITY OF ANY KIND OR NATURE THAT OCCURRED
BEFORE THE EFFECTIVE DATE.

 

E.

Preservation of Causes of Action.

 

In accordance with section 1123(b) of the Bankruptcy Code, and except as
expressly provided herein (including Article VI.J.1), the Reorganized Debtor
shall retain all Causes of Action, including those Causes of Action listed as
retained Causes of Action on an exhibit to the Plan Supplement. Nothing
contained in this Plan, the Plan Supplement, or the Confirmation Order shall be
deemed a waiver or relinquishment of any claim, Cause of Action, right of
setoff, or other legal or equitable defense of the Debtor that is not
specifically waived or relinquished by this Plan. The Reorganized Debtor shall
have, retain, reserve, and be entitled to assert, all such claims, Causes of
Action, rights of setoff, and other legal or equitable defenses that the Debtor
had immediately before the Petition Date as fully as if the Chapter 11 Case had
not been commenced, and all of the Reorganized Debtor’s legal and equitable
rights respecting any claim that is not specifically waived or relinquished by
this Plan may be asserted after the Effective Date to the same extent as if the
Chapter 11 Case had not been commenced. No Person may rely on the absence of a
specific reference in the Plan or the Disclosure Statement to any Cause of
Action against them as any indication that the Debtor or the Reorganized Debtor,
as applicable, will not pursue any and all available Causes of Action against
such Person. The Debtor or the Reorganized Debtor, as applicable, expressly
reserve all rights to prosecute any and all Causes of Action against any Person,
in accordance with the Plan. From and after the Effective Date, the Debtor or
the Reorganized Debtor, as applicable, shall have the exclusive right,
authority, and discretion to determine and to initiate, file, prosecute,
enforce, abandon, settle, compromise, release, withdraw, or litigate to judgment
any Cause of Action and to decline to do any of the foregoing without further
notice to or action, order, or approval of the Court. The Reorganized Debtor is
deemed representatives of the Estate for the purpose of prosecuting any Claim or
Cause of Action and any objections to Claims pursuant to 11 U.S.C.
§ 1123(b)(3)(B).

 

 
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F.

Votes Solicited in Good Faith.

 

The Debtor has, and upon entry of the Confirmation Order shall be deemed to
have, solicited acceptances of the Plan in good faith and in compliance with the
applicable provisions of the Bankruptcy Code. The Debtor, and its respective
affiliates, agents, directors, officers, members, employees, and Professionals,
have participated in good faith and in compliance with the applicable provisions
of the Bankruptcy Code in the offer and issuance of the securities offered and
sold under the Plan and therefore have not been, and on account of such offer
and issuance will 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 the offer or issuance of the securities offered and distributed
under the Plan.

 

G.

Prepetition Credit Facility Agent and Consenting Lenders’ Fees and Expenses.

 

On the Effective Date, the Reorganized Debtor shall pay, in full, in Cash, the
unpaid reasonable fees, expenses, costs, and other charges of the Prepetition
Credit Facility Agent and the Consenting Lenders (including the fees and
expenses of Paul, Weiss, Rifkind, Wharton & Garrison LLP, Houlihan Lokey
Capital, Inc., and maritime and appropriate foreign counsel engaged by Paul
Weiss), in each case in accordance with the DIP Orders and the Restructuring
Support Agreement, and as required by the underlying credit agreement,
indemnity, or fee letter.

 

H.

Cancellation of Certain Indebtedness, Agreements, and Existing Securities.

 

On the Effective Date, except as otherwise specifically provided for in the
Plan: the obligations of the Debtor and the Non-Debtor Subsidiaries under the
Restructuring Support Agreement, the Existing Management Incentive Programs, the
Guarantees, the Prepetition Finance Documents, and any other certificate, share,
note, bond, indenture, purchase right, option, warrant, or other instrument or
document directly or indirectly evidencing or creating any indebtedness or
obligation of or ownership interest in the Debtor or the Non-Debtor Subsidiaries
giving rise to any Claim or Equity Interest (except such certificates, notes, or
other instruments or documents evidencing indebtedness or obligations of the
Debtor or the Non-Debtor Subsidiaries that are specifically reinstated pursuant
to the Plan), shall be cancelled as to the Debtor and the Non-Debtor
Subsidiaries, and the Reorganized Debtor and the Non-Debtor Subsidiaries shall
not have any continuing obligations thereunder; and the obligations of the
Debtor and the Non-Debtor Subsidiaries pursuant, relating, or pertaining to any
agreements, indentures, certificates of designation, by-laws, or certificate or
articles of incorporation or similar documents governing the shares,
certificates, notes, bonds, purchase rights, options, warrants, or other
instruments or documents evidencing or creating any indebtedness or obligation
of the Debtor or the Non-Debtor Subsidiaries (except such agreements,
certificates, notes, or other instruments evidencing indebtedness or obligations
of the Debtor or the Non-Debtor Subsidiaries that are specifically reinstated
pursuant to the Plan or assumed by the Debtor) shall be released and discharged;
provided, however, that, notwithstanding the occurrence of the Confirmation Date
or the Effective Date, any such indenture or agreement that governs the rights
of the holder of a Claim shall continue in effect solely for purposes of
(a) allowing holders of such Claims to receive distributions under the Plan as
provided herein, (b) allowing the Prepetition Credit Facility Agent to make
distributions under the Plan as provided herein, and deduct therefrom such
reasonable compensation, fees, and expenses due thereunder or incurred in making
such distributions, to the extent not paid by the Debtor and authorized under
such agreement, and (c) allowing the Prepetition Credit Facility Agent to seek
compensation and/or reimbursement of fees and expenses in accordance with the
terms of the Plan. For the avoidance of doubt, nothing in this section shall
affect the discharge of or result in any obligation, liability, or expense of
the Debtor, the Reorganized Debtor, or the Non-Debtor Subsidiaries or affect the
discharge of Claims or Equity Interests pursuant to the Bankruptcy Code, the
Confirmation Order, or the Plan, or result in any additional obligation,
expense, or liability of the Debtor, the Reorganized Debtor, or the Non-Debtor
Subsidiaries. On and after the Effective Date, all duties and responsibilities
of the Prepetition Credit Facility Agent shall be discharged except to the
extent required to effectuate the Plan. Notwithstanding anything in this
paragraph to the contrary, the DIP Credit Agreement shall continue in effect
solely for the purpose of allowing the DIP Agent to receive distributions from
the Debtor under the Plan and to make further distributions to the Holders of
DIP Claims on account of such Claims, as set forth in Article VII of the Plan.

 

 
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I.

Claims Incurred After the Effective Date.

 

Claims incurred by the Debtor after the Effective Date may be paid by the
Reorganized Debtor in the ordinary course of business and without application
for or Court approval, subject to any agreements with such holders of a Claim
and applicable law.

 

J.

Releases, Exculpations, and Injunctions of Released Parties.

 

1.     Releases by the Debtor. On the Effective Date, and notwithstanding any
other provisions of the Plan, the Debtor, the Reorganized Debtor, and the
Non-Debtor Subsidiaries, on behalf of themselves and the Estate, shall be deemed
to unconditionally release the Released Parties from any and all claims,
obligations, suits, judgments, damages, rights, Causes of Action, and
liabilities whatsoever, whether known or unknown, foreseen or unforeseen,
existing or hereafter arising, in law, equity or otherwise, assertable on behalf
of or derivative from the Debtor or the Non-Debtor Subsidiaries, based in whole
or in part upon actions taken solely in their respective capacities described
herein or any omission, transaction, agreement, event, or other occurrence
taking place on or before the Effective Date in any way relating to the Debtor,
the Non-Debtor Subsidiaries, the Chapter 11 Case, the purchase, sale, or
rescission of the purchase or sale of any security of the Debtor, the
Reorganized Debtor, or the Non-Debtor Subsidiaries, the Disclosure Statement,
the Restructuring Support Agreement, the Plan Supplement or any of the documents
included therein, the Plan, or any related agreements, instruments, or other
documents, provided, however, that (a) no individual shall be released from any
act or omission that constitutes gross negligence, willful misconduct, or fraud
as determined by a Final Order, (b) other than with respect to the
Prepetition Credit Facility Claims, the Reorganized Debtor shall not relinquish
or waive the right to assert any of the foregoing as a legal or equitable
defense or right of set-off or recoupment against any Claims of any such persons
asserted against the Debtor, and (c) the foregoing release shall not apply to
obligations arising under the Exit Financing Facility.

 

 
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2.     Releases by Holders of Claims and Equity Interests. On the Effective
Date, and notwithstanding any other provisions of the Plan, (i) each Releasing
Party will be deemed to have forever released and covenanted with the Released
Parties not to sue or otherwise seek recovery from any Released Party on account
of any Claim or Guarantee Claim, including any Claim or Cause of Action based
upon tort, breach of contract, violations of federal or state securities laws or
otherwise, or any other legal or equitable theory, based in whole or in part
upon any act, occurrence, or failure to act from the beginning of time through
the Effective Date in any way related to the Debtor, the Non-Debtor
Subsidiaries, or their respective businesses and affairs and (ii) each Releasing
Party will be deemed to have forever released and covenanted with the Released
Parties not to assert against any Released Party any Claim, Guarantee Claim,
obligation, right, Cause of Action, or liability that any holder of a Claim or
Guarantee Claim may be entitled to assert, whether known or unknown, foreseen or
unforeseen, existing or hereafter arising, based in whole or in part on any act
or omission, transaction, or occurrence from the beginning of time through the
Effective Date in any way relating to the Debtor or the Non-Debtor Subsidiaries,
the purchase, sale, or rescission of the purchase or sale of any security of the
Debtor, the Reorganized Debtor, or the Non-Debtor Subsidiaries, the subject
matter of, or the transactions or events giving rise to, any Claim, Guarantee
Claim, or Equity Interest, the Debtor’s restructuring, the Chapter 11 Case, the
Restructuring Support Agreement, the Plan, the Disclosure Statement, the Plan
Supplement or any of the documents included therein, the DIP Facility, the DIP
Credit Agreement, or any agreements, instruments, or other documents relating to
any of the foregoing, or the preparation and negotiation of the Exit Financing
Facility, provided, however, the foregoing release will not (i) apply to
obligations arising under the Plan, (ii) apply to obligations arising under the
Exit Financing Facility, (iii) be construed to prohibit a party in interest from
seeking to enforce the terms of the Plan, and (iv) apply to any act or omission
that constitutes gross negligence, willful misconduct, or fraud as determined by
a Final Order.

 

3.     Release of Liens. Except as otherwise expressly 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, and other security interests against any property of the Debtor’s
Estate 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, and
other security interests shall revert to the Reorganized Debtor and each of its
successors and assigns.

 

4.     Release and Discharge of Non-Debtor Subsidiaries. On the Effective Date,
the Prepetition Credit Facility Agent, any future agent or security trustee
under the Prepetition Credit Agreement, and the holders of the Prepetition
Credit Facility Claims shall be deemed to have forever waived, released, and
discharged all Liens granted by the Non-Debtor Subsidiaries pursuant to any of
the Prepetition Finance Documents, Guarantees, Guarantee Claims, and Causes of
Action, rights, and liabilities arising from the Guarantees. In addition, the
Confirmation Order shall authorize and direct the Prepetition Credit Facility
Agent and any future agent or security trustee under the Prepetition Credit
Agreement to take, or refrain from taking, whatever action may be necessary or
appropriate to effectuate the foregoing, including, without limitation,
providing a release of all Liens granted by the Non-Debtor Subsidiaries pursuant
to any of the Prepetition Finance Documents, Guarantees, Guarantee Claims, and
Causes of Action, rights, and liabilities arising from the Guarantees.

 

 
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5.     Exculpation and Injunction. The Debtor, the Reorganized Debtor, and the
other Released Parties (i) shall have no liability whatsoever to any holder or
purported holder of an Administrative Claim, Claim, or Equity Interest for any
act or omission that occurred during and in connection with the Chapter 11 Case
or in connection with or arising out of the preparation and filing of the
Chapter 11 Case, the preparation and negotiation of the Restructuring Support
Agreement, the preparation, negotiation, and filing of the Plan, the Disclosure
Statement, the negotiation of the documents included in the Plan Supplement, the
preparation and negotiation of the Exit Financing Facility, the pursuit of
approval of the Disclosure Statement or the solicitation of votes for
confirmation of the Plan, the Chapter 11 Case, the consummation of the Plan or
the Exit Financing Facility, the administration of the Plan or the property to
be distributed under the Plan, or any transaction contemplated by the Plan or
Disclosure Statement or in furtherance thereof except for any act or omission
that constitutes willful misconduct, gross negligence, or fraud as determined by
a Final Order, and (ii) in all respects, shall be entitled to rely upon the
advice of counsel with respect to their duties and responsibilities under the
Plan. This exculpation shall be in addition to, and not in limitation of, all
other releases, indemnities, exculpations, and any other applicable law or rules
protecting such Released Parties from liability. Without limiting the generality
of the foregoing, the Released Parties shall be entitled to and granted the
protections and benefits of section 1125(e) of the Bankruptcy Code. Pursuant to
section 105 of the Bankruptcy Code, no holder or purported holder of an
Administrative Claim, Claim, or Equity Interest shall be permitted to commence
or continue any Cause of Action, employment of process, or any act to collect,
offset, or recover any Claim against a Released Party that accrued on or before
the Effective Date and that has been released or waived pursuant to this Plan.

 

6.     Liabilities to, and Rights of, Governmental Units.

 

As to the United States of America, its agencies, departments, or agents
(collectively, the “United States”), nothing in the Plan or Confirmation Order
shall limit or expand the scope of discharge, release, or injunction to which
the Debtor or the Reorganized Debtor are entitled to under the Bankruptcy Code.
The discharge, release, and injunction provisions contained in the Plan and
Confirmation Order are not intended and shall not be construed to bar the United
States from, subsequent to the Confirmation Order, pursuing any police or
regulatory action, except to the extent those discharge and injunctive
provisions bar a Governmental Unit from pursuing Claims.

 

 
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Notwithstanding anything contained in the Plan or Confirmation Order to the
contrary, nothing in the Plan or Confirmation Order shall discharge, release,
impair, or otherwise preclude: (1) any liability to a Governmental Unit that is
not a Claim; (2) any Claim of a Governmental Unit arising on or after the
Confirmation Date; (3) any valid right of setoff or recoupment of the United
States against the Debtor; or (4) any liability of the Debtor or the Reorganized
Debtor under environmental law to any Governmental Unit as the owner or operator
of property that such entity owns or operates after the Confirmation Date,
except those obligations to reimburse costs expended or paid by a Governmental
Unit before the Petition Date or to pay penalties owing to a Governmental Unit
for violations of environmental laws or regulations that occurred before the
Petition Date. Nor shall anything in the Plan or Confirmation Order: (i) enjoin
or otherwise bar the United States or any Governmental Unit from asserting or
enforcing, outside the Court, any liability described as not discharged in the
preceding sentence; or (ii) divest any court of jurisdiction to determine
whether any liabilities asserted by the United States or any Governmental Unit
are discharged or otherwise barred by the Plan, Confirmation Order, or the
Bankruptcy Code.

 

Moreover, nothing in the Plan or Confirmation Order shall release or exculpate
any non-Debtor, including any Released Parties, from any liability to the United
States, including but not limited to any liabilities arising under the Internal
Revenue Code, the environmental laws, or the criminal laws against the Released
Parties, nor shall anything in the Plan or Confirmation Order enjoin the United
States from bringing any claim, suit, action, or other proceeding against the
Released Parties for any liability whatsoever; provided, however, that the
foregoing sentence shall not limit the scope of discharge granted to the Debtor
under sections 524 and 1141 of the Bankruptcy Code.

 

K.

Preservation of Insurance.

 

The Debtor’s discharge and release from all claims, including all Claims and
Guarantee Claims, as provided herein, shall not, except as necessary to be
consistent with this Plan, diminish or impair the enforceability of any
insurance policy that may provide coverage for claims, including Claims and
Guarantee Claims, against the Debtor, the Reorganized Debtor, the Non-Debtor
Subsidiaries, their current and former directors and officers, or any other
Person.

 

ARTICLE VII.
DISTRIBUTIONS UNDER THE PLAN

 

A.

Procedures for Treating Disputed Claims.

 

1.     Filing Proofs of Claim. Except as required by the Bar Date Order, holders
of Claims need not file proofs of Claim with the Court. In the event that a
holder of a Claim elects to file a proof of Claim with the Court, it will be
deemed to have consented to the exclusive jurisdiction of the Court for all
purposes with respect to the determination, liquidation, allowance, or
disallowance of such Claim.

 

2.     Disputed Claims. If the Debtor disputes any Claim as to which no proof of
Claim has been filed, such dispute shall be determined, resolved, or
adjudicated, as the case may be, in a manner as if the Chapter 11 Case had not
been commenced, provided, however, that the Reorganized Debtor may elect, at its
sole option, to object under section 502 of the Bankruptcy Code to any Claim or
proof of Claim filed by or on behalf of a holder of a Claim.

 

 
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3.     Objections to Claims. Except insofar as a Claim is Allowed under the
Plan, the Debtor, the Reorganized Debtor, and any other party in interest shall
be entitled to object to Claims. Any objections to Claims shall be filed and
served by the Claims Objection Deadline.

 

4.     Disallowance of Claims. With respect to each Claim not subject to the Bar
Date Order, except as provided herein or otherwise agreed, any and all proofs of
Claim shall be deemed expunged from the claims register on the Effective Date
without any further notice to or action, order, or approval of the Court and the
Claim on which such proof of Claim was filed shall be determined, resolved, or
adjudicated, as the case may be, in the manner as if the Chapter 11 Case had not
been commenced and shall survive the Effective Date as if the Chapter 11 Case
had not been commenced.

 

With respect to each General Unsecured Claim and Claim subordinated pursuant to
section 510(b) of the Bankruptcy Code subject to the Bar Date Order, except as
provided herein or otherwise agreed, any and all proofs of Claim filed after the
Bar Date shall be deemed disallowed and expunged as of the Effective Date
without any further notice to or action, order, or approval of the Court, and
holders of such Claims may not receive any distributions on account of such
Claims.

 

B.

Allowed Claims and Equity Interests.

 

1.     Delivery of Distributions in General. Except as otherwise provided
herein, distributions under the Plan shall be made by the Reorganized Debtor (or
its agent or designee) to the holders of Allowed Claims and Allowed Equity
Interests in all Classes for which a distribution is provided in this Plan at
the addresses set forth on the Schedules (if filed) or in the Debtor’s books and
records, as applicable, unless such addresses are superseded by proofs of Claim
or Equity Interests or transfers of Claim filed pursuant to Bankruptcy Rule 3001
by the Record Date (or at the last known addresses of such holders if the Debtor
or the Reorganized Debtor have been notified in writing of a change of address).

 

2.     Delivery of Distributions to Prepetition Credit Facility Claims. The
Prepetition Credit Facility Agent shall be deemed to be the holder of all
Prepetition Credit Facility Claims for purposes of distributions to be made
hereunder, and all distributions on account of the Prepetition Credit Facility
Claims shall be made to the Prepetition Credit Facility Agent. As soon as
practicable following compliance with the requirements set forth in Article VII
of the Plan, the Prepetition Credit Facility Agent shall arrange to deliver or
direct the delivery of such distributions to or on behalf of the holders of
Allowed Prepetition Credit Facility Claims in accordance with the terms of the
Prepetition 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 Prepetition Credit Facility Agent shall not have any liability to
any person with respect to distributions made or directed to be made by the
Prepetition Credit Facility Agent.

 

 
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3.     Delivery of Distributions on DIP Claims. The DIP Agent shall be deemed to
be the holder of all DIP Claims for purposes of distributions to be made
hereunder, and all distributions on account of such DIP Claims shall be made to
the DIP Agent. As soon as practicable following compliance with the requirements
set forth in Article VII of the Plan, the DIP Agent shall arrange to deliver or
direct the delivery of such distributions to or on behalf of the Holders of DIP
Claims in accordance with the terms of the DIP Facility, subject to any
modifications to such distributions in accordance with the terms of this Plan.
Notwithstanding anything in the Plan to the contrary, and without limiting the
exculpation and release provisions of the Plan, the DIP Agent shall not have any
liability to any person with respect to distributions made or directed to be
made by the DIP Agent.

 

4.     Distribution of Cash. Any payment of Cash by the Reorganized Debtor
pursuant to the Plan shall be made at the option and in the sole discretion of
the Reorganized Debtor by (i) a check drawn on, or (ii) wire transfer from, a
domestic bank selected by the Reorganized Debtor.

 

5.     Unclaimed Distributions of Cash. Any distribution of Cash under the Plan
that is unclaimed after six (6) months after it has been delivered (or attempted
to be delivered) shall, pursuant to section 347(b) of the Bankruptcy Code,
become the property of the Reorganized Debtor notwithstanding any state or other
escheat or similar laws to the contrary, and the entitlement by the holder of
such unclaimed Allowed Claim or Allowed Equity Interest to such distribution or
any subsequent distribution on account of such Allowed Claim or Allowed Equity
Interest shall be extinguished and forever barred.

 

6.     Distributions of New Eagle Common Stock and New Eagle Equity Warrants. On
the Effective Date, the Reorganized Debtor (or its agent or designee) shall
distribute (i) the Prepetition Credit Facility Equity Distribution to the
holders of the Prepetition Credit Facility Claims, (ii) the Shareholder Equity
Distribution to the holders of Equity Interests, and (iii) the New Eagle Equity
Warrants to the holders of Equity Interests.

 

7.     Unclaimed Distributions of New Eagle Common Stock and New Eagle Equity
Warrants. Any distribution of New Eagle Common Stock and New Eagle Equity
Warrants under the Plan that is unclaimed after six (6) months after it has been
delivered (or attempted to be delivered) shall be retained by the Reorganized
Debtor, notwithstanding any state or other escheat or similar laws to the
contrary, and the entitlement by the holder of such Allowed Claim or Allowed
Equity Interest to such distribution or any subsequent distribution on account
of such Allowed Claim or Allowed Equity Interest shall be extinguished and
forever barred.

 

8.     Saturdays, Sundays, or Legal Holidays. If any payment, distribution 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, and shall be deemed to have
been completed as of the required date.

 

9.     Fractional New Eagle Common Stock and New Eagle Equity Warrants and De
Minimis Distributions. Notwithstanding any other provision in the Plan to the
contrary, no fractional shares of New Eagle Common Stock or fractional New Eagle
Equity Warrants shall be issued or distributed pursuant to the Plan. Subject to
Article III.D.6.(b), whenever any distribution of a fraction of a share of New
Eagle Common Stock or a fractional New Eagle Equity Warrant would otherwise be
required under the Plan, the actual distribution made shall reflect a rounding
of such fraction to the nearest whole share or warrant (up or down), with half
shares or warrants or less being rounded down and fractions in excess of a half
of a share or warrant being rounded up. No consideration will be provided in
lieu of fractional shares that are rounded down. Fractional shares of New Eagle
Common Stock or New Eagle Equity Warrants, as applicable, that are not
distributed in accordance with this Article VII.B.9 shall be cancelled. The
Reorganized Debtor shall not be required to, but may in its sole and absolute
discretion, make any payment on account of any Claim or Equity Interest in the
event that the costs of making such payment exceeds the amount of such payment.

 

 
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10.     Distributions to Holders of Claims:

 

(a)     Initial Distribution to Claims Allowed as of the Effective Date. On or
as soon as reasonably practicable after the Effective Date, or as otherwise
expressly set forth in the Plan, the Reorganized Debtor (or its agent or
designee) shall distribute Cash or Collateral, as the case may be, to the
holders of Allowed Claims as contemplated herein.

 

(b)     Claims Allowed after the Effective Date. Each holder of a Claim that
becomes an Allowed Claim subsequent to the Effective Date shall receive the
distribution to which such holder of an Allowed Claim is entitled as set forth
in Article III, and distributions to such holder shall be made in accordance
with the provisions of this Plan. As soon as practicable after the date that the
Claim becomes an Allowed Claim, the Reorganized Debtor shall provide to the
holder of such Claim the distribution (if any) to which such holder is entitled
under this Plan as of the Effective Date, without any interest to be paid on
account of such Claim.

 

11.     Special Rules for Distributions to Holders of Disputed Claims and
Disputed Equity Interests. Notwithstanding any provision otherwise in the Plan
and except as otherwise agreed to by the relevant parties, no partial payments
and no partial distributions shall be made with respect to a Disputed Claim or
Disputed Equity Interest until all such disputes in connection with such
Disputed Claim or Disputed Equity Interest, respectively, have been resolved by
settlement or Final Order. In the event that there are Disputed Claims or
Disputed Equity Interests requiring adjudication and resolution, the Reorganized
Debtor shall establish appropriate reserves for potential payment of such Claims
or Equity Interests.

 

12.     Interest on Claims and Equity Interests. Except as specifically provided
for in the Plan, no Claims or Equity Interests, Allowed or otherwise (including
Administrative Claims), shall be entitled, under any circumstances, to receive
any interest on a Claim or Equity Interests.

 

C.

Allocation of Consideration.

 

The aggregate consideration to be distributed to the holders of Allowed Claims
in each Class under the Plan shall be treated as first satisfying an amount
equal to the principal amount of the Allowed Claim for such holders, and any
remaining consideration as satisfying accrued, but unpaid and interest, as
applicable.

 

 
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D.

Estimation.

 

Before or after the Effective Date, the Debtor or the Reorganized Debtor, as
applicable, may (but is not required to), at any time, request that the Court
estimate (i) any Disputed Claim or Disputed Equity Interest pursuant to
section 502(c) of the Bankruptcy Code or (ii) any contingent or unliquidated
Claim or Equity Interest pursuant to section 502(c) of the Bankruptcy Code, for
any reason, regardless of whether the Debtor or the Reorganized Debtor has
previously objected to such Claim or Equity Interest or whether the Court has
ruled on any such objection. The Court will retain jurisdiction to estimate any
Claim or Equity Interest at any time, including during proceedings concerning
any objection to such Claim or Equity Interest. In the event that the Court
estimates any Claim or Equity Interest, such estimated amount shall constitute
either the Allowed amount of such Claim or Equity Interest or a maximum
limitation on such Claim or Equity Interest for all purposes under the Plan
(including for purposes of distributions), as determined by the Court. If the
estimated amount constitutes the maximum limitation on such Claim or Equity
Interest, the Debtor or the Reorganized Debtor, as the case may be, may elect to
pursue supplemental proceedings to object to any ultimate allowance of such
Claim or Equity Interest. All of the aforementioned objection, estimation, and
resolution procedures are cumulative and not necessarily exclusive of one
another.

 

E.

Insured Claims.

 

If any portion of an Allowed Claim is an Insured Claim, no distributions under
the Plan shall be made on account of such Allowed Claim until the holder of such
Allowed Claim has exhausted all remedies with respect to any applicable
insurance policies. To the extent that the Debtor’s insurers agree to satisfy a
Claim in whole or in part, then immediately upon such agreement, the portion of
such Claim so satisfied may be expunged without an objection to such Claim
having to be filed and without any further notice to or action, order or
approval of the Court.

 

ARTICLE VIII.
RETENTION OF JURISDICTION

 

Notwithstanding the entry of the Confirmation Order and the occurrence of the
Effective Date, on and after the Effective Date, the Court shall retain
exclusive jurisdiction over all matters arising out of, or related to, the
Chapter 11 Case and the Plan pursuant to sections 105(a) and 1142 of the
Bankruptcy Code, including jurisdiction:

 

(i)     to resolve any matters related to (a) the assumption, assumption and
assignment, or rejection of any Executory Contract or Unexpired Lease to which
the Debtor or the Reorganized Debtor is party or with respect to which the
Debtor or the Reorganized Debtor may be liable and to hear, determine, and, if
necessary, liquidate, any Claims arising therefrom, including Cure Claims
pursuant to section 365 of the Bankruptcy Code; (b) the Reorganized Debtor
amending, modifying, or supplementing, after the Effective Date, pursuant to
Article IX, any Executory Contracts or Unexpired Leases to the Rejection
Schedule or otherwise; and (c) any dispute regarding whether a contract or lease
is or was executory or expired;

 

 
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(ii)     to determine, adjudicate, or decide any other applications, adversary
proceedings, contested matters, and any other matters pending on the Effective
Date;

 

(iii)     to ensure that distributions to holders of Allowed Claims and Equity
Interests are accomplished as provided herein;

 

(iv)     to resolve disputes as to the ownership of any Claim or Equity
Interest;

 

(v)     to allow, disallow, determine, liquidate, classify, estimate, or
establish the priority, secured or unsecured status, or amount of any Claim or
Equity 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 Equity
Interests;

 

(vi)     to enter and implement such orders as may be appropriate in the event
the Confirmation Order is for any reason stayed, revoked, reversed, modified, or
vacated;

 

(vii)     to issue such orders in aid of execution of the Plan, to the extent
authorized by section 1142 of the Bankruptcy Code;

 

(viii)     to consider any modifications of the Plan, to cure any defect or
omission, or to reconcile any inconsistency in any order of the Court, including
the Confirmation Order;

 

(ix)     to hear and determine all applications for compensation and
reimbursement of expenses of professionals under sections 330, 331, and 503(b)
of the Bankruptcy Code;

 

(x)     to hear and determine disputes arising in connection with the
interpretation, implementation, consummation, or enforcement of the Plan,
including the release of the Guarantee Claims;

 

(xi)     to hear and determine any issue for which the Plan requires a Final
Order of the Court;

 

(xii)     to hear and determine matters concerning state, local, and federal
taxes in accordance with sections 346, 505, and 1146 of the Bankruptcy Code;

 

(xiii)     to hear and determine disputes arising in connection with
compensation and reimbursement of expenses of professionals for services
rendered during the period commencing on the Petition Date through and including
the Effective Date;

 

(xiv)     to hear and determine any Causes of Action preserved under the Plan;

 

(xv)     to hear and determine any matter regarding the existence, nature, and
scope of the Debtor’s discharge;

 

(xvi)     to hear and determine any matter, case, controversy, suit, dispute, or
Cause of Action (i) regarding the existence, nature, and scope of the discharge,
releases, injunctions, and exculpation provided under the Plan, and (ii) enter
such orders as may be necessary or appropriate to implement such discharge,
releases, injunctions, exculpations, and other provisions;

 

 
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(xvii)     to enter a final decree closing the Chapter 11 Case;

 

(xviii)     to 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 consummation or enforcement of the Plan;

 

(xix)     to adjudicate any and all disputes arising from or relating to
distributions under the Plan;

 

(xx)     to enforce all orders previously entered by the Court; and

 

(xxi)     to hear any other matter not inconsistent with the Bankruptcy Code.

 

For the avoidance of doubt, the Court shall not retain exclusive jurisdiction
with respect to the following documents entered into by the Reorganized Debtor
on or after the Effective Date: (i) the Exit Financing Facility Credit
Agreement, (ii) the Registration Rights Agreement, (iii) the New Eagle By-Laws,
(iv) the New Eagle Charter, (v) the New Eagle Equity Warrant Agreement, (vi) the
New Eagle MIP Option Agreements, and (vii) the New Eagle MIP Primary Equity
Agreements.

 

ARTICLE IX.
EXECUTORY CONTRACTS AND UNEXPIRED LEASES

 

A.

Assumption of Executory Contracts and Unexpired Leases.

 

Except as otherwise provided herein, each Executory Contract and Unexpired Lease
not previously assumed, assumed and assigned, or rejected shall be deemed
automatically assumed pursuant to sections 365 and 1123 of the Bankruptcy Code
as of the Effective Date, unless any such executory contract or unexpired lease:
(i) is expressly identified on the Rejection Schedule; (ii) has been previously
rejected by the Debtor by Final Order or has been rejected by the Debtor by
order of the Court as of the Effective Date, which order becomes a Final Order
after the Effective Date; (iii) is the subject of a motion to reject pending as
of the Effective Date; or (iv) is otherwise rejected pursuant to the terms
herein.

 

Subject to certain amendments that are reasonably satisfactory to the Debtor and
the Majority Consenting Lenders, the Delphin Management Agreement shall be
assumed pursuant to sections 365 and 1123 of the Bankruptcy Code as of the
Effective Date.

 

The Confirmation Order will constitute an order of the Court approving such
assumptions pursuant to sections 365 and 1123 of the Bankruptcy Code as of the
Effective Date or as otherwise set forth in the Plan Supplement.

 

 
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B.

Cure Claims.

 

At the election of the Debtor or the Reorganized Debtor, as applicable, any
monetary defaults under each Executory Contract and Unexpired Lease to be
assumed under the Plan shall be satisfied pursuant to section 365(b)(1) of the
Bankruptcy Code in one of the following ways: (i) payment of the Cure Claim in
Cash on or as soon as reasonably practicable following the occurrence of
(A) thirty (30) days after the determination of the Cure Claim, and (B) the
Effective Date or such other date as may be set by the Court; or (ii) on such
other terms as agreed to by the Debtor or the Reorganized Debtor and the
non-Debtor counterparty to such Executory Contract or Unexpired Lease. In the
event of a dispute pertaining to assumption or assignment, the Cure Claim
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. No later than the Plan Supplement Filing Date, to the
extent not previously filed with the Court and served on affected
counterparties, the Debtor shall provide for notices of proposed assumption and
proposed cure amounts to be sent to applicable contract and lease
counterparties, together with procedures for objecting thereto and resolution of
disputes by the Court. Any objection by a contract or lease counterparty to a
proposed assumption or related cure amount must be filed, served, and actually
received by the Debtor by the date on which objections to Confirmation are due
(or such other date as may be provided in the applicable assumption notice). Any
counterparty to an Executory Contract or Unexpired Lease that fails to object
timely to the proposed assumption or cure amount will be deemed to have assented
to such assumption or cure amount.

 

The only adequate assurance of future performance shall be the promise of the
Reorganized Debtor to perform all obligations under any executory contract or
unexpired lease under this Plan.

 

ASSUMPTION OF ANY EXECUTORY CONTRACT OR UNEXPIRED LEASE PURSUANT TO THE PLAN OR
OTHERWISE 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 BEFORE THE DATE THE DEBTOR OR THE REORGANIZED DEBTOR
ASSUMES SUCH EXECUTORY CONTRACT OR UNEXPIRED LEASE. ANY PROOFS OF CLAIM FILED
WITH RESPECT TO AN EXECUTORY CONTRACT OR UNEXPIRED LEASE THAT HAS BEEN ASSUMED
SHALL BE DEEMED DISALLOWED AND EXPUNGED, WITHOUT FURTHER NOTICE TO OR ACTION,
ORDER OR APPROVAL OF THE COURT.

 

Obligations arising under insurance policies assumed by the Debtor before the
Effective Date shall be adequately protected in accordance with any order
authorizing such assumption.

 

 
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C.

Reservation of Rights.

 

Neither the exclusion nor inclusion of any contract or lease in the Plan
Supplement, as applicable, nor anything contained in the Plan, shall constitute
an admission by the Debtor that any such contract or lease is in fact an
Executory Contract or Unexpired Lease or that any Reorganized Debtor has any
liability thereunder. In the event a written objection is filed with the Court
as to whether a contract or lease is executory or unexpired, the right of the
Debtor or the Reorganized Debtor to move to assume or reject such contract or
lease shall be extended until the date that is thirty (30) days after the entry
of a Final Order by the Court determining that the contract or lease is
executory or unexpired, in which case the deemed assumptions and rejections
provided for in the Plan shall not apply to such contract or lease.

 

D.

Rejection of Executory Contracts and Unexpired Leases.

 

1.     Rejection Schedule. The Debtor will file the Rejection Schedule with the
Court no later than five (5) Business Days before the deadline to object to the
Plan. The Rejection Schedule will include (a) the name of the non-Debtor
counterparty, (b) the legal description of the contract or lease to be rejected,
and (c) the proposed effective date of rejection (if not the Effective Date). On
or as soon as practicable thereafter, the Debtor will serve a Rejection Notice
as well as notice of filing of the Rejection Schedule upon each non-Debtor
counterparty listed thereon that will describe the procedures by which such
parties may object to the proposed rejection of their respective Executory
Contract or Unexpired Lease and explain how such disputes will be resolved by
the Court if the parties are not able to resolve a dispute consensually.

 

The Confirmation Order will constitute an order of the Court approving such
rejections pursuant to sections 365 and 1123 of the Bankruptcy Code as of the
Effective Date or as otherwise set forth in the Plan Supplement.

 

2.     Rejection Damage Claims. If the rejection by the Debtor, pursuant to the
Plan or otherwise, of an Executory Contract or Unexpired Lease gives rise to a
Rejection Damage Claim, a proof of Claim must be filed with the Court within
(i) thirty (30) days after the date of entry of an order of the Court approving
such rejection, or (ii) if the Executory Contract or Unexpired Lease is listed
on the Rejection Schedule, within thirty (30) days after the date of entry of
the Confirmation Order. For the avoidance of doubt, all Allowed Rejection Damage
Claims shall be treated as General Unsecured Claims.

 

3.     REQUIREMENT TO FILE A PROOF OF CLAIM FOR REJECTION DAMAGE CLAIMS. ANY
REJECTION DAMAGE CLAIMS THAT ARE NOT TIMELY FILED SHALL BE DISALLOWED
AUTOMATICALLY, FOREVER BARRED FROM ASSERTION, AND SHALL NOT BE ENFORCEABLE
AGAINST ANY REORGANIZED DEBTOR WITHOUT THE NEED FOR ANY OBJECTION BY THE
REORGANIZED DEBTOR OR FURTHER NOTICE TO OR ACTION, ORDER, OR APPROVAL OF THE
COURT, AND ANY REJECTION DAMAGE CLAIM SHALL BE DEEMED FULLY SATISFIED, RELEASED
AND DISCHARGED, NOTWITHSTANDING ANYTHING IN THE SCHEDULES OR A PROOF OF CLAIM TO
THE CONTRARY.

 

 
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E.

Assignment.

 

Any Executory Contract or Unexpired Lease to be held by the Debtor or the
Reorganized Debtor and assumed hereunder or otherwise in the Chapter 11 Case, if
not expressly assigned to a third party previously in the Chapter 11 Case, will
be deemed assigned to the Reorganized Debtor pursuant to section 365 of the
Bankruptcy Code. If an objection to a proposed assumption, assumption and
assignment, or Cure Claim is not resolved in favor of the Debtor before the
Effective Date, the applicable Executory Contract or Unexpired Lease may be
designated by the Debtor or the Reorganized Debtor for rejection within five
(5) Business Days of the entry of the order of the Court resolving the matter
against the Debtor. Such rejection shall be deemed effective as of the Effective
Date.

 

F.

Insurance Policies.

 

Notwithstanding anything in this Plan to the contrary, all of the Debtor’s
insurance policies and any agreements, documents or instruments relating
thereto, are treated as and deemed to be Executory Contracts under the Plan. On
the Effective Date, the Debtor shall be deemed to have assumed all insurance
policies and any agreements, documents, and instruments related thereto.

 

G.

Post-Petition Contracts and Leases.

 

All contracts, agreements, and leases that were entered into by the Debtor or
assumed by the Debtor after the Petition Date shall be deemed assigned by that
Debtor to the Reorganized Debtor on the Effective Date.

 

ARTICLE X.
EFFECTIVENESS OF THE PLAN

 

A.

Conditions Precedent to Effectiveness.

 

The Plan shall not become effective unless and until the Confirmation Date has
occurred and the following conditions have been satisfied in full or waived in
accordance with Article X.B:

 

1.     the Confirmation Order entered by the Court shall be in form and
substance reasonably acceptable to the Debtor and the Majority Consenting
Lenders;

 

2.     the Confirmation Order shall not have been stayed, modified, or vacated
on appeal;

 

3.     the Definitive Documentation (as such term is defined in the
Restructuring Support Agreement) shall be in form and substance reasonably
acceptable to the Debtor and the Majority Consenting Lenders;

 

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;

 

 
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5.     all authorizations, consents, and regulatory approvals required (if any)
for the Plan’s effectiveness shall have been obtained;

 

6.     the Reorganized Debtor shall have executed the Exit Financing Facility
Credit Agreement, and all conditions precedent to effectiveness of the Exit
Financing Facility shall have been satisfied or waived;

 

7.     the Fee Claims Escrow Account shall be established and shall have been
funded in full, in Cash in accordance with, and in the amounts required by, the
Plan; and

 

8.     the Reorganized Debtor, Eagle Shipping International (USA) LLC, and
Sophocles Zoullas each shall have executed the New CEO Employment Agreement.

 

B.

Waiver of Conditions Precedent to Effectiveness.

 

The Debtor, with the consent of the Majority Consenting Lenders (which consent
shall not be unreasonably withheld, conditioned, or delayed), may waive
conditions set forth in Article X.A above at any time without leave of or order
of the Court and without any formal action.

 

C.

Effect of Failure of Conditions.

 

In the event that the Effective Date does not occur on or before sixty (60) days
after the Confirmation Date, upon notification submitted by the Debtor to the
Court: (i) the Confirmation Order may be vacated, (ii) no distributions under
the Plan shall be made; (iii) the Debtor and all holders of Claims and Equity
Interests shall be restored to the status quo ante as of the day immediately
preceding the Confirmation Date as though the Confirmation Date had never
occurred; and (iv) the Debtor’s obligations with respect to the Claims and
Equity Interests shall remain unchanged and nothing contained in the Plan shall
constitute or be deemed a waiver, release, or discharge of any Claims or Equity
Interests by or against the Debtor or any other person or to prejudice in any
manner the rights of the Debtor or any person in any further proceedings
involving the Debtor unless extended by Court order.

 

D.

Vacatur of Confirmation Order.

 

If a Final Order denying confirmation of the Plan is entered, or if the
Confirmation Order is vacated, then the Plan shall be null and void in all
respects, and nothing contained in the Plan shall: (i) constitute a waiver,
release, or discharge of any Claims, Guarantee Claims, or Equity Interests;
(ii) prejudice in any manner the rights of the holder of any Claim, Guarantee
Claim, or Equity Interest; (iii) prejudice in any manner any right, remedy, or
claim of the Debtor or the Non-Debtor Subsidiaries; or (iv) be deemed an
admission against interest by the Debtor or the Non-Debtor Subsidiaries.

 

 
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E.

Modification of the Plan.

 

Subject to the limitations contained in the Plan, and subject to the terms of
the Restructuring Support Agreement, (i) the Debtor reserves the right, in
accordance with the Bankruptcy Code and the Bankruptcy Rules, 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 (ii) after
entry of the Confirmation Order, the Debtor or the Reorganized Debtor, as the
case may be, may, upon order of the Court, amend or modify the Plan, in
accordance with section 1127(b) of the Bankruptcy Code. Notwithstanding the
foregoing, the Confirmation Order shall authorize the Debtor or the Reorganized
Debtor, as the case may be, to make appropriate technical adjustments, remedy
any defect or omission, or reconcile any inconsistencies in the Plan, the
documents included in the Plan Supplement, any and all exhibits to the Plan,
and/or the Confirmation Order, as may be necessary to carry out the purposes and
effects of the Plan, provided, however, that such action does not materially and
adversely affect the treatment of holders of Allowed Claims or Equity Interests
pursuant to the Plan.

 

F.

Revocation, Withdrawal, or Non-Consummation.

 

1.     Right to Revoke or Withdraw. The Debtor reserves the right to revoke or
withdraw the Plan at any time before the Effective Date; provided, however, that
this provision shall have no impact on the rights of the Consenting Lenders, as
set forth in the Restructuring Support Agreement, in respect of any such
revocation or withdrawal.

 

2.     Effect of Withdrawal, Revocation, or Non-Consummation. If the Debtor
revokes or withdraws the Plan prior to the Effective Date, or if the
Confirmation Date or the Effective Date does not occur, the Plan, any settlement
or compromise embodied in the Plan (including the fixing or limiting to an
amount certain any Claim or Equity Interest or Class of Claims or Equity
Interests), the assumption or rejection of Executory Contracts, Unexpired Leases
or benefit plans effected by the Plan, any release, exculpation, or
indemnification provided for in the Plan, and any document or agreement executed
pursuant to the Plan shall be null and void. In such event, nothing contained
herein, and no acts taken in preparation for consummation of the Plan shall be
deemed to constitute a waiver or release of any Claims by or against or Equity
Interests in the Debtor or any other Person, to prejudice in any manner the
rights of the Debtor or any Person in any further proceedings involving the
Debtor, or to constitute an admission of any sort by the Debtor or any other
Person.

 

ARTICLE XI.
MISCELLANEOUS PROVISIONS

 

A.

Immediate Binding Effect.

 

Notwithstanding Bankruptcy Rules 3020(e), 6004(h), 7062, or otherwise, upon the
occurrence of the Effective Date, the terms of the Plan shall be immediately
effective and enforceable and deemed binding upon the Debtor, the Reorganized
Debtor, and any and all holders of Claims or Equity Interests (irrespective of
whether such Claims or Equity 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 with the Debtor.

 

 
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B.

Governing Law.

 

Unless a rule of law or procedure is supplied by federal law (including the
Bankruptcy Code and Bankruptcy Rules), the laws of the State of New York
(without reference to the conflicts of laws provisions thereof that would
require or permit the application of the law of another jurisdiction) shall
govern the construction and implementation of the Plan and any agreements,
documents, and instruments executed in connection with the Plan, unless
otherwise specified.

 

C.

Filing or Execution of Additional Documents.

 

On or before the Effective Date or as soon thereafter as is practicable, the
Debtor or the Reorganized Debtor shall (on terms materially consistent with the
Plan) file with the Court or execute, as appropriate, such agreements and other
documents as may be necessary or appropriate to effectuate and further evidence
the terms and conditions of the Plan, which shall be in form and substance
reasonably acceptable to the Majority Consenting Lenders.

 

D.

Term of Injunctions or Stays.

 

All injunctions or stays provided for in the Chapter 11 Case under sections 105
or 362 of the Bankruptcy Code, or otherwise, and in existence on the
Confirmation Date, shall remain in full force and effect until the Effective
Date.

 

E.

Withholding and Reporting Requirements.

 

In connection with the Plan and all instruments issued in connection therewith
and distributions thereon, the Reorganized Debtor shall comply with all
withholding and reporting requirements imposed by any United States federal,
state, local, or non-U.S. taxing authority and all distributions hereunder shall
be subject to any such withholding and reporting requirements. Notwithstanding
any provision in the Plan to the contrary, the Reorganized Debtor 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 distribution pending receipt of
information necessary or appropriate to facilitate such distributions, or
establishing any other mechanisms they believe are reasonable and appropriate.

 

F.

Exemption From Transfer Taxes.

 

Pursuant to, and to the fullest extent permitted by, section 1146(a) of the
Bankruptcy Code, all transfers of property pursuant hereto, including (i) the
issuance, transfer, or exchange under the Plan of New Eagle Common Stock, the
New Eagle Equity Warrants, the New Eagle MIP Primary Equity, the New Eagle MIP
Reserved Equity, the New Eagle MIP Options, and the security interests in favor
of the lenders under the Exit Financing Facility, (ii) the making or assignment
of any lease or sublease, or (iii) the making or delivery of any other
instrument whatsoever, in furtherance of or in connection with the Plan, shall
not be subject to any stamp, conveyance, mortgage, sales or use, real estate
transfer, recording, or other similar tax or governmental assessment, and upon
entry of the Confirmation Order, the appropriate state or local governmental
officials or agents shall forgo the collection of any such tax or governmental
assessment and accept for filing and recordation any of the foregoing
instruments or other documents without the payment of any such tax, recordation
fee, or governmental assessment.

 

 
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G.

Plan Supplement.

 

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. The documents
contained in the Plan Supplement shall be available online at www.pacer.gov and
www.eaglebulkrestructuring.com. Holders of Claims or Equity Interests may obtain
a copy of the Plan Supplement upon written request to counsel to the Debtor. The
Debtor reserves the right, in accordance with the terms hereof, to modify,
amend, supplement, restate, or withdraw any part of the Plan Supplement after
they are filed and shall promptly make such changes available online at
www.pacer.gov and www.eaglebulkrestructuring.com.

 

H.

Notices.

 

All notices, requests, and demands hereunder to be effective shall be made in
writing or by e-mail, and unless otherwise expressly provided herein, shall be
deemed to have been duly given when actually delivered or, in the case of notice
by facsimile transmission, when received and telephonically confirmed. Each of
such notices shall be addressed as follows:

 

1.     To the Debtor: Eagle Bulk Shipping Inc., 477 Madison Avenue, New York, NY
10022, attention: Adir Katzav, Chief Financial Officer, Tel: (212) 785-2500, Fax
(212) 785-3311, with a copy to (i) Milbank, Tweed, Hadley & McCloy LLP, 601 S.
Figueroa St., 30th Floor, Los Angeles, CA 90017, attention: Paul S. Aronzon,
Esq. and Haig M. Maghakian, Esq., Tel.: (213) 892-4000, Fax: (213) 629-5063,
e-mail: paronzon@milbank.com, hmaghakian@milbank.com; and (ii) Milbank, Tweed,
Hadley & McCloy LLP, 1 Chase Manhattan Plaza, New York, NY 10005, attention:
Tyson M. Lomazow, Esq. and Matthew Brod, Esq., Tel.: (212) 530-5000, Fax: (212)
530-5219, e-mail: tlomazow@milbank.com, mbrod@milbank.com.

 

2.     To the Prepetition Credit Facility Agent: (i) if by mail to: Paul, Weiss,
Rifkind, Wharton & Garrison LLP, 1285 Avenue of the Americas, New York, NY
10019, attention: Andrew N. Rosenberg, Esq. and Alice B. Eaton, Esq.; (ii) if by
e-mail to: arosenberg@paulweiss.com, aeaton@paulweiss.com.

 

3.     To the U.S. Trustee: (i) if by mail to: 201 Varick Street, New York,
NY 10014-4811, attention: Paul K. Schwartzberg, Esq. and Michael Driscoll, Esq.,
Tel.: (212) 510-0500, Fax: (212) 668-2255; (ii) if by e-mail to:
Paul.Schwartzberg@usdoj.gov, Michael.Driscoll@usdoj.gov.

 

 
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I.

Conflicts.

 

The terms of the Plan shall govern in the event of any inconsistency between the
Plan and the Disclosure Statement. In the event of any inconsistency with the
Plan and the Confirmation Order, the Confirmation Order shall govern with
respect to such inconsistency.

 

 

 

 

 

 

 

 

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Dated: August 6, 2014

 

EAGLE BULK SHIPPING INC.

 

 

 

By:                                                
Name: Adir Katzav
Title: Chief Financial Officer

 

 
 

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EXHIBIT B TO THE DISCLOSURE STATEMENT

 

EAGLE’S PREPETITION CORPORATE STRUCTURE

 

 

 
 

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 [image.jpg]

 

 
 

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EXHIBIT C TO THE DISCLOSURE STATEMENT

 

FINANCIAL PROJECTIONS

 

 

 
 

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FINANCIAL PROJECTIONS

 

The Company developed a set of financial projections for the purposes set forth
below. The Financial Projections reflect the Company’s most recent estimates of
the financial position, results of operations and cash flows after confirmation
of the Plan, based upon the Company’s assumptions and judgments as to future
market and business conditions, expected future operating performance, and the
occurrence or nonoccurrence of certain future events, all of which are subject
to change. Actual operating results and values may vary.

 

 

A.

Financial Projections

 

 

As a condition to confirmation of a plan, the Bankruptcy Code requires, among
other things, that the Bankruptcy Court determine that confirmation is not
likely to be followed by the liquidation or the need for further financial
reorganization of the debtor. In connection with the development of the Plan,
and for purposes of determining whether the Plan satisfies this feasibility
standard, the Company’s management has, through the development of the Financial
Projections, analyzed the Debtor’s ability to meet its obligations under the
Plan and to maintain sufficient liquidity and capital resources to conduct its
business subsequent to its emergence from these Chapter 11 Cases. The Financial
Projections were prepared to assist those holders of Allowed Claims entitled to
vote on the Plan in determining whether to accept or reject the Plan.

 

A Chapter 11 proceeding is viewed as a significant threat to the continuing
operations of our international business. The Company has recently experienced
dislocation in its business operations caused by the uncertainty of its
financial restructuring process and the potential of a bankruptcy filing and
there is no assurance that we will be able to avert loss or reduction in
business from our customers. Furthermore, the drybulk industry has historically
been and continues to be subject to significant volatility due to continuously
evolving dynamics as they relate to the supply of vessels and demand for
shipping services. The unpredictable nature of factors, such as weather,
seasonal demand for resources and asymmetrical timing of vessel deliveries
results in significant freight rate volatility and could cause actual results to
differ.

 

For the purpose of demonstrating Plan feasibility, the Company prepared the
Financial Projections. The Financial Projections present, to the best of the
Company’s knowledge, the Reorganized Debtor’s projected financial position,
results of operations, and cash flows from 2014 through 2018 and reflect the
Debtor’s assumptions and judgments as of July 31, 2014.

 

THE FINANCIAL PROJECTIONS WERE NOT PREPARED WITH A VIEW TOWARDS COMPLYING WITH
THE GUIDELINES FOR PROSPECTIVE FINANCIAL STATEMENTS PUBLISHED BY THE AMERICAN
INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS. THE COMPANY’S INDEPENDENT ACCOUNTANT
HAS NEITHER COMPILED NOR EXAMINED THE ACCOMPANYING PROSPECTIVE FINANCIAL
INFORMATION TO DETERMINE THE REASONABLENESS THEREOF AND, ACCORDINGLY, HAS NOT
EXPRESSED AN OPINION OR ANY OTHER FORM OF ASSURANCE WITH RESPECT THERETO.

 

THE COMPANY DOES NOT INTEND TO, AND DISCLAIMS ANY OBLIGATION TO (A) FURNISH
UPDATED PROJECTIONS TO HOLDERS OF CLAIMS OR EQUITY INTERESTS PRIOR TO THE
EFFECTIVE DATE OR TO HOLDERS OF REORGANIZED EAGLE COMMON STOCK OR ANY OTHER
PARTY AFTER THE EFFECTIVE DATE, (B) INCLUDE SUCH UPDATED INFORMATION IN ANY
DOCUMENTS THAT MAY BE REQUIRED TO BE FILED WITH THE SEC, OR (C) OTHERWISE MAKE
SUCH UPDATED INFORMATION PUBLICLY AVAILABLE.

 

 
 

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THESE FINANCIAL PROJECTIONS, WHILE PRESENTED WITH NUMERICAL SPECIFICITY, ARE
NECESSARILY BASED ON A VARIETY OF ESTIMATES AND ASSUMPTIONS WHICH, THOUGH
CONSIDERED REASONABLE BY THE COMPANY’S MANAGEMENT, MAY NOT BE REALIZED, AND ARE
INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE COMPANY’S CONTROL.
THE COMPANY CAUTIONS THAT NO REPRESENTATIONS CAN BE MADE AS TO THE ACCURACY OF
THESE FINANCIAL PROJECTIONS OR TO THE COMPANY’S ABILITY TO ACHIEVE THE PROJECTED
RESULTS. SOME ASSUMPTIONS INEVITABLY WILL NOT MATERIALIZE. FURTHER, EVENTS AND
CIRCUMSTANCES OCCURRING SUBSEQUENT TO THE DATE ON WHICH THESE FINANCIAL
PROJECTIONS WERE PREPARED MAY BE DIFFERENT FROM THOSE ASSUMED OR, ALTERNATIVELY,
MAY HAVE BEEN UNANTICIPATED AND, THUS, THE OCCURRENCE OF THESE EVENTS MAY AFFECT
FINANCIAL RESULTS IN A MATERIAL AND POSSIBLY ADVERSE MANNER.

 

Scope of Financial Projections

The Financial Projections are based on the assumption that the Effective Date
will occur on or about September 30, 2014. If the Effective Date is
significantly delayed, additional expenses, including professional fees, may be
incurred and operating results may be negatively impacted. It is also assumed
that the Reorganized Debtor will conduct operations substantially similar to its
current business.

 

The Financial Projections do not fully reflect the application of fresh start
accounting. Any formal fresh-start reporting adjustments that may be required in
accordance with Statement of Position 90-7 Financial Reporting by Entities in
Reorganization under the Bankruptcy Code, including any allocation of the
Company’s reorganization value to the Company’s assets in accordance with the
procedures specified in Accounting Standards Codification 805, will be made
after the Company emerges from bankruptcy.

 

The Financial Projections include the (i) Projected Consolidated Balance Sheet
of Reorganized Eagle, (ii) Projected Consolidated Cash Income Statement of
Reorganized Eagle, and (iii) Projected Consolidated Cash Flow Statement of
Reorganized Eagle.

 

The Financial Projections are “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995. Factors that could cause
actual results to differ materially include, but are not limited to: the ability
of Reorganized Eagle to operate its business consistent with its projections
generally, including the ability to maintain or increase revenue and cash flow
to satisfy its liquidity needs, service its indebtedness and finance the ongoing
obligations of its business, and to manage its future operating expenses and
make necessary capital expenditures; the ability of the Reorganized Eagle to
comply with the covenants and conditions under its credit facilities; the loss
or reduction in business from Reorganized Eagle’s significant customers or the
failure of Reorganized Eagle’s significant customers to perform their
obligations; the loss or material downtime of major suppliers; material declines
in demand for drybulk shipping services or the rates in the drybulk shipping
market; changes in production of, or demand for, iron ore, coal, steel, grain or
other drybulk, either generally or in particular regions; greater than
anticipated levels of vessel new building orders; changes in the typical
seasonal variations in drybulk charter rates; increases in costs including,
without limitation, crew wages, insurance, provisions, repairs and maintenance;
changes in rules and regulations applicable to the drybulk industry including,
without limitation, legislation adopted by international organizations such as
the IMO and the European Union or by individual countries; actions by the
courts, the United States Coast Guard, the U.S. Department of Justice or other
governmental or regulatory authorities, and the results of the legal proceedings
to which the Reorganized Debtor or any of their affiliated vessels may be
subject; changes in the condition of the Debtor’s vessels or applicable
maintenance or regulatory standards (which may affect, among other things, the
Debtor’s anticipated drydocking or maintenance and repair costs); the
Reorganized Debtor’s ability to attract and maintain key executives, managers
and employees; changes in general domestic and international political
conditions; and adverse changes in foreign currency exchange rates affecting the
Reorganized Debtor’s expenses.

 

 
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Overview of the Debtor

The Debtor is a leading provider of worldwide seaborne transportation services
for dry bulk cargo including, among others, iron ore, coal and grain,
collectively referred to as "major bulks," and steel products, fertilizers,
cement, bauxite, sugar and scrap metal, collectively referred to as "minor
bulks”. The Debtor’s fleet currently consists of 45 drybulk carriers, including
43 Supramax and two Handymax, with an aggregate carrying capacity of
approximately 2,451,000 deadweight tons (“dwt”). The average age of the Debtor’s
current fleet is approximately 7.2 years, as compared to the average age for the
world fleet of approximately 9.0 years for the drybulk shipping segments in
which the Debtor competes.

 

KEY ASSUMPTIONS TO FINANCIAL PROJECTIONS

 

Methodology

The Debtor’s current business plan incorporates assumptions related to certain
economic and business conditions for the forecast period of 2014-2018. These
assumptions are based upon historic seasonality and industry experience.

 

The Financial Projections represent selected income statement, balance sheet and
cash flow accounts from 2014 through 2018. The financial statements included
herein reflect the projected core operating performance of the Debtor. The
Financial Projections were developed on a vessel-by-vessel, bottom-up basis and
incorporate multiple sources of information including general business and
economic conditions as well as industry and competitive trends.

 

Net Voyage Revenue  

The Financial Projections forecast Net Voyage Revenue from Time Charter, Voyage
Charter, Spot Market Charter and Pool Charter contracts (described below). Net
Voyage Revenue represents the income associated with providing freight services
to the Debtor’s customers less Voyage Expenses and third-party commissions.
Voyage Expenses consist of fuel, canal tolls, and port charges. In the dry bulk
industry, it is customary to report revenue on a net basis, also known as a Time
Charter Equivalent basis (“TCE Basis”), to enable comparability between
differing contract structures. A Time Charter Equivalent rate (“TCE Rate”) is
calculated by dividing Net Voyage Revenue by vessel operating days.

 

The Debtor’s vessels are chartered by third-party customers to earn revenue
through: (a) “time charters” – which are charters under which the shipowner is
paid charter hire rate on a per day basis for a certain period of time and is
responsible for providing the crew and paying operating costs, while the
charterer is responsible for paying the voyage costs; (b) “voyage charters” –
which are charters under which a shipowner is paid freight on the basis of
moving cargo from a loading port to a discharge port and is responsible for
paying both operating costs and voyage costs, while the charterer may be
responsible for any delay at the loading or discharging ports; (c) “spot market
charters” – which are charters for specific time periods at rates that fluctuate
based on the spot market; and (d) “pool charters” – whereby the vessels
participate in a charter pool with other vessels managed by pool managers.

 

To calculate revenue, the Financial Projections assume a utilization of 98.5%
when vessels are not undergoing drydocking (described further below), which
takes into account unplanned off-hire due to maintenance, repairs and
repositioning. Additionally, industry standard commissions of 4.5%, payable to
third-parties, are subtracted from revenues derived in the spot market.

 

 
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Vessel Operating Expenses

Vessel operating expenses include crew wages and related costs, the cost of
insurance, expenses relating to repairs and maintenance (excluding drydocking),
the costs of spares and consumable stores, tonnage taxes and other miscellaneous
expenses. The Financial Projections assume vessel operating expenses based on
historical operating expenses per vessel class, estimates provided by
independent and in-house technical managers, and management’s view of continued
cost-efficient operations, and assume inflation of 2.5% per year.

 

Technical management involves the day-to-day management of vessels, including
performing routine maintenance, attending to vessel operations, and arranging
for crews and supplies. The Debtor currently provides technical management for
the majority of its vessels through its in-house technical management division
with the remainder managed by an independent technical manager. The Financial
Projections for technical management fees are based on management’s budget and
current arrangements with the aforementioned third-party independent manager.

 

General and Administrative Expenses

General and Administrative Expenses (“G&A”) include payroll expenses, rent,
legal, auditing, and other corporate expenses. The Financial Projections for
general and administrative expenses are estimated based on historical general
and administrative expenses and management’s view of continued lean operations,
and assume inflation of 2.5% per year.

 

Drydock Expense

Drydock expenses are based on expected maintenance requirements corresponding to
the age of the Company’s fleet. Costs associated with drydockings are
capitalized as they occur and amortized on a straight- line basis over the
period between drydockings.

 

The Financial Projections also include the future installation of ballast water
treatment systems during each vessel’s first drydock after January 1, 2016 at an
estimated cost of $750,000 per vessel. Expenditures for ballast water treatment
systems are capitalized as they occur and amortized on a straight-line basis
over the remaining useful life of the vessel.

 

Post-Effective Date Capital Structure

For the purposes of these Financial Projections, the Debtor has assumed a
capital structure for the reorganized Debtor that consists of a $275mm Credit
Facility made up of a $225mm Term Loan and a $50mm Revolving Credit Facility ($0
drawn). The Term Loan and the Revolving Credit Facility bear interest at a rate
of LIBOR plus 3.50% and amortizes at 6.7% per annum.

 

 
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($ in thousands)

 

[image2.jpg]

 

[image3.jpg]

 

 

 
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($ in thousands)

 

[image4.jpg]

 

 

 
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EXHIBIT D TO THE DISCLOSURE STATEMENT

 

LIQUIDATION ANALYSIS

 

 

 
 

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Liquidation Analysis

 

 

Pursuant to Section 1129(a)(7) of the Bankruptcy Code (often called the “Best
Interests Test”), holders of Allowed Claims and Equity Interests must either (a)
accept the Plan or (b) receive or retain under the Plan property of a value, as
of the Plan’s assumed Effective Date, that is not less than the value such
non-accepting holder would receive or retain if the Debtor was liquidated under
Chapter 7 of the Bankruptcy Code (“Chapter 7”).

 

In determining whether the Best Interests Test has been met, the first step is
to determine the dollar amount that would be generated from a hypothetical
liquidation of the Debtor’s assets under Chapter 7. The Debtor has prepared this
hypothetical Liquidation Analysis (the “Liquidation Analysis”) in connection
with the Disclosure Statement. The Liquidation Analysis reflects the estimated
cash proceeds, net of liquidation-related costs, that would be available to the
Debtor’s creditors if the Debtor was to be liquidated under Chapter 7 as an
alternative to continued operation of the Debtor’s business and reorganization
under the Plan. Accordingly, asset values discussed herein may be different than
amounts referred to in the Plan. The Liquidation Analysis is based upon the
assumptions discussed herein and in the Disclosure Statement. All capitalized
terms not defined in this Liquidation Analysis have the meanings ascribed to
them in the Disclosure Statement.

 

UNDERLYING THE LIQUIDATION ANALYSIS ARE NUMEROUS ESTIMATES AND ASSUMPTIONS
REGARDING LIQUIDATION PROCEEDS THAT, ALTHOUGH DEVELOPED AND CONSIDERED
REASONABLE BY THE DEBTOR’S MANAGEMENT ARE INHERENTLY SUBJECT TO SIGNIFICANT
BUSINESS, ECONOMIC, REGULATORY AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES
BEYOND THE CONTROL OF THE DEBTOR AND ITS MANAGEMENT. ACCORDINGLY, THERE CAN BE
NO ASSURANCE THAT THE VALUES REFLECTED IN THE LIQUIDATION ANALYSIS WOULD BE
REALIZED IF THE DEBTOR WAS, IN FACT, LIQUIDATED, AND ACTUAL RESULTS COULD
MATERIALLY DIFFER FROM THE RESULTS SET FORTH HEREIN.

 

General Assumptions

 

Overview of the Liquidation Process

The Debtor prepared this Liquidation Analysis in connection with its
solicitation of votes to accept or reject its Plan, which contemplates a
prepackaged chapter 11 case of Eagle Bulk Shipping Inc. (“Eagle”). Under the
hypothetical Chapter 7 scenario the Liquidation Analysis assumes the liquidation
of Eagle as well as its respective subsidiaries (collectively referred to as the
“Chapter 7 Debtor.”)

 

In a hypothetical Chapter 7, a trustee (the “Chapter 7 Trustee”) would be
appointed to manage the Chapter 7 Debtor’s affairs and to conduct a liquidation
of the Chapter 7 Debtor’s assets. The Chapter 7 Debtor’s assets would be
liquidated, rather than liquidating Eagle’s equity interest in the Non-Debtor
Subsidiaries in order to provide for a sale “free and clear” to purchasers. The
Liquidation Analysis assumes that the Chapter 7 Debtor would be forced to cease
substantially all operations in an orderly manner and use its cash position to
liquidate its assets and pay claims in accordance with the priority scheme set
forth in the Bankruptcy Code. Given the international nature of the Debtor’s
business, it is possible that in a liquidation scenario multiple international
insolvency proceedings would need to be commenced to protect the Debtor’s assets
physically located outside of the United States (like the vessels) which would
increase the cost of the liquidation. This Liquidation Analysis does not account
for any such international proceedings.

 

 
 

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Hypothetical Liquidation Period

The Chapter 7 Debtor assumes an expedited, but orderly wind-down of its
operations to maximize recovery values. The hypothetical Chapter 7 liquidation
is assumed to commence following the conversion to a Chapter 7. While the
Liquidation Analysis assumes the majority of the wind-down would be accomplished
in approximately 90 days, the liquidation is likely to take up to six months to
be completed fully for various reasons including the following:

 

 

 

●

The Chapter 7 Debtor’s revenues are primarily derived by employing its vessels
on short-term fixed-rate and spot-market related time charters. Commencement of
a Chapter 7 liquidation is likely to cause customers to seek other dry bulk
transportation sources, making it highly unlikely that a Chapter 7 Trustee could
maintain many of the existing customers for any significant period of time
following the end of the already ongoing voyages. Lost customers are unlikely to
be replaced by new customers. The Debtors may also, as a result, experience high
levels of uncollectible accounts receivable.

 

 

●

A Chapter 7 liquidation would likely cause the Chapter 7 Debtor’s vendors to be
keenly aware of any unpaid claims and would significantly increase the risk of
ship arrests in foreign jurisdictions where enforcement of the automatic stay is
uncertain, thereby complicating the process associated with an orderly
liquidation of those assets in a reasonable timeframe. Arrested vessels could
also result in breach of contract or damage claims by charterers impacted by
such arrests. Arrested vessels may also force a sale of such vessel under the
law of a foreign jurisdiction and outside of the supervision and control of the
Chapter 7 Trustee and the Court.

 

 

●

With the Debtor facing liquidation, employees, including crews on the Debtor’s
vessels, would likely leave the Chapter 7 Debtor to the extent there were
employment opportunities elsewhere. The loss of employees would hinder the
pursuit of going concern sales. Instead, executing a liquidation through sale of
the Chapter 7 Debtor’s individual vessels would be difficult over a long period
of time due to the loss of institutional and industry knowledge.

 

 

Estimate of Net Proceeds

The estimated cash proceeds that could be realized in a liquidation are
approximated by evaluating the Chapter 7 Debtor’s assets. The Chapter 7 Debtor’s
assets primarily consist of (i) cash, (ii) its fleet of dry bulk vessels, (iii)
equity interest in Korea Line Corporation (“KLC”) and (iv) additional operating
assets such as customer receivables and other current assets. The net proceeds
estimated in the Liquidation Analysis are based on unaudited asset and liability
account balances for the Debtor as of the latest available date, March 31,
2014.13

 

Estimate of Costs

The estimated liquidation costs include fees payable to a Chapter 7 trustee as
well as those to attorneys and other professionals that the trustee may engage.
Further, priority expenses would include any obligations and unpaid expenses
that Eagle incurred both during the Chapter 11 case and from the start and until
the conclusion of the Chapter 7 case. In a Chapter 7 case, the wind-down
expenses may be greater or less than the estimated amount. Such expenses are in
part dependent on the length of time of the liquidation. In addition, while the
Chapter 7 Debtor’s assets are located outside of the United States, the proceeds
from the sale of these assets are assumed to be consistent across jurisdictions.
Further, it is assumed that the expenses incurred to sell assets located outside
of the United States would be comparable to the expenses incurred to sell such
assets if they were located in the United States.

 

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13 For the purposes of the liquidation analysis, (i) the value of the Company’s
interest in KLC is based on the closing market price as of July 31, 2014, (ii)
the Company’s vessels are valued based on appraisals as of June 2, 2014 and
(iii) secured claims are estimated as of June 30, 2014.

 

 
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Distribution of Net Proceeds

The proceeds available represent the sum of the disposition of the Chapter 7
Debtor’s assets and cash on the balance sheet at the commencement of the
hypothetical Chapter 7 liquidation.

 

Available proceeds from the liquidation of assets and cash would be first
applied to the payment of post-petition Administrative Expense claims.
Thereafter, net proceeds attributable to the liquidation of the Chapter 7
Debtor’s vessels would first be applied to the satisfaction of prepetition
maritime liens or claims with respect to services rendered on account of the
Chapter 7 Debtor’s vessels, followed by the satisfaction of debt obligations
secured by the Chapter 7 Debtor’s various assets. Any remaining liquidated
proceeds and cash would be available for the satisfaction of General Unsecured
Claims.

 

The holders of the Prepetition Credit Facility have first priority liens or
mortgages on, security interests in, and assignments, charges, or pledges on
certain property, including, without limitation, forty-five (45) vessels owned
by forty-five (45) Debtor Subsidiaries.

 

The table below summarizes the estimated proceeds that would be available for
distribution to the Chapter 7 Debtor’s creditors and equity interest holders in
a hypothetical liquidation of the estates under Chapter 7 of the Bankruptcy
Code. The estimated recoveries do not reflect any potential negative impact on
the distributable value available to the Chapter 7 Debtor’s creditors on account
of any potential unknown and contingent liabilities. Additional assumptions with
respect to the Liquidation Analysis are provided below.

 

 
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[image5.jpg]

 

 

Specific Assumptions

 

Note 1 – Cash and Cash Equivalents

As of March 31, 2014 there was approximately $19.8 million in cash and cash
equivalents at Eagle and its Debtor Subsidiaries.

 

Note 2 – Accounts Receivable

Estimated proceeds realized from accounts receivable under a liquidation are
based on management’s estimate of collectability and the assumption that every
reasonable effort will be made by the Chapter 7 Trustee to collect receivables
from customers, a number of whom may be in various foreign jurisdictions.

 

Note 3 – Prepaid Expenses

Prepaid expenses consist of prepaid insurance, which includes insurance premiums
paid in advance that cover a period of time which has not elapsed. The
Liquidation Analysis does not take into account any right the Secured Lenders
may have to assert secured claims on some of the Prepaid Expenses.

 

Note 4 – Inventory

Inventory include bunker , which is used to operate vessels and is stored
on-board the vessels.

 

 
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Note 5 – Investment

Eagle owns 566,529 shares of KLC common stock which represents an approximately
2.3% ownership. KLC is listed on the Korea Stock Exchange under the symbol
“KLC.” As of July 31, 2014, the share price of KLC was $22.20, implying an
approximate value of $12.6 million for the Debtor’s stake in KLC. The
Liquidation Analysis assumes an incremental 10% discount after taking into
account the potential market impact of liquidating shares representing a
significant ownership percentage of KLC. Over the prior 90 days, as of July 31,
2014, KLC’s average daily trading volume was approximately 131,332 and over the
prior month trading volume averaged approximately 114,250 shares per day.

 

Note 6 – Other Current Assets

Other current assets include working capital associated with Eagle vessels
participating in the commercial pool.

 

Note 7 – Value of Vessels, net

The Liquidation Analysis assumes that the Chapter 7 Debtor’s vessels will be
sold in the secondary market over an accelerated 90-day time period. The Debtor
has received recent appraisals from an independent ship brokerage firm, who
conducted an asset-level appraisal of the fleet’s fair market value as of June
2, 2014. Fair market value is considered the estimated amount on a cash basis,
as of June 2, 2014, that may reasonably be expected for the vessel in an
exchange between a willing buyer and a willing seller, with equity to both,
neither under any compulsion to buy or sell, and both fully aware of all
relevant facts, considering that the vessel will be removed to another location.
The valuation of the vessel was made assuming a sale between a willing seller
and a willing buyer who can utilize the particular vessel’s features, and also
taking into consideration the vessel’s age, size and other characteristics. The
Liquidation Analysis applies a discount of 15% to 50% to each vessel’s appraised
value to account for the forced nature of the transaction, the expedited time
frame (90 days) and the magnitude of supply (45 vessels) being sold into the
market.

 

Note 8 – Other Fixed Assets

Other fixed assets include leasehold improvements, furniture, computer
equipment, software and other assets. A large portion of these items are
significantly depreciated and may not result in significant liquidation value,
particularly since the potential universe of buyers for these assets is narrow
and is primarily comprised of competing companies.

 

Note 9 – Deferred Drydock

The Debtor’s vessels are required to be drydocked approximately every 30 months
for major repairs and maintenance that cannot be performed while the vessels are
operating. The Debtor capitalizes the costs associated with the drydocks as they
occur and amortize these costs on a straight line basis over the period between
drydocks. From management’s experience when selling assets, buyers give little
to no credit to historical drydock payments.

 

Note 10 – Other Noncurrent Assets

Other noncurrent assets consist of primarily bonds and escrow deposits due to
claims and other noncurrent assets.

 

Note 11 – Chapter 7 Trustee and Other Liquidator Fees

The Chapter 7 Debtor estimates that it would incur Chapter 7 Trustee fees of
approximately $16.9 million to $23.2 million in aggregate calculated as 3.0% of
the proceeds available for post-petition administrative claims. This Liquidation
Analysis assumes that one Chapter 7 Trustee is appointed for the Debtor.
However, it is possible that if the Debtor was to liquidate under Chapter 7,
additional Chapter 7 Trustees could be appointed resulting in additional costs
than what is presented herein. This does not account for possible fees by
foreign administrators or liquidators in the event of a foreign insolvency
proceeding.

 

 
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Note 12 – Corporate Wind-Down Costs

Corporate wind-down costs consist of corporate overhead and occupancy costs to
be incurred during the Chapter 11 reorganization and Chapter 7 liquidation
processes. It is assumed that the liquidation would occur over a six-month
period following the conversion of the Chapter 11 case to a Chapter 7 and that
such expenses, costs and overhead would decrease over time. Any positive income
from operating businesses during this time is assumed to offset corporate
wind-down costs.

 

Note 13 – Professionals & Other

The costs associated with the Chapter 7 Trustee’s legal counsel and professional
advisors are estimated to be 25% of the fees paid to the Chapter 7 Trustee.

 

 
6 

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EXHIBIT E TO THE DISCLOSURE STATEMENT

 

VALUATION ANALYSIS

 

 

 
 

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Reorganized Debtor Valuation Analysis

 

At the Debtor’s request, Moelis & Company (“Moelis”) performed a valuation
analysis of the Reorganized Debtor. Based upon, and subject to, the review and
analysis described herein, and subject to the assumptions, limitations, and
qualifications described herein, Moelis’s view, as of July 15, 2014, was that
the estimated going concern enterprise value of the Reorganized Debtor, as of an
assumed Effective Date of September 30, 2014, would be in a range between $850
and $950 million. Moelis’s views are necessarily based on economic, market, and
other conditions as in effect on, and the information made available to Moelis
as of, the date of its analysis (July 30, 2014). It should be understood that,
although subsequent developments may affect Moelis’s views, Moelis does not have
any obligation to update, revise, or reaffirm its estimate.

 

Moelis’s analysis is based on, at the Debtor’s direction, a number of
assumptions, including, among other assumptions, that: (i) the Debtor will be
reorganized in accordance with the Plan, which will be consummated on or prior
to September 30, 2014; (ii) Eagle’s fleet could be sold in the range of the
appraisal value set forth in a report provided by an independent shipping
advisory firm to the Debtor and shared with Moelis; (iii) the Reorganized Debtor
will achieve the results set forth in the projections provided to Moelis by the
Debtor for the years 2014 through 2018 and annexed to this Disclosure Statement
(the “Financial Projections”); (iv) the Reorganized Debtor’s capitalization and
available cash will be as set forth in the Plan and this Disclosure Statement
(in particular, the pro forma indebtedness of the Reorganized Debtor as of the
Effective Date will be a maximum of $225 million, assuming an undrawn revolver
at closing); and (v) the Reorganized Debtor will be able to obtain all future
financings, on the terms and at the times, necessary to achieve the results set
forth in the Financial Projections. Moelis makes no representation as to the
achievability or reasonableness of such assumptions. In addition, Moelis assumed
that there will be no material change in economic, market, and other conditions
as in effect on, and the information made available to Moelis as of, the assumed
Effective Date.

 

Moelis assumed, at the Debtor’s direction, that the appraisal provided to Moelis
of Eagle’s fleet by an independent shipping advisory firm was reasonably
prepared on a basis reflecting the best currently available estimates and
judgments of the appraised value of the Eagle’s fleet. The appraisal value of
Eagle’s fleet is dependent upon various factors, many of which are beyond the
control or knowledge of the Debtor, and consequently are inherently difficult to
estimate. The actual market value that might be realized through a sale of
Eagle’s fleet may differ materially (positively or negatively) from the
appraised value and, as a result, the Reorganized Debtor’s enterprise value may
be significantly higher or lower than the estimated range herein. Moelis also
assumed, at the Debtor’s direction, that the Financial Projections prepared by
the Debtor’s management were reasonably prepared on a basis reflecting the best
currently available estimates and judgments of the Debtor’s management as to the
future financial and operating performance of the Reorganized Debtor. The future
results of the Reorganized Debtor are dependent upon various factors, many of
which are beyond the Debtor’s control or knowledge and, consequently, are
inherently difficult to project. See Disclosure Statement Exhibit C (Financial
Projections). The Reorganized Debtor’s actual future results may differ
materially (positively or negatively) from the Financial Projections and, as a
result, the Reorganized Debtor’s actual enterprise value may be significantly
higher or lower than the estimated range set forth herein. Among other things,
failure to consummate the Plan in a timely manner may have a material impact on
the Reorganized Debtor’s enterprise value.

 

The estimated enterprise value in this section represents a hypothetical
enterprise value of the Reorganized Debtor as the continuing operator of Eagle’s
business and assets, after giving effect to the Plan, based on consideration of
certain valuation methodologies as described below. The estimated enterprise
value in this section 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 Debtor, its securities or its assets, which may
be materially higher or lower than the estimated enterprise value range set
forth herein. The actual value of an operating business such as the Reorganized
Debtor’s business is subject to uncertainties and contingencies that are
difficult to predict and will fluctuate with changes in various factors
affecting the financial condition and prospects of such a business.

 

 
 

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In conducting its analysis, Moelis, among other things: (i) reviewed certain
publicly available business and financial information relating to the
Reorganized Debtor that Moelis deemed relevant; (ii) reviewed an appraisal of
Eagle’s fleet by an independent shipping advisory firm provided to Moelis by the
Debtor and current data from VesselsValue, an industry recognized provider of
vessel sale and valuation information; (iii) reviewed certain internal
information relating to the business, earnings, cash flow, capital expenditures,
assets, liabilities and prospects of the Reorganized Debtor, including the
Financial Projections furnished to Moelis by the Debtor; (iv) conducted
discussions with members of senior management and representatives of the Debtor
concerning the matters described in clauses (i) and (iii) of this paragraph, as
well as their views concerning the Debtor’s business and prospects before giving
effect to the Plan, and the Reorganized Debtor’s business prospects after giving
effect to the Plan; (v) reviewed publicly available financial and stock market
data for certain other companies in lines of business that Moelis deemed
relevant; (vi) reviewed publicly available financial data for certain
transactions that Moelis deemed relevant; (vii) reviewed a draft of the Plan;
and (viii) conducted such other financial studies and analyses and took into
account such other information as Moelis deemed appropriate. In connection with
its review, Moelis did not assume any responsibility for independent
verification of any of the information supplied to, discussed with, or reviewed
by Moelis and, with the consent of the Debtor, relied on such information being
complete and accurate in all material respects. In addition, at the direction of
the Debtor, Moelis did not make any independent evaluation or appraisal of any
of the Reorganized Debtor’s assets or liabilities (contingent, derivative,
off-balance-sheet, or otherwise). Moelis also assumed, with the Debtor’s
consent, that the final form of the Plan does not differ in any respect material
to its analysis from the draft Plan that Moelis reviewed.

 

The estimated enterprise value in this section does not constitute a
recommendation to any holder of a Claim or Equity Interest as to how such holder
should vote or otherwise act with respect to the Plan. Moelis has not been
asked, and does not express any view as to, what the trading value of the
Reorganized Debtor’s securities would be when issued pursuant to the Plan or the
prices at which they may trade in the future. The estimated enterprise value set
forth herein does not constitute an opinion as to fairness, from a financial
point of view, to any holder of the consideration to be received by such holder
under the Plan, or of the terms and provisions of the Plan.

 

Valuation Methodologies

 

In preparing its valuation, Moelis performed a variety of financial analyses and
considered a variety of factors. The following is a brief summary of the
material financial analyses considered by Moelis, which consisted of (a) a
selected transactions analysis, (b) selected publicly traded companies analysis,
and (c) other analyses. This summary does not purport to be a complete
description of the analyses performed and factors considered by Moelis. The
preparation of a valuation analysis is a complex analytical process involving
various judgmental determinations as to the most appropriate and relevant
methods of financial analysis and the application of those methods to particular
facts and circumstances, and such analyses and judgments are not readily
susceptible to summary description.

 

A.

Selected Transactions Analysis. The selected transactions analysis is based on
the implied enterprise values of companies and assets involved in publicly
disclosed merger and acquisition transactions for which the targets had
operating and financial characteristics comparable in certain respects to the
Reorganized Debtor. Under this methodology, the enterprise value of each such
target is determined by an analysis of the consideration paid and the net debt
assumed in the merger or acquisition transaction. The enterprise value is then
compared to select operating and financial metrics, in this case, publicly
available consensus asset values, in order to determine an enterprise value
multiple. Moelis analyzed various merger and acquisition transactions that have
occurred in the shipping sector since 2004. In this analysis, the enterprise
value multiples were utilized to determine a range of implied enterprise value
for the Reorganized Debtor.

 

Moelis utilized consensus Wall Street research estimates of asset values, which
are primarily informed by individual vessel valuations conducted by shipbroking
and shipping advisory firms with extensive experience in understanding the
global ship purchase and sale markets. These firms review and evaluate a
substantial portion of these transactions on an ongoing basis, in addition to
formulating informed views on underlying shipping markets and their influence on
these transactions, giving them a current view of the market value of vessels
based on a going-concern non-distressed asset sale transaction between a willing
buyer and seller. These market values are based upon various factors including
vessel type, vessel age, market charter rates, and the market’s view of the
vessel’s ability to generate a certain stream of future earnings.

 

In performing its analysis, Moelis reviewed an appraisal of Eagle’s fleet from
an independent shipping advisory firm, who conducted an asset-level valuation of
Eagle’s fleet. In addition to this appraisal, Moelis also evaluated current data
from VesselsValue, an industry recognized provider of vessel sale and valuation
information. The range of these indications of value was used to determine an
aggregate market value of the 45 vessels owned and operated by the Debtor and
its subsidiaries.

 

 
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Other factors not directly related to a company’s business operations can affect
a valuation in a transaction, including, among others factors: (a) circumstances
surrounding a merger transaction may introduce “diffusive quantitative results”
into the analysis (i.e., a buyer may pay an additional premium for reasons that
are not solely related to competitive bidding); (b) the market environment is
not identical for transactions occurring at different periods of time; and
(c) circumstances pertaining to the financial position of the company may have
an impact on the resulting purchase price (i.e., a company in financial distress
may receive a lower price due to perceived weakness in its bargaining leverage).

 

B.

Selected Publicly Traded Companies Analysis. The selected publicly traded
companies analysis is based on the enterprise values of selected publicly traded
drybulk shipping companies that have operating and financial characteristics
comparable in certain respects to the Reorganized Debtor, for example, fleet
composition and age, charter coverage, business model, capital structure, size,
business risks, geography, diversification and size and scale of operations.
Under this methodology, certain operating and financial multiples that measure
value and financial performance are calculated for each selected company and
then applied to Eagle’s fleet value and financial information to derive an
enterprise value for the Reorganized Debtor. Moelis used enterprise value
(defined as market value of equity plus book value of debt, book value of
preferred stock and minority interests less cash, subject to adjustment where
appropriate) for each selected company as a multiple of such company’s publicly
available consensus asset value.

 

Although the selected companies were used for comparison purposes, no selected
company is either identical or directly comparable to the Reorganized Debtor’s
business. Accordingly, Moelis’s comparison of selected companies to the
Reorganized Debtor’s business and analysis of the results of such comparisons
was not purely mathematical, but instead involved considerations and judgments
concerning differences in operating and financial characteristics and other
factors that could affect the relative values of the selected companies and the
Reorganized Debtor. The selection of appropriate companies for this analysis is
a matter of judgment and subject to limitations due to sample size and the
public availability of meaningful market-based information.

 

C.

Other Analyses. Moelis also conducted certain customary cash flow based
valuation methodologies as described below. Moelis did not ascribe significant
weight in reaching its conclusion with respect to the value of the Reorganized
Debtor to any cash flow based valuation methodologies because (i) the highly
volatile environment present in the drybulk shipping industry makes projections
of rates and financial results very challenging, and (ii) the cash flow based
methodologies would imply values for the Reorganized Debtor significantly below
the appraised value of Eagle’s vessel fleet. As a result, Moelis’s valuation
conclusions are based on the asset based methodologies described above.

 

As part of its Selected Transactions Analysis, Moelis analyzed enterprise value
for targets in the selected transactions as a multiple of such target’s last
twelve months EBITDA. Also, as part of its Selected Publicly Traded Companies
Analysis, Moelis analyzed enterprise value for the selected companies as a
multiple of such company’s publicly available consensus projected EBITDA for
2015 and 2016.     

 

Moelis also conducted a discounted cash flow (“DCF”) analysis which 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. Moelis’s DCF analysis used the
Reorganized Debtor’s projections of its debt-free, after-tax cash flows through
December 31, 2018. These cash flows were then discounted at a range of estimated
weighted average costs of capital (“Discount Rate”) for the Reorganized Debtor.
The Discount Rate reflects the estimated blended rate of return that would be
expected by debt and equity investors to invest in the Reorganized Debtor’s
business based on its target capital structure. The enterprise value was
determined by calculating the present value of the Reorganized Debtor’s
unlevered free cash flows based on the Financial Projections, plus an estimate
for the Reorganized Debtor’s value beyond December 31, 2018, known as the
“terminal value.” The terminal value was derived by applying a range of
perpetuity growth rates to the Reorganized Debtor’s terminal year unlevered free
cash flow. The DCF analysis involves complex considerations and judgments
concerning appropriate terminal values and discount rates.

 

 
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To determine the Discount Rate, Moelis used the estimated cost of equity and the
estimated cost of debt for the Reorganized Debtor, assuming a targeted long-term
debt-to-total capitalization ratio (based on debt-to-capitalization ratios of
selected publicly traded drybulk shipping companies). Moelis calculated the cost
of equity based on (i) the capital asset pricing model, which assumes that the
expected equity return is a function of the risk-free rate and the correlation
of a publicly-traded stock’s performance to the return on the broader market and
(ii) an adjustment related to the estimated equity market capitalization of the
Reorganized Debtor, which reflects the historical equity returns of companies
with an equity market capitalization in the range of the Reorganized Debtor that
are not accounted for by the capital asset pricing model.

 

 

 

Valuation Considerations

 

As a result of the foregoing, the estimated enterprise value in this section is
not necessarily indicative of actual value, which may be significantly higher or
lower than the estimate herein. Accordingly, none of the Debtor, Moelis, or any
other person assumes responsibility for the accuracy of such estimated
enterprise value. Depending on the actual financial results of the Debtor or
changes in the financial markets, the Reorganized Debtor’s enterprise value as
of the Effective Date may differ from the estimated enterprise value set forth
herein as of an assumed Effective Date of September 30, 2014. In addition, the
market prices, to the extent there is a market, of the Reorganized Debtor’s
securities will depend upon, among other things, prevailing interest rates,
conditions in the financial markets, the investment decisions of prepetition
creditors receiving such securities under the Plan (some of whom may prefer to
liquidate their investment rather than hold it on a long-term basis), and other
factors that generally influence the prices of securities.

 

 

 
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Exhibit D

 

to the Restructuring Support Agreement

 

INTERIM FINANCING ORDER

 

 
 

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UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK

 

________________________________________

     

)

 

In re:

)

   

)

Chapter 11

EAGLE BULK SHIPPING INC., 

)

   

)

Case No. 14-_______ ( )

Debtor.

)

 

________________________________________

)

 

INTERIM ORDER (I) AUTHORIZING THE DEBTOR TO OBTAIN POSTPETITION FINANCING

AND TO USE CASH COLLATERAL; (II) GRANTING LIENS AND

PROVIDING SUPERPRIORITY ADMINISTRATIVE EXPENSE STATUS;
(III) GRANTING ADEQUATE PROTECTION; (IV) MODIFYING AUTOMATIC
STAY; (V) SCHEDULING A FINAL HEARING TO CONSIDER ENTRY
OF A FINAL ORDER; AND (VI) GRANTING RELATED RELIEF

 

Upon the motion (the “Motion”), dated August 5, 2014, of Eagle Bulk Shipping
Inc., as debtor and debtor in possession (the “Debtor”), in the above-captioned
case (this “Case”) pursuant to sections 105, 361, 362, 363(c), 364(d)(1), 364(e)
and 507 of title 11 of the United States Code, 11 U.S.C. §§ 101, et seq. (the
“Bankruptcy Code”), rules 2002, 4001, 6004, and 9014 of the Federal Rules of
Bankruptcy Procedure (the “Bankruptcy Rules”), and the Local Bankruptcy Rules
for the Southern District of New York (the “SDNY Local Rules”), including SDNY
Local Rule 4001-2 , seeking, among other things:

 

(1) authorization for the Debtor to obtain postpetition financing in an
aggregate principal amount of up to $50 million, of which (a) $25,000,000 will
be made available to the Debtor upon entry of this Interim Order and (b) the
remaining $25,000,000 will be made available to the Debtor as a delayed draw
occurring after the entry of the Final Order and prior to Maturity Date (as
defined in the DIP Documents (as defined below)) if the aggregate cash balances
of the Debtor and the Guarantors (as defined below) fall below $15,000,000 (the
actual principal amount available to be borrowed at any time being subject to
those conditions set forth in the DIP Documents (as defined below) and this
Interim Order), pursuant to a term loan facility (the “DIP Facility”, and the
loans thereunder the “DIP Loans”), in which Wilmington Trust (London) Limited
will act as sole Agent and Security Trustee (in such capacities, the “DIP
Agent”), for a syndicate of banks, financial institutions and other
institutional lenders party to the DIP Facility from time to time (together with
the DIP Agent, the “DIP Lenders”), and arranged by Goldman Sachs Lending
Partners LLC, as sole bookrunner and sole arranger (solely in its capacity as
such, the “Arranger”);

 

 
 

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(2) authorization for the Debtor to execute and enter into the DIP Documents and
to perform all such other and further acts as may be required in connection with
the DIP Documents;

 

(3) authorization for the Debtor to cause all of its non-debtor subsidiaries
(the “Guarantors”) to (i) guarantee the Debtor’s obligations under the DIP
Facility, (ii) execute and enter into guarantees (the “Guarantees”), (iii) grant
security interests and liens thereunder, and (iv) perform all such other and
further acts as may be required in connection with the DIP Documents;

 

(4) authorization for the granting of adequate protection to the Prepetition
Secured Lenders (as defined below) under or in connection with that certain
Fourth Amended and Restated Credit Agreement, dated as of June 20, 2012 (as
heretofore amended, supplemented or otherwise modified, the “Prepetition Credit
Agreement”), among Eagle Bulk Shipping Inc. (the “Prepetition Borrower”), each
of the Prepetition Borrower’s subsidiaries, as guarantors (the “Prepetition
Guarantors” and, together with the Prepetition Borrower, the “Prepetition
Obligors”), the lenders that are party thereto from time to time (the
“Prepetition Secured Lenders”), Wilmington Trust (London) Limited (as successor
to The Royal Bank of Scotland plc), as Agent (in such capacity, the “Prepetition
Agent” and together with the Prepetition Secured Lenders, the “Prepetition
Secured Creditors”), and that certain Security Agreement, dated as of June 20,
2012, between the Prepetition Borrower, the Prepetition Guarantors, and
Wilmington Trust (London) Limited (as successor to The Royal Bank of Scotland
plc), as security trustee (as heretofore amended, supplemented or otherwise
modified, the “Security Agreement” and, collectively with the Prepetition Credit
Agreement, and the mortgages and all other documentation executed in connection
therewith, the “Existing Agreements”), whose liens and security interests are
being primed by the DIP Facility;

 

 
2

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(5) authorization for the Debtor to use Cash Collateral (as defined below) and
all other collateral in which the Prepetition Secured Creditors have an
interest, and the granting of adequate protection to the Prepetition Secured
Lenders with respect to, inter alia, such use of their Cash Collateral and all
use and diminution in the value of the Prepetition Collateral (as defined
below);

 

(6) approval of certain stipulations by the Debtor with respect to the Existing
Agreements and the respective liens and security interests arising therefrom;

 

(7) the granting of superpriority claims to the DIP Lenders and first priority
priming liens in favor of the DIP Agent (for the benefit of the DIP Lenders) on
all prepetition and postpetition property of the Debtor’s estate and all
proceeds thereof (but excluding a lien on Avoidance Actions (as defined below)
and, prior to entry of the Final Order (as defined below), any Avoidance
Proceeds (as defined below)), subject to the Carve-Out (as defined below) and
the terms of this Interim Order;

 

 
3

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(8) subject only to and effective upon entry of a final order granting the
foregoing relief and such other relief as provided herein and in such final
order (the “Final Order”), the waiver of any right to surcharge against
collateral pursuant to section 506(c) of the Bankruptcy Code;

 

(9) pursuant to Bankruptcy Rule 4001, that an interim hearing (the “Interim
Hearing”) on the Motion be held before this Court to consider entry of this
Interim Order (a) authorizing the Debtor, on an interim basis, to borrow from
the DIP Lenders under the DIP Documents up to an aggregate principal or face
amount not to exceed $25,000,000 under the DIP Facility (w) for operational,
working capital, and general corporate purposes of the Debtor, (x) to pay the
fees, costs and expenses incurred by the Debtor in connection with this Case,
(y) to pay the fees, costs and expenses incurred in connection with the
foregoing, and (z) to provide liquidity to the Debtor’s subsidiaries, (b)
authorizing the Debtor’s use of Cash Collateral and all other collateral, and
(c) granting the liens, superpriority claims and adequate protection described
herein; and

 

(10) that this Court schedule a final hearing (the “Final Hearing”) to be held
no later than thirty-seven (37) days following the entry of this Interim Order
to consider entry of the Final Order authorizing the balance of the borrowings
under the DIP Documents on a final basis, as set forth in the Motion and the DIP
Documents.

 

 
4

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Due and appropriate notice of the Motion, the relief requested therein and the
Interim Hearing having been served by the Debtor on (a) the United States
Trustee for the Southern District of New York (the “U.S. Trustee”); (b) those
creditors holding the twenty (20) largest unsecured claims against the Debtor’s
estate; (c) the DIP Agent and its attorneys; (d) the Prepetition Agent and its
attorneys; (e) the Internal Revenue Service; (f) the Securities and Exchange
Commission; and (g) the United States Attorney for the Southern District of New
York (collectively, the “Notice Parties”).

 

The Interim Hearing having been held by this Court on August [ ], 2014.

 

Upon the record made by the Debtor in the Motion, the Declaration of Adir
Katzav, Chief Financial Officer of Eagle Bilk Shipping Inc., Pursuant to Local
Bankruptcy Rule 1007-2 and in Support of First Day Filings and the Declaration
of Thane Carlston in Support of Debtor’s Motion for Entry of an Interim Order
Pursuant to Sections 105, 361, 362, 363, 364, and 507 of the Bankruptcy Code,
Bankruptcy Rules 2002, 4001, 6004, and 9014, and Local Rule 4001-2 (A)
Authorizing the Debtor to Obtain Postpetition DIP Facility and to Use Cash
Collateral; (B) Granting Liens and Providing Superpriority Administrative
Expense Status; (C) Granting Adequate Protection; (D) Modifying Automatic Stay;
and (E) Scheduling a Final Hearing to Consider Entry of a Final Order, and at
the Interim Hearing and after due deliberation and consideration and sufficient
cause appearing therefor;

 

IT IS FOUND, DETERMINED, ORDERED AND ADJUDGED, that:

 

1.     Disposition. The Motion is granted on an interim basis in accordance with
the terms of this Interim Order. Any objections to the Motion with respect to
the entry of this Interim Order that have not been withdrawn, waived or settled,
and all reservations of rights included therein, are hereby denied and
overruled. This Interim Order shall become effective immediately upon its entry.

 

 
5

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2.     Petition Date. On August 5, 2014 (the “Petition Date”), the Debtor
commenced the Case under chapter 11 of the Bankruptcy Code before this Court.
The Debtor is authorized to operate its business and manage its properties as
debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy
Code.

 

3.     Jurisdiction. This Court has core jurisdiction over this Case, the Motion
and the parties and property affected hereby pursuant to 28 U.S.C. §§ 157(b) and
1334. Venue is proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.
The Guarantors submit to the jurisdiction of this Court with respect to any and
all matters arising under the Existing Agreements and the DIP Documents (each as
defined below), and any and all disputes with the Debtor or a Guarantor arising
in connection with the Existing Agreements or actions taken thereunder with the
Debtor or a Guarantor shall be resolved by this Court.

 

4.     Notice. Notice of the Motion, the relief requested therein and the
Interim Hearing was served by the Debtor on the Notice Parties. The interim
relief granted herein is necessary to avoid immediate and irreparable harm to
the Debtor, its estate and its subsidiaries pending the Final Hearing. Under the
circumstances, the notice given by the Debtor of the Motion and the Interim
Hearing (i) was, in the Debtor’s good faith belief, the best available under the
circumstances, (ii) constitutes due and sufficient notice thereof and (iii)
complies with Bankruptcy Rules 4001(b) and (c) and the SDNY Local Rules. No
further notice of the relief sought at the Interim Hearing is necessary or
required.

 

 
6

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5.     Debtor’s Stipulations. Without prejudice to the rights of any other party
(but subject to the limitations thereon contained in paragraphs 19 and 26
below), the Debtor admits, stipulates and agrees that:

 

(a)     Prepetition Debt. (i) As of the Petition Date, the Prepetition Obligors
were indebted and liable to the Prepetition Secured Lenders, without defense,
counterclaim or offset of any kind, in the aggregate amount of (A) approximately
$1,200,000,000 in principal amount owing under the Prepetition Credit Agreement,
and (B) all accrued and unpaid interest and fees thereon and any additional
accrued and unpaid fees, expenses (including any reasonable and documented
attorneys’, accountants’, appraisers’ and financial advisors’ fees and expenses
that are chargeable or reimbursable under the Existing Agreements), charges and
other amounts, in each case, due under the Existing Agreements (collectively,
the “Prepetition Debt”), (ii) the Prepetition Debt constitutes the legal, valid
and binding obligation of the Debtor, enforceable in accordance with the terms
of the Existing Agreements (other than in respect of the stay of enforcement
arising from section 362 of the Bankruptcy Code) and (iii) no portion of the
Prepetition Debt is subject to avoidance, recharacterization, recovery or
subordination pursuant to the Bankruptcy Code or applicable nonbankruptcy law;

 

(b)     the Existing Agreements are valid, binding and enforceable;

 

(c)     the liens and security interests granted to the Prepetition Agent
pursuant to and in connection with the Existing Agreements (including, without
limitation, all security agreements, pledge agreements, mortgages, deeds of
trust, account control agreements and other security documents executed by the
Debtor or any other loan party thereto in favor of the Prepetition Agent, for
its benefit and for the benefit of the Prepetition Secured Lenders)
(the “Prepetition Liens”), (i) are valid, binding, perfected, enforceable,
first-priority liens and security interests in the personal and real property
described in the Existing Agreements (the “Prepetition Collateral”), (ii) were
granted to, or for the benefit of, the Prepetition Secured Creditors for fair
consideration and reasonably equivalent value, (iii) are not subject to
avoidance, recharacterization or subordination pursuant to the Bankruptcy Code
or applicable nonbankruptcy law and (iv) are subject and subordinate only to (A)
the DIP Liens (as defined below), (B) the Carve-Out (as defined below) to which
the DIP Liens are subject and (C) valid, perfected and unavoidable liens
permitted under the Existing Agreements to the extent that such permitted liens
are senior to or pari passu with the liens of the Prepetition Agent on the
Prepetition Collateral;

 

 
7

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(d)     the Debtor’s borrowings from the DIP Lenders under the DIP Facility and
this Interim Order will be used in a manner consistent with the terms and
conditions of the DIP Documents, solely for (a) working capital and other
general corporate purposes, (b) permitted payment of costs of administration of
this Case, and (c) providing liquidity to the Debtor’s subsidiaries;

 

(e)     (i) the proceeds from the DIP Loans shall not be loaned or advanced to,
or invested in (in each case, directly or indirectly), any entity that is not a
subsidiary of the Debtor or a Guarantor, (ii) the proceeds from the DIP Facility
loaned or advanced to, or invested in, any subsidiary of the Debtor or a
Guarantor shall be evidenced by an intercompany note, in form and substance
reasonably satisfactory to the DIP Agent, for the full amount of the proceeds so
loaned, advanced or invested, (iii) such intercompany note shall be pledged to
the DIP Agent, for the benefit of the DIP Lenders, to secure the DIP Obligations
(as defined herein), and (iv) all intercompany liens of the Debtor and the
Guarantors, if any, will be contractually subordinated to the liens securing the
DIP Facility and to the Adequate Protection Liens (as defined herein) on terms
satisfactory to the DIP Agent; and

 

 
8

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(f)     subject to the reservation of rights set forth in paragraph 19 below,
each Obligor (as defined in the Prepetition Credit Agreement) shall be deemed to
have forever waived, discharged and released each of the Prepetition Secured
Creditors and their respective affiliates and each of the respective members,
managers, equity holders, agents, attorneys, financial advisors, consultants,
officers, directors, employees and other representatives thereof (all of the
foregoing, solely in their respective capacities as such, collectively, the
“Prepetition Secured Lender Releasees”) of any and all “claims” (as defined in
the Bankruptcy Code), counterclaims, causes of action (including, without
limitation, causes of action in the nature of “lender liability”), defenses,
setoff, recoupment or other offset rights against any and all of the Prepetition
Secured Lender Releasees, whether arising at law or in equity, relating to
and/or otherwise in connection with the Prepetition Obligations, the Prepetition
Liens or the debtor-creditor relationship between any of the Prepetition Agent
or the Prepetition Secured Lenders, on the one hand, and the Debtor and each
Obligor (as defined in the Prepetition Credit Agreement), on the other hand,
from the beginning of time through the date hereof, including, without
limitation, (i) any recharacterization, subordination, avoidance or other claim
arising under or pursuant to section 105 or chapter 5 of the Bankruptcy Code or
under any other similar provisions of applicable state law, federal law or
municipal law and (ii) any right or basis to challenge or object to the amount,
validity or enforceability of the Prepetition Obligations or any payments made
on account of the Prepetition Obligations, or the validity, enforceability,
priority or non-avoidability of the Prepetition Liens securing the Prepetition
Obligations. For the avoidance of doubt, the foregoing release shall not act to
release any independent, non-derivative claims of third parties against the
Prepetition Secured Lender Releasees.

 

 
9

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6.     Findings Regarding the DIP Facility.

 

(a)     Good cause has been shown for the entry of this Interim Order.

 

(b)     The Debtor has an immediate need to enter into the DIP Facility and use
Cash Collateral in order to permit, among other things, the orderly continuation
of the operation of its business, to maintain business relationships with
vendors, suppliers and customers, to make capital expenditures, and to satisfy
other working capital and operational needs. The access of the Debtor to
sufficient working capital and liquidity made available through the use of Cash
Collateral, incurrence of new indebtedness for borrowed money and other
financial accommodations provided for, under or in connection with the DIP
Facility is vital to the preservation and maintenance of the value of the Debtor
and to a successful reorganization of the Debtor or sale of the Debtor’s assets
as a going concern or otherwise.

 

(c)     The Debtor is unable to obtain financing on more favorable terms from
sources other than the DIP Lenders under the DIP Facility and is unable to
obtain adequate unsecured credit allowable under section 503(b)(1) of the
Bankruptcy Code as an administrative expense. The Debtor is also unable to
obtain secured credit allowable under sections 364(c)(1), 364(c)(2) and
364(c)(3) of the Bankruptcy Code without the Debtor granting to the DIP Agent
and the DIP Lenders, subject to the Carve-Out as provided for herein, the DIP
Liens and the Superpriority Claims (as defined below) under the terms and
conditions set forth in this Interim Order and in the DIP Documents, as well as
any and all other protections provided to the DIP Agent and the DIP Lenders
herein and therein.

 

 
10

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(d)     The terms of the DIP Facility and the use of Cash Collateral are fair
and reasonable, reflect the Debtor’s exercise of prudent business judgment
consistent with their fiduciary duties and constitute reasonably equivalent
value and fair consideration.

 

(e)     The DIP Facility has been negotiated in good faith and at arm’s length
among the Debtor, the DIP Agent, the Arranger and the DIP Lenders, and all of
the Debtor’s obligations and indebtedness arising under, in respect of or in
connection with the DIP Facility and the DIP Documents, including without
limitation, (i) all loans made to the Debtor pursuant to the superpriority
secured debtor-in-possession credit agreement, substantially in the form
attached as Exhibit B to the Motion (the “DIP Credit Agreement”), and (ii) all
other “Obligations” (as defined in the DIP Credit Agreement) of the Debtor, in
each case owing to the DIP Agent, any DIP Lender or any of their respective
affiliates, in accordance with the terms of the DIP Documents (all of the
foregoing, collectively, the “DIP Obligations”), shall be deemed to have been
extended by the DIP Agent and the DIP Lenders and their affiliates in good
faith, as that term is used in section 364(e) of the Bankruptcy Code and in
express reliance upon the protections offered by section 364(e) of the
Bankruptcy Code, and the DIP Agent and the DIP Lenders (and the successors and
assigns of each) shall be entitled to the full protection of section 364(e) of
the Bankruptcy Code in the event that this Interim Order or any provision hereof
is vacated, reversed or modified, on appeal or otherwise.

 

(f)     Based upon the record before the Court, the terms of the DIP Facility,
the use of Cash Collateral and the adequate protection granted in this Interim
Order have been negotiated at arm’s length and in good faith, as that term is
used in section 364(e) of the Bankruptcy Code, and are in the best interests of
the Debtor and its estate and creditors and are consistent with the Debtor’s
fiduciary duties.

 

 
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(g)     In light of the subordination of the Prepetition Liens to the Carve-Out
and the DIP Liens, the Prepetition Secured Creditors are entitled to all of the
rights and benefits of section 552(b) of the Bankruptcy Code, and, subject to
the entry of the Final Order, the “equities of the case” exception shall not
apply.

 

(h)     The Debtor has requested entry of this Interim Order pursuant to
Bankruptcy Rules 4001(b)(2) and 4001(c)(2). Absent granting the relief set forth
in this Interim Order, the Debtor’s estate and business will be immediately and
irreparably harmed. Consummation of the DIP Facility and the use of Cash
Collateral in accordance with this Interim Order and the DIP Documents are
therefore in the best interests of the Debtor’s estate.

 

7.     Authorization of the DIP Facility and the DIP Documents.

 

(a)     The Debtor is hereby authorized to enter into and perform all
obligations under the DIP Documents. The Debtor is hereby authorized to borrow
money pursuant to the DIP Credit Agreement, and the Guarantors are hereby
authorized to guarantee such borrowings and the Debtor’s obligations with
respect to such borrowings, up to an aggregate principal amount of $25,000,000
on an interim basis and up to an aggregate principal amount of $50,000,000
subject to entry of the Final Order and as set forth in the DIP Documents (plus
interest, fees, amounts paid-in-kind, expenses (including professional fees and
expenses) and other amounts, in each case, as provided for in the DIP Documents)
under the DIP Facility, in accordance with the terms of this Interim Order and
the DIP Documents, which borrowings shall be used for all purposes permitted
under the DIP Documents, including, without limitation, to provide working
capital for the Debtor and to pay interest, fees and expenses in accordance with
this Interim Order and the DIP Documents.

 

 
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(b)     In furtherance of the foregoing and without further approval of this
Court, the Debtor is authorized and directed to perform all acts, to make,
execute and deliver all instruments and documents (including, without
limitation, the execution or recordation of security agreements, mortgages and
financing statements), and to pay all fees and expenses, that may be required or
reasonably necessary for the Debtor’s performance of its obligations under or
related to the DIP Facility, including, without limitation:

 

(i)     the execution, delivery and performance of the Loan Documents (as
defined in the DIP Credit Agreement) and any exhibits attached thereto,
including, without limitation, the DIP Credit Agreement, the Security Agreement
(as defined in the DIP Credit Agreement), any account control agreements and all
other related documents contemplated by the foregoing (collectively, and
together with the letter agreements referred to in clause (iii) below, the “DIP
Documents”);

 

(ii)     the execution, delivery and performance of one or more amendments to or
waivers of the requirements of the DIP Documents, including the DIP Credit
Agreement for, among other things, the purpose of adding additional financial
institutions as DIP Lenders and reallocating the commitments for the DIP
Facility among the DIP Lenders, in each case in such form as the Debtor, the DIP
Agent and the applicable DIP Lenders may agree (it being understood that no
further approval of the Court shall be required for amendments to the DIP Credit
Agreement (and any fees paid in connection therewith) that do not shorten the
maturity of the extensions of credit thereunder or increase the aggregate
commitments or the rate of interest payable thereunder);

 

(iii)     the non-refundable payment to the DIP Agent, the Arranger or the DIP
Lenders, as the case may be, of any fees and other amounts due, including any
reimbursement of indemnified obligations referred to in the DIP Credit Agreement
(and in any separate letter agreements between such applicable parties and the
Debtor in connection with the DIP Facility) and reasonable costs and expenses as
may be due from time to time, including, without limitation, the reasonable fees
and expenses of the professionals retained as provided for in the DIP Documents,
without the need to file retention motions or fee applications, in each case,
solely to the extent provided for in the DIP Credit Agreement;

 

 
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(iv)     the performance of all other acts required under or in connection with
the DIP Documents, including the granting and perfection of the DIP Liens and
the Superpriority Claims as permitted herein and therein; and

 

(v)     cause the execution and delivery of and performance under the
Guarantees.

 

(c)     Upon execution and delivery of the DIP Documents, the DIP Documents
shall constitute valid and binding obligations of the Debtor, enforceable
against the Debtor in accordance with the terms of such DIP Documents and this
Interim Order. No obligation, payment, transfer or grant of security under the
DIP Documents or this Interim Order shall be stayed, restrained, voidable or
recoverable under the Bankruptcy Code or under any applicable law (including
without limitation, under section 502(d) of the Bankruptcy Code), or subject to
any defense, reduction, setoff, recoupment or counterclaim.

 

8.     Superpriority Claims.

 

(a)     Pursuant to section 364(c)(1) of the Bankruptcy Code, all of the DIP
Obligations shall constitute allowed claims (the “Superpriority Claims”) against
the Debtor (without the need to file any proof of claim) with priority over any
and all administrative expenses, diminution claims (including all Adequate
Protection Obligations (as defined below)) and all other claims against the
Debtor, now existing or hereafter arising, of any kind whatsoever, including,
without limitation, all administrative expenses of the kind specified in
sections 503(b) and 507(b) of the Bankruptcy Code, and over any and all
administrative expenses or other claims arising under sections 105, 326, 328,
330, 331, 365, 503(b), 506(c), (subject only to and effective upon entry of the
Final Order, to the extent therein approved), 507(a), 507(b), 726, 1113 or 1114
of the Bankruptcy Code, whether or not such expenses or claims may become
secured by a judgment lien or other non-consensual lien, levy or attachment,
which allowed Superpriority Claims shall be payable from and have recourse to
all pre- and postpetition property of the Debtor and all proceeds thereof (but
excluding Avoidance Actions and, prior to entry of the Final Order, any
Avoidance Proceeds), subject only to the payment of the Carve-Out to the extent
specifically provided for herein. Any payments, distributions or other proceeds
received on account of such Superpriority Claims shall be promptly delivered to
the DIP Agent to be applied or further distributed by the DIP Agent on account
of the DIP Obligations in such order as is specified in the DIP Documents. The
Superpriority Claims shall be entitled to the full protection of section 364(e)
of the Bankruptcy Code in the event that this Interim Order or any provision
hereof is vacated, reversed or modified, on appeal or otherwise.

 

 
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(b)     For purposes hereof, the “Carve-Out” means (i) all fees required to be
paid pursuant to 28 U.S.C. §1930 and 31 U.S.C. §3717, (ii) all reasonable fees
and expenses incurred by a trustee under section 726(b) of the Bankruptcy Code
in an amount not to exceed $50,000, (iii) to the extent allowed at any time
whether by interim order, procedural order, or otherwise, but subject in all
respects to the Budget (as defined in the DIP Credit Agreement), all accrued and
unpaid fees, disbursements, costs and expenses (“Professional Fees”) (other than
any restructuring fee, sale fee or other success fee of any investment bankers
or financial advisors of the Debtor (except the Debtor’s current financial
advisor Moelis & Company engaged pursuant to its existing engagement letter with
the Debtor) or the Creditors’ Committee (as defined below)), incurred by
professionals or professional firms whose retention has been approved by the
Court during this Case pursuant to sections 327 and 1103 of the Bankruptcy Code
(collectively, “Professional Persons”) retained by the Debtor and the official
committee of unsecured creditors appointed in this Case (the “Creditors’
Committee”), if any, at any time before or on the first business day following
delivery by the DIP Agent of a Carve Out Trigger Notice (as defined below), to
the extent such Professional Fees are allowed by this Court whether by interim
order, procedural order or otherwise, prior to or after delivery of a Carve Out
Trigger Notice; and (iv) after the first business day following delivery by the
DIP Agent of the Carve Out Trigger Notice, to the extent allowed by this Court
whether by interim order, procedural order or otherwise, prior to or after
delivery of a Carve Out Trigger Notice, all unpaid fees, disbursements, costs
and expenses incurred by Professional Persons, in an aggregate amount not to
exceed $2,500,000 (the amount set forth in this clause (iv) being the “Carve-Out
Cap”); provided, however, that none of the Prepetition Collateral, the Cash
Collateral, the Collateral, the DIP Facility or borrowings thereunder, the
Carve-Out or any portion or proceeds of the foregoing shall be used by any party
in connection with (1) objecting to or contesting the validity or enforceability
of the Interim Order or Final Order or any obligations outstanding under the DIP
Documents or the Existing Agreements; (2) asserting or prosecuting any claims or
defenses or causes of action against the DIP Agent, the DIP Lenders or their
respective agents, affiliates, representatives, attorneys or advisors or
preventing, hindering or otherwise delaying the DIP Agent’s or the DIP Lenders’
assertion, enforcement or realization on the Collateral or Superpriority Claims
once an Event of Default has occurred and is continuing in accordance with the
DIP Documents and this Interim Order, provided that the Debtor may contest or
dispute whether an Event of Default has occurred as provided for in paragraph 10
of this Interim Order; (3) seeking to modify any of the rights granted under the
Interim Order or Final Order to the DIP Agent, any DIP Lender, the Prepetition
Agent or any Prepetition Lender, or for any act which has the effect of
materially or adversely modifying or compromising the rights and remedies of the
DIP Agent or any DIP Lender as set forth in any DIP Documents or the Prepetition
Agent or any Prepetition Lender as set forth in the Existing Agreements; (4)
making any payment in settlement or satisfaction of any prepetition or
administrative expense claim, unless in compliance with the DIP Documents and,
with respect to the payment of any prepetition claim or non-ordinary course
administrative expense claim, separately approved by the Court pursuant to a
filing in form and substance acceptable to the DIP Agent and the Required
Lenders (as defined in the DIP Credit Agreement), provided that the motions
filed by the Debtor on the Petition Date shall be deemed to be so acceptable;
(5) objecting to, contesting, delaying, preventing or interfering with in any
way the exercise of rights and remedies by the DIP Agent and the DIP Lenders
with respect to the Collateral once an Event of Default has occurred, provided
that the Debtor may contest or dispute whether an Event of Default has occurred
as provided for in paragraph 10 of this Interim Order; (6) except as expressly
provided by the DIP Documents, making any payment or distribution to any
affiliate, equity holder, or insider of the Debtor outside of the ordinary
course of business; (7) using or seeking to use any insurance proceeds related
to the Collateral except as permitted by the DIP Documents or otherwise with the
consent of the DIP Agent and, to the extent provided in the DIP Credit
Agreement, the DIP Lenders; or (8) a request, without the prior consent of the
DIP Agent, and, to the extent provided in the DIP Credit Agreement, the DIP
Lenders, for authorization to obtain debtor in possession financing pursuant to
section 364(c) or (d) of the Bankruptcy Code that does not indefeasibly
discharge in full in cash the DIP Obligations immediately upon the closing of
such financing. For purposes of the foregoing, the term “Carve-Out Trigger
Notice” shall mean a written notice delivered by the DIP Agent to the Debtor and
its lead counsel, the U.S. Trustee and lead counsel to the Creditors’ Committee,
if any, which notice may be delivered following the occurrence and during the
continuation of an Event of Default under the DIP Documents, expressly stating
that the Carve-Out Cap is invoked and the Event of Default that is alleged to
have occurred and be continuing.

 

 
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(c)     The DIP Agent, DIP Lenders, Prepetition Agent, and Prepetition Lenders
shall not be responsible for the direct payment or reimbursement of any fees or
disbursements of any Professional Persons incurred in connection with this Case
or any successor case under any chapter of the Bankruptcy Code. Nothing in this
Interim Order or otherwise shall be construed (i) to obligate the DIP Agent, DIP
Lenders, Prepetition Agent or Prepetition Lenders, in any way to pay
compensation to or to reimburse expenses of any Professional Persons, or to
guarantee that the Debtor has sufficient funds to pay such compensation or
reimbursement; (ii) to increase the Carve Out if actual Allowed Professional
Fees are higher in fact than reflected in the Budget (as defined in the DIP
Credit Agreement); or (iii) as consent to the allowance of any professional fees
or expenses of any Professional Persons. Any funding of the Carve Out shall be
added to and made a part of the DIP Obligations and secured by the Collateral
and otherwise entitled to the protections granted under this Interim Order, the
DIP Documents, the Bankruptcy Code and applicable law. The DIP Agents’ and DIP
Lenders’ liens and claims shall, however, be subject to the Carve Out as set
forth in this Interim Order.

 

 
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9.     DIP Liens.

 

As security for the DIP Obligations, effective and perfected upon the date of
this Interim Order and without the necessity of the execution, recordation of
filings by the Debtor of mortgages, security agreements, control agreements,
pledge agreements, financing statements or other similar documents, or the
possession or control by the DIP Agent of, or over, any Collateral (including
Cash Collateral), the security interests and liens identified in clauses (a),
(b) and (c) below are hereby granted to the DIP Agent for its own benefit and
the benefit of the DIP Lenders (all property identified in clauses (a), (b) and
(c) below, together with all other property to which the DIP Agent is granted a
lien under the DIP Documents (other than as expressly excluded pursuant to this
Interim Order), being collectively referred to as the “Collateral”), subject,
only in the event of the occurrence and during the continuance of an Event of
Default, to the payment of the Carve-Out as provided herein (all such liens and
security interests granted to the DIP Agent, for its benefit and for the benefit
of the DIP Lenders, pursuant to this Interim Order and the DIP Documents, the
“DIP Liens”). Notwithstanding the foregoing, the DIP Agent and the DIP Lenders
may take any action (and are, to the extent necessary in connection therewith,
hereby granted relief from the automatic stay), to evidence, confirm, validate
or perfect, or to ensure the contemplated priority of, such liens, and the
Debtor shall execute and deliver to the DIP Agent and the DIP Lenders all such
financing statements, notices and other documents as the DIP Agent or any DIP
Lender may reasonably request in connection therewith and shall deliver account
control agreements or other documentation in respect of and evidencing
perfection of all collection and deposit accounts to the extent required by the
DIP Documents.

 

(a)     First Lien on Unencumbered Property. Pursuant to section 364(c)(2) of
the Bankruptcy Code, a valid, binding, continuing, enforceable, fully-perfected
first priority senior security interest in and lien upon all pre- and
postpetition tangible and intangible property of the Debtor and the Debtor’s
estate, whether existing on the Petition Date or thereafter acquired, that, on
or as of the Petition Date is not subject to valid, perfected and non-avoidable
liens, other than the junior and subordinated Adequate Protection Liens (or to
valid liens in existence as of the Petition Date that are subsequently perfected
as permitted by section 546(b) of the Bankruptcy Code) (collectively,
“Unencumbered Property”), including without limitation, all inventory, accounts
receivable, general intangibles, chattel paper, contracts, owned real estate,
real and personal property leaseholds, property, plants, fixtures and machinery
and equipment, vehicles, vessels, deposit accounts, cash and cash collateral of
the Debtor (whether maintained with the DIP Agent or otherwise) and any
investment of such cash and cash collateral, including Cash Collateral, letter
of credit rights, patents, copyrights, trademarks, trade names, rights under
license agreements and other intellectual property and capital stock of
subsidiaries of the Debtor. Unencumbered Property shall exclude the Debtor’s
claims and causes of action under sections 502(d), 544, 545, 547, 548, 549 and
550 of the Bankruptcy Code, or any other avoidance actions under the Bankruptcy
Code (collectively, “Avoidance Actions”), but, subject only to and effective
upon entry of the Final Order, shall include any proceeds or property recovered,
unencumbered or otherwise the subject of successful Avoidance Actions, whether
by judgment, settlement or otherwise (“Avoidance Proceeds”).

 

 
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(b)     Liens Priming Prepetition Secured Lenders’ Liens. Pursuant to section
364(d)(1) of the Bankruptcy Code, a valid, binding, continuing, enforceable,
fully-perfected first priority senior priming security interest in and lien upon
all pre- and postpetition property of the Debtor (including, without limitation,
cash and cash collateral of the Debtor (whether maintained with the DIP Agent or
otherwise), including Cash Collateral, and any investment of such cash and cash
collateral, inventory, accounts receivable, letter of credit rights and other
rights to payment whether arising before or after the Petition Date, contracts,
properties, plants, equipment, vehicles, vessels, general intangibles,
documents, instruments, interests in leaseholds, real properties, patents,
copyrights, trademarks, trade names, other intellectual property, capital stock
of subsidiaries and the proceeds, product, offspring of profits of all the
foregoing), whether now existing or hereafter acquired, that is subject to the
existing liens presently securing the Prepetition Debt. Such security interests
and liens shall be senior in all respects to the interests in such property of
the Prepetition Secured Creditors arising from current and future liens of the
Prepetition Secured Creditors (including, without limitation, the Adequate
Protection Liens granted hereunder), but shall not be senior to (i) any valid,
perfected and unavoidable interests of other secured parties arising out of
liens, if any, on such property existing immediately prior to the Petition Date,
(ii) any valid, perfected and unavoidable interests in such property arising out
of liens to which the liens of the Prepetition Secured Creditors become subject
subsequent to the Petition Date as permitted by section 546(b) of the Bankruptcy
Code.

 

 
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(c)     Liens Junior to Certain Other Liens. Pursuant to section 364(c)(3) of
the Bankruptcy Code, a valid, binding, continuing, enforceable, fully-perfected
security interest in and lien upon all pre- and postpetition tangible and
intangible property of the Debtor and the Debtor’s estate (other than the
property described in clauses (a), (b) or (d) of this paragraph 9, as to which
the liens and security interests in favor of the DIP Agent will be as described
in such clauses), whether now existing or hereafter acquired, that is subject to
valid, perfected and unavoidable liens in existence immediately prior to the
Petition Date, or to any valid and unavoidable liens in existence immediately
prior to the Petition Date that are perfected subsequent to the Petition Date as
permitted by section 546(b) (in each case, other than the Prepetition Liens and
the Adequate Protection Liens) of the Bankruptcy Code, which security interests
and liens in favor of the DIP Agent are junior to such valid, perfected and
unavoidable liens.

 

 
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(d)     Liens Senior to Certain Other Liens. The DIP Liens and the Adequate
Protection Liens (as defined below) shall not be subject or subordinate to
(i) any lien or security interest that is avoided and preserved for the benefit
of the Debtor and its estate under section 551 of the Bankruptcy Code or (ii)
unless otherwise provided for in the DIP Documents, any liens arising after the
Petition Date including, without limitation, any liens or security interests
granted in favor of any federal, state, municipal or other domestic or foreign
governmental unit (including any regulatory body), commission, board or court
for any liability of the Debtor.

 

10.     Protection of DIP Lenders’ Rights.

 

(a)     So long as there are any borrowings or other amounts (other than
contingent indemnity obligations as to which no claim has been asserted when all
other amounts have been indefeasibly paid in full in cash) outstanding, or the
DIP Lenders have any outstanding Commitments (as defined in the DIP Credit
Agreement), under the DIP Credit Agreement, the Prepetition Secured Creditors
shall (i) have no right to and shall take no action to foreclose upon or recover
in connection with the liens granted on the Collateral thereto pursuant to the
Existing Agreements or this Interim Order, or otherwise seek to exercise or
exercise any enforcement rights or remedies against any Collateral, including in
connection with the Adequate Protection Liens, (ii) be deemed to have consented
to any transfer, disposition or sale of, or release of liens on, Collateral, to
the extent such transfer, disposition, sale or release is authorized under the
DIP Documents, (iii) not file any financing statements, trademark filings,
copyright filings, mortgages, notices of lien or similar instruments, or
otherwise take any action to perfect their security interests in the Collateral
unless, solely as to this clause (iii) (other than with respect to mortgages,
which shall not be filed), prior to the expiration of the Challenge Period,
there has been a Successful Challenge (as defined below) and (iv) deliver or
cause to be delivered, at the Debtor’s cost and expense, any termination
statements, releases and/or assignments in favor of the DIP Lenders or other
documents necessary to effectuate and/or evidence the release, termination
and/or assignment (to the extent provided herein) of liens on any portion of the
Collateral that is sold or otherwise disposed, including the Prepetition Liens
or Adequate Protection Liens upon the sale or disposition of such Collateral or
upon the expiration of the Challenge Period (without the occurrence of a
Successful Challenge).

 

 
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(b)     Notwithstanding section 362 of the Bankruptcy Code, the automatic stay
provisions of section 362 of the Bankruptcy Code shall be vacated and modified
to the extent necessary to permit the DIP Agent and the DIP Lenders to exercise
all rights and remedies provided for in the DIP Loan Documents and this Interim
Order, including to take any or all of the following actions, without further
order of or application or motion to this Court, immediately upon the occurrence
of the Termination Date (as defined in the DIP Credit Agreement) and, but
subject in all respects to clause (b) of paragraph 17 and the Carve Out Cap as
set forth in clause (b) of paragraph 8, upon seven days’ prior written notice
(which seven days’ notice period (the “Notice Period”) shall run concurrently
with any notice provided under the DIP Documents) to the Debtor and the
Creditors’ Committee, if any, of the DIP Agent’s intent to exercise such rights
and remedies: (i) immediately terminate the Debtor’s use of any Cash Collateral;
(ii) freeze monies or balances in the Debtor’s accounts and sweep all funds
contained therein and apply the same to pay the DIP Obligations; (iii) declare
all DIP Obligations to be immediately due and payable; (iv) immediately set-off
any and all amounts in accounts maintained by the Debtor with the DIP Agent or
any DIP Lender or on their behalf against the DIP Obligations, or otherwise
enforce any and all rights against the Collateral in the possession of the DIP
Agent or any of the DIP Lenders or being held on their behalf, including,
without limitation, disposition of the Collateral solely for application towards
the DIP Obligations; and (v) take any other actions or exercise any other rights
or remedies permitted under this Interim Order, the DIP Documents or applicable
law to effect the repayment of the DIP Obligations; provided that neither the
Debtor, the Creditors’ Committee, if any, nor any other party-in-interest shall
have the right to contest the enforcement of the remedies set forth in this
Interim Order and the DIP Documents on any basis other than an assertion that an
Event of Default has not occurred or has been cured within the cure periods
expressly set forth herein or in the applicable DIP Documents; and provided
further that during the Notice Period, but subject in all respects to clause (b)
of paragraph 17 and paragraph 20, the Debtor shall have no authority to borrow
under the DIP Facility, and the DIP Agent may terminate the DIP Facility and
declare all DIP Obligation to be immediately due and payable, and the Debtor’s
authority to use Cash Collateral shall be as set forth in the Budget (as defined
in the DIP Credit Agreement) and limited solely to payment of expenses critical
to preservation of the Debtor’s estate and the payment of the fees, costs and
expenses to administer this Case, as agreed by the DIP Agent in its sole
discretion. The Debtor, the Prepetition Agent and the Prepetition Secured
Creditors shall waive any right to seek relief under the Bankruptcy Code,
including under section 105 thereof, to the extent such relief would restrict or
impair the rights and remedies of the DIP Agent and the DIP Lenders set forth in
this Interim Order and in the DIP Documents. The Debtor, the DIP Agent and the
DIP Lenders shall waive any right to seek relief under the Bankruptcy Code,
including under section 105 thereof, to the extent such relief would restrict or
impair the rights and remedies of the Prepetition Agent set forth in this
Interim Order.

 

 
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(c)     In no event shall the DIP Agent, the DIP Lenders, the Prepetition Agent
or any of the Prepetition Secured Creditors be subject to the equitable doctrine
of “marshaling” or any similar doctrine with respect to the Collateral.

 

(d)     No rights, protections, or remedies of the DIP Agents or the DIP Lenders
granted by the provisions of this Interim Order or the DIP Documents shall be
limited, modified, or impaired in any way by (i) any actual or purported
withdrawal of the consent of any party to the Debtor’s authority to use Cash
Collateral or to grant the DIP Liens and the Superiority Claims or (ii) any
actual or purported termination of the Debtor’s authority to use Cash Collateral
or to grant the DIP Liens and the Superiority Claims.

 

11.     Limitation on Charging Expenses Against Collateral. Subject only to and
effective upon entry of the Final Order and to the extent provided therein,
except to the extent of the Carve-Out, no expenses of administration of this
Case, any successor case or any future proceeding that may result therefrom,
including liquidation in bankruptcy or other proceedings under the Bankruptcy
Code, shall be charged against or recovered from the Collateral pursuant to
section 506(c) of the Bankruptcy Code or any similar principle of law, without
the prior written consent of the DIP Agent (acting with the consent of the
Required Lenders (as defined in the DIP Credit Agreement)), the Prepetition
Agent and the Prepetition Secured Lenders, as the case may be with respect to
their respective interests, and no such consent shall be implied from any other
action, inaction or acquiescence by the DIP Agent, the DIP Lenders, the
Prepetition Agent or the Prepetition Secured Lenders, respectively.

 

12.     The Cash Collateral. The Prepetition Collateral includes cash collateral
within the meaning of section 363(a) of the Bankruptcy Code. Any cash and cash
equivalent proceeds of the Prepetition Collateral, including any cash and cash
equivalent proceeds located in deposit or securities accounts subject to control
agreements or otherwise, are cash collateral of the Prepetition Secured
Creditors within the meaning of section 363(a) of the Bankruptcy Code. Except as
otherwise specifically provided for herein, cash collateral of any of the
Prepetition Secured Creditors within the meaning of section 363(a) of the
Bankruptcy Code (including, without limitation, all proceeds of Prepetition
Collateral) is collectively referred to herein as “Cash Collateral”.

 

 
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13.     Use of Cash Collateral. The Debtor is hereby authorized, subject to the
terms and conditions of the DIP Documents and this Interim Order, to use all
Cash Collateral, and each of the Prepetition Secured Creditors is directed
promptly to turn over to the Debtor all Cash Collateral received or held by
them; provided that the Prepetition Secured Creditors are granted adequate
protection as provided herein. Unless and to the extent otherwise consented to
by the Required Lenders (as defined in the DIP Credit Agreement) in accordance
with the DIP Documents, the Debtor’s right to use Cash Collateral hereunder
shall terminate automatically on the Termination Date upon the giving of five
business days’ prior written notice (which shall run concurrently with any
notice provided under the DIP Documents) to the Debtor and the Creditors’
Committee, if any, subject to the Carve Out Cap as set forth in paragraph 8(b),
the second proviso in paragraph 10(b) and paragraph 17(b) hereof.
Notwithstanding the foregoing, the Debtor will apply the collections and
proceeds from asset sales, debt or equity issuances, and insurance recoveries to
reduce the DIP Obligations, in each case, to the extent required by the terms of
the DIP Credit Agreement.

 

14.     Adequate Protection. The Prepetition Secured Lenders are entitled,
pursuant to sections 361, 363(e) and 364(d)(1) of the Bankruptcy Code, to
adequate protection of their interest in the Prepetition Collateral, including
the Cash Collateral, for and equal in amount to the aggregate diminution in the
value of the Prepetition Secured Lenders’ interest in the Prepetition
Collateral, including, without limitation, any such diminution resulting from
the sale, lease or use by the Debtor (or other decline in value) of Cash
Collateral and any other Prepetition Collateral, the priming of the Prepetition
Agent’s security interests and liens in the Prepetition Collateral by the DIP
Agent and the DIP Lenders pursuant to the DIP Documents and this Interim Order,
and the imposition of the automatic stay pursuant to section 362 of the
Bankruptcy Code. As adequate protection, the Prepetition Agent and the
Prepetition Secured Lenders are hereby granted the following (collectively, the
“Adequate Protection Obligations”):

 

 
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(a)     Adequate Protection Liens. The Prepetition Agent (for itself and for the
benefit of the Prepetition Secured Lenders) is hereby granted (effective and
perfected upon the date of this Interim Order and without the necessity of the
execution by the Debtor of mortgages, security agreements, pledge agreements,
financing statements or other agreements), in the amount of such diminution, (1)
a replacement security interest in and lien upon all the Collateral (such liens
securing the Adequate Protection Obligations, the “Adequate Protection Liens”),
subject and subordinate only to (i) the DIP Liens and any liens on the
Collateral to which such DIP Liens are junior and (ii) the Carve-Out and (2) (A)
until such time as all of the DIP Obligations are indefeasibly paid in full in
cash in accordance with the DIP Documents and this Interim Order, the
Prepetition Agent and the Prepetition Secured Creditors shall have no right to
seek or exercise any enforcement rights or remedies in connection with the
Adequate Protection Liens, including, without limitation, in respect of the
occurrence or continuance of any Event of Default (as defined in the Prepetition
Credit Agreement); (B) the Prepetition Agent and the Prepetition Secured
Creditors shall be deemed to have consented to any sale or disposition of
Collateral permitted under the DIP Credit Agreement or approved, arranged for or
by the DIP Agent or the Required Lenders (as defined in the DIP Credit
Agreement), and shall terminate and release upon any such sale or disposition
all of its liens on and security interests in such Collateral (where the DIP
Agent also releases any DIP Liens as necessary); (C) the Prepetition Agent
and/or the Prepetition Secured Creditors shall deliver or cause to be delivered,
at the Debtor’s costs and expense (for which the Prepetition Agent and/or the
Prepetition Secured Creditors, as the case may be, shall be reimbursed upon
submission to the Debtor of invoices or billing statements), any termination
statements, releases or other documents necessary to effectuate and/or evidence
the release and termination of any Prepetition Secured Creditors’ liens on or
security interests in any portion of the Collateral subject to any sale or
disposition permitted under the DIP Credit Agreement or approved or arranged for
by the DIP Agent or any of the DIP Lenders (where the DIP Agent also releases
any DIP Liens as necessary); and (D) upon the Final Order becoming a final and
nonappealable order and the expiration of the Challenge Period (as defined
below) with no challenge having been brought, or if such a challenge is brought,
until the entry of a final judgment and the payment to the Prepetition Agent and
the Prepetition Secured Creditors of all amounts owed by the Debtor under the
Existing Agreements and this Interim Order (or the Final Order), the Adequate
Protection Liens shall terminate and be released (automatically and without
further action of the parties), and the Prepetition Secured Creditors shall
execute and deliver such agreements to evidence and effectuate such termination
and release as the Debtor or the DIP Agent may request, and the Debtor and the
DIP Agent shall be authorized to file on behalf of the Prepetition Secured
Creditors such UCC termination statements or such other filings as may be
applicable to the extent such authorization is required under the Uniform
Commercial Code of the applicable jurisdiction. Without limiting the generality
of the foregoing, the Adequate Protection Liens granted to the Prepetition Agent
shall be junior and subordinate in all respects to the DIP Liens and the Carve
Out.

 

 
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(b)     Section 507(b) Claim. The Prepetition Agent and the Prepetition Secured
Creditors are hereby granted, subject only to the Superpriority Claims and the
Carve-Out, a superpriority claim, as provided for in section 507(b) of the
Bankruptcy Code, immediately junior to the Superpriority Claims and any other
claims under section 364(c)(1) of the Bankruptcy Code held by the DIP Agent and
the DIP Lenders, and payable from and having recourse to all prepetition and
postpetition property of the Debtor and all proceeds thereof (but excluding
Avoidance Actions and, prior to entry of the Final Order, any Avoidance
Proceeds); provided, however, that the Prepetition Agent and the Prepetition
Secured Creditors shall not receive or retain any payments, property or other
amounts in respect of the superpriority claims under section 507(b) of the
Bankruptcy Code granted hereunder or under the Existing Agreements unless and
until the DIP Obligations have indefeasibly been paid in full in cash in
accordance with the DIP Documents.

 

(c)     Fees and Expenses. As further adequate protection, the Debtor is
authorized and directed to provide adequate protection to the Prepetition Agent
and the Prepetition Lenders, in the form of: (i) current cash payments of all
reasonable out-of-pocket costs, fees and expenses payable to the Prepetition
Agent under the Existing Agreements as may hereafter be incurred in accordance
with the Existing Agreements, (ii) the reasonable fees and expenses of the
following legal, financial and other professionals collectively retained by the
Prepetition Agent and certain Prepetition Lenders: (a) Paul, Weiss, Rifkind,
Wharton & Garrison LLP, legal counsel, (b) Houlihan Lokey Capital, Inc.,
financial advisor, (c) maritime counsel; (d) foreign counsel for each applicable
jurisdiction, and (e) one local counsel to the Prepetition Agent upon any change
of venue, in each case in cash within ten (10) calendar days of receipt of an
invoice therefor without the need to file retention motions or fee applications,
(iii) continued maintenance and insurance of the Prepetition Collateral in
amounts and for the risks, and by the entities, as required under the Existing
Agreements; (iv) financial and other reporting substantially in compliance with
the Existing Agreements, and (v) all obligations, including accrued but unpaid
interest, under the Existing Agreements owing by the Debtor thereunder and other
fees owing by the Debtor thereunder shall continue to accrue interest (and
interest on interest) at the default rate applicable on the Petition Date under
the Existing Agreements, but shall not be payable in cash. No payments set forth
in clause (ii) above shall be subject to Court approval or required to be
maintained in accordance with the U.S. Trustee Guidelines, and no recipient of
any such payments shall be required to file any interim or final fee application
with the Court or otherwise seek Court’s approval of any such payments. The
Debtor shall provide a copy of such invoice to the U.S. Trustee
contemporaneously with the delivery of such invoice to the Debtor. Any such
invoice shall include the number of hours billed and a reasonably detailed
description of the services provided and the expenses incurred by the applicable
professional; provided, however, that any such invoice (i) may be redacted to
protect privileged, confidential or proprietary information, (ii) shall not be
required to contain individual time detail, and (iii) with respect to any
financial advisor or investment banker, shall not include the number of hours
billed or a description of services rendered if the engagement letter of such
financial advisor or investment banker describes the services to be rendered and
the fee amount requested. To the extent that the U.S. Trustee has an objection
to the fees and expenses of any such professional, the U.S. Trustee shall be
afforded ten (10) calendar days after receipt of such invoice to submit to the
applicable professional, the Debtor, counsel to the DIP Agent and counsel to the
Creditors’ Committee, if any, a written objection to the reasonableness of such
fees, which must contain a specific basis for the objection, and failure to
object with specificity will constitute a waiver of any objection to such
invoice. If any objection is properly submitted as set forth above and cannot be
resolved and/or withdrawn within ten (10) calendar days after such objection has
been properly submitted, the Court shall adjudicate the matter and fashion an
appropriate remedy. Payment of any such costs, fees and expenses shall not be
delayed based on any objections thereto, and the relevant agent or professional
shall only be required to disgorge amounts objected to upon being “so ordered”
pursuant to a final non-appealable order of the Bankruptcy Court.

 

 
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(d)     Notwithstanding anything in this paragraph 14 to the contrary, following
delivery of a Carve-Out Trigger Notice and prior to the payment to the
Prepetition Agent or any Prepetition Secured Creditor on account of any adequate
protection or otherwise, the Carve-Out Reserve (as defined in the DIP Credit
Agreement) shall have been fully funded and the DIP Obligations shall have been
paid in full.

 

(e)     The Adequate Protection Obligations (A) shall not be subject to sections
510, 549, 550 or 551 of the Bankruptcy Code or, subject to entry of the Final
Order, section 506(c) of the Bankruptcy Code or the “equities of the case”
exception of section 552 of the Bankruptcy Code, (B) shall not be subordinate
to, or pari passu with, (x) any lien that is avoided and preserved for the
benefit of the Debtor and its estate under section 551 of the Bankruptcy Code or
otherwise or (y) any intercompany or affiliate liens or claims of the Debtor,
and (C) shall be valid and enforceable against any trustee or any other estate
representative appointed in this Case or any successor cases, and/or upon the
dismissal of this Case.

 

 
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15.     Sufficiency of Adequate Protection. Under the circumstances and given
that the above-described adequate protection is consistent with the Bankruptcy
Code, including section 506(b) thereof, the Court finds that the adequate
protection provided herein is reasonable and sufficient to protect the interests
of the Prepetition Secured Lenders.

 

16.     Perfection of DIP Liens.

 

(a)     The DIP Agent and the DIP Lenders are hereby authorized, but not
required, to file or record financing statements or take control over deposit
accounts and securities accounts, in each case, in order to validate and perfect
the liens and security interests granted to them hereunder. Whether or not the
DIP Agent on behalf of the DIP Lenders in its discretion, chooses to file such
financing statements or take control over deposit accounts and securities
accounts, such liens and security interests shall be deemed valid, perfected,
allowed, enforceable, non-avoidable and not subject to challenge dispute or
subordination, at the time and on the date of entry of this Interim Order. Upon
the request of the DIP Agent, without any further consent of any party, the DIP
Agent, the Debtor and each DIP Lender are authorized and directed to take,
execute, deliver and file such instruments (in each case, without representation
or warranty of any kind) to enable the DIP Agent to further perfect the DIP
Liens.

 

(b)     A certified copy of this Interim Order may, in the discretion of the DIP
Agent, be filed with or recorded in filing or recording offices in addition to
or in lieu of such financing statements, mortgages, notices of lien or similar
instruments, and all filing offices are hereby authorized to accept such
certified copy of this Interim Order for filing and recording. For the avoidance
of doubt, the automatic stay provisions of section 362(a) of the Bankruptcy Code
shall be modified to the extent necessary to permit the DIP Agent to take all
actions, as applicable, referenced in this subparagraph (b) and in the
immediately preceding subparagraph (a).

 

 
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17.     Preservation of Rights Granted Under this Interim Order.

 

(a)     Except as otherwise provided for herein, or permitted under the DIP
Credit Agreement, no claim or lien having a priority superior to or pari passu
with those granted by this Interim Order to the DIP Agent and the DIP Lenders or
to the Prepetition Agent and the Prepetition Secured Lenders, respectively,
shall be granted or allowed while any portion of the DIP Facility (or any
refinancing thereof) or the Commitments thereunder or the DIP Obligations or the
Adequate Protection Obligations remain outstanding, and the DIP Liens and the
Adequate Protection Liens shall not be (i) subject or junior to any lien or
security interest that is avoided and preserved for the benefit of the Debtor’s
estate under section 551 of the Bankruptcy Code or (ii) subordinated to or made
pari passu with any other lien or security interest, whether under section
364(d) of the Bankruptcy Code or otherwise, in each case other than the
Carve-Out; provided, however, a claim or lien granted by this Interim Order to
the Prepetition Agent and the Prepetition Secured Lenders shall be subordinated
to any claim or lien that may be granted from time to time having a priority
superior to or pari passu with those liens or claims granted under the DIP
Documents and/or by this Interim Order to the DIP Agent and the DIP Lenders,
solely to the extent the DIP Agent and DIP Lenders consent to the granting of
any such claim or lien.

 

 
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(b)     In addition to the Events of Default set forth in the DIP Documents,
unless all DIP Obligations shall have been indefeasibly paid in full in cash,
and the Prepetition Debt and the Adequate Protection Obligations (if any) shall
have been paid in full, the Debtor shall not seek, and it shall constitute an
Event of Default and terminate the right of the Debtor to use Cash Collateral if
the Debtor seeks, or there is entered, unless the DIP Agent has otherwise
consented, (i) any modification or extension of this Interim Order without the
prior written consent of the DIP Agent, and no such consent shall be implied by
any other action, inaction or acquiescence by the DIP Agent, (ii) any
modification or extension of this Interim Order with respect to the Prepetition
Debt or the Adequate Protection Obligations without the prior written consent of
the Prepetition Agent, and no such consent shall be implied by any other action,
inaction or acquiescence by the Prepetition Agent, (iii) an order converting or
dismissing this Case and such order shall not have been reversed or vacated
within ten (10) days; (iv) an order appointing a chapter 11 trustee in this Case
and such order shall not have been reversed or vacated within ten (10) days, (v)
an order appointing an examiner with enlarged powers in this Case and such order
shall not have been reversed or vacated within ten (10) days, (vi) an order
providing for a change of venue (other than a change of venue to Delaware) with
respect to this Case and such order shall not have been reversed or vacated
within ten (10) days; (vii) an order approving a plan of reorganization or the
sale of all or substantially all of the Collateral shall have been entered which
does not provide for the repayment in full in cash of the DIP Obligations (other
than any contingent obligations not yet due and payable) upon the consummation
thereof. If an order dismissing this Case under section 1112 of the Bankruptcy
Code or otherwise is at any time entered, such order shall provide (in
accordance with sections 105 and 349 of the Bankruptcy Code) that (x) the
Superpriority Claims, priming liens, security interests and replacement security
interests granted to the DIP Agent and the DIP Lenders, including the DIP Liens,
and, as applicable, the Prepetition Agent and the Prepetition Secured Lenders
pursuant to this Interim Order shall continue in full force and effect and shall
maintain their priorities as provided in this Interim Order (and that such
Superpriority Claims, priming liens and replacement security interests, shall,
notwithstanding such dismissal, remain binding on all parties in interest,
including the priorities set forth herein and in the DIP Documents) until all
DIP Obligations and the Adequate Protection Obligations, as applicable, shall
have been paid and satisfied in full and (y) this Court shall retain
jurisdiction, notwithstanding such dismissal, for the purposes of enforcing the
claims, liens and security interests referred to in clause (x) above.

 

 
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(c)     Notwithstanding the foregoing, any modification or extension of this
Interim Order with respect to the Adequate Protection Obligations or the
Prepetition Debt, shall require the prior written consent of the Prepetition
Agent, and no such consent shall be implied by any other action, inaction or
acquiescence by the Prepetition Agent.

 

(d)     If any or all of the provisions of this Interim Order are hereafter
reversed, modified, vacated or stayed, such reversal, modification, vacation or
stay shall not affect (i) the validity of any DIP Obligations or Adequate
Protection Obligations incurred prior to the actual receipt of written notice by
the DIP Agent or the Prepetition Agent, as applicable, of the effective date of
such reversal, modification, vacation or stay or (ii) the validity or
enforceability of any lien or priority authorized or created hereby or pursuant
to the DIP Documents with respect to any DIP Obligations or Adequate Protection
Obligations. Notwithstanding any such reversal, modification, vacation or stay,
any use of Cash Collateral, or DIP Obligations or Adequate Protection
Obligations incurred by the Debtor to the DIP Agent, the DIP Lenders, the
Prepetition Agent or the Prepetition Secured Lenders prior to the actual receipt
of written notice by the DIP Agent and the Prepetition Agent of the effective
date of such reversal, modification, vacation or stay shall be governed in all
respects by the original provisions of this Interim Order, and the DIP Agent,
the DIP Lenders, the Prepetition Agent and the Prepetition Secured Lenders shall
be entitled to all the rights, remedies, privileges and benefits granted in
section 364(e) of the Bankruptcy Code, this Interim Order and pursuant to the
DIP Documents with respect to all uses of Cash Collateral and proceeds of the
DIP Facility, DIP Obligations and Adequate Protection Obligations.

 

 
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(e)     Except as expressly provided in this Interim Order or in the DIP
Documents, the DIP Liens, the Superpriority Claims and all other rights and
remedies of the DIP Agent and the DIP Lenders, and the Adequate Protection Liens
granted by the provisions of this Interim Order and the DIP Documents shall
survive, and shall not be modified, impaired or discharged by the entry of an
order converting this Case to a case under chapter 7, dismissing this Case,
approving the sale of any Collateral pursuant to section 363(b) of the
Bankruptcy Code (except to the extent permitted by the DIP Documents) or the
entry of an order confirming a plan of reorganization in this Case (except as
provided for herein and in the Acceptable Reorganization Plan (as defined in the
DIP Credit Agreement)) and, pursuant to section 1141(d)(4) of the Bankruptcy
Code, the Debtor has waived any discharge as to any remaining DIP Obligations or
Adequate Protection Obligations. The terms and provisions of this Interim Order
and the DIP Documents shall continue in this Case, in any successor case, or in
any superseding chapter 7 case under the Bankruptcy Code, and the DIP Liens, the
Superpriority Claims, all other rights and remedies of the DIP Agent and the DIP
Lenders, the DIP Documents, the Adequate Protection Liens granted by the
provisions of this Interim Order shall continue in full force and effect until
(i) the DIP Obligations are indefeasibly paid in full in cash and (ii) the
Adequate Protection Obligations (if any) are paid in full in cash.

 

(f)     The Prepetition Agent, on behalf of itself and the Prepetition Secured
Creditors, will not be required to file proofs of claim in this Case or
successor cases for any prepetition claim arising under the Existing Agreements
allowed herein. The Debtor’s stipulations herein shall be deemed to constitute a
timely filed proof of claim for any prepetition claims arising under the
Existing Agreements. Notwithstanding any order entered by the Court in relation
to the establishment of a bar date in this Case or successor cases to the
contrary, the Prepetition Agent, for the benefit of itself and the Prepetition
Secured Lenders, is hereby authorized and entitled, in its sole discretion, but
not required, to file (and amend and/or supplement, as it sees fit) a proof of
claim and/or aggregate proofs of claim in this Case or successor cases for any
claim allowed herein.

 

 
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18.     Exculpation. Nothing in this Interim Order, the DIP Documents, or any
other documents related to the transactions contemplated hereby shall in any way
be construed or interpreted to impose or allow the imposition upon any DIP Agent
or any DIP Lender any liability for any claims arising from the prepetition or
postpetition activities of the Debtor in the operation of their businesses, or
in connection with their restructuring efforts. In addition, (a) the DIP Agent
and the DIP Lenders shall not, in any way or manner, be liable or responsible
for (i) the safekeeping of the Collateral, (ii) any loss or damage thereto
occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
servicer, bailee, custodian, forwarding agency, or other person, and (b) all
risk of loss, damage, or destruction of the Collateral shall be borne by the
Debtor; provided that, (i) the foregoing shall not apply to any act or omission
by the DIP Agent or the DIP Lenders that constitutes gross negligence or willful
misconduct by the DIP Agent or the DIP Lenders as finally determined by a court
of competent jurisdiction (and in the case of clause iv, the DIP Agent and DIP
Lenders shall not be by reason of any act or default of any carrier, servicer,
bailee, custodian, forwarding agency or other person if such person has been
selected by the DIP Agent or DIP Lenders in good faith).

 

 
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19.     Effect of Stipulations on Third Parties. The stipulations and admissions
contained in this Interim Order, including, without limitation, in paragraph 5
of this Interim Order, shall be binding upon the Debtor and any successor
thereto (including, without limitation, any chapter 7 or chapter 11 trustee
appointed or elected for any of the Debtor) in all circumstances. The
stipulations and admissions contained in this Interim Order, including, without
limitation, in paragraph 5 of this Interim Order and in the proviso to this
sentence, shall be binding upon all other parties in interest, including,
without limitation, any statutory or nonstatutory committees appointed or formed
in this Case (including the Creditors’ Committee) and any other person or entity
acting on behalf of the Debtor’s estate, unless (a) a party in interest has
timely and properly filed an adversary proceeding or contested matter (subject
to the limitations contained herein, including, inter alia, in paragraph 17) by
no later than the date that is sixty (60) calendar days after the date of entry
of the Final Order or such later date (x) as has been agreed to, in writing, by
the Prepetition Agent, in its sole discretion or (y) as has been ordered by the
Court (the “Challenge Period”), (i) challenging the validity, enforceability,
priority or extent of the Prepetition Debt or the Prepetition Agent’s or the
Prepetition Secured Creditors’ liens on the Prepetition Collateral or (ii)
otherwise asserting or prosecuting any action for preferences, fraudulent
conveyances, other avoidance power claims or any other claims, counterclaims or
causes of action, objections, contests or defenses (collectively, “Claims and
Defenses”) against the Prepetition Agent or any of the Prepetition Secured
Creditors or any of such parties’ affiliates, representatives, attorneys or
advisors in connection with matters related to the Existing Agreements, the
Prepetition Debt, the Prepetition Collateral, and (b) there is a final order in
favor of the plaintiff sustaining any such challenge or claim in any such timely
filed adversary proceeding or contested matter (a “Successful Challenge”);
provided that, (i) all such Claims and Defenses are hereby irrevocably waived
and relinquished by the Debtor as of the Petition Date and (ii) any challenge or
claim shall set forth with specificity the basis for such challenge or claim and
any challenges or claims not so specified prior to the expiration of the
Challenge Period shall be forever deemed waived, released and barred. If the
Challenge Period expires and a Successful Challenge has not occurred, (w) the
Prepetition Debt and all related obligations of the Debtor (the “Prepetition
Obligations”) shall constitute allowed claims, not subject to counterclaim,
setoff, subordination, recharacterization, defense or avoidance, for all
purposes in this Case, any successor case and any subsequent chapter 7 case, and
(x) the Prepetition Liens on the Prepetition Collateral shall be deemed to have
been, as of the Petition Date, legal, valid, binding and perfected, not subject
to recharacterization, subordination or avoidance, (y) the Prepetition
Obligations, the Prepetition Liens on the Prepetition Collateral and the
Prepetition Agent and the Prepetition Secured Lenders shall not be subject to
any other or further challenge by any party in interest seeking to exercise the
rights of the Debtor’s estate, including, without limitation, any successor
thereto (including, without limitation, any chapter 7 or 11 trustee appointed or
elected for the Debtor). If any such adversary proceeding or contested matter is
timely and properly filed, the stipulations and admissions contained in
paragraph 5 of this Interim Order shall nonetheless remain binding and
preclusive (as provided in the second sentence of this paragraph) on any
statutory or nonstatutory committee appointed or formed in this Case (including
the Creditors’ Committee) and on any other person or entity, except to the
extent that such findings and admissions were expressly challenged in such
adversary proceeding or contested matter. Nothing in this Interim Order vests or
confers on any Person (as defined in the Bankruptcy Code), including any
statutory or nonstatutory committees appointed or formed in this Case (including
the Creditors’ Committee), standing or authority to pursue any cause of action
belonging to the Debtor or its estate, including, without limitation, Claims and
Defenses with respect to the Existing Agreements or the Prepetition Obligations.
Notwithstanding anything contrary herein, regardless of the outcome of any
adversary proceeding or other process described in this paragraph 19, the DIP
Obligations shall remain valid and binding obligations of the Debtor and the
Guarantors.

 

 
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20.     Limitation on Use of DIP Facility Proceeds and Collateral.
Notwithstanding anything herein or in any other order by this Court to the
contrary, none of the Prepetition Collateral, the Cash Collateral, the
Collateral, the DIP Facility or borrowings thereunder, the Carve-Out or any
portion or proceeds of the foregoing may be used by any party in connection with
(a) objecting, contesting or raising any defense to, the validity, perfection,
priority, extent or enforceability of any amount due under the DIP Documents or
the Existing Agreements, or the liens or claims granted under this Interim
Order, the DIP Documents or the Existing Agreements, (b) asserting any Claims
and Defenses or causes of action against the DIP Agent, the DIP Lenders, the
Prepetition Agent or the Prepetition Secured Lenders or their respective agents,
affiliates, representatives, attorneys or advisors, (c) preventing, hindering or
otherwise delaying the DIP Agent’s or the DIP Lenders’ assertion, enforcement or
realization on the Collateral once an Event of Default has occurred and is
continuing in accordance with the DIP Documents or this Interim Order, provided
that the Debtor may use the Carve Out Cap as set forth in paragraph 8(b) of this
Interim Order to contest or dispute whether an Event of Default has occurred as
provided for in paragraph 10 of this Interim Order, (d) seeking to modify any of
the rights granted to the DIP Agent, the DIP Lenders, the Prepetition Agent or
the Prepetition Secured Lenders hereunder or under the DIP Documents and the
Existing Agreements, in each of the foregoing cases, without such parties’ prior
written consent, (e) paying any amount on account of any claims arising prior to
the Petition Date unless such payments are (i) approved by an order of this
Court and (ii) in accordance with the DIP Credit Agreement and the Budget (as
defined in the DIP Credit Agreement), (f) using or seeking to use Cash
Collateral except to the extent permitted under the DIP Documents and not
otherwise prohibited hereunder, (g) selling or otherwise disposing of the
Collateral except as permitted by the DIP Documents or otherwise with the
consent of the DIP Agent or the Required Lenders (as defined in the DIP Credit
Agreement) or (h) using or seeking to use any insurance proceeds related to the
Collateral, except as permitted by the DIP Documents or otherwise with the
consent of the DIP Agent or the Required Lenders (as defined in the DIP Credit
Agreement). Notwithstanding the foregoing, advisors to the Creditors’ Committee,
if any, may investigate claims and liens under the Existing Agreements during
the Challenge Period at an aggregate expense for such investigation, but not
litigation, prosecution, objection or challenge thereto, not to exceed $75,000.

 

 
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21.     Priorities Among Prepetition Secured Lenders. Notwithstanding anything
to the contrary herein or in any other order of this Court, in determining the
relative priorities and rights of the Prepetition Secured Lenders (including,
without limitation, the relative priorities and rights of the Prepetition
Secured Lenders with respect to the Adequate Protection Obligations granted
hereunder), such priorities and rights shall continue to be governed by the
Existing Agreements.

 

22.     Payments Held in Trust. Except as expressly permitted in this Interim
Order or the DIP Documents, in the event that any person or entity receives any
payment on account of a security interest in Collateral, receives any proceeds
of Collateral or receives any other payment with respect thereto from any other
source prior to indefeasible satisfaction of all DIP Obligations under the DIP
Documents, and termination of the Commitments in accordance with the DIP
Documents, such person or entity shall be deemed to have received, and shall
hold, any such payment or proceeds of Collateral in trust for the benefit of the
DIP Agent and DIP Lenders and shall immediately turn over such proceeds to the
DIP Agent, or as otherwise instructed by this Court, for application in
accordance with the DIP Documents and this Interim Order.

 

 
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23.     Credit Bidding.

 

(a)     The DIP Agent shall, acting at the direction of the Required Lenders (as
defined in the DIP Credit Agreement), have the right to credit bid up to the
full amount of the DIP Obligations in any sale of the Collateral subject to and
to the extent permitted under 363(k) of the Bankruptcy Code, without the need
for further Court order authorizing the same and whether such sale is
effectuated through section 363(b) or 1129(b) of the Bankruptcy Code, by a
chapter 7 trustee under section 725 of the Bankruptcy Code, or otherwise.

 

(b)     Subject to the indefeasible satisfaction and discharge in full of all
DIP Obligations and the termination of the Commitments under the DIP Credit
Agreement, the Prepetition Agent or its assignee, designee or successor may
“credit bid” up to the full amount of the Prepetition Debt then outstanding for
the assets and property of the Debtor (to the extent such assets are Prepetition
Collateral or secured by Adequate Protection Liens) subject to and to the extent
permitted under section 363(k) of the Bankruptcy Code, without the need for
further Court order authorizing the same and whether such sale is effectuated
through section 363(b) or 1129(b) of the Bankruptcy Code, by a chapter 7 trustee
under section 725 of the Bankruptcy Code, or otherwise. For the avoidance of
doubt, all DIP Obligations must be indefeasibly satisfied and paid in cash in
full, and the Commitments thereunder terminated, at or prior to the closing of
any sale in which the Prepetition Debt is credit bid as any portion of the
consideration paid in respect of such sale, without prejudice to the DIP Agent’s
right to make a competing credit bid of up to the full amount of the DIP
Obligations in any sale in which all or any part of the Prepetition Debt is
credit bid.

 

 
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24.     Retention of Jurisdiction. This Court has and will retain exclusive
jurisdiction with respect to any and all disputes or matters under, or arising
out of or in connection with, either the DIP Documents or this Interim Order.

 

25.     Interim Order Governs. In the event of any inconsistency between the
provisions of this Interim Order or Final Order, if and when entered, and the
DIP Documents, the provisions of this Interim Order or Final Order, as
applicable, shall govern. Additionally, to the extent that there may be an
inconsistency between the terms of this Interim Order or Final Order, if and
when entered, and the Order Establishing Certain Case Management Procedures and
Granting Related Relief, the terms of this Interim Order or Final Order, as
applicable, shall govern.

 

26.     Binding Effect; Successors and Assigns. The DIP Documents and the
provisions of this Interim Order, including all findings herein, shall be
binding upon all parties in interest in this Case, including, without
limitation, the DIP Agent, the DIP Lenders, the Prepetition Agent, the
Prepetition Secured Lenders, any statutory or nonstatutory committee appointed
or formed in this Case, and the Debtor and its successors and assigns (including
any chapter 7 trustee, chapter 11 trustee or similar responsible person or
similar designee or litigation trust hereinafter appointed or elected for the
estate of the Debtor) and shall inure to the benefit of the DIP Agent, the DIP
Lenders, the Prepetition Agent, the Prepetition Secured Lenders and the Debtor
and their respective successors and assigns; provided, however, that the DIP
Agent and the DIP Lenders shall have no obligation to extend any financing to
any chapter 7 trustee, chapter 11 trustee or similar responsible person or
similar designee or litigation trust hereunder appointed or elected for the
estate of the Debtor. In determining to make any loan under the DIP Credit
Agreement or in exercising any rights or remedies as and when permitted pursuant
to this Interim Order or the DIP Documents, the DIP Agent and the DIP Lenders
shall not be deemed to be in control of the operations of or participating in
the management of the Debtor or to be acting as an “owner or operator” with
respect to the operation or management of the Debtor (as such terms, or any
similar terms, are used in the United States Comprehensive Environmental
Response, Compensation and Liability Act, 29 U.S.C. §§ 9601, et seq., as
amended, or any similar federal or state statute).

 

 
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27.     Final Hearing. The Final Hearing to consider the Motion and Final Order
is hereby scheduled for ____________, 2014 at _____ .m. (prevailing Eastern
Time) at United States Bankruptcy Court, Southern District of New York, before
the undersigned United States Bankruptcy Judge.

 

28.     Notice.      Following entry of this Interim Order, the Debtor shall, on
or before ___________, 2014, provide notice of the Motion, this Interim Order
and the Final Hearing by telecopy, overnight delivery service, hand delivery or
U.S. mail to each of the Initial Notice Parties and, without duplication, to the
parties who have filed a request for service prior to such date. Such notice
shall constitute good and sufficient notice of the Final Hearing. The notice of
approval of this Interim Order shall state that any party in interest objecting
to the DIP Facility, the adequate protection being provided to the Adequate
Protection Parties, or the terms of the Final Order shall serve and file written
objections in this Case with the Court, and shall serve such objections so that
they are actually received, by not later than 5:00 p.m. (prevailing Eastern
Time) on ____________, 2014 (with reply papers thereto filed and served not
later than 5:00 p.m. (prevailing Eastern Time) on ____________, 2014). Any such
objections shall be served upon: (a) proposed counsel for the Debtor, Milbank,
Tweed, Hadley & McCloy LLP, 1 Chase Manhattan Plaza, New York, NY 10005, Attn:
Tyson M. Lomazow, Esq. and Matthew Brod, Esq.; (b) counsel for the DIP Agent and
Prepetition Agent, Paul, Weiss, Rifkind, Wharton & Garrison LLP, 1285 Avenue of
the Americas, New York, New York 10019, Attn: Andrew N. Rosenberg, Esq., Alice
B. Eaton, Esq. and Oksana Lashko, Esq.; and (c) the U.S. Trustee, 201 Varick
Street, New York, NY 10014, Attn: Paul K. Schwartzberg, Esq. and Michael
Driscoll, Esq.

 

 
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SO ORDERED by the Court this ______ day of August, 2014.

 

 

 

     

UNITED STATES BANKRUPTCY JUDGE

 

 

 
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Exhibit E

 

to the Restructuring Support Agreement

 

CONSUMMATION DOCUMENTS2

 

 

1.

Rejection Schedule

 

 

2.

New Eagle Charter

 

 

3.

New Eagle By-Laws

 

 

4.

New Eagle MIP Option Agreements

 

 

5.

New Eagle MIP Primary Equity Agreements

 

 

6.

New Eagle Equity Warrant Agreement

 

 

7.

Identity and affiliations of the officers and members of the New Board of the
Reorganized Debtor

 

 

8.

List of retained Causes of Action

 

 

9.

Management Incentive Program

 

 

10.

New CEO Employment Agreement

 

 

11.

Registration Rights Agreement

 

 

12.

Exit Financing Facility Credit Agreement

 

 

13.

Delphin Management Agreement, as amended

 

 

 

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2 Capitalized terms used in this Exhibit E shall have the meanings ascribed to
such terms in the Plan. 

 

 
 

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Exhibit F 

 

to the Restructuring Support Agreement

 

Form of Transferee Joinder

 

This joinder (this “Joinder”) to the Restructuring Support Agreement (the
“Agreement”), dated as of April __, 2014, entered into by and among (i) Eagle
Bulk Shipping Inc. (“EBS”) and each of its direct and indirect subsidiaries
(each an “Eagle Entity” and, collectively, the “Eagle Entities” or the
“Company”) and (ii) the lenders under the Credit Agreement that are (or may
become in accordance with Section 11 thereof) signatories thereto (the
“Consenting Lenders”), is executed and delivered by [________________] (the
“Joining Party”) as of [________________], 2014. Each capitalized term used
herein but not otherwise defined shall have the meaning set forth in the
Agreement.

 

1.     Agreement to be Bound. The Joining Party hereby agrees to be bound by all
of the terms of the Agreement, a copy of which is annexed to this Joinder as
Annex I (as the same has been or may be hereafter amended, restated, or
otherwise modified from time to time in accordance with the provisions hereof).
The Joining Party shall hereafter be deemed to be a Party and a Consenting
Lender for all purposes under the Agreement.

 

2.     Representations and Warranties. With respect to the aggregate amount of
debt outstanding under the Credit Agreement held by the Joining Party upon
consummation of the sale, assignment, transfer, hypothecation, or other
disposition of such debt, the Joining Party hereby (a) represents and warrants
to each other Party to the Agreement that it is the legal or beneficial holder
of, or holder of investment authority over (with authority to bind such holder),
the debt outstanding under the Credit Agreement in the amounts as identified
below its name on the signature page hereof and (b) makes the representations
and warranties set forth in Section 15 of the Agreement to each other Party.

 

3.     Governing Law. This Joinder shall be governed by and construed in
accordance with the laws of the State of New York, without regard to any
conflicts of law provisions which would require the application of the law of
any other jurisdiction.

 

4.     Notice. All notices and other communications given or made pursuant to
the Agreement shall be sent to:

 

To the Joining Party at:

 

[JOINING PARTY]

[ADDRESS]

Attn:

Facsimile: [FAX]

EMAIL:

 

 

 

IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as
of the date first written above.

 

 
 

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  [JOINING PARTY]            

By:

         

Name:

       

Title:

   

 

 

Holdings:

$  

of Revolving

   

Commitments Under the Credit Agreement

                     

Holdings:

$  

of Term Loans

   

Under the Credit Agreement

                     

Holdings:

$  

of PIK Loans

   

Under the Credit Agreement

 

 

 

Acknowledgements:

           

By:

         

Name:

       

Title:

   

 

 
 

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Annex I to the Form of Transferee Joinder

 

Agreement

 

 
 

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Exhibit G 

 

to the Restructuring Support Agreement

 

Claims of Consenting Lenders

 

 

 

 

Aggregate Claims as of August 6, 20141:

$1,025,998,898.98

 

 

 

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1 Calculated based on term loan and PIK loan amounts as of July 31, 2014,
excluding uncapitalized interest and accrued but unpaid interest.

 

 
 

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Schedule 1

 

to the Restructuring Support Agreement

 

 

1.

An Event of Default arising under Section 26.3(a) of the Credit Agreement, due
to the failure to supply the Agent with a consolidated balance sheet and related
consolidated statements of income, equity and cash flows within 90 days of the
end of each financial year that does not include a “going concern” qualification
or any qualification or exception as to the scope of the audit performed by
PricewaterhouseCoopers or another independent certified public accountant, as
required in Section 19.1(a) of the Credit Agreement.

 

 

2.

An Event of Default arising under Section 26.2 of the Credit Agreement, due to
the failure to meet the Leverage Ratio specified for the Accounting Period
ending December 31, 2013 and each quarter thereafter, as required in Section
20.1 of the Credit Agreement.

 

 

3.

An Event of Default arising under Section 26.2 of the Credit Agreement, due to
the failure to meet the Minimum Interest Coverage Ratio specified for the
Accounting Period ending March 31, 2014 and each quarter thereafter, as required
in Section 20.2 of the Credit Agreement.

 

 

4.

An Event of Default arising under Section 26.1 of the Credit Agreement, due to
the failure to make the Cash Pay Interest payment scheduled for June 30, 2014 on
or before such date.

 

 

5.

Any related Event of Default with respect to the foregoing or which would result
from the failure to give notice with respect to any of the foregoing.