Exhibit 10.1

EXECUTION VERSION

PLAN SPONSOR AGREEMENT

This PLAN SPONSOR AGREEMENT (as amended, supplemented, or otherwise modified
from time to time, this “Agreement”), dated as of February 14, 2017, is entered
into by and among Violin Memory, Inc. (the “Company”), VM Bidco LLC (“Soros”),
and the Official Committee of Unsecured Creditors appointed in the Company’s
chapter 11 case (the “Committee”). The Company, Soros and the Committee are
together referred to herein as the “Parties” and each individually as a “Party.”
If Quantum Partners LP (“QP”) becomes a party to this Agreement by executing and
delivering a joinder agreement substantially in the form attached hereto as
Exhibit D (a “Joinder Agreement”), then QP shall be a Party to this Agreement as
set forth in the Joinder Agreement.

The Parties have agreed to undertake a financial restructuring of the Company
(the “Restructuring”), to be effected pursuant to the Company’s chapter 11
bankruptcy case (the “Chapter 11 Case”) currently pending in the United States
Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”), on the
terms and conditions set forth in the plan term sheet attached hereto as Exhibit
A (as may be amended from time to time in accordance with this Agreement, the
“Plan Term Sheet”).

The Company and Soros have also agreed to a debtor-in-possession financing
arrangement to support the Restructuring pursuant to the terms and conditions of
the term sheet attached hereto as Exhibit B (the “DIP Term Sheet”) and exit
financing pursuant to the terms and conditions of the term sheet attached hereto
as Exhibit C (the “Exit Financing Term Sheet” and together with the Plan Term
Sheet and the DIP Term Sheet, the “Term Sheets”).

The Parties desire to express to each other their mutual support and commitment
in respect of the matters set forth in the Term Sheets and hereunder, and
therefore agree as follows:

 

  1. Certain Definitions.

As used in this Agreement, the following terms have the following meanings:1

(a) “Affiliate” means, as applied to any person, any other person directly or
indirectly controlling, controlled by, or under common control with, that
person. For the purposes of this definition, “control” (including, with
correlative meanings, the terms “controlling,” “controlled by” and “under common
control with”), as applied to any person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that person, whether through the ownership of voting securities or
by contract or otherwise.

(b) “Cash Portion of the Sale Proceeds” means that amount of the Sale Proceeds
(which amount shall be not less than $10.7 million) necessary, as of the Plan
Effective Date, to fund a cash distribution to holders of Allowed claims (which
claims, for the avoidance

 

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Capitalized terms used but not defined in this Agreement have the meanings
ascribed to them in the Plan Term Sheet.

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of doubt, shall not include claims under the DIP Facility and shall include
Administrative Claims, Priority Tax Claims, Secured Claims (other than claims
under the DIP Facility), Other Priority Claims, General Unsecured Claims, and
the Allowed claims of Quantum Partners LP (“QP”)), without consideration of the
Initial Cash or the Supplemental Cash, in an amount equal to (i) the amount of
the Sale Proceeds less (ii) the cash distribution that would otherwise be
payable to QP on account of its Allowed general unsecured claims but for the
separate treatment provided for such Claims in the Plan.

As relates to disputed claims, the Cash Portion of the Sale Proceeds shall be
computed on the Plan Effective Date treating any Disputed Claims as if they were
Allowed claims in the amount asserted or, alternatively, as estimated by the
Court. The Liquidation Trust (as defined below) shall withhold from the
distribution to holders of General Unsecured Claims, and set aside in a
segregated account, the amount of Cash that would be distributable to such
disputed claims had such claims been so Allowed, pending the resolution of such
claims. At reasonable period intervals as such claims are resolved, the amount
set aside for such claim(s) (including any earnings thereon, net of any
allocable expenses of the reserve) shall be distributed (i) in the case of
amounts allocable to the Allowed portion of any such claim, to the holder of
such resolved disputed claim and (ii) in the case of amounts allocable to the
Disallowed portion of any such Claim, to the Liquidation Trust for
redistribution to Allowed claims. (The amount of cash set aside with respect to
disputed claims will be treated as held by a “disputed ownership fund” for
federal and applicable state and local income tax purposes).

(c) “Definitive Documentation” means the definitive documents and agreements
governing the Restructuring, and shall include every material order entered by
the Bankruptcy Court, and every pleading, motion, proposed order, or document
filed by the Company, in each case material to this Restructuring at any point
prior to termination of this Agreement including, without limitation: (i) the
Plan (and all exhibits thereto) and the confirmation order with respect to the
Plan (the “Confirmation Order”); (ii) the Disclosure Statement (and all exhibits
thereto) and the order approving the Disclosure Statement (the “Disclosure
Statement Order”); (iii) the solicitation materials with respect to the Plan
(collectively, the “Solicitation Materials”); and (iv) any documents or
agreements in connection with the reorganized Company after the date the Plan
becomes effective (the “Plan Effective Date”), including, without limitation,
any amended certificates of incorporation or similar organizational documents,
or other related transactional or corporate documents. The Definitive
Documentation identified in the foregoing sentence remains subject to
negotiation and shall, upon completion, contain terms, conditions,
representations, warranties, and covenants consistent with the terms of this
Agreement. Any document that is included within the definition of “Definitive
Documentation,” including any amendment, supplement, or modification thereof,
shall be in a form and substance reasonably satisfactory to Soros, provided that
corporate governance for reorganized VM or any of its subsidiaries, including
charters, bylaws, operating agreements, or other organization or formation
documents, as applicable, shall be consistent with section 1123(a)(6) of the
Bankruptcy Code, as applicable, and in form and substance acceptable to Soros in
its sole discretion. The Company acknowledges and agrees that it will provide
advance draft copies of all Definitive Documentation at least five (5) days
prior to the date when the Company intends to file any such pleading or other
document (and, if not reasonably practicable, as soon as reasonably practicable
prior to filing) to Weil, Gotshal & Manges LLP (“Weil”), as counsel to Soros,
and shall consult in good faith with Weil regarding the form and substance of
any such proposed filing.

 

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(d) “D&O Claims” means any and all actual or potential claims and causes of
action against current and former directors and officers of the Company.

(e) “Releases” means customary releases for D&O Claims in the Plan.

(f) “Disclosure Statement” means the disclosure statement of the Company with
respect to the Plan, as may be amended from time to time in accordance with this
Agreement, in form and substance reasonably acceptable to Soros, to the Company,
and to the Committee.

(g) “Letter of Support” means a letter from the Committee in support of
confirmation of the Plan included in the Solicitation Materials that urges
creditors to vote in favor of the Plan, which letter shall affirmatively state
that the Committee has evaluated the results of the Company’s postpetition sale
process and agrees that the consideration provided by the Restructuring
represents the highest and best offer for the Company’s business and assets,
including Soros’ acquisition of the D&O Claims and the treatment of such claims
under the Plan.

(h) “Plan” means the plan of reorganization consistent with the terms of the
Plan Term Sheet attached hereto as Exhibit A, in form and substance reasonably
acceptable to Soros, to the Company, and to the Committee.

(i) “Sale Proceeds” means the amount of $15,000,000.00.

(j) “Solicitation” means the solicitation of votes for the Plan pursuant to, and
in compliance with, chapter 11 of title 11 of the United States Code (the
“Bankruptcy Code”) and any applicable nonbankruptcy law, rule, or regulation
governing the adequacy of information in connection with such solicitation.

 

  2. The Plan.

(a) The terms and conditions of the Restructuring will be as set forth in the
Plan; provided that the Plan is supplemented by the terms and conditions of this
Agreement, including the Plan Term Sheet. In the event of any inconsistencies
between the terms of this Agreement (including the Plan Term Sheet) and the
Plan, the Plan shall govern.

(b) The Plan shall contain the Releases, provided that the Company may not
withdraw and must affirmatively support confirmation of the Plan even if the
Bankruptcy Court does not approve the Releases as part of the confirmed Plan
and/or the Confirmation Order. In the event that the Releases are not approved
by the Bankruptcy Court as part of the confirmed Plan and/or the Confirmation
Order, the D&O Claims shall vest in the reorganized Company (and, for the
avoidance of doubt, shall no longer be property of the Company’s bankruptcy
estate) and shall not be further transferred or sold.

(c) Through the Plan the Parties shall use their commercially reasonable efforts
to seek an exculpation of all estate parties and their professionals (including
Committee

 

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Members in their individual capacities) for all postpetition actions taken in
furtherance of their responsibilities in this case, all as consistent with the
practice in the District of Delaware; provided, that notwithstanding the
foregoing, the failure of the Plan to contain such provisions shall not be a
Soros Termination Event or a Company Termination Event (each as hereinafter
defined).

 

  3. Bankruptcy Process; Plan of Reorganization.

(a) Filing of the Plan and Disclosure Statement. The Company shall file the Plan
and the Disclosure Statement with the Bankruptcy Court no later than
February 15, 2017.

(b) DIP Facility. The Company shall file a motion with the Bankruptcy Court
seeking approval of the DIP Facility (the “DIP Motion”) no later than
February 8, 2017.

(c) Disclosure Statement Approval. The Company shall seek to have the Disclosure
Statement approved by no later than March 6, 2017.

(d) Solicitation. The Company shall initiate the Solicitation no later than one
business day after entry of an order approving the Disclosure Statement.

(e) Confirmation of the Plan. The Company shall use its commercially reasonable
efforts to obtain confirmation of the Plan as soon as reasonably practicable
(and on or prior to April 20, 2017) in accordance with the Bankruptcy Code and
on terms consistent with this Agreement; and Soros and the Committee shall use
their commercially reasonable efforts to cooperate fully in connection
therewith.

 

  4. Agreements of the Company, Soros, the Committee, and the Committee Members

 

  (a) The Company agrees that it shall:

(i) (A)(1) support and work diligently towards the completion of the
Restructuring set forth in this Agreement, (2) negotiate in good faith all
Definitive Documentation that is subject to negotiation as of the effective date
of this Agreement and take any and all necessary and appropriate actions in
furtherance of the Plan and this Agreement, (3) take all commercially reasonable
actions necessary to complete the Restructuring set forth in the Plan, (4) make
commercially reasonable efforts to obtain any and all required regulatory and/or
third-party approvals necessary to consummate the Restructuring, if any, and
(5) support and take such actions as are necessary or appropriate or reasonably
requested by Soros or QP in furtherance of the Restructuring in accordance with,
and within the time frames contemplated by, this Agreement, including, without
limitation, filing and pursuing any pleadings that Soros or QP may reasonably
request, which pleadings shall be in form and substance reasonably satisfactory
to Soros and QP; and (B) shall not undertake any action materially inconsistent
with the adoption and implementation of the Plan and the speedy confirmation
thereof, including, without limitation, filing any motion to reject this
Agreement.

 

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(ii) afford Soros and its respective attorneys, consultants, accountants, and
other authorized representatives full access, upon reasonable notice during
normal business hours, and at other reasonable times, to all properties, books,
contracts, commitments, records, management personnel, and advisors of the
Company (but not including access to any privileged information). In addition,
the Company shall promptly notify Soros of any material developments with
respect to its business, the Chapter 11 Case, or otherwise.

(iii) as to itself and its subsidiaries, after the date of its entry into the
Plan Sponsor Agreement and prior to the Plan Effective Date (unless Soros shall
otherwise approve in writing) and except as required by applicable law:

(A) The Company shall submit to Soros for prior written approval all proposed
new contracts and agreements involving individual commitments of more than
$25,000;

(B) The Company shall submit to Soros for prior written approval the sale or
encumbrance of any assets between the date of this Agreement and the Plan
Effective Date in excess of $25,000 for any single transaction or $50,000 for
any series of related transactions;

(C) The Company shall use commercially reasonable efforts to maintain all of the
assets and properties (excluding the Company’s current lease at 4555 Great
America Parkway, Santa Clara, CA or lease at 200 Holger Way, San Jose, CA (prior
to a decision to assume such lease)) in their current condition, ordinary wear
and tear excepted;

(D) The Company shall maintain insurance upon all of the assets and properties
of the Company in such amounts and of such kinds comparable to that in effect on
the date of this Agreement;

(E) (i) The Company shall use commercially reasonable efforts to maintain the
books, accounts and records of the Company in the ordinary course of business,
(ii) the Company shall continue to collect accounts receivable and pay accounts
payable utilizing reasonable procedures and without discounting or accelerating
payment of such accounts, and (iii) the Company shall use commercially
reasonable efforts to comply with all contractual and other obligations
applicable to the operation of the Company;

(F) The Company shall comply in all material respects with applicable laws;

(G) The Company shall only submit tax returns and otherwise conduct its affairs
with respect to tax matters with the prior written consent of Soros; and the
Company shall not (without Soros’ prior written consent) make or rescind any
election relating to taxes, settle or compromise any claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to taxes, or except as may be required by applicable law or GAAP, make
any material change

 

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to any of its methods of accounting or methods of reporting income or deductions
for tax or accounting practice or policy from those employed in the preparation
of its most recent tax returns;

(H) The Company shall not, without the prior written consent of Soros,
(A) materially increase the annual level of compensation of any employee of the
Company, (B) increase the annual level of compensation payable or to become
payable by the Company to any of its executive officers, (C) grant any unusual
or extraordinary bonus, benefit or other direct or indirect compensation to any
employee, director or consultant, (D) materially increase the coverage or
benefits available under any (or create any new) severance pay, termination pay,
vacation pay, company awards, salary continuation for disability, sick leave,
deferred compensation, bonus or other incentive compensation, insurance, pension
or other employee benefit plan or arrangement made to, for, or with any of the
directors, officers, employees, agents or representatives of the Company or
otherwise modify or amend or terminate any such plan or arrangement or (E) enter
into any employment, deferred compensation, severance, consulting,
non-competition or similar agreement (or amend any such agreement) to which
Company is a party or involving a director, officer or employee of the Company
in his or her capacity as a director, officer or employee of Company; and

(I) The Company shall not cancel or compromise any debt or claim or waive or
release any material right of the Company except in the ordinary course of
business. For the avoidance of doubt, the foregoing shall not limit the
Company’s ability to resolve, fix or allow administrative or prepetition claims
to be resolved in accordance with the Plan.

For the purposes of this Section 4(a)(iii), upon execution by QP of the Joinder
Agreement annexed hereto as Exhibit D, consent of QP shall thereafter also be
required in addition to the consent of Soros for any of the actions contemplated
in this Section.

 

  (b) Soros agrees that it shall:

(i) subject to the Company complying in all material respects with the terms of
this Agreement, procure the vote of all of the claims and interests of QP
against or in the Company to accept the Plan by promptly after commencement of
the Solicitation delivering its duly executed and completed ballots accepting
the Plan; and

(ii) not change or withdraw (or cause to be changed or withdrawn) any such vote
in clause (i) above except upon a termination of this Agreement pursuant to the
occurrence of a Soros Termination Event or a Company Termination Event (or
otherwise), or as otherwise expressly permitted pursuant to this Agreement.

(c) The Committee hereby covenants and agrees to (A) not take any action or
inaction to hinder, delay or impede confirmation of the Plan or the consummation
of the Restructuring, (B) support and cooperate with the other Parties to take
all reasonable actions necessary to obtain confirmation of the Plan and to
consummate the Restructuring, including

 

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supporting motions reasonably requested by the Company or Soros to consummate
the Restructuring, (C) include a Letter of Support in the Solicitation
Materials, which letter and recommendation shall not be subsequently withdrawn,
(D) file a statement with the Bankruptcy Court in support of confirmation of the
Plan and the consummation of the Restructuring, which statement shall not be
subsequently withdrawn, and (E) use commercially reasonable efforts to procure a
joinder to this Agreement from any entity or individual appointed to the
Committee. Each of Clinton Group, Inc., Forty Niners SC Stadium Company LLC and
Wilmington Trust N.A., as indenture trustee for the Notes (each, a “Committee
Member”) hereby covenants and agrees to (A) not take any action or inaction to
hinder, delay or impede confirmation of the Plan or the consummation of the
Restructuring, and (B) support and cooperate with the other Parties to obtain
confirmation of the Plan and to consummate the Restructuring. Each Committee
Member, subject to the Company and Soros complying in all material respects with
the terms of this Agreement, shall (A) to the extent eligible to vote on the
Plan, vote all of its claims against the Company (if any) to accept the Plan by
promptly after commencement of the Solicitation delivering its duly executed and
completed ballots accepting the Plan, (B) not change or withdraw (or cause to be
changed or withdrawn) any such vote except upon the occurrence of a Company
Termination Event, or as otherwise expressly permitted pursuant to this
Agreement, and (C) continue to serve on the Committee until the Plan Effective
Date. Notwithstanding the foregoing, a Committee Member may resign from the
Committee only if the Committee Member is replaced by a new member that agrees,
in writing, to be bound by this Agreement to the same extent as each Committee
Member is bound hereunder.

(d) Treatment of Sale Proceeds: The Sale Proceeds shall be treated as follows by
Soros, the Company and the Committee, and this Section 4(d) shall survive
termination of the Agreement:

(i) Soros shall fund the Cash Portion of the Sale Proceeds to the trust account
of Debtor’s counsel (the “Trust Account”) as follows:

(A) Upon (i) entry of the final order approving the Debtor’s entry into and
performance under this Agreement, and (ii) the filing of the Plan and Disclosure
Statement, an advance on the Cash Portion of the Sale Proceeds in the amount of
$10,700,000.00 (the “Sale Proceeds Advance”) shall be paid to the Trust Account.

(B) Upon occurrence of the Plan Effective Date, the balance of the Cash Portion
of the Sale Proceeds (the “Sale Proceeds Balance”) shall be paid to the
Liquidating Trust for disbursement as provided for in the Plan.

(C) The Cash Portion of the Sale Proceeds shall be added to the Exit Facility
(as defined in Exhibit C hereto) on the Plan Effective Date, and Soros shall
receive the Exit Loans on the Plan Effective Date in consideration for its
allocation of the Cash Portion of the Sale Proceeds.

 

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(ii) the Parties hereby agree and instruct that the Sale Proceeds shall be
disbursed from the Trust Account as follows:

(A) Prior to the occurrence of the Plan Effective Date, the Sale Proceeds
Advance shall be held in the Trust Account for disbursement in accordance with
the terms of this Agreement.

(B) Upon the occurrence of the Plan Effective Date, the Sale Proceeds Advance
shall be disbursed from the Trust Account to the Liquidating Trust for
disbursement as provided for in the Plan.

(C) Upon termination of this Agreement pursuant to the occurrence of a Soros
Termination Event, the Sale Proceeds Advance shall be promptly disbursed from
the Trust Account to Soros.

(D) Upon termination of this Agreement pursuant to the occurrence of a Company
Termination Event, the Sale Proceeds Advance shall be disbursed from the Trust
Account to the Company as liquidated damages.

(e) Soros and the Company acknowledge and agree that the DIP Facility has been
structured to support the Company’s performance of its obligations under this
Agreement. In the event that, notwithstanding the Company’s performance of its
obligations under this Agreement, the Plan Effective Date does not occur on or
prior to May 1, 2017, the Company and Soros shall negotiate in good faith to
develop a budget for the period of May 1, 2017 – August 30, 2017, which budget
shall be consistent in form and detail with the then-current Budget (as defined
in the DIP Term Sheet) and shall identify the expenses and any additional
funding reasonably necessary for the Company to continue its then-current
operations and continue to administer its bankruptcy case in accordance with
this Agreement through August 30, 2017, including, without limitation,
continuing to pursue confirmation of the Plan through such date (the
“Continuation Budget”). The initial draft of the Continuation Budget shall be
developed in good faith by the Company in consultation with the Committee and
based upon assumptions and projections believed by the Company in good faith to
be reasonable at such time, and shall be delivered to Soros no later than May 1,
2017 or such later date as may be agreed to between the Company and Soros (the
“Continuation Budget Milestone”). Subject to reaching agreement with the Company
on the Continuation Budget and any related documentation, and further subject to
any requisite Bankruptcy Court approval, Soros will provide the Company with
postpetition financing (in addition to the DIP Facility) in accordance with the
Continuation Budget.

 

  5. Termination of Agreement.

This Agreement shall automatically terminate three (3) business days after
delivery of written notice to the other Party (in accordance with Section 21)
from (i) the Company at any time after the occurrence and during the continuance
of any Company Termination Event or (ii) Soros at any time after the occurrence
and during the continuance of any Soros Termination Event. In addition, this
Agreement shall terminate automatically on the Plan Effective Date without any
further required action or notice.

 

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  (a) A “Soros Termination Event” shall mean any of the following:

(i) the breach in any material respect by the Company of any of the
undertakings, representations, warranties, or covenants of the Company set forth
herein that would prevent and result in a material adverse effect on the
consummation of the Plan in accordance with this Agreement and which remains
uncured for a period of five (5) business days after the receipt of written
notice of such breach pursuant to this Section 5 and in accordance with
Section 21 (as applicable);

(ii) the Company files Definitive Documentation in a form not reasonably
acceptable to Soros, or makes any amendments, modifications, exhibits, or
supplements thereto, in a manner that adversely affects Soros without the
consent of Soros or except as otherwise permitted by this Agreement;

(iii) the Company withdraws the Plan or publicly announces its intention not to
support the Plan, or propounds, or otherwise supports any chapter 11 plan other
than the Plan;

(iv) the Company withdraws the DIP Motion or publicly announces its intention
not to support the DIP Motion, or propounds, or otherwise supports any
postpetition financing motion other than the DIP Motion without the consent of
Soros;

(v) The Committee or any Committee Member breaches any or all of its obligations
set forth in Section 4(c), including pursuant to the exercise of the Committee’s
“fiduciary out” as provided for in Section 8.

(vi) the Disclosure Statement Order is not filed in a form and substance
reasonably satisfactory to Soros, it being understood and agreed that Soros will
act reasonably and commercially in considering any modifications to the
Disclosure Statement Order requested or required by the Bankruptcy Court and
other parties in interest;

(vii) the Confirmation Order is not filed in form and substance reasonably
satisfactory to Soros, it being understood and agreed that Soros will act
reasonably and commercially in considering any modifications to the Confirmation
Order requested or required by the Bankruptcy Court and other parties in
interest;

(viii) the Company fails to comply with its obligations in Section 4(a) or
Section 4(e);

(ix) the Company, any Committee Member and/or the Committee seek, pursue,
support and/or do not oppose 2 an order to be entered by the Bankruptcy Court or
a court of competent jurisdiction either converting the Chapter 11 Case to a
case under chapter 7 of the Bankruptcy Code or dismissing the Chapter 11 Case;

 

2  In the case of individual Committee Members, such opposition may take the
form of an objection filed by the Committee.

 

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(x) the Company, any Committee Member and/or the Committee seek, pursue, support
and/or do not oppose3 an order of the Bankruptcy Court seeking appointment, in
respect of the Company, a trustee, a responsible officer, or an examiner with
enlarged powers (powers beyond those set forth in subclauses (3) and (4) of
section 1106(a)) under section 1106(b) of the Bankruptcy Code);

(xi) this Agreement is waived, modified, amended, or supplemented in any way,
except by mutual agreement of, and in a writing signed by, the Company, Soros
and the Committee; or

(xii) the Bankruptcy Court grants relief that is inconsistent with this
Agreement or the Plan in any material respect, except if such relief is granted
pursuant to a motion by Soros (or with the consent of Soros); provided, however,
that the failure to obtain confirmation of the Plan and/or the occurrence of the
Effective Date shall not constitute a Soros Termination Event pursuant to this
Section 5(a)(xii) unless such failure is the result of any Soros Termination
Event identified in Section 5(a)(i)-(xi).

For the avoidance of doubt, (i) this Agreement may not be terminated for a
material adverse change in the business or operations of the Company; and
(ii) the failure of any Committee Member to individually take affirmative action
to oppose any proposed order referenced in subsection (ix) or (x) above shall
not constitute a Soros Termination Event so long as such proposed order is
affirmatively opposed by the Committee.

(b) A “Company Termination Event” shall mean (i) the breach in any material
respect by Soros of any of the undertakings, representations, warranties, or
covenants of Soros set forth herein that would result in a material adverse
effect on the consummation of a Plan in accordance with this Agreement and which
remains uncured for a period of five (5) business days after the receipt of
written notice of such breach pursuant to this Section 5 and in accordance with
Section 21 (as applicable); (ii) the failure by Soros to agree on the
Continuation Budget, and any amendment to the DIP Facility necessary to provide
the Company with additional financing in accordance with the Continuation
Budget, no later than May 10, 2017, provided that the Company delivers the
Continuation Budget to Soros by the Continuation Budget Milestone; (iii) the
delivery by Soros of a notice of its intention to abandon the Transaction
contemplated herein (other than as a result of a Soros Termination Event); and
(iv) the failure of the Plan Effective Date to occur by August 30, 2017, other
than as a result of a Soros Termination Event. Each of the Company and the
Committee hereby acknowledge and agree that, in the event of a termination of
this Agreement pursuant to the occurrence of a Company Termination Event, the
only recourse for the Company will be to the Sale Proceeds Advance in accordance
with Section 4(d)(ii)(D).

 

3  In the case of individual Committee Members, such opposition may take the
form of an objection filed by the Committee.

 

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(c) Mutual Termination. This Agreement may be terminated by mutual agreement of
the Parties upon the receipt of written notice delivered in accordance with
Section 21.

(d) Effect of Termination. Subject to the provisions contained in Section 15,
upon the termination of this Agreement in accordance with this Section 5, and
this Agreement shall become void and of no further force or effect and each
Party shall, except as otherwise provided in Section 4(d), and as otherwise
provided in this Agreement, be immediately released from its respective
liabilities, obligations, commitments, undertakings, and agreements under or
related to this Agreement, shall have no further rights, benefits, or privileges
hereunder, and shall have all the rights and remedies that it would have had and
shall be entitled to take all actions, whether with respect to the Restructuring
or otherwise, that it would have been entitled to take had it not entered into
this Agreement and no such rights or remedies shall be deemed waived pursuant to
a claim of laches or estoppel; provided that in no event shall any such
termination relieve a Party from liability for its breach or non-performance of
its obligations hereunder before the date of such termination (except as set
forth in Section 4(d)). Except as set forth herein, if the transactions
contemplated hereby are not consummated, or if this Agreement is terminated for
any reason, the Parties fully reserve any and all of their rights.

(e) Automatic Stay. The Company acknowledges that the giving of notice of
termination by any Party pursuant to this Agreement shall not be a violation of
the automatic stay of section 362 of the Bankruptcy Code; provided that nothing
herein shall prejudice any Party’s rights to argue that the giving of notice of
termination was not proper under the terms of this Agreement.

6. Term Sheets. The Term Sheets are incorporated herein by reference and the
obligations of the Parties set forth therein shall be binding obligations of the
Parties subject to the terms thereof.

7. Good Faith Cooperation; Further Assurances. Each Party hereby covenants and
agrees to cooperate with each other in good faith in connection with, and shall
exercise commercially reasonable efforts with respect to, the pursuit, approval,
implementation, and consummation of the Restructuring, as well as the
negotiation, drafting, execution, and delivery of the Definitive Documentation.
Furthermore, subject to the terms hereof, the Parties shall take such action as
may be reasonably necessary or reasonably requested by any Party to carry out
the purposes and intent of this Agreement, and shall refrain from taking any
action that would frustrate the purposes and intent of this Agreement.

8. Fiduciary Out. Nothing in this Agreement shall prevent the Committee or
Wilmington Trust, N.A. from taking or failing to take any action that such
person determines, based on the advice of its legal counsel, it is obligated to
take in the performance of its statutory, contractual or fiduciary duties or as
otherwise required by the Bankruptcy Code or applicable law that is in violation
of Section 4(c) above; provided, however that it is agreed any such actions (or
inactions) shall result in a Soros Termination Event. The Committee represents
that as of the effective date of this Agreement, the Committee’s entry into this
Agreement is consistent with the Committee’s fiduciary duties based upon the
facts and circumstances actually known by the Committee as of such date.

 

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  9. Representations and Warranties.

(a) Each Party and the Committee Members (collectively, the “PSA Parties” and
individually a “PSA Party”) represent and warrants to the other PSA Parties that
the following statements are true, correct, and complete as of the date hereof:

(i) Such PSA Party is validly existing and in good standing under the laws of
its jurisdiction of incorporation or organization, and has all requisite
corporate, partnership, limited liability company, or similar authority to enter
into this Agreement and carry out the transactions contemplated hereby and
perform its obligations contemplated hereunder. The execution and delivery of
this Agreement and the performance of such PSA Party’s obligations hereunder
have been duly authorized by all necessary corporate, limited liability company,
partnership, or other similar action on its part.

(ii) The execution, delivery, or performance by such PSA Party of this Agreement
does not and will not (A) violate any provision of law, rule, or regulation
applicable to it, (B) violate its charter or bylaws (or other similar governing
documents), or (C) 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, except, in the case of the Company, for the
filing of the Chapter 11 Case and, with respect to (A) and (C), except for a
violation, conflict, breach, or default which would not individually or in the
aggregate have a material and adverse effect on the Plan and Restructuring.

(iii) The execution, delivery, or performance by such PSA Party of this
Agreement does not and will not require any registration or filing with, consent
or approval of, or notice to, or other action, with or by, any federal, state,
or governmental authority or regulatory body.

(iv) This Agreement is the legally valid and binding obligation of such PSA
Party, enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, or other similar laws relating to or limiting creditors’ rights
generally or by equitable principles relating to enforceability.

(b) VM Bidco LLC is controlled by Soros Fund Management LLC in its capacity as
investment adviser to VM Bidco LLC.

10. Disclosure; Publicity. The Company shall submit drafts to Soros of any press
releases and public documents (other than Court filings, which shall be governed
as set forth in Section 1(b) above) that constitute disclosure of the existence
or terms of this Agreement or any amendment to the terms of this Agreement at
least five (5) calendar days before making any such disclosure. Neither the
Company nor any agent, officer, or representative of the Company may directly or
indirectly use or refer to Soros Fund Management LLC, the “Soros” name, Quantum
Partners LP, or any derivation thereof for any purpose whatsoever (including,
without limitation, in any filing with any governmental authority (other than as
specifically agreed to by Soros), any press release, any public announcement or
statement, advertisement,

 

12

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marketing materials, client lists, or any interview or other discussion with any
reporter or other member of the media), without Soros’ prior written consent
with respect to each such use or reference.

11. Amendments and Waivers. Except as otherwise expressly set forth herein, this
Agreement may not be waived, modified, amended, or supplemented except in a
writing signed by each Party.

12. Effectiveness. Subject to approval by the Bankruptcy Court, this Agreement
shall become effective and binding upon each Party upon the execution and
delivery by such Party of an executed signature page hereto.

13. Governing Law; Jurisdiction; Waiver of Jury Trial.

(a) This Agreement shall be construed and enforced in accordance with, and the
rights of the Parties shall be governed by, the laws of the State of New York,
without giving effect to the conflict of laws principles thereof. The Parties
irrevocably agree that any legal action, suit, or proceeding (each, a
“Proceeding”) arising out of or relating to this Agreement brought by any Party
or its successors or assigns shall be brought and determined in any federal or
state court in the Borough of Manhattan, the City of New York (the “New York
Courts”), and the Parties hereby irrevocably and generally submit to the
exclusive jurisdiction of the New York Courts for themselves and with respect to
their property, and unconditionally with respect to any Proceeding arising out
of or relating to this Agreement and the Restructuring. The Parties agree not to
commence any Proceeding relating hereto or thereto except in the New York
Courts, other than Proceedings in any court of competent jurisdiction to enforce
any judgment, decree, or award rendered by any New York Court. The Parties
further agree that notice as provided in Section 21 shall constitute sufficient
service of process and the Parties further waive any argument that such service
is insufficient. The Parties hereby irrevocably and unconditionally waive and
agree not to assert that a Proceeding in any New York Court is brought in an
inconvenient forum or the venue of such Proceeding is improper. Notwithstanding
the foregoing, during the pendency of the Chapter 11 Case, all Proceedings
contemplated by this Section 13(a) shall be brought in the Bankruptcy Court.

(b) The Parties hereby waive, to the fullest extent permitted by applicable law,
any right they may have to a trial by jury in any Proceeding directly or
indirectly arising out of or relating to this Agreement or the transactions
contemplated hereby (whether based on contract, tort or any other theory).

14. Specific Performance/Remedies. It is understood and agreed by the PSA
Parties that money damages would be an insufficient remedy for any breach of
this Agreement by any PSA Party and each non-breaching PSA Party shall be
entitled to specific performance and injunctive or other equitable relief
(including attorneys’ fees and costs) as a remedy of any such breach, without
the necessity of proving the inadequacy of money damages as a remedy. The PSA
Parties hereby waive any requirement for the security or posting of any bond in
connection with such remedies. For the avoidance of doubt, the remedies provided
for in this Section 14 apply only to this Agreement (without reference to the
exhibits).

 

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15. Survival. Notwithstanding the termination of this Agreement pursuant to
Section 5, Section 4(d), and Sections 13–24 shall survive such termination and
shall continue in full force and effect in accordance with the terms hereof;
provided that any liability of a Party for failure to comply with the terms of
this Agreement shall survive such termination.

16. Headings. The headings of the sections, paragraphs, and subsections of this
Agreement are inserted for convenience only and shall not affect the
interpretation hereof or, for any purpose, be deemed a part of this Agreement.

17. Successors and Assigns; Severability. This Agreement is intended to bind and
inure to the benefit of the PSA Parties and their respective successors,
permitted assigns, heirs, executors, administrators, and representatives. If any
provision of this Agreement, or the application of any such provision to any
person or entity or circumstance, shall be held invalid or unenforceable, in
whole or in part, such invalidity or unenforceability shall attach only to such
provision or part thereof and the remaining part of such provision hereof and
this Agreement shall continue in full force and effect. Upon any such
determination of invalidity, the PSA Parties shall negotiate in good faith to
modify this Agreement so as to effectuate the original intent of the PSA Parties
as closely as possible in a reasonably acceptable manner so that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible. No assignment of this Agreement or of any rights
or obligations hereunder may be made by any PSA Party (by operation of law or
otherwise) without the prior written consent of the other parties hereto and any
attempted assignment without the required consents shall be void; provided,
however, that Soros may assign this Agreement and any or all rights or
obligations hereunder to any Affiliate of Soros. Upon any such permitted
assignment, the references in this Agreement to Soros shall also apply to any
such assignee unless the context otherwise requires.

18. Relationship Among Parties. Unless expressly stated herein, this Agreement
shall be solely for the benefit of the Parties and no other person or entity
shall be a third-party beneficiary hereof. No Party shall have any
responsibility for the transfer, sale, purchase, or other disposition of
securities by any other entity, including with respect to the Notes, by virtue
of this Agreement. No prior history, pattern, or practice of sharing confidences
among the Parties shall in any way affect or negate this understanding and
agreement. The Parties have no agreement, arrangement, or understanding with
respect to acting together for the purpose of acquiring, holding, voting, or
disposing of any securities of the Company and do not constitute a “group”
within the meaning of Rule 13d-5 under the Securities Exchange Act of 1934, as
amended.

19. Prior Negotiations; Entire Agreement. This Agreement, including the exhibits
and schedules hereto (including the Term Sheets), constitutes the entire
agreement of the PSA Parties, and supersedes all other prior negotiations
regarding the subject matters hereof and thereof.

20. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original, and all of which together shall be
deemed to be one and the same agreement. Execution copies of this Agreement
delivered by facsimile or PDF shall be deemed to be an original for the purposes
of this paragraph.

 

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21. Notices. All notices hereunder shall be deemed given if in writing and
delivered, if contemporaneously sent by electronic mail, facsimile, courier, or
by registered or certified mail (return receipt requested) to the following
addresses and facsimile numbers or such other addresses of which notice is given
pursuant hereto:

 

  (a)    if to the Company, to:   Violin Memory, Inc.   4555 Great America
Parkway   Suite 150   Santa Clara, CA   Attention:   Cory Sindelar   E-mail:  
csindelar@vmem.com   with a copy (which shall not constitute notice) to:  
Pillsbury Winthrop Shaw Pittman LLP (as counsel to the Company)   1540 Broadway
  New York, NY 10036   Attention:   Deryck A. Palmer   E-mail:  
deryck.palmer@pillsburylaw.com   -and-     (b)    If to Soros:   Soros Fund
Management LLC   250 W. 55th St.   New York, NY 10019   Attention:   Regan
O’Neill and Nicholas Esayan   Facsimile:   (646) 731-5581   E-mail:  
Regan.ONeill@soros.com, and Nick.Esayan@soros.com   with a copy (which shall not
constitute notice) to:   Weil, Gotshal & Manges LLP (as counsel to Soros)   767
Fifth Avenue   New York, NY 10153   Attention:   Gary Holtzer, Esq. and David
Griffiths, Esq.   Facsimile:   (212) 310-8007   E-mail:   Gary.Holtzer@weil.com
and David.Griffiths@weil.com

 

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  (c)    If to the Committee or Committee Members:   Cooley LLP   1114 Avenue of
the Americas   New York, NY 10036   Attention:   Jay Indyke and Michael Klein  
Facsimile:   (212) 479-6275   E-mail:   jindyke@cooley.com and mklein@cooley.com

Any notice given by delivery, mail, or courier shall be effective when received.
Any notice given by facsimile or electronic mail shall be effective upon oral,
machine, or electronic mail (as applicable) confirmation of transmission.

22. No Solicitation; Adequate Information. This Agreement is not and shall not
be deemed to be a solicitation for consents to the Plan. The votes of the
holders of claims against the Company will not be solicited until such holders
who are entitled to vote on the Plan have received the Plan, Disclosure
Statement, related ballots, and other required Solicitation Materials. In
addition, this Agreement does not constitute an offer to issue or sell
securities to any person or entity, or the solicitation of an offer to acquire
or buy securities, in any jurisdiction where such offer or solicitation would be
unlawful.

23. Business Day Convention. Any reference to “business day” means any day,
other than a Saturday, a Sunday, or any other day on which banks located in New
York, New York are closed for business as a result of federal, state, or local
holiday. When a period of days under this agreement ends on a day that is not a
business day, then such period shall be extended to the specified hour of the
next business day.

24. Interpretation; Rules of Construction; Representation by Counsel. When a
reference is made in this Agreement to a Section, Exhibit, or Schedule, such
reference shall be to a Section, Exhibit, or Schedule, respectively, of or
attached to this Agreement unless otherwise indicated. Unless the context of
this Agreement otherwise requires, (a) words using the singular or plural number
also include the plural or singular number, respectively, (b) the terms
“hereof,” “herein,” “hereby” and derivative or similar words refer to this
entire Agreement, (c) the words “include,” “includes” and “including” when used
herein shall be deemed in each case to be followed by the words “without
limitation,” and (d) the word “or” shall not be exclusive and shall be read to
mean “and/or.” The Parties agree that they have been represented by legal
counsel during the negotiation and execution of this Agreement and, therefore,
waive the application of any law, regulation, holding, or rule of construction
providing that ambiguities in an agreement or other document shall be construed
against the party drafting such agreement or document.

[ remainder of page intentionally left blank ]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and
delivered by their respective duly authorized officers, solely in their
respective capacity as officers of the undersigned and not in any other
capacity, as of the date first set forth above.

 

VIOLIN MEMORY, INC. By:  

/s/ Cory Sindelar

Name:   Cory Sindelar Title:   CFO VM BIDCO LLC By:  

/s/ REGAN P.T. O’NEILL

Name:   REGAN P.T. O’NEILL Title:   Attorney-in-Fact THE OFFICIAL COMMITTEE OF
UNSECURED CREDITORS By:  

/s/ Jay R. Indyke

Name:   JAY R. INDYKE Title:   COUNSEL ACKNOWLEDGED AND AGREED SOLELY WITH
RESPECT TO THOSE MATTERS PERTAINING TO COMMITTEE MEMBERS IN THEIR INDIVIDUAL
CAPACITIES SET FORTH IN SECTIONS 4(c), (5)(a)(v), (ix) and (x), 9, 14, 17 AND 19
HEREIN

WILMINGTON TRUST NATIONAL ASSOCIATION, AS INDENTURE

TRUSTEE FOR THE NOTES

By:  

/s/ Rita Marie Ritrovato

Name:   Rita Marie Ritrovato Title:   Assistant Vice President

 

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CLINTON GROUP, INC. By:  

/s/ Joseph A. de Perio

Name:   Joseph A. de Perio Title:   Senior Portfolio Manager FORTY NINERS SC
STADIUM COMPANY LLC By:  

/s/ Jihad Beauchman

Name:   Jihad Beauchman Title:   Associate General Counsel

 

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EXHIBIT A

VIOLIN MEMORY, INC.

PLAN TERM SHEET

February 14, 2017

THIS TERM SHEET (THE “PLAN TERM SHEET”) DESCRIBES THE PRINCIPAL TERMS OF A PLAN
OF REORGANIZATION FOR VIOLIN MEMORY, INC. (“VM” OR THE “COMPANY”).

THIS TERM SHEET IS NOT AN OFFER OR A SOLICITATION WITH RESPECT TO ANY SECURITIES
OF THE COMPANY, NOR IS IT A SOLICITATION OF THE ACCEPTANCE OR REJECTION OF THE
PLAN OR ANY OTHER CHAPTER 11 PLAN FOR PURPOSES OF SECTIONS 1125 AND 1126 OF
CHAPTER 11 OF TITLE 11 OF THE UNITED STATES CODE (THE “BANKRUPTCY CODE”). ANY
SUCH OFFER OR SOLICITATION SHALL COMPLY WITH ALL PROVISIONS OF THE BANKRUPTCY
CODE.

OVERVIEW

The Plan will be filed in the United States Bankruptcy Court for the District of
Delaware (the “Bankruptcy Court”), where the Company’s chapter 11 case is
pending.

This Plan Term Sheet does not include a description of all of the terms,
conditions, and other provisions that are to be contained in the Plan and the
related Definitive Documentation governing the Company’s restructuring. The
Definitive Documentation includes, but is not limited to, plan solicitation
documents, plan supplement documents, and related motions and orders. The
Definitive Documentation shall contain terms, conditions, representations,
warranties, and covenants that are customary for the transactions described
herein, to the extent not inconsistent with the terms and conditions explicitly
set forth herein. The Definitive Documentation shall be consistent with this
Plan Term Sheet and in form and substance reasonably acceptable to VM Bidco LLC
(“Soros”).

 

1. DIP Financing. Subject to the terms set forth in Exhibit B hereto, Soros will
enter into a DIP credit agreement (the “DIP Facility”) to provide DIP financing
to the Company in the amount of $6,100,000.00; with incremental availability of
up to $1,900,000.00 in accordance with the terms and conditions of the DIP
Facility.

 

2. Sale Proceeds. The Soros bid is the economic equivalent to general unsecured
claimholders of any amount remaining from $15,000,000.00 (the “Sale Proceeds”),
after payment of any outstanding secured (other than claims under the DIP
Facility), administrative and priority claims, with the general unsecured claims
of Quantum Partners LP being satisfied with new common equity in reorganized VM,
and all other general unsecured claimants receiving their pro rata share of the
Cash Portion of the Sale Proceeds (as defined in that certain Plan Sponsor
Agreement among VM, Soros, and other parties thereto (the “PSA”)) in cash.

 

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3. Conversion of DIP Facility to Exit Facility. On the effective date of the
Plan (the “Plan Effective Date”), the DIP Facility shall convert to an exit
facility (the “Exit Facility”), and such Exit Facility shall include the
aggregate amount of the Sale Proceeds in the Funding Tranche.

 

4. Classification. Quantum Partners LP’s claims on account of its holdings of
Notes (as defined below) shall be separately classified under the Plan, and
shall receive 100% of the common equity in reorganized VM on account of such
claims.

 

5. Use of Proceeds. The DIP Facility funds will be used (subject to a DIP budget
approved by Soros, such approval not to be unreasonably withheld) solely to fund
or reserve for those expenses reasonably necessary to fund VM through the Plan
Effective Date on an accrued basis (i.e., amounts incurred but not paid shall be
drawn under the DIP Facility, as incurred, and set aside (the “Supplemental
Cash”)) which shall be used solely to satisfy such obligations when payable
(with any remaining balance of Supplemental Cash after all such obligations have
become payable to revert to reorganized VM). The Sale Proceeds shall be used
solely to provide a recovery to administrative, priority, secured and general
unsecured claims against VM (but not to any claims arising under the DIP
Facility). In addition to and without limiting the foregoing, VM’s cash on hand
immediately prior to the initial funding of the DIP Facility (the “Initial
Cash”) will be set aside and used to fund administrative (including professional
fees accrued but not yet authorized for payment by the Bankruptcy Court),
priority, secured and general unsecured claims against VM (but not any claims
arising under the DIP Facility).

 

6. Access/Cooperation. Subject to the terms of the existing confidentiality
agreement with Soros Fund Management LLC, in agreeing to proceed, Soros and its
representatives shall have (to the extent lawful) access at reasonable times to
the properties, books and records of VM and its subsidiaries for purposes of
conducting such due diligence as Soros deems necessary or advisable (but
excluding privileged information).

 

7. “Allowed.” With reference to any claim or interest, (i) any claim or interest
arising on or before the Plan Effective Date (a) as to which no objection to
allowance has been interposed within the time period set forth in the Plan, or
(b) as to which any objection has been determined by a final order of the
Bankruptcy Court to the extent such objection is determined in favor of the
respective holder, (ii) any claim or interest as to which the liability of the
Company and the amount thereof are determined by a final order of a court of
competent jurisdiction other than the Bankruptcy Court, or (iii) any claim or
interest expressly allowed under the Plan; provided, however, that
notwithstanding the foregoing, the reorganized VM will retain all claims and
defenses with respect to Allowed claims that are reinstated or otherwise
unimpaired pursuant to the Plan.

 

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8. Liquidation Trust. The following assets shall be vested in a liquidation
trust for the benefit of general unsecured creditors on the Plan Effective Date
(A) the Initial Cash (after payment of claims in the course of the case or
disbursement on the Plan Effective Date on account of Allowed claims), (B) the
Sale Proceeds (as defined in the PSA), less all amounts necessary to satisfy all
Allowed Administrative, Secured Claims and Priority Claims on the Plan Effective
Date, (C) all avoidance actions, other than against (i) Soros and its
affiliates; (ii) counterparties to any assumed contracts; (iii) and the
Company’s customers, and (D) all litigation recoveries with respect to the
foregoing described in clause (C) above. D&O Claims shall not vest in the
Liquidating Trust, as provided for in Section 9 (Releases) below. The
Liquidating Trust shall have sole responsibility for the payment of all Allowed
Administrative, Secured Claims, Priority Claims and General Unsecured Claims
from and after the Plan Effective Date

 

9. Releases. The Plan shall contain the Releases, provided that the Company may
not withdraw and must affirmatively support confirmation of the Plan even if the
Bankruptcy Court does not approve the Releases as part of the confirmed Plan
and/or the Confirmation Order. In the event that the Releases are not approved
by the Bankruptcy Court as part of the confirmed Plan and/or the Confirmation
Order, the D&O Claims shall vest in the reorganized Company (and, for the
avoidance of doubt, shall no longer be property of the Company’s bankruptcy
estate) and shall not be further transferred or sold.

 

10. Indenture Trustee. To the extent not satisfied as an administrative expense
claim, the Plan will provide for the payment of fees and expenses to Wilmington
Trust, N.A. in its capacity as indenture trustee under the Notes, to the extent
provided for by the documents governing the Notes.

 

Unsecured

Indebtedness

to be

Restructured

  

i.       Approximately $120,000,000.00 in unpaid principal, plus interest, fees,
and other expenses, arising under or in connection the 4.25% Convertible Senior
Notes Due 2019 issued pursuant to that certain Indenture, dated as of
September 24, 2014 by and among the Company as Issuer and Wilmington Trust,
National Association as Trustee (the “Notes”).

  

ii.      All other prepetition non-priority unsecured claims against the
Company.

Equity

Interests to be

Restructured

  

Any equity interests in the Company (the “Existing Equity Interests”).

 

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CLASSIFICATION AND TREATMENT OF CLAIMS

Treatment of Unclassified Claims

 

Administrative Claims    Treatment. Each holder of an Allowed administrative
claim, including claims of the type described in section 503(b)(9) of the
Bankruptcy Code to the extent such claim has not already been paid during the
Chapter 11 Cases (each, an “Administrative Claim”), in full and final
satisfaction, compromise, settlement, release, and discharge of and in exchange
for each Administrative Claim, shall receive payment in full, in cash, of the
unpaid portion of its Allowed Administrative Claim on the Plan Effective Date or
as soon thereafter as reasonably practicable (or, if payment is not then due,
shall be paid in accordance with its terms) or pursuant to such other terms as
may be agreed to by the holder of such Administrative Claim and the Company.   

 

Voting. Unclassified and non-voting.

 

Priority Tax Claims    Treatment. Each holder of an Allowed claim described in
section 507(a)(8) of the Bankruptcy Code, to the extent such claim has not
already been paid during the Chapter 11 Cases (collectively, the “Priority Tax
Claims”), in full and final satisfaction, compromise, settlement, release, and
discharge of and in exchange for each Priority Tax Claim, shall be treated in
accordance with section 1129(a)(9)(C) of the Bankruptcy Code.   

 

Voting. Unclassified and non-voting.

  

 

Treatment of Classified Claims and Interests

Secured Claims   

Treatment. Each holder of an Allowed claim that is secured by a lien on property
in which the Company’s estate has an interest, to the extent such claim has not
already been paid during the Chapter 11 Case (collectively, the “Secured
Claims”), in full and final satisfaction, compromise, settlement, release, and
discharge of and in exchange for each Secured Claim, shall receive payment in
full, in cash, of the unpaid portion of its Secured Claim on the Plan Effective
Date or as soon thereafter as reasonably practicable (or, if payment is not then
due, shall be paid in accordance with its terms), such other treatment as
permitted by the Bankruptcy Code, or pursuant to such

other terms as may be agreed to by the holder of a Secured Claim and the
Company.

 

Voting. Unimpaired. Each holder of a Secured Claim will be conclusively deemed
to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.
Therefore, each holder of a Secured Claim will not be entitled to vote to accept
or reject the Plan.

 

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Other Priority Claims    Treatment. Each holder of an Allowed claim described in
section 507(a) of the Bankruptcy Code other than a Priority Tax Claim, to the
extent such claim has not already been paid during the Chapter 11 Cases
(collectively, the “Other Priority Claims”), in full and final satisfaction,
compromise, settlement, release, and discharge of and in exchange for each Other
Priority Claim, shall receive payment in full, in cash, of the unpaid portion of
its Other Priority Claim on the Plan Effective Date or as soon thereafter as
reasonably practicable (or, if payment is not then due, shall be paid in
accordance with its terms) or pursuant to such other terms as may be agreed to
by the holder of an Other Priority Claim and the Company.    Voting. Unimpaired.
Each holder of an Other Priority Claim will be conclusively deemed to have
accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore,
each holder of an Other Priority Claim will not be entitled to vote to accept or
reject the Plan. Soros Claims    Allowance. Quantum Partners LP’s claims on the
Notes (the “Soros Claims”) shall be allowed for the purposes of the Plan in an
aggregate amount equal to $25,650,000.00 plus interest accrued prepetition.   
Treatment. On the Plan Effective Date, or as soon thereafter as reasonably
practicable, in full and final satisfaction, compromise, settlement, release,
and discharge of and in exchange for the Soros Claims, Quantum Partners LP shall
receive 100% of the common equity in reorganized VM in lieu of its pro rata
share of the Cash Portion of the Sale Proceeds.    Voting. Impaired. QP as
holder of the Soros Claims will be entitled to vote to accept or reject the
Plan. General Unsecured Claims    Treatment. On the Plan Effective Date, or as
soon thereafter as reasonably practicable, each holder of an Allowed general
unsecured claim (each, a “General Unsecured Claim”), other than the Soros
Claims, in full and final satisfaction, compromise, settlement, release, and
discharge of and in exchange for each Allowed General Unsecured Claim, shall
receive its pro rata share of the Cash Portion of the Sale Proceeds after all
Administrative Claims, Priority Tax Claims, Secured Claims and Other Priority
Claims are paid from (or for which funds have been fully reserved from) the
Initial Cash or the Cash Portion of the Sale Proceeds.    Voting. Impaired. Each
holder of a General Unsecured Claim will be entitled to vote to accept or reject
the Plan.

 

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Section 510(b) Claims    Treatment. On the Plan Effective Date, allowed claims
arising under section 510(b) of the Bankruptcy Code (each, a “510(b) Claim”), if
any, shall be cancelled without any distribution, and such holders of 510(b)
Claims will receive no recovery.    Voting. Impaired. Each holder of a 510(b)
Claim will be conclusively deemed to have rejected the Plan pursuant to section
1126(g) of the Bankruptcy Code. Therefore, each holder of a 510(b) Claim will
not be entitled to vote to accept or reject the Plan. Intercompany Claims   
Treatment. Claims held by the Company against any of its subsidiaries, and
claims held by and of the Company’s subsidiaries against the Company (each, an
“Intercompany Claim”) may be extinguished or compromised (by distribution,
contribution, or otherwise) in the discretion of the Company on or after the
Plan Effective Date.    Voting. Holders of Intercompany Claims are either
unimpaired, and such holders of Intercompany Claims conclusively are presumed to
have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code, or
impaired, and such holders of Intercompany Claims are deemed to have rejected
the Plan pursuant to section 1126(g) of the Bankruptcy Code. Therefore, each
holder of an Intercompany Claim will not be entitled to vote to accept or reject
the Plan. Existing Equity Interests    Treatment. On the Plan Effective Date,
all Existing Equity Interests shall be deemed canceled and extinguished, and
shall be of no further force and effect, whether surrendered for cancelation or
otherwise, and there shall be no distribution to holders of Existing Equity
Interests on account of such equity interests.    Voting. Impaired. Each holder
of an Existing Equity Interest will be conclusively deemed to have rejected the
Plan pursuant to section 1126(g) of the Bankruptcy Code. Therefore, each holder
of an Existing Equity Interest will not be entitled to vote to accept or reject
the Plan.    OTHER PROVISIONS Initial Board of Directors and Officers of
Reorganized VM    The initial board of directors of reorganized VM shall consist
of up to three members, all of which shall be appointed by Quantum Partners LP.
Assumption of Executory Contracts    All executory contracts to which the
Company is a party shall be rejected unless specifically assumed at the option
of Soros in its sole discretion under the Plan on the Plan Effective Date. All
cure costs for such assumed executory contracts shall be funded to the Debtor by
Soros.

 

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Charter; Bylaws; Corporate Governance    Corporate governance for reorganized VM
or any of its subsidiaries, including charters, bylaws, operating agreements, or
other organization or formation documents, as applicable, shall be consistent
with section 1123(a)(6) of the Bankruptcy Code, as applicable, and in form and
substance acceptable to Soros. Releases, Exculpation, Injunction, and Discharge
   The Plan shall contain the Releases (as described above) and shall include
standard debtor, director and officer and third party releases for Soros and QP
and standard exculpation, injunction, and discharge provisions, all as
consistent with the practice in the District of Delaware. The Plan shall also
include an exculpation of all estate parties and their professionals (including
Committee members in their individual capacities) for all postpetition actions
taken in furtherance of their responsibilities in this case, all as consistent
with the practice in the District of Delaware. Other Matters    The Company
shall seek to implement its restructuring in a tax efficient manner and in a
manner acceptable to Soros. Conditions to Confirmation    The conditions
precedent to confirmation of the Plan shall be customary for a reorganization of
this type. Conditions Precedent to the Plan Effective Date   

The Plan shall be subject to usual and customary conditions for a reorganization
of this size and type, including but not limited to the following:

 

iii.    All Definitive Documentation, including but not limited to, the Plan and
the Confirmation Order, shall be consistent with the provisions of this Term
Sheet and in form and substance reasonably satisfactory to Soros;

 

iv.    The Bankruptcy Court shall have entered the Confirmation Order and such
Confirmation Order shall be in full force and effect, not subject to an appeal
and not have been reversed, stayed, modified, or amended; and

 

v.    All governmental, judicial, and third party approvals and consents that
are required in connection with the transactions contemplated by this Term Sheet
shall have been obtained, not be subject to unfulfilled conditions, and shall be
in full force and effect.

 

For the avoidance of doubt, the failure to occur of the Plan Effective Date for
any reason shall not result in a Soros Termination Event under the PSA except to
the extent explicitly stated therein.

 

7

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EXHIBIT B

DIP Financing Term Sheet

 

Amount/Facility:    Delayed draw non-amortizing term loan debtor-in-possession
credit facility (the “DIP Facility”; the loans thereunder, the “DIP Loans”) with
availability of $6,100,000.00 to be used only in accordance with the Budget (as
defined below) and incremental availability of $1,900,000.00 subject to the
prior approval of the Lender (as defined below) in its sole discretion (such
approval not to be unreasonably withheld; it being understood and agreed that
the Borrower and Lender will use commercially reasonable efforts to consult in
good faith and reach agreement prior to the Borrower incurring expenses that are
reasonably likely to require use of the incremental availability; and it being
further understood and agreed that if Borrower and Lender cannot agree on such
expenses requiring use of the incremental availability, such differences will be
resolved by the Bankruptcy Court).   

All available proceeds of the DIP Facility shall be funded into a cash
collateral account in the name of the Agent (as defined below) and may be
accessed by the Borrower only in accordance with the Budget and with the consent
of the Lender on terms and pursuant to documentation acceptable to the Lender.

 

Borrower:   

Violin Memory, Inc. (the “Borrower”).

 

Guarantors:   

Each domestic subsidiary of the Borrower, unless otherwise determined by the
Lender in its sole discretion.

 

Lender   

VM Bidco LLC, in its capacity as the lender under the DIP Facility (the
“Lender”).

 

Agent:   

VM Bidco LLC, in its capacity as the agent under the DIP Facility (the “Agent”).

 

Security:   

The DIP Facility shall be accorded superpriority administrative expense claim
status pursuant to Section 364(c)(1) of the Bankruptcy Code and be secured by a
first-priority security interest in all of the Borrower’s assets pursuant to
Sections 364(c)(2) of the Bankruptcy Code, with such superpriority status and
liens subject to (i) customary limitations with respect to stock of foreign
subsidiaries; (ii) a carve-out for any Sale Proceeds (as defined in the Plan
Term Sheet above); (iii) a carve-out for any Initial Cash (as defined in the
Plan Term Sheet above); and (iv) a carve-out for Supplemental Cash (as defined
in the Plan Term Sheet above), including professional fees funded on a weekly
basis as accrued prior to the occurrence of a trigger event and receipt of
notice thereof (but limited by the approved Budget).

 

Funding:    Funding will occur on an accrued basis in accordance with the Budget
(for reasonable and necessary costs to administer the estate/bankruptcy cases
and pursue the Plan) and subject to the consent of Soros not to be unreasonably
withheld.

 

8

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

Maturity Date:   

The earliest to occur of: (a) August 30, 2017; (b) the effective date of a plan
of reorganization consistent with the Plan Term Sheet set forth above, (c) the
occurrence of an Event of Default under the DIP credit agreement or the
acceleration of the obligations under the DIP Facility; (d) the consummation of
any transaction other than the transaction contemplated by the Plan (each, an
“Alternate Transaction”); (e) the entry of an order by the Bankruptcy Court
granting (i) relief from the automatic stay permitting foreclosure of any assets
of the Company with a value in excess of $100,000 in the aggregate, (ii) a
motion or other pleading filed, supported and/or not opposed by the Borrower
requesting (or entry of an order approving) the appointment of a trustee or an
examiner with special powers, or (iii) a motion for the dismissal or conversion
of the Chapter 11 Case; and (f) the filing or support by the Company of any
Alternate Transaction that does not provide for indefeasible payment in full, in
cash of all obligations owing under the DIP Facility. The date on which the
earliest of clauses (a) through (f) above occurs is referred to hereinafter as
the “Termination Date.”

 

   On the Termination Date, the DIP Facility shall be deemed terminated, and the
Lender shall have no further obligation to provide financing pursuant to the DIP
Facility. All unpaid principal, interest, fees, costs and expenses on the DIP
Facility shall be due and payable in full on the Termination Date.
Availability/Use of Proceeds:    Up to $3,100,000.00 shall be available to the
Borrower upon entry of the interim DIP order (the “Initial Draw”); up to
$3,000,000.00 million shall be available to the Borrower upon entry of the final
DIP order (the “Final Draw”); with incremental availability of up to
$1,900,000.00 subject to the prior approval of the Lender in its sole discretion
(such approval not to be unreasonably withheld; it being understood and agreed
that the Borrower and Lender will use commercially reasonable efforts to consult
in good faith and reach agreement prior to the Borrower incurring expenses that
are reasonably likely to require use of the incremental availability; and it
being further understood and agreed that if Borrower and Lender cannot agree on
such expenses requiring use of the incremental availability, such differences
will be resolved by the Bankruptcy Court).    Proceeds of the DIP Facility shall
only be utilized by the Borrower in accordance with a budget in form and
substance approved by Lender (the “Budget”), such approval not to be
unreasonably withheld, to fund on an as accrued basis those expenses reasonably
necessary to fund Borrower from entry of the interim order approving the DIP
Facility to the Plan Effective Date. The initial Budget is attached hereto as
Schedule 1.

 

9

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

Mandatory Prepayments:    Customary for transactions of this type and to include
100% of insurance and condemnation proceeds and 100% of the net cash proceeds of
any asset sales or debt issuance (without any reinvestment rights or de minimis
dollar carveouts). Prepayment Premium:    None Interest Rate:    L + 9% (with a
1% LIBOR floor), payable in kind on maturity. Default Rate:    Additional 2% per
annum, payable in cash Fees and Expenses:    The Company shall promptly pay or
reimburse the Lender, or its professionals, when invoiced for all reasonable
costs and expenses of legal counsel (including Weil, Gotshal & Manges LLP as
legal counsel and Richards, Layton & Finger, P.A. as Delaware counsel) and
including all due diligence, including but not limited to consultation, travel,
duplication or printing costs, and attendance at court hearings, regardless of
whether the DIP Facility is consummated, up to a cap of $250,000. Conditions
Precedent to Initial Loan:    Customary for transactions of this type and
otherwise satisfactory to the Lender and to include: (i) negotiation of
satisfactory loan documentation, (ii) delivery of the Budget, (iii) perfection
of liens, (iv) motions and orders filed in the Borrower’s chapter 11 case
approving such motions, in each case, shall be in form and substance reasonably
satisfactory to Lender, (v) payment of legal fees and expenses of the Lender as
set forth above (including Weil, Gotshal & Manges LLP as legal counsel and
Richards, Layton & Finger, P.A. as Delaware counsel), and (vi) accuracy of all
representations and warranties and absence of any default. Conditions Precedent
to Subsequent Loans:    Customary for transactions of this type and otherwise
satisfactory to the Lender and to include: (i) accuracy of all representations
and warranties and absence of any default, (ii) good faith and diligent efforts
to meet the Milestones (listed on Schedule 2 hereto) in accordance with the
Borrower’s obligations under Section 4(a)(i) of the Plan Support Agreement, and
(iii) the interim order and, if applicable, final order approving the DIP
Facility shall be in full force and effect and shall not have been vacated,
reversed, modified, amended or stayed in any manner adverse to the Lender.
Reporting:    Customary for transactions of this type and otherwise satisfactory
to the Lender and to include weekly rolling 13-week cash flow forecasts,
variance reports and detailed statements of receipts and disbursements. Variance
to Budget:    10% on an aggregate disbursement basis (the “Permitted Variance”).
Financial Covenants:    Customary for transactions of this type and otherwise
satisfactory to the Lender, but to include weekly compliance with the Budget,
tested on an aggregate cumulative basis, starting after the third full week
after approval of the DIP Facility on an interim basis, subject to the Permitted
Variance.

 

10

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

Bankruptcy Covenants:    Until the DIP Loans are indefeasibly repaid in full in
cash, all motions, applications and other documents filed with the Bankruptcy
Court by the Company shall be in a form and substance reasonably satisfactory to
the Lender. The Company shall covenant to use good faith and diligent efforts to
meet the Milestones in accordance with the Borrower’s obligations under Section
4(a)(i) of the Plan Support Agreement to meet the Milestones.
Representations and Warranties, Affirmative and Negative Covenants:    Customary
for transactions of this type and otherwise satisfactory to the Lender.
Events of Default:    Customary for transactions of this type and otherwise
satisfactory to the Lender. Governing Law:    New York (except as governed by
the Bankruptcy Code).

For the avoidance of doubt, the references herein to customary terms or
conditions are to such terms or conditons to the extent not inconsistent with
the terms and conditions set forth herein, the Plan Sponsor Agreement or Plan
Term Sheet.

 

11

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

SCHEDULE 1

Initial Budget

.

 

12

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

Violin Memory, Inc.

 

Weekly Cash Forecast as of
February 10, 2017   Actual     Actual     Actual     DIP Period(1):         ($
millions)   0     1     2     3     4     5     6     7     8     9     10    
11     12     13     Wk 3-13  

Week Ending:

  01/27/17     02/03/17     02/10/17     02/17/17     02/24/17     03/03/17    
03/10/17     03/17/17     03/24/17     03/31/17     04/07/17     04/14/17    
04/21/17     04/28/17     Total  

Beginning Cash

  $ 3.80     $ 3.43     $ 3.32     $ —       $ (1.49 )    $ (1.39 )    $ (1.99
)    $ (2.29 )    $ (2.75 )    $ (2.83 )    $ (3.56 )    $ (3.80 )    $ (4.25 ) 
  $ (4.52 )    $ —    

Collections:

                             

AR Collections

    0.03       0.13       —         —         —         —         —         —  
      —         —         —         —         —         —         —    

VAT Collections

    —         —         —         —         0.22       —         —         —    
    —         —         —         —         —         —         0.22  

Misc. Cash Receipts

    0.00       0.00       0.04       —         —         0.03       —        
—         —         —         0.03       —         —         —         0.06    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Collections

    0.03       0.13       0.04       —         0.22       0.03       —        
—         —         —         0.03       —         —         —         0.28  

Disbursements:

                             

Payroll

    (0.24 )      (0.15 )      (0.03 )      (0.36 )      —         (0.35 )     
—         (0.35 )      —         (0.35 )      —         (0.35 )      (0.17 )   
  (0.17 )      (2.10 ) 

Benefits

    (0.00 )      (0.01 )      (0.02 )      (0.12 )      —         (0.12 )     
—         —         —         —         (0.12 )      —         —         —      
  (0.36 ) 

Expense Reports

    (0.00 )      (0.00 )      (0.01 )      (0.01 )      (0.01 )      (0.01 )   
  (0.01 )      (0.01 )      (0.01 )      (0.01 )      (0.01 )      (0.01 )     
(0.01 )      (0.01 )      (0.11 )   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Payroll & Payroll Related

    (0.25 )      (0.15 )      (0.07 )      (0.49 )      (0.01 )      (0.48 )   
  (0.01 )      (0.36 )      (0.01 )      (0.36 )      (0.13 )      (0.36 )     
(0.18 )      (0.18 )      (2.57 ) 

Vendor Payments

    (0.16 )      (0.09 )      (0.02 )      (1.00 )      (0.11 )      (0.14 )   
  (0.29 )      (0.10 )      (0.08 )      (0.37 )      (0.15 )      (0.09 )     
(0.08 )      (0.13 )      (2.54 ) 

Interest

    —         —         —         —         —         —         —         —    
    —         —         —         —         —         —         —      

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Operating Disbursements

    (0.41 )      (0.24 )      (0.08 )      (1.49 )      (0.12 )      (0.62 )   
  (0.30 )      (0.46 )      (0.09 )      (0.72 )      (0.28 )      (0.45 )     
(0.27 )      (0.31 )      (5.11 )   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending Cash Balance

    3.43       3.32       3.29       (1.49 )      (1.39 )      (1.99 )     
(2.29 )      (2.75 )      (2.83 )      (3.56 )      (3.80 )      (4.25 )     
(4.52 )      (4.83 )      (4.83 ) 

Weekly Accrued Professional Fees

    (0.32 )      (0.19 )      (0.13 )      (0.30 )      (0.09 )      (0.13 )   
  (0.09 )      (0.24 )      (0.09 )      (0.09 )      (0.14 )      (0.09 )     
(0.09 )      (0.09 )      (1.44 )   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Weekly Disbursements

    (0.72 )      (0.43 )      (0.21 )      (1.79 )      (0.21 )      (0.75 )   
  (0.39 )      (0.70 )      (0.18 )      (0.82 )      (0.42 )      (0.54 )     
(0.36 )      (0.40 )      (6.55 ) 

Cumulative Accrued Professional Fees

    (1.86 )      (2.05 )      (2.19 )      (0.30 )      (0.39 )      (0.52 )   
  (0.61 )      (0.85 )      (0.94 )      (1.03 )      (1.17 )      (1.26 )     
(1.35 )      (1.44 )      (1.44 )   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Cash Balance

  $ 1.57     $ 1.27     $ 1.10     $ (1.79 )    $ (1.78 )    $ (2.50 )    $
(2.89 )    $ (3.59 )    $ (3.77 )    $ (4.59 )    $ (4.97 )    $ (5.51 )    $
(5.87 )    $ (6.27 )    $ (6.27 )   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash Escrow Account(1)

  $ —       $ —       $ 3.29     $ 3.29     $ 3.29     $ 3.29     $ 3.29     $
3.29     $ 3.29     $ 3.29     $ 3.29     $ 3.29     $ 3.29     $ 3.29     $
3.29  

Pre-DIP Accrued Professional Fees

    (1.86 )      (2.05 )      (2.19 )      (2.19 )      (2.19 )      (2.19 )   
  (2.19 )      (2.19 )      (2.19 )      (2.19 )      (2.19 )      (2.19 )     
(2.19 )      (2.19 )      (2.19 ) 

Minimum Cash / Winddown

    (0.97 )      (0.97 )      (0.97 )      (0.97 )      (0.97 )      (0.97 )   
  (0.97 )      (0.97 )      (0.97 )      (0.97 )      (0.97 )      (0.97 )     
(0.97 )      (0.97 )      (0.97 ) 

Est. Transaction Fees

    (1.50 )      (1.50 )      (1.50 )      (1.50 )      (1.50 )      (1.50 )   
  (1.50 )      (1.50 )      (1.50 )      (1.50 )      (1.50 )      (1.50 )     
(1.50 )      (1.50 )      (1.50 )   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Cash Escrow

  $ (4.33 )    $ (4.52 )    $ (1.37 )    $ (1.37 )    $ (1.37 )    $ (1.37 )   
$ (1.37 )    $ (1.37 )    $ (1.37 )    $ (1.37 )    $ (1.37 )    $ (1.37 )    $
(1.37 )    $ (1.37 )    $ (1.37 )   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Budgeted Disbursements in the week ending 2/17/17 prior to DIP Funding will
be reimbursed in full to the Initial Cash account upon Initial DIP draw

 

1 of 1

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SCHEDULE 2

DIP Facility Milestones

 

February 15, 2017:    Filing of Plan of Reorganization and Disclosure Statement
in form and substance reasonably satisfactory to the Lender. March 6, 2017:   
Approval of Disclosure Statement in form and substance reasonably satisfactory
to the Lender. April 20, 2017:    Entry of Confirmation Order confirming of Plan
of Reorganization in form and substance reasonably satisfactory to the Lender.

 

13

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EXHIBIT C

Exit Financing Term Sheet

 

Borrower:    The Borrower, as reorganized in the chapter 11 proceedings (the
“Reorganized Borrower”). Guarantors:    All domestic subsidiaries of the
Reorganized Borrower unless otherwise agreed by the Exit Lenders (the “Exit
Guarantors” and together with the Reorganized Borrower, collectively, the “Exit
Loan Parties”). Lenders:    VM Bidco LLC (or another entity designated by VM
Bidco LLC) and one or more additional financial institutions acceptable to VM
Bidco LLC (the “Exit Lenders”). Exit Agent:    A financial insitution selected
by the Exit Lenders (in such capacity, the “Exit Agent”). Exit Facility:    A
senior secured term loan credit facility (the “Exit Facility”) in an aggregate
principal amount equal to (i) the outstanding principal amount of the DIP
Facility on the date of entry of the Confirmation Order (the “DIP Tranche”),
plus, (ii) the aggregate amount of the Cash Portion of the Sale Proceeds (the
“Funding Tranche”), plus (iii) such additional amounts as may be agreed by the
Exit Lenders in their sole discretion with the consent of the Borrower (the
“Incremental Proceeds,” and together with DIP Tranche and the Funding Tranche,
the “Exit Loans”). Conditions to Conversion:    Customary for facilities of this
type and satisfactory to the Exit Lenders, including the entry of a satisfactory
Confirmation Order. Purpose:    The Exit Loans (other than the Incremental
Proceeds, if any) shall be used solely to refinance the DIP Facility, with the
Sale Proceeds subsequently used solely to pay recoveries to certain creditors as
described in the Plan Term Sheet. The Incremental Proceeds, if any, shall be
used for working capital and general corporate purposes. Interest Rate:    L +
5.00% (with a 1% LIBOR floor) per annum payable in cash. Default Rate:   
Additional 2% per annum, payable in cash. Amortization:    None. Fees:    None.
Maturity:    Earlier of (i) two (2) years from the Plan Effective Date; or
(ii) the occurrence of an Event of Default under the Exit Facility.

 

14

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Security:    Substantially all assets of the Exit Loan Parties, subject to
customary limitations with respect to stock of foreign subsidiaries. Mandatory
Prepayments:    Customary for facilities of this type and satisfactory to the
Exit Lenders. Optional Prepayments:    Exit Loans may be prepaid at any time
without premium or penalty, in minimum amounts to be agreed.
Representations and Warranties:    Customary for facilities of this type and
satisfactory to the Exit Lenders.

Affirmative, Negative and

Financial Covenants:

   Customary for facilities of this type and satisfactory to the Exit Lenders.
Events of Default:    Customary for facilities of this type and satisfactory to
the Exit Lenders. Governing Law:    New York.

 

15

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EXHIBIT D

FORM OF JOINDER AGREEMENT FOR QUANTUM PARTNERS LP

WHEREAS, Violin Memory, Inc. (the “Company”), and VM Bidco LLC (“Soros”) entered
into a Plan Sponsor Agreement dated January 25, 2017 (as amended, supplemented
or otherwise modified from time to time, the “Agreement”).

WHEREAS, Quantum Partners LP (the “Joining Party”) is a holder of $25,600,000 in
principal amount of 4.25% Convertible Senior Notes Due 2019 issued pursuant to
that certain Indenture, dated as of September 24, 2014 by and among the Company
as Issuer and Wilmington Trust, National Association as Trustee (the “Notes”),
plus interest, fees, and other expenses.

WHEREAS, the Joining Party intends to be bound by certain provisions of the Plan
Sponsor Agreement pursuant to the terms of this Joinder Agreement.

Each capitalized term used herein but not otherwise defined shall have the
meaning set forth in the Plan Sponsor Agreement.

1. The Joining Party hereby agrees that, subject to the Company complying in all
material respects with the terms of the Plan Sponsor Agreement, it shall the
vote all of its claims and interests with respect to the Notes against or in the
Company to accept the Plan by promptly after commencement of the Solicitation
delivering its duly executed and completed ballots accepting the Plan.

2. The Joining Party further agrees not to change or withdraw (or cause to be
changed or withdrawn) any such vote in Section 1 above except upon the
occurrence of a Soros Termination Event or a Company Termination Event, or as
otherwise expressly permitted pursuant to the Plan Sponsor Agreement.

3. The Company agrees that the Joining Party may direct the Company in
accordance with Section 4(a) of the Plan Sponsor Agreement and enforce the
provisions of Section 4(a) of the Plan Sponsor Agreement.

4. The Joining Party and the Company agree that Section 12 of the Plan Sponsor
Agreement shall apply to this Joinder Agreement.

[Signature pages follow.]

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

IN WITNESS WHEREOF, the Joining Party has caused this Joinder Agreement to be
executed as of the date first written above.

 

QUANTUM PARTNERS LP By:  

 

Name:   Title:   Acknowledged and Agreed VIOLIN MEMORY, INC. By:  

 

Name:   Title:   Acknowledged and Agreed VM BIDCO LLC By:  

 

Name:   Title:  

 

2